Elephant Analytics • Thu, Jan. 22
- Rhino Resource Partners has provided a Q4 operational update, with the key takeaway being that it signed an additional long-term contract for Pennyrile and is adding a second mining section.
- I had previously highlighted the Pennyrile expansion as the key driver for Rhino's recovery and the ability to increase its distribution in the long term.
- The new contract could improve cash flow by as much as $10 million per year by 2017.
- Rhino is also working on getting additional customers, which would allow it to expand operations further.
- Fully expanded Pennyrile operations could improve cash flow by as much as $25 million per year over current levels.
Update: Rhino Resource Partners Reports Termination Of Its Rhino Eastern Joint VentureElephant Analytics • Fri, Jan. 9
- Rhino Resource Partners has reported that its Rhino Eastern joint venture with Patriot Coal has been terminated.
- Patriot Coal is taking over the Eagle mining complex and associated reserves, while Rhino Resource Partners retains 37 million tons of coal reserves from the partnership.
- I did not anticipate this move, but it frees Rhino from operations that are deeply unprofitable at current metallurgical coal prices.
- The move does slightly reduce Rhino's upside if met coal prices should recover strongly.
- However, Rhino can still fully fund its previous distribution of $1.78 per unit under my 2017 scenario without any contribution from Rhino Eastern.
Rhino Resource Partners: Pennyrile Expansion Potential Makes It A Strong Long-Term Rebound Candidate
- Rhino Resource Partners cut its distribution by 88% and investors have fled the stock.
- The reduced distribution allows it to invest in expanding its Pennyrile mine without adding too much debt. Expansion can add up to $25 million per year to cash flow.
- Even if thermal markets fail to recover, an eventual rebound in metallurgical coal prices to $160 per ton (below long-term analyst forecasts) could add $14 million in additional cash flow.
- Reducing operating costs at its NAPP and Eastern Met operations to historical levels could improve cash flow by another $10 million per year as well.
- These items make restored $1.78 per unit distributions quite feasible by 2017/2018 without requiring extraordinary assumptions. This scenario should result in its shares reaching over $11 again, 4x current levels.
- Rhino Resource Partners changed CEOs on November 20th.
- I have been on the sidelines, and continue to believe being on the sidelines is still the right course of action.
- I did not anticipate the CEO change.
- Rhino Resource Partners cut its dividend distribution by 88% on October 20th.
- The company cut its distribution because of lower coal prices, which look here to stay.
- Rhino Resource Partners has plenty of liquidity and some costs that it can trim, but at this point the stock is speculative given the poor coal industry conditions.
Rhino Resource Partners: New Leadership, New Strategy?
Rhino Resource Partners: Ready To Charge Into The Future
Wed, Jan. 21, 3:21 PM
- Rhino Resource Partners (RNO +23%) is soaring after reporting late yesterday that its Pennyrile operations in Kentucky produced 111K tons while coal sales totaled 143K tons during Q4.
- RNO says federal authorities recently approved a deep cut mining plan for Pennyrile, which is expected to boost productivity and lower future mining costs it also dissolved a joint venture with with Patriot Coal and expects to soon complete the sale of the Rhino Eastern joint venture, adding ~$6M to annual cash flow this year.
- Also, Northern Appalachia operations produced 256K tons of steam coal during Q4, with coal sales totaling 257K tons and limestone sales of 179K tons; Castle Valley operations produced 287K tons and sold 301K tons in the quarter.
- Earlier: Rhino Resource Partners declares $0.05 distribution
Wed, Jan. 21, 12:45 PM
Tue, Jan. 20, 4:49 PM| Comment!
Oct. 30, 2014, 7:23 AM| Comment!
Oct. 21, 2014, 12:46 PM
Oct. 21, 2014, 9:14 AM
Oct. 20, 2014, 5:44 PM
- Rhino Resource Partners (NYSE:RNO) -36.9% AH after announcing a Q3 distribution of $0.05/unit, far lower than the previous quarter's distribution of $0.445/unit.
- RNO says the reduced distribution is the result of prolonged weakness in the coal markets, which has continued to adversely affect its cash flow.
- RNO says it will redouble its cost cutting efforts, including reducing overhead to reflect market realities and the company's smaller size.
Oct. 20, 2014, 5:38 PM
Jul. 31, 2014, 7:11 AM| 1 Comment
Jul. 29, 2014, 10:33 AM
- Arch Coal (ACI +3.5%) moves higher after its Q2 earnings loss came in better than expected as operating costs per ton fell 7%.
- Q2 sales fell 7% Y/Y to $713.8M, missing analyst consensus, but operating costs per ton fell to $20.55 from $21.19.
- ACI lowers its FY 2014 sales volume targets, including cutting its thermal sales volumes forecast to 124M-130M tons from 124M-132M tons to reflect the effects of transportation bottlenecks and the impact of a fall in steel production.
- Other coal names also are higher: ANR +4.3%, ARLP +2.4%, PVA +1.9%, WLB +1.9%, BTU +1.4%, RNO +0.9%, WLT +0.8%, KOL +0.4%.
Jul. 7, 2014, 12:44 PM
- Coal stocks suffer a beating after Deutsche Bank downgrades Peabody Energy (BTU -3.3%) to Hold from Buy with a $19 price target, down from $23, to reflect lower realized coal prices (particularly metallurgical coal) and anticipated ongoing cost pressures in foreseeable future.
- Consol Energy (CNX -1.7%) is the firm’s only Buy-rated coal stock because of the company’s “fast-growing natural gas business and solid financial position.”
- Although the Deutsche team says its focus is shifting to more company specific stories from an emphasis on sector performance, other coal companies are sharply lower: ACI -4.3%, ANR -4.8%, YZC -1.3%, CLD -2.4%, WLT -3.6%, RNO -1.5%, WLB -2%.
May. 16, 2014, 5:03 AM
- The White House is considering forcing power plants to cut carbon emissions by 25% over a 15-year period, Bloomberg reports.
- The problem is that owners can only cut so much of a facility's emissions by increasing efficiency, so a lot of the reduction could have to come by "going outside the fence," such as by deepening the use of renewable energy, improving grid efficiency and encouraging customers to use less electricity.
- Trying to compel operators to rely on such external measures could run afoul of what the government is allowed to do under the Clean Air Act.
- ETFs: KOL, XLU, IDU, VPU, RYU, PUI, UPW, FXU, SDP, PSCU, FUTY, UTLT
- Coal Tickers: PCXCQ, BTU, WLT, CNX, ACI, ANR, JRCC, YZC, ARLP, AHGP, NRP, PVR, PVG, PVA, OXF, CLD, WLB, RNO
- Utilities: ED, POM, PEG, FE, NST, UTL, ETR, EXC, D, NU, PCG, DUK
Feb. 27, 2014, 9:12 AM
- Gulfport Energy (GPOR) -1.5% premarket after Q4 earnings and revenues miss Wall Street expectations.
- GPOR's Q4 output totaled ~1.53M boe; estimates FY 2014 production of 50K-60K boe/day, with E&P capex activities estimated at $675M-$725M.
- Says it is evaluating strategic alternatives for its oilfield service business, and may pursue an IPO of the interests later this year.
- Agrees to acquire 8,200 net acres and ~1,000 boe/day of production in the eastern Ohio Utica Shale from Rhino Resources (RNO) for ~$185M.
Feb. 27, 2014, 7:29 AM| Comment!
Feb. 4, 2014, 12:48 PM
- Arch Coal (ACI +2%) shares turn green after management makes positive comments about the thermal coal market during this morning's earnings call.
- ACI reported a larger than expected Q4 loss, but expects U.S. thermal coal markets to tighten further this year, as several factors including favorable weather trends, healthier economic activity and elevated natural gas prices should ensure that the prices of most U.S. thermal coal is competitive.
- The same can't be said for metallurgical coal, as overseas markets remain weak, ACI says, but production of higher cost met coal would ease and cause markets to tighten in the future.
- Other coal miners also are higher: CLD +3.9%, WLT +3.7%, WLB +3.4%, ANR +2.6%, RNO +2.1%, CNX +1.5%, BTU +0.2%.
Feb. 3, 2014, 5:39 PM
- James River Coal (JRCC) -6.7% AH after plunging nearly 20% in the final half-hour of regular trading on a Bloomberg report that it hired Perella Weinberg Partners to advise on the restructuring of its debt and restructuring advisers including Blackstone have been pitching creditors.
- JRCC, which has closed mines and hasn’t posted an annual net profit since 2010, is among U.S. producers hurt by a decline in coal prices and the natural gas boom; for metallurgical coal used in steelmaking, rising Australian output has helped create a global surplus.
- Other coal producers also fell sharply today: ANR -8.1%, WLT -7.1%, ACI -5.4%, OXF -3.1%, BTU -2.7%, RNO -1.4%, CNX -1.2%.
RNO vs. ETF Alternatives
Rhino Resource Partners LP produces, processes and sells high quality coal of various steam and metallurgical grades. The Company markets its steam coal to electric utility companies as fuel for their steam-powered generators.
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