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Cloud Peak Energy 2Q15 results

Published by
World Coal,

Cloud Peak Energy’s 2Q15 adjusted EBITDA was US$10.6 million whereas in 2Q14 it was US$45.2 million.

Shipments for 2Q15 were down from 20.6 million short t in 2Q14 to 16 million short t. It is reported the declines in shipments were a result of weather-related impacts to the railroads and mines as well as Cordero Rojo Mine transitioning to lower production levels.

Cost per short t increased in 2Q15 to US$10.75 from US$10.48 in the same period in 2014. This was attributed to lower shipments. Yet total cost to produce coal was down by 21% compared to 2Q14, unit operating costs were 3% higher due to 22% lower shipments. It is reported the combination of lower diesel prices and good overall cost control enabled Cloud Peak to manage unit costs as production was reduced below plan levels.

A US$33.4 million non-cash impairment charge relating to goodwill from a 1997 acquisition was recorded at the Company’s 8400 Btu Cordero Rojo Mine.

The final lease by application (LBA) payments of US$69 million was made in June, resulting in no further committed payments going forward.

For 2015, the company has currently committed to sell 79 million short t from its three mines. Of this committed production, 76 million short t are under fixed-price contracts with a weighted-average price of US$12.76/short t.

Colin Marshall, President and CEO commented: “Given increasing utility coal inventories and continuing low natural gas prices, we believe domestic coal prices will remain subdued this year. International prices continue to be negatively impacted by oversupply, the strong US dollar and the decline in Chinese thermal coal imports. Cloud Peak Energy is actively managing its exposure to these tough conditions and has a strong balance sheet and efficient operations that we believe will help carry us through this cycle.”

Marshall added: “In what are clearly tough domestic and international conditions, we will stay focused on matching our supply to demand while controlling costs. I continue to be impressed with the ways our employees find ways to control costs across all aspects of the business. We remain optimistic that markets will improve due to the significant reduction in US oil and natural gas drilling and continued Asian demand growth. However, we are not sure when this will occur and we believe that our strong financial position and low-cost operations will enable us to manage through these difficult times.”

Edited from press release by Harleigh Hobbs

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