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Cloud Peak Energy releases Q3 2014 results

World Coal,

Cloud Peak Energy has announced results for Q3 2014 and the first nine months of 2014.

Shipments of coal have been reduced, due to slow rail service. This has impacted Cloud Peak’s financial results and led to an Adjusted EBITBA of US$ 45.7 million for Q3 2014 and US$ 130.3 million for the first nine months of 2014.

The company said demand for its coal remained strong and that it was optimistic railroad throughput would steadily increase through 2015.

Mild summer weather and the decision by a number of power plants to conserve coal has also hit Cloud Peak’s bottom line.

Colin Marshall, president and CEO of Cloud Peak, commented, “In such a challenging environment, we are proud to be able to deliver these operational and financial results for the quarter. During the quarter, we carried out several significant opportunistic transactions, which enhanced our export growth strategy, reduced our legacy liabilities, and further strengthened our balance sheet and financial flexibility.”

The company’s earnings were not helped by a significant rain storm, which flooded the Cordero Rojo mine and damaged mining equipment. The storm caused at least US$ 3 million in costs.

Looking overseas

The company was pleased to announce an expansion in its throughput agreement with Westshore Terminals to increase long-term committed capacity at the port from 2.8 million tpa to 6.3 million tpa initially (this in turn is set to rise to 7.2 million tpa in 2019). Cloud Peak paid US$ 37 million for the expansion in capacity.

Meanwhile, the sale of Cloud Peak’s 50% stake in the Decker coal mine to Ambre Energy allowed the company to reduce asset retirement obligations by US$ 72.2 million. The company also received an option of up to 7.7 million tpa of export capacity at the proposed Millennium Bulk Terminals facility in Washington State.

The focus on increasing terminal capacity comes as Cloud Peak looks to position itself to meet growing demand from Asia.

“We were very pleased to be able to secure additional export capacity at the bottleneck in our export supply chain. These opportunities only come available at certain points in the cycle, and we were glad we were able to take advantage of the opportunity due to our sound balance sheet. We remain committed to our strategy of growth through increased West Coast exports. We are pleased to be able to increase our sales to South Korea, Japan, Taiwan, and other Asian countries who are keen to diversify their coal import suppliers,” Marshall added.

“We believe that as rail performance improves, utilities will take the opportunity to replenish their stockpiles, and in some cases increase them to higher levels, which will hopefully improve pricing. We have reviewed our forecast of international demand and supply and continue to believe that demand growth will exceed supply over the coming years and lead to a return to higher international prices. We continue to position Cloud Peak Energy to weather current weak domestic and international markets and to benefit from a recovery when it occurs,” Marshall concluded.

Written by Sam Dodson

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