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Foresight Energy 3Q15 results

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World Coal,

A leading producer and marketer of thermal coal with reserves in the Illinois Basin, Foresight Energy, has reported its 3Q15 results.

Production for the quarter totalled 4.9 million short t. Total revenues were US$253.1 million for 3Q15 – decreasing from US$300 million in 3Q14.

Sales volumes reached 5.7 million short t, which resulted in US$253.1 million and Adjusted EBITDA of US$91.1 million for 3Q15. Coal sales revenue decreased US$48.8 million from 3Q14 – a result of a 5.2% decline in sales volumes.

The company has indicated that the decline in coal sales realisation was due to a decrease in realisation per ton on both domestic and international sales driven by weak coal market conditions as well as a lower mix of international shipments. Increased domestic shipments during the current year period is reported to have partially offset the 0.7 million short t decrease in sales volumes to international markets from the year ago period.

Net income attributable to limited partner units came in at US$8.1 million (US$0.06 per unit. This includes transition and reorganisation costs of US$5 million ($0.04 per unit) that are associated with the transaction with Murray Energy Corp.

“The third quarter was significant for Foresight as we realised Adjusted EBITDA of $91.1 million in this very difficult coal environment," commented Robert D. Moore, Foresight’s President and CEO. "We continue to make progress on the integration of Foresight and Murray’s operations and are evaluating additional synergy opportunities. Further, during the quarter we were able to increase our 2016 committed position to 19.5 million short t.”

The Board of Directors of Foresight’s General Partner reduced its quarterly cash distribution to US$0.17 per unit for common unit holders, while suspending its distribution on all subordinated units. The company indicates that this decision is a result of a difficult business environment for coal – oversupply in many domestic and international basins, natural gas competition and soft dometic utility demand all contributing to this.

“The decision to cut the distribution reflects the Board’s disciplined long-term approach to creating value for unit holders and will allow Foresight to prudently manage its liquidity during this uncertain period,” stated Christoper Cline, Founder and Chairman of the Board of Directors. “As the low-cost provider and most productive underground coal mining company, we believe Foresight is better positioned to navigate this difficult period in the coal markets.”

Updated full-year earnings outlook

Following its results and taking into consideration year-to-date performance and the continued decline in the coal markets, the company has updated its full-year earnings outlook.

“In reaction to the current market conditions and taking into account the impact of synergies resulting from the transaction with Murray Energy, we are updating our guidance for 2015,” said Moore.

Guidance for sales volumes is cut down to 21.5 to 22.0 million short t from the previous range, which was between 22.5 and 23.2 million short t.

As a result of a slight decrease in expected sales volumes, Foresight is tightening its Adjusted EBITDA guidance from US$385 to US$400 million to a range of US$375 – US$385.

Foresight is reducing its capital expenditures guidance to US$90 – US$100 million, including maintenance capital estimates of US$70 – US$75 million. The previous range was US$105 – US$110 million for total capital and US$70 – US$80 million for maintenance capital.

Edited from press release by Harleigh Hobbs

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