Will Arch Coal Succeed in Avoiding Bankruptcy?

(Continued from Prior Part)

Arch Coal (ACI) sold 25.5 million tons of Powder River Basin coal (KOL) in 2Q15. This was down from 2Q14’s 26.9 million tons and 1Q15’s 28.5 million tons. Lower shipments were due to weak natural gas prices and the implementation of the Mercury and Air Toxic Standards (or MATS) by the US Environmental Protection Agency (or EPA).

At the end of 2Q15, the Supreme Court ordered the EPA to review its MATS regulation. However, the ruling isn’t expected to have a major immediate effect, as power producers have already retired or have decided to retire most coal-fired power plants scheduled for retirement in 2015 under the rule.

In 1H15, Arch Coal’s PRB segment sold 54.0 million tons of thermal coal compared to 52.6 million tons in 1H14.

The price per ton for ACI’s Powder River Basin coal came in at $13.24 in 2Q15—higher than the $12.79 per ton in 2Q14. The company benefitted from a higher price for contracts renewed during last year’s harsh winter. Pricing for 2Q15 was lower than 1Q15’s $13.48 per ton.

The segment’s price per ton improved to $13.37 in 1H15 compared to $12.76 in 1H14.

Arch Coal (ACI) operates two surface mines that produce thermal coal in the Powder River Basin (or PRB) in Wyoming. The Black Thunder mine is the second-largest coal mine in the United States, after Peabody Energy’s (BTU) North Antelope Rochelle mine in Wyoming. The company’s other mine in the PRB is its Coal Creek mine.

Both PRB mines are connected by the Union Pacific Railroad (UNP) and the Burlington Northern Santa Fe Railroad (BRK-B).

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Browse this series on Market Realist:

• Part 1 - Why Arch Coal Is in the News for Debt Exchange
• Part 2 - Why Arch Coal Rallied During a Bad Week for the S&P 500
• Part 3 - Arch Coal’s Appalachian Shipments Remain under Pressure in 2Q15