U.S. coal producer
Cloud Peak Energy Inc.
) released its second quarter 2013 shipment details and also
updated its annual adjusted earnings before interest tax
depreciation and amortization (EBITDA) guidance.
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The shipments from its three operated mines totaled 20.1 million
tons versus 21.1 million tons in the first quarter of 2013 and
20.1 million tons in the second quarter of 2012. The decline in
coal shipments in the first half of the year did not come as a
surprise as the accumulated stockpiles at the utilities delayed
The sequential decline in shipment of 1 million ton was
attributable to weather interruptions, unplanned power plant
outages at major customers, and the impact of production
interruptions due to planned maintenance outages.
Cloud Peak adjusted its EBITDA guidance for 2013 and expects
second quarter EBITDA to be below first quarter results. As a
consequence the company decided to lower its full year EBITDA
guidance at the midpoint by $15 million. Cloud Peak now expects
2013 EBITDA in the range of $210 million to $250 million.
Coal demand for power generation is expected to revive gradually
in the U.S. due to a steady rise in natural gas prices. Moreover,
the projected addition of nearly 300 gigawatts of coal power
units over the next five years globally will create additional
demand for coal.
Cloud Peak Energy is a pure-play Powder River Basin (PRB) coal
company. The company has recently received approval to start
exploration and development work in a coal mine located in Crow
Indian Reservation. The development of this mine will take 5
years and production is expected to touch 10 million tons
Cloud Peak could utilize its increased production capability from
the PRB mines to cater to the Asian markets where the demand for
thermal coal continues to rise.
Another operator in the sector
SunCoke Energy Inc.
) disclosed its preliminary second quarter 2013 domestic coke
production figure, which slipped moderately by 1.3% to 1,081
thousand tons from 1,095 thousand tons in the year-ago quarter.
The decline in output is attributed to lower production
activities in the company's Indiana Harbor coke making plant.
Cloud Peak Energy currently has a Zacks Rank #4 (Sell).
However, other companies in the industry worth considering are
Alliance Resource Partners LP
Hallador Energy Company
). Alliance Resource Partners presently holds a Zacks Rank #1
(Strong Buy) while Hallador Energy has a Zacks Rank#2 (Buy).