Patriot Warns 3Q Production Hit - Analyst Blog
19 September 2011 - 2:15PM
Zacks
Coal miner Patriot Coal Corporation (PCX), on
Friday, said geological issues at its two longwall mines and the
closure of a thermal mine are likely to affect production in the
third quarter. Highlighting the problems faced at its mines the
company tweaked its third quarter production projection, expecting
to lose about 450,000 tons.
Patriot said longwall moves at both the Federal and Panther
mines, which were scheduled to take place in the third quarter,
were delayed causing production declines. At the Federal longwall,
geologic challenges caused delays in the start of the move, while
equipment issues impacted the restart process. Put together, this
lowered production at the mine for over six weeks during the
quarter. At Panther, difficult geology is expected to result in
lower volumes in the third quarter, in addition to the scheduled
longwall move.
Apart from the longwall delays, Patriot also closed a West
Virginia mine in the Big Mountain complex, after the roof collapsed
in August. The roof fall at the thermal coal mine is believed
to have emanated from the earthquake tremors felt near Washington
D.C. in August 2011.
Due to the production fall, Patriot sees average cost per ton
for its Appalachian operations to be several dollars higher than
the mid-$70s guidance provided for the third quarter. At the end of
the second quarter, Patriot had forecast sales volumes in the range
of 31 to 32 million tons for full-year 2011, including
metallurgical coal sales of at least 8 million tons.
Looking into the rest of 2011, Patriot now plans to provide
forecasts for the rest of the year in October when it announces its
third quarter financial results.
Based in St. Louis, Missouri, Patriot Coal is a leading coal
producer in the eastern United States, having 14 mining complexes
in Appalachia and the Illinois Basin. The company primarily
competes with Penn Virginia Resource Partners L.P.
(PVR) and Peabody Energy Corp. (BTU).
Patriot Coal currently has a short-term Zacks #3 Rank (Hold
rating). We maintain our Neutral recommendation on the stock.
PEABODY ENERGY (BTU): Free Stock Analysis Report
PATRIOT COAL CP (PCX): Free Stock Analysis Report
PENN VA RESRC (PVR): Free Stock Analysis Report
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