Weak coal production data coming from the U.S. Energy Information Administration led B. Riley FBR analyst Lucas Pipes to lower earnings estimates for the country's two largest coal miners by volume for the fourth quarter.

Total coal production from the Powder River Basin is on pace to decline 8% from third-quarter levels, Pipes wrote. The decline led B. Riley FBR to tweak its expected volumes from Arch Coal Inc. from 17.5 million tons to 17.0 million tons, while adjusting its expectations for Peabody Energy Corp. from 29.5 million tons to 28.5 million tons.

Pipes also expects the companies' costs to increase in the Powder River Basin, where companies mine thermal coal primarily sold into the U.S. power sector for electricity generation. Producers in the region are struggling from a decline in demand brought on by a transition to natural gas and renewable energy sources of power in the U.S.

Fourth-quarter adjusted EBITDA for Arch and Peabody was lowered from $50 million to $35 million and $106 million to $93 million, respectively. B. Riley FBR maintained price targets of $97 for Arch and $12 for Peabody stock. Pipes also maintained a "buy" rating on Arch and a "neutral" rating on Peabody.

Arch and Peabody are in the middle of linking certain mines in the Powder River Basin and in Colorado as part of a joint venture announced in June.