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Cloud Peak coal production continues to drop in Q2'16

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Cloud Peak coal production continues to drop in Q2'16

Production at CloudPeak Energy Inc. coal mines continues to drop, though there are somesigns that the dive may be slowing for the Powder River Basin energy company.

Overall production is down 7.3% to just over 11.8 million tonsin the second quarter of 2016, from 12.8 million tons produced in the previous quarter.The amount produced in the most recent quarter dropped 25.8% from the nearly 16million tons produced in the second quarter of 2015.

The Antelope mine in Wyoming, the company's biggest producer,saw the largest drop in terms of tonnage. Antelope produced 6.3 million tons inthe second quarter of 2016, down 8.3% from around 6.9 million tons in the previousquarter and down around 17.7% from 7.6 million tons produced in the second quarterof 2015.

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But the company's other two mines showed signs of leveling out.The Cordero mine in Wyoming produced 3.6 million tons in the second quarter, downonly 1.7% from the roughly 3.7 million tons produced in the first quarter of thisyear. In contrast, production levels at Cordero in the second quarter dropped around20.1% from the roughly 4.5 million tons produced in the same period in 2015.

Cloud Peak's smallest producer, Spring Creek in Montana, sawthe largest drops in terms of percentage. Spring Creek produced around 1.9 milliontons, down 13.8% from the previous quarter's 2.3 million tons and down some 49.1%from the 3.8 million tons produced in the year-ago period. There may not be anyrelief for this mine in sight, as one of its buyers, the Minnesota-based electricpower cooperative Great River Energy,announced earlier thismonth that it would retire its coal-fired Stanton plant in Mercer County, N.D., by May 2017. Stantonhas purchased over 160,000 tons of coal from Spring Creek in 2016 so far.

An analyst predicted recently that the oversupply of coal atutilities could returnto normal levels by the summer of 2017. Analyst Lucas Pipes of FBR & Co. predictedthat this would happen if production rates and natural gas prices held at currentlevels. While they expected some coal producers to outperform, FBR rated Cloud Peakat market underperform.

Cloud Peak's stock was trading at $2.56 per share in midday tradingJuly 19.

A spokesperson from Cloud Peak said the company would not commenton the production in advance of its quarterly earnings report due next week.