Cloud Peak Energy Inc. (NYSE:CLD), one of the largest U.S. coal
producers, today announced that it has acquired the Youngs Creek Mining
Company, LLC (Youngs Creek) joint venture and other related coal and
surface assets from Chevron U.S.A. Inc. (Chevron) and CONSOL Energy Inc.
(CONSOL) for $300 million. Of this purchase price, $195 million is
allocated to the lease of approximately 450 million tons of in-place
coal and $105 million to the purchase and lease of 38,800 acres of land.
The coal and land are well suited to support potential increased exports
through the Pacific Northwest. Youngs Creek is a permitted but
undeveloped surface mine project in the Northern Powder River Basin
located 13 miles north of Sheridan, Wyoming, contiguous with the
Wyoming-Montana state line. It is 7 miles south of Cloud Peak Energy′s
Spring Creek mine and 7 miles from the mainline railroad.
'The significant coal and surface assets we acquired position Cloud Peak
Energy well for future growth in our Asian exports as additional
terminal capacity becomes available. The location of the coal and
surface lands close to the Spring Creek mine and its rail spur should
reduce development costs and allow future operating synergies to be
realized. The quality of the coal is similar to that of our Spring Creek
mine and offers lower sodium levels to further meet the needs of our
customers,? said Colin Marshall, President and Chief Executive Officer,
of Cloud Peak Energy.
Of the approximately 450 million tons of in-place coal, the undeveloped
Youngs Creek mine permits cover 291 million recoverable tons of low
sulfur, high Btu subbituminous coal. Of this permitted coal, 267 million
tons benefit from a royalty rate of 8.0% payable to CONSOL and Chevron
which is below the normal 12.5% of gross proceeds payable on federal
coal.
The 38,800 acres of land includes Youngs Creek surface to the south and
extends to the border with Cloud Peak Energy′s Spring Creek mine to the
north. The property also extends onto the Crow Indian Reservation to the
west and abuts the Decker mine, of which Cloud Peak Energy owns 50%, to
the east.
'This coal has the same geographic and quality advantages over Southern
PRB coal as the Spring Creek mine, which have allowed us to make the
majority of PRB export sales in recent years. We now have a large asset
base and lots of options as to how we develop our Northern PRB
operations to meet future export and domestic coal demand,? said
Marshall.
Future development timing and production levels are expected to depend
largely on the availability of additional export terminal capacity on
the West Coast and continued strong Asian demand for thermal coal. The
mine would be served exclusively by the BNSF railroad. As Cloud Peak
Energy has not completed detailed mine development planning, the
acquired coal is not expected to be reported as reserves at year-end
2012.
About Cloud Peak Energy ?
Cloud Peak Energy Inc. (NYSE:CLD) is headquartered in Wyoming and is one
of the largest U.S. coal producers and the only pure-play PRB coal
company. As one of the safest coal producers in the nation, Cloud Peak
Energy specializes in the production of low sulfur, subbituminous coal.
The company owns and operates three surface coal mines in the PRB, the
lowest cost major coal producing region in the nation. The Antelope and
Cordero Rojo mines are located in Wyoming, and the Spring Creek mine is
located near Decker, Montana. With approximately 1,600 employees, the
company is widely recognized for its exemplary performance in its safety
and environmental programs. Cloud Peak Energy is a sustainable fuel
supplier for approximately 4 percent of the nation′s electricity.
Cautionary Note Regarding Forward Looking Statements
This release contains 'forward-looking statements? within the meaning of
the safe harbor provisions of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements are not statements of historical facts and often contain
words such as 'may,? 'will,? 'expect,? 'believe,? 'anticipate,? 'plan,?
'estimate,? 'seek,? 'could,? 'should,? 'intend,? 'potential,? or words
of similar meaning. Forward-looking statements are based on management's
current expectations or beliefs, as well as assumptions and estimates
regarding our company, industry, economic conditions, government
regulations and energy policies and other factors. Forward-looking
statements may include, for example, (1) our current estimates of the
quantity and quality of the acquired coal assets and evaluation of such
coal for any inclusion in the company′s reported reserves, (2) any
future development, production and/or marketing of this coal, (3)
anticipated additional West Coast export terminal capacity and the
timing of any such additional capacity, (4) Asian export demand, (5)
business development and growth initiatives and strategies; (6)
potential synergies of this transaction, and (7) other statements
regarding this transaction and our plans, strategies, prospects and
expectations concerning our business, industry, economic conditions,
operating results, financial condition and other matters that do not
relate strictly to historical facts. These statements are subject to
significant risks, uncertainties, and assumptions that are difficult to
predict and could cause actual results to differ materially from those
expressed or implied in the forward-looking statements, including the
risks that (i) sufficient additional West Coast terminal capacity is not
developed at all or in a timely manner, (ii) Asian export demand and
domestic demand for PRB coal weakens, (iii) the coal leases from Chevron
and CONSOL terminate if we fail to meet minimum future production
requirements, (iv) future development and operating costs significantly
exceed our expectations, or (v) anticipated synergies are not achieved.
For a discussion of some of the additional factors that could adversely
affect our future results or the anticipated benefits of this
transaction, refer to the risk factors described from time to time in
the reports and registration statements we file with the Securities and
Exchange Commission ('SEC?), including those in Item 1A - Risk Factors
in our most recent Form 10-K and any updates thereto in our Forms 10-Q
and current reports on Forms 8-K. There may be other risks and
uncertainties that are not currently known to us or that we currently
believe are not material. We make forward-looking statements based on
currently available information, and we assume no obligation to, and
expressly disclaim any obligation to, update or revise publicly any
forward-looking statements made in this release, whether as a result of
new information, future events or otherwise, except as required by law.
