Cloud Peak Energy’s board of directors, its management team, and legal and financial advisors have initiated a review of strategic alternatives, which includes the potential sale of the company.
“While our board is undertaking this strategic review, Cloud Peak Energy remains focused on executing against our operational and financial priorities,” said Colin Marshall, president and CEO of Cloud Peak Energy. “We will continue to adjust our business to the structural changes in the U.S. coal industry and to position our company for future growth opportunities.”
In its third-quarter earnings report, the company reduced its guidance to 49 million tons and 51 million tons for 2018, citing operational issues at the Antelope mine. The company shipped 13.1 million tons during the third quarter of 2018, compared to 15.5 million tons for the third quarter of 2017. In 2017, Cloud Peak Energy sold approximately 58 million tons.
The company said it was working to mitigate the impact of mid-August spoil failures at the Antelope mine, which were caused by heavy rains that fell in the Powder River Basin (PRB), earlier in the year.
“The spoil failures will reduce fourth-quarter shipments as pre-stripping was delayed when equipment was diverted to deal with them,” said Marshall. “We are working with our customers to move Antelope tons to our other mines or into 2019 where possible. Exports went very well during the quarter, though the recent drop in the Kalimantan price index will reduce fourth quarter logistics earnings.”
The company said both dragline pits suffered significant spoil failures when coal was removed from the base of the wet spoil piles. Coal removal has recently been completed from these pits. The re-handling of spoil out of the pits, however, reduced coal shipments and diverted resources from pre-stripping operations. Fourth-quarter shipments will be reduced as pre-stripping needs take place before the draglines can resume their normal operating cycle, Cloud Peak said.
Meanwhile, cost-reduction efforts continue with the company completing the move from its corporate headquarters near Denver to the Cordero Rojo mine by year end, the company said.
Cloud Peak Energy owns and operates three surface coal mines in the PRB. The Antelope and Cordero Rojo mines are located in Wyoming and the Spring Creek mine is located in Montana.
The company has engaged J.P. Morgan Securities LLC as its financial advisor and Allen & Overy LLP as legal counsel in connection with the strategic alternatives review.