In addition to its coal holdings, Rhino also controls Utica Shale acreage in the region. David Zatezalo, Rhino president and CEO, told analysts during a phone conference to discuss the company’s quarterly performance that earnings of $6.9 million from Utica Shale leases contributed in part to the company’s record adjusted EBITDA of $25 million in the three months ended June 30. Overall, Rhino earned $13 million, or $0.46/share, in the quarter, up from $9.4 million, or $0.37/share, a year ago. Quarterly coal sales declined by 100,000 tons to 1.1 million tons in the second quarter of 2012.

“While our second quarter results were satisfactory, they reflect the continued weakness in coal markets,” Zatezalo said. “The actions we took to idle a majority of our Central Appalachia operations for five weeks [in early summer] helped to lower our overall inventory by more than 100,000 tons from peak levels.” Those operations were restarted July 9.

Zatezalo said Rhino’s Hopedale and Castle Valley steam coal mines in Ohio and Utah, respectively, remain fully contracted through 2013 and 2014. During the second quarter, the company picked up some additional metallurgical coal sales, with 30,000 tons sold on a spot basis as a low quality met product, and Castle Valley achieving its first 100,000 ton plus sales month.

Rhino is in the process of permitting a No. 7 seam reserve that will be accessed from the existing portal and infrastructure at Hopedale to provide up to 1 million tons of annual production similar in quality to Hopedale’s coal within the next 18 months, depending upon market conditions.

In addition, he said, Rhino has “seen a pickup from a steam customer that had previously delayed shipments in Northern and Central Appalachia.”

Zatezalo added the company’s Rhino Eastern joint venture in West Virginia with Patriot Coal “showed positive results during the quarter as our ongoing efforts to improve safety, productivity and cost structure at this operation have resulted in positive returns.”

Although the long-term impact of Patriot’s bankruptcy filing earlier this year on the joint venture remains uncertain. “We have continued normal production at the joint venture and we are hopeful the bankruptcy filing will not have a material negative effect on Rhino Eastern,” he said.

Rhino Eastern’s Eagle No. 1 mine is expected to see its reserves play out next March. Eagle No. 3, a replacement mine, is ready to take its place.

Rhino has reduced staffing at its McClane Canyon mine in Colorado and has placed the operation on a “care and maintenance” schedule pending market improvement.

Currently, Rhino has operations in Central Appalachia, Northern Appalachia and in Utah and Colorado. In addition to the newly acquired western Kentucky reserves, the company still is weighing the possibility of opening a large underground steam coal mine in Christian County, Ill.