Westmoreland first acquired Kemmerer from Chevron in January 2012. Since that time, its financial and operating performance has improved while operational and productivity improvements have also been realized. Safety citations and reportable incidents have been significantly reduced as well.
CEO Keith Alessi called the deal, which is expected to close during the third quarter, its inaugural transaction in its MLP drop-down strategy.
“We expect the contribution of Kemmerer to significantly expand the size of the production base at WMLP, diversify the customers we serve, and improve the stability of its cash flows through Kemmerer’s long-term contracts. This transaction demonstrates Westmoreland’s continued support of WMLP and our commitment to properly capitalize the partnership and position the balance sheet to fund future transactions.”
The news is just the latest in a series of growth activity by the Colorado-based miner as of late; Westmoreland, the oldest independent coal company in the U.S., completed its takeover of Oxford Resources and acquired Buckingham Coal Co. in January.
The company also announced in early May that it had agreed in principle to purchase the San Juan mine in New Mexico from BHP Billiton. Under the terms of a contemplated new coal supply agreement, Westmoreland could take over operations by early 2016.
The 12,400-acre Kemmerer mine currently produces coal in three active areas from 12 primary seams and their splits; the mine primarily supplies fuel to PacifiCorp’s neighboring Naughton Power Station via overland conveyor.
The San Juan mine, one of the nation’s top longwall operations, produced about 8.8 million tons last year.