Walter Energy Files for Bankruptcy: What Investors Should Know

(Continued from Prior Part)

Walter Energy, Inc. (WLTG) produced 2.0 million tons of met coal from its American mines in 1Q15. The production was lower than its 2.1 million tons in 1Q14 since the company curtailed production from its Alabama mines due to difficult mining conditions.

The company sold 1.97 million tons of coal in 1Q15 compared with 2.01 million tons in 1Q14, a 2.1% drop. The drop can be blamed on oversupply in the industry amid a weak demand environment. Walter Energy’s operations received $106.40 per ton for its US met coal in 1Q15, down from $127.40 in 1Q14. Its Canadian and UK operations saw met coal prices plunge to $100.50 in 1Q15, from $123.60 in 1Q14.

Total revenues came in at $290.9 million in 1Q15, compared with $413.9 million in 1Q14.

Note that we are limiting our cost discussion to the company’s US operations because the UK and Canadian operations didn’t produce any coal during the quarter. The cash cost of production for Walter Energy’s (WLTG) US met coal came in a notch higher at $67.70 per ton in 1Q15, compared with $62.10 per ton in 1Q14. The increase was primarily due to geological issues at the company’s Alabama No. 7 mine.

The cash cost of sales per ton for US met coal came in at $96.90 in 1Q15 versus $95.50 in 1Q14. The cash cost of sales per ton excluding the cost of production came in at $29.20 in 1Q15, compared with $33.40 in 1Q14.

All coal producers, including Arch Coal (ACI), Alpha Natural Resources (ANR), Peabody Energy (BTU), and BHP Billiton (BHP), are focusing on cost savings in a difficult pricing environment.

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Browse this series on Market Realist:

• Part 1 - Walter Energy Is Preparing for Chapter 11 Bankruptcy
• Part 2 - NYSE Suspends Trading of Walter Energy Stock
• Part 3 - Walter Energy’s Path to Bankruptcy: The Beginning