Contura Energy Has Short-Term Expectations For Western Mines
Contura Energy is not yet the owner of Blackjewel's two Wyoming mines. But, in an earnings call, the company did give insight into their expectations for the Eagle Butte and Belle Ayr mines.
Andy Eidson, Contura executive Vice President and CFO, explained it's not looking at a long-term operating plan for the mines.
"Strategically, being out there for a lengthy term is simply not really an option. We have continued to drive our focus towards the eastern met [coal] properties, particularly with David [Stetson] coming on board, the desire to do that increases even more," Eidson said. Stetson is Contura's new CEO and Chairman.
That's in line with anonymous reports to Wyoming Public Radio last week that Contura does not expect to keep its mines open 6 to 12 years. Blackjewel had originally reported that timeline in a filing, though Contura never confirmed it.
Eidson added that "Plan A" is not speedy reclamation of the mines; Plan A is selling these assets to an operator more interested in the Powder River Basin. If immediate reclamation was necessary, he said, "it's not a wonderful outcome, but it's not cataclysmic by any stretch of the imagination."
The call also confirmed that Contura Energy was interested in acquiring the mines due to their remaining reclamation responsibility. CEO David Stetson explained it gave the company more control.
"We determined through careful analysis, the most prudent course of action for the company was to serve as the stalking horse better or select Blackjewel assets in order to accommodate a smooth sale process, as well as to provide us with optionality regarding those operations," he said.
Eidson explained the cost would not be a full $250 million, the value of its surety bonds, but closer to $100 million over eight to 10 years.
Stetson said revenue from the Pax mine could also help pay off the $33.75 million price tag for the assets purchased from Blackjewel.
Eidson said he did want to reemphasize that nothing is set in stone. It's been a week since a West Virginia court approved Contura's purchase of several Blackjewel assets. It's been held up, though, due to a debt settlement between Blackjewel and the federal government.
"This transaction is wholly dependent on an agreement being reached with the federal government to rescind its objection to the sale," Eidson said, adding a conversion to a Chapter 7 reorganization is still a possibility.