I will review this material in detail. Thanks for the links. One question: are you sure we are comparing apples to apples here?
first: "Zeigler Coal Holding Company ("Zeigler" or the "Company"), through its
subsidiaries, is one of the largest coal producers in the United States. "
Must have high overhead costs (G&A?). I can name any number of producers in WV that have bought out reserves from the majors (esp. in O&G) and are producing quite profitably because of lower G&A. Example #1 Eastern American Energy Corporation out of Glenville, WV. Give them a call and discuss how they have bought properties from the majors and are producing these abandoned reserves.
Second - I haven't thoroughly evaluated the financials yet but it appears that much of the coal reserves quoted are out of WY. This from the report you cited:
Underground Reserves Measured Indicated
(UG) or (tons in (tons in (tons in Sulfur
Mine Surface (S) millions) millions) (1) millions) (2) (%) (3) Btu/lb.
----------------------------- ---------- --------- ------------- ------------- ------- -------
ASSIGNED ECONOMIC RESERVES:
Mountaineer Coal Development Co.
Marrowbone(4) UG&S 25.4 23.6 1.8 0.7 12,100
Wolf Creek UG 11.7 9.7 2.0 1.7 13,275
Old Ben Coal Company
Old Ben Mine #11 UG 18.3 18.3 - 2.3 11,100
Bluegrass Coal Development Co.
Evergreen S 31.3 31.3 - 1.0 12,350
Pike County UG&S 37.3 37.3 - 1.2 12,500
R. & F. S 31.6 31.6 - 3.8 11,800
Turris UG 71.3 71.3 - 3.0 10,400
Triton Coal Company
Buckskin S 466.4 300.7 165.7 0.5 8,350
North Rochelle S 329.0 293.7 35.3 0.2 8,850
By far most of the reserves are in WY. Also apparently many of these reserves are in Illinois Eastern Interior basin with very few reserves in Appalachian Basin.
Now take a look to this:
energy.usgs.gov
"In the United States, major changes in the coal industry and in the economy of the coal-producing regions are already occurring.
In general, production from eastern coal fields is steady or declining, and production from western coal-producing regions is
increasing in response to the demand for low sulfur steam coal. The Appalachian basin is in a mature stage of development.
Re-serves in some states are depleted and residual coal production is low. In other Appalachian states annual production rates,
although considerable, are declining. Only in eastern Kentucky, West Virginia, and Alabama is coal production increasing or
remaining steady in response to the high demand for steam coal. The relatively high sulfur content of coal from the Eastern
Interior (Illinois) basin is a serious impediment to its use for steam production. Like the Appalachian basin, the Eastern Interior
basin has a long history of mining and is in a mature stage of development. In contrast, production from the very thick,
sub-bituminous low sulfur coal in the Powder River basin is increasing dramatically as a source for steam coal, even though its
heat content is lower than that of eastern coals. Low Btu, impure lignites are being utilized for electric power generation in Texas
and North Dakota."
Really think we are not comparing apples to apples here.
To review:
Zeigler Coal likely has high G&A costs and most of their reserves are in WY and are apparently low Btu lignite coal.
MTEI - high Btu - lower G&A - all in southern WV appalachain basin oil & natural gas reserves additional.
Note for our discussions gas is natural gas NOT coal-bed methane. MTEI has not even started to value their GAS reserves - will likely be large given the region.
Eric |
