Peabody Posts $119.9MM Third Quarter Net Profit

Peabody Energy Inc. has reported $119.9 million in net income attributable to common shares for the July–September 2023 period, down from $179.2 million for the second quarter as lower coal prices offset higher production.

Adjusted for non-recurring or extraordinary items, earnings before deductions stood at $270 million, from $358.2 million for the prior quarter, the St Louis, Missouri-based coal mining company said in a press release.

Peabody sold at an average realized price of $20.92 per short ton, down from $23.76 in the April–June quarter. It had an average realized export price of $99.55 per short ton, down from $139.88 in the prior three-month period.

In the third quarter of 2023 Peabody sold 22.7 million metric tons from its Powder River Basin output in the northwestern USA. The sales volume for its seaborne thermal coal totaled 4.2 million metric tons. It sold 1.5 million metric tons of seaborne metallurgical coal during the period.

Last year the total average sales price of coal from domestic mines in the USA climbed 49.4 percent from 2021 to $54.46 per short ton, according to the country’s Energy Information Administration (EIA) in its Annual Coal Report.

Amid the increase in prices, coal consumption in the USA in 2022 fell 5.5 percent year-on-year to 515.5 million short tons (MMst), according to the EIA report published October 3. Production, though, grew 2.9 percent in 2022 to 594.2 MMst compared to 2021, the report said.

Peabody posted average costs per ton of $43.68 for the third quarter of 2023, down from $50.88 for the preceding quarter.

“In the third quarter of 2023, we delivered strong operational results with better-than-expected production and effective cost management”, Peabpody president and chief executive Jim Grech said in the earnings news release.

The company declared $0.075 in dividend per common stock, compared to diluted earnings per unit of $0.82. It said it has so far returned $307 million to shareholders this year, consisting of $287 million in buybacks and $21 million in dividends.

Peabody expects to produce 4.2 MMst, including 2.8 MMst for export, in the fourth quarter of this year.

It said it has successfully re-entered Zone B at the North Goonyella mine in Australia’s Bowen Basin during the third quarter and now expects production to start 2026. The project has over 70 MMst of coal reserves, according to information on Peabody’s website.

“The project remains on track to commence mining of development coal in the first quarter of 2024 and begin longwall panel development”, the earnings release stated. “The Board provided full funds approval to complete development at North Goonyella with longwall production expected in 2026”.

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Expected capital expenditures for North Goonyella have now been revised up by $109 million to $489 million “due to higher labour costs, equipment cost escalations, and increased regulatory and development costs”, Peabody said.

On October 25 it signed a deal to acquire part of the adjacent Wards Well coal deposit for $136 million in cash and a contingent royalty of up to $200 million “payable after recovery of our full project investment and coal prices exceeding certain targets”, it announced in the quarterly report.

“The acquisition represents a strategic opportunity to extend the mine life of our premium hard coking coal North Goonyella mine by over 20 years through an integrated 130 million ton mine plan”.

In its announcement of the agreement, Wards Well owner Stanmore Resources Ltd. said the transaction is expected to close in the first half of 2024.

“The addition of this world-class coal deposit in the same seam as North Goonyella leverages our existing infrastructure and equipment”, Grech commented. “The acquired resources will support a North Goonyella mine life of 25 years or more, making North Goonyella a premier, tier one premium hard coking coal mine”.

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