Cloud Peak Energy Inc. (NYSE:CLD) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 26, 2018 • 05:00 pm ET

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Cloud Peak Energy Inc. (NYSE:CLD) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Executive
Colin Marshall

Japanese utilities that could occur later this year. On the domestic front, while the cold weather in January helped reduce coal inventories, the recent milder weather increased natural gas production have allowed utilities to continue to hold off contracting. Natural gas prices for May delivery are currently around $2.80 even within inventories 41% down on this time last year. When utilities have issued RFPs recently, coal pricing has been very competitive as producers seek to fill that capacity. We have currently contracted to sell 47 million tons this year, including the 3.3 million tons of exports.

This means we still have around 5 million tons of domestic sales to make to meet the midpoint of our production guidance range. The 47 million tons of committed production are under fixed price contracts with a weighted average price of $12.28 per ton. The 2 million tons we contracted or priced since our last call was at a weighted average price of $11.83 per ton reflecting the mix of 8,800 and 8,400 coal and prevailing prices. There was no change to our 2019 sales position since our last call. And we have contracted 24 million tons for delivery in 2019. Of this committed production 17 million tons are in the fixed price contracts with a weighted average price of $12.63.

So to sum up before we take your questions, as we come out of winter we have seen a recent increase in the number of RFPs as utilities begin to contract for remaining 2018 deliveries. Competition is fierce keeping coal prices down as increased natural gas production keeps prices below $3. We expect gas prices and the weather to continue to drive incremental domestic coal consumption going forward. At the same time, the outlook for our export business continues to improve with strong demand and solid prices. We are looking to take this opportunity to schedule test burns with new high-quality customers and to continue to build our long-term relationships with our existing export customers. With that we can take your questions.