Patriot looking to sell West Virginia coal tract to Pardee Minerals

Patriot Coal told its bankruptcy court in a Nov. 29 filing that it wants to sell a tract of coal reserves in West Virginia to Pardee Minerals LLC, with any party objecting to that sale having a Dec. 10 deadline to do so.

The sale motion was filed at the U.S. Bankruptcy Court for the Southern District of New York, though that court recently agreed to transfer the Chapter 11 cases of Patriot and various subsidiaries to the U.S. Bankruptcy Court for the Eastern District of Missouri.

The property to be sold consists of coal in the Lower 5 Block seam and all seams of coal above the Lower 5 Block seam within a tract of land containing approximately 2,473 acres (663 coal acres) located west of Witchers Creek and the Left Fork of Witchers Creek in the Cabin Creek District of Kanawha County, W.Va. The tract contains approximately 850,000 tons of recoverable, saleable coal reserves within a current mine plan.

The sale price is $2.3m (plus, in the event that coal in excess of 850,000 tons is mined and sold from the premises, an amount equal to 3.5% of the sale price of each ton of such coal). No commissions are to be paid to any third party as part of this sale deal.

“The majority of the coal reserves contained in the Premises are leased to the current lessee (the ‘Lessee’),” Patriot noted. “Discussions concerning the sale of the Premises were first held with the Lessee in October 2011. The Lessee subsequently determined that it did not want to proceed further with a purchase of the Premises itself and introduced Pardee Minerals, LLC, a natural resource landholding company into the discussion. Pardee would acquire the Premises and fund the Lessee portion of the railroad construction costs.”

This property is covered by West Virginia Department of Environmental Protection mine permit #S-3015-09 issued to lessee, Patriot said. The DEP has also issued an NPDES water permit for the mine, #WV1024418.

DEP records show that permit S-3015-09 was issued April 19 to Development Permits LLC for the 649-acre Upland Area III strip mine. The agency on Oct. 12 approved Development Services Inc. as an operator on the property. DEP records show the site as “active, moving coal.”

U.S. Office of Surface Mining data shows that John Wellford III is the 100% owner of both Development Permits and Development Services.

U.S. Mine Safety and Health Administration data shows that Development Services has had the “Quincy Manufactured Home Park” strip mine in Kanawha County listed with that agency since 2000, with production of 231,939 tons in the first nine months of this year and 330,173 tons in all of 2011. It is fairly common, particularly in Kanawha County, near the state capital of Charleston, for developers to mine surface coal and then reclaim the land with an eye on commercial and/or residential development as a post-mining land use.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.