Oxford records higher net loss in Q2 2013, closes out Ky. ops

Ohio-based coal producer Oxford Resource Partners LP (NYSE: OXF) reported Aug. 6 that the second quarter 2013 cash margin of $8.28 per ton was a slight improvement over the second quarter 2012 cash margin of $8.26 per ton.

Coal sales revenue increased 2.6% to $51.21 per ton, but was offset by an increase in cash cost of coal sales of 3.1% to $42.93 per ton as a result of lower Illinois Basin (western Kentucky) production.

Net loss for the second quarter of 2013 was $4.1m compared to a net loss of $1.4m for the second quarter of 2012. Excluding unusual items, Adjusted Net Loss would have been $3.5m for the second quarter of 2013 compared to $1.9m for the second quarter of 2012. 

“We successfully completed our refinancing in June which greatly increases our financial flexibility,” said Oxford President and CEO Charles Ungurean. “By extending the maturity of our debt and increasing availability under our revolver, we have enhanced our liquidity, giving us a runway to execute our strategic plan. We continue to focus on increasing productivity across our operations and, with our improved liquidity, are in a stronger position to participate when coal markets improve.”

Oxford’s projected sales volume is almost fully committed and priced for 2013, underscoring the strength of its long-term customer relationships and its strategic importance in its core region of Ohio. For 2014, projected sales volume is 81% committed (with 49% of the projected sales volume priced and 32% of the projected sales volume unpriced).

Continued rationalization of its western Kentucky operations has allowed for the transfer of excess equipment to the Northern Appalachian surface mines, which has reduced capital spending. Based on current market conditions, Oxford expects to idle production in western Kentucky and conclude its restructuring activities by the end of 2013.   

Oxford provided the following updated guidance for 2013 based on its current industry outlook:

  • It expects to produce between 6.1 million tons and 6.4 million tons and sell between 6.6 million tons and 6.9 million tons of thermal coal.
  • The average selling price is projected to be $50.50 per ton to $52.00 per ton, with an anticipated average cost of $43.00 per ton to $44.50 per ton.
  • Adjusted EBITDA is expected to be in the range of $45m to $48m.
  • Oxford anticipates capital expenditures of $22m to $25m.

In the second quarter, the company sold 1.7 million tons of coal, down from 1.8 million in the year-ago quarter. It sold 3.3 million tons in the first half of this year, down from 3.7 million in the first half of 2012.

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.