Westmoreland reports results for ex-Oxford Resource Partners operations

Westmoreland Resource Partners LP (NYSE: WMLP), which holds the Ohio mines acquired recently by Westmoreland Coal, on Feb. 27 reported its results for fiscal year 2014.

Highlights for 2014 include:

  • Revenues totaled $322.3 million in 2014.
  • Adjusted EBITDA of $36.3 million was achieved for 2014.
  • WMLP continued their strong safety performance achieving reportable and lost time incident rates approximately 53.0% and 32.1%, respectively, of the Appalachian Basin averages for surface mining operations for the year ended December 31, 2014.
  • As previously announced, WMLP’s management intends to resume quarterly distributions of $0.20 per unit beginning in April 2015, or $5.0 million annually.

“Westmoreland completed the acquisition of Oxford Resources GP, LLC, the general partner of Oxford Resource Partners, LP, and 79% of the limited partner interests of Oxford Resource Partners, LP, on December 31, 2014, changing the names of the entities to Westmoreland Resources GP, LLC and Westmoreland Resource Partners, LP, respectively,” noted Keith E. Alessi, Chief Executive Officer. “As such, we are reporting the fiscal year 2014 results today.”

He added: “As we have previously discussed, the ability to acquire the general partner and reset the limited partnership terms provided a unique opportunity to enter the MLP space on favorable terms. Because of this, we viewed the acquisition of the GP and LP interests as a platform to achieve future value enhancement. The 2014 operating results reflect company performance based on a different operating philosophy than the Westmoreland operating model.”

The company sold 5.6 million tons in 2014, down from 6.6 million tons in 2013. Adjusted EBITDA was $36.3 million for the year ended December 31, 2014 compared to $42.1 million for the year ended December 31, 2013. Cash coal sales revenue increased 3.1% to $52.50 per ton for 2014 from $50.92 per ton for 2013. In 2014, cash cost of coal sales increased by 4.4% to $45.92 per ton from $43.99 per ton in 2013, primarily due to lower volume and higher costs of transportation and employee compensation. Cash margins decreased 5.1% to $6.58 per ton in 2014 from $6.93 per ton in 2013.

Adjusted Net Loss for 2014 was $39.7 million, compared to $32.3 million for 2013.

As a low-cost producer of thermal coal and the largest producer of surface-mined coal in Ohio, WMLP continues to focus on its core Northern Appalachian operations. In December 2014, parent Westmoreland Coal contributed to WMLP 30.4 million tons of proven and probable coal reserves in Lincoln County, Wyoming, in exchange for 4,512,500 post-reverse split common units. In connection with this contribution, WMLP entered into a coal mining lease with respect to these coal reserves with a subsidiary of Westmoreland Coal pursuant to which WMLP will earn a per ton royalty as these coal reserves are mined. Through the coal leasing arrangement, the mining of the reserves are expected to generate $5.8 million in average annual royalties over the next three years, with a minimum royalty payment of $1 million per quarter from the start of 2015 through the end 2020 and $0.5 million per quarter thereafter through December 2025.

Westmoreland Resource Partners is a low-cost producer of high-value thermal coal in Northern Appalachia. It markets its coal primarily to large electric utilities with coal-fired, base-load scrubbed power plants under long-term coal sales contracts. A primary customer is the Conesville power plant in Ohio operated by American Electric Power.

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.