Rhino sells most assets at Deane complex in Kentucky to Quest Energy

Rhino Resource Partners LP (NYSE: RNO) announced Dec. 30 that it has completed the sale of its Deane coal mining complex in Central Appalachia to Quest Energy Inc.

The Deane complex is located in eastern Kentucky and includes one underground mine and related infrastructure that consists of a preparation plant and a unit train loadout facility. The sale of this complex transfers the underground mine, related equipment, the prep plant and the loadout, while Rhino retains the mineral rights for the 39.3 million tons of proven and probable steam coal reserves at this complex. The completed transaction also includes a royalty agreement with Quest Energy under which Rhino will collect future royalties for coal mined and sold from the Deane complex. The sale of the Deane complex relieves Rhino of significant reclamation liabilities and bonding requirements. 

Joe Funk, President and Chief Executive Officer of Rhino’s general partner, stated: “The sale of the Deane mining complex is a significant step in our strategy to convert idle, non-core mining operations with high carrying costs to cash generating royalty assets. The Deane mining complex sale demonstrates our strategy to retain the mineral ownership or mineral rights to properties that transforms these assets to generate future royalty income streams. Our strategy with the Deane mining complex sale reduces our operational risk, reclamation liabilities and bonding requirements, while converting an idle, high carrying cost property to a royalty-generating asset that will provide stable, long-term cash flows to us. We are excited about our relationship with Quest Energy and look forward to the long-term business opportunity with a significant lessee partner.” 

Mark Jensen, Chief Executive Officer of Quest Energy said: “Completing the acquisition of the Deane mining complex and leasing the surrounding coal from Rhino’s Elk Horn subsidiary complements our current operational and reserve footprint in the region and allows us to expand our production and processing capabilities. We are excited about the potential for new, additional reserves to be mined and processed through the Deane mining complex and loadout.” 

Rhino is a diversified energy limited partnership that is focused on coal and energy related assets and activities, including energy infrastructure investments. Rhino produces metallurgical and steam coal in a variety of basins throughout the United States and it leases coal through its Elk Horn Coal subsidiary.

Quest Energy is a diversified energy company focused on the extraction, processing, storage and distribution of energy sources and products. Quest Energy’s business model is built around niche, localized, and scalable low-cost operations, and is currently centralized on coal mining in the Appalachian and Illinois Basin regions of the United States.

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.