Right now, an investor can't be sure that BTU will avoid bankruptcy. Once it becomes certain that they can avoid it, then BTU will be worth a lot more. Right now, low volumes coupled with low prices. PRB coal is so cheap that it is difficult to generate much cash flow from it. China's steel production is slacking off, so coaling coal prices and volumes are apt to be weak for quite some time. At the end of the day though the world needs and will burn ever increasing amounts of coal. Nattie gas really is only profitable above $8/mcf. Hence, in due course, we either burn coal or pay a lot more to have our lights come on. Liquid oil prices will spike soon, unless world growth gets put in the crapper. The average Bakken well produces less than 60 bpd. Most Bakken wells deplete to this level in about 3 years. Nattie gas is not going to make the U.S. independent of foreign imports. That brings up the point that world oil exports are declining, get that folks? DECLINING!!! We are not going to have very good world growth going forward. Growth is slowing for many reasons, but perhaps the BIG 3 reasons are too much total debt in every developed country, a demographic that points toward slow growth hitting bottom in the mid 2020's, and a liquid oil crisis that is not distant in time. This will spike oil prices, Nattie prices, and along with it coal prices. The big problem for BTU right now is they have to be able to cash flow until both coal prices and coal volumes start to swing in their favor. Once a person is sure they can get through 2016, load the boat. IF the world economies in the aggregate do grow at roughly 3.5%, volumes and prices should turn positive by mid 2015. I think when the market itself gets ugly, and it does every once in a while, BTU will go from cheap to cheaper.
(Dollars in millions) 2011
Term Loan 469,000,000
Loan Facility 1,000,000,000
5.875% Note due April 2016 218,000,000
7.375% Note due Nov. 2016 650,000,0