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Alpha Natural Resources, inc. c Message Board

james.craigen 3 posts  |  Last Activity: Nov 24, 2015 10:08 PM Member since: Sep 6, 2011
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  • james.craigen james.craigen Nov 24, 2015 10:08 PM Flag

    What you are missing is the margin BTU got on those tons. Only 11 mm tons produced 90mm in ebitda. The coal sold for $37 a ton, made 9-10 in gross margin.

  • james.craigen james.craigen Nov 24, 2015 9:42 PM Flag

    Oh no, some of us are well aware of disconnect over here on Cloud 9. It's why i came here in the first place.
    Might start calling it Hotel California.... Cheap keeps getting cheaper.

    the deal was for about 90mm pretax ebitda, or 5x. In actuality it's about 2/3 of CLD ebitda generation.

    5x CLD 2016 expected ebitda of ~$130-160mm is $725mm.

    Knock out $498mm debt, less $140mm cash, leaves you a $367mm market cap at 5x CLD's ebitda.

    Or $6.01 pps.
    At BTU recent asset valuation, in the belly of the worst coal market in history.

  • Reply to

    Price Forecast

    by cornbeef5 Nov 4, 2015 2:00 PM
    james.craigen james.craigen Nov 10, 2015 9:23 AM Flag

    Q3 was a big step to putting to rest the contagion from ACI and BTU. CLD price is finally starting to unshackle itself from the BK fear driven price of BTU, as you can see from the price divergence since Q3.

    Lots of specifics of why, re ebitda, valuation, leverage comparisons between these pairs to dissect that, but the result is that CLD is setting itself apart even further from it's peers last qtr.

    I'm not sure with certainty how much they will generate in 2017, and that is the big variable. 30mm tons contracted at ~13 something is going to hep a lot. Thats about 40% of 2017 production on 75mm tons. But for the rest of this year and 2016, people hopefully realize they are not a low 2 stock generating 1x 2016 equity to ebitda, and 3.7x ev/ebitda, and the price is reflecting that vs BTU and ACI.

    If coal rolls to $11 in 2017, and margins roll to a dollar, they are likely a sub $2 stock. But go look at ACI and BTU - they have fully annualized cash cost of a dollar higher than than CLD. At $11 there would be a lot of coal at a cash loss in the PRB, meaning prices would not likely stay a $11.

    Also, the coal price is strongly related to NG. If you believe NG to remain depressed into late q4 2016 and q2 2017, then you may get your 2017 trough year. What mitigates that is that coal prices become more sticky at these levels of coat to gas switching. Many operators that could, have done so already. However, there is likely some currently contracted coal customers that are perhaps on the fence, watching NG here. But Operators know how volatile NG has been in many years past too, and like the stable cheap prices of coal. There are surely a lot of variables playing here. US climate policy notwithstanding. How long will losing NG companies continue to operate and keep supply higher? Some inferences about investor willingness to lend to E&P shale companies vs previously, and bank covenant and debt service abilities of participants can be drawn. Time will tell ~ in 6mos IMO.

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