US coal producer Foresight Energy's sales volumes and cash costs both improved in the first quarter as it took advantage of stronger export markets and increased production, company executives said Thursday.
The St. Louis-based company, which operates solely in the Illinois Basin, reported sales volumes of 5.3 million st, up 40.7% from the year-ago quarter, as Foresight shipped 24% of its coal into the export market. By comparison, the producer had shipped 14% of its coal into exports in the year-ago quarter, said Rob Moore, the company's president and CEO.
"Most significant was our ability to access export markets due to substantial improvements in API2 prices compared with the prior-year quarter," Moore said.
Foresight, which did not take questions after its prepared remarks, noted production efficiencies at both Sugar Camp and Williamson mines, which ranked as the two most productive mines in the country in terms of clean tons per hours worked, Moore said.
Foresight's cash costs averaged $22.80/st for the quarter, down from $23.86/st in the year-ago quarter, and down from $22.84/st in the prior quarter. Its coal sales averaged $43.12/st, down from $43.45/st in the year-ago quarter and down from $48.46/st in the prior quarter.
The company generated coal sales revenues of $227.8 million during the quarter on sales of 5.3 million st, up from $163.1 million in the year-ago quarter on sales of 3.8 million st.
"Our current cost structure is sustainable, and we anticipate improving costs over the remainder of the year," Moore said.
For the remainder of 2017, Foresight has 18.6 million st contracted for delivery and anticipates an "active spot market," Moore said. Its contracted tonnage is 84%-91% of the company's projected production of 20.5 million-22 million st for the remainder of the year, he said.
Moore also touched on the next steps for reopening its long-idled Deer Run longwall mine near Hillsboro in Montgomery County, Illinois.
The company had submitted a formal application last month to the US Mine Safety and Health Administration to re-enter the mine. Moore said that MSHA had accepted its plan to evaluate the status of the underground mine, which has been idled for over two years due to elevated carbon monoxide levels.
MSHA's acceptance of the plan did not include longwall systems or returning air shafts, but Moore called it "a step in the right direction in evaluating conditions of the mine."
"In coming weeks, we plan to breach the seals that are restricting airflow into the mine and allow personnel into the mine," he said.
