During its 2Q08 Earnings Report today, Massey Energy (MEE), the 4th largest coal producer in the United States, provided some pretty EYE-opening guidance related to its Coal Sales and Production Targets for 2008, 2009 and 2010.The one HUGE takeaway for me is the impressive ACCELERATION in COAL Prices this company sees through all the way into 2010...clearly Massey is 'banking' on continued growth in demand for the commodity (specifically metallurgical or coking coal as MEE is one of North America's Largest suppliers of the coal required for the manufacture of steel).
Let it be known that I also greatly respect Massey's TRANSPARENCY and the fact that they're able to be SO transparent given the current state of the U.S economy. It's not too often you see public companies in a RECESSION backdrop providing AGGRESSIVE GROWTH forecasts three years out...An impressive sign of management confidence if you ask me.
http://www.reuters.com/article/rbssEnergyNews/idUSN3137963420080731
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MEE's 2008 Forecast:
* Production: 41.5 to 43 million tons
* Avg Price: $65 to $66 per ton
* Estimated Coal Sales: $2.8 Billion
MEE's 2009 Forecast:
* Production: 46 to 48 million tons
* Avg Price: $84 to $92 per ton (34% price increase over 2008)
* Estimated Coal Sales: $4.1 Billion (46% Growth over 2008)
MEE's 2010 Forecast:
* Production: 50 million tons
* Avg Price: $115 to $132 per ton (40% price increase over 2009)
* Estimated Coal Sales: $6.2 Billion (50% Growth over 2009)
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Other Misc. Notes from MEE's 2Q08 Results:
* MEE's total coal exports increased by 83% and sales of metallurgical coal were up over 36%.
* Massey's produced tons sold was up 8% year over year to 10.8 million tons
* MEE's avg 2Q08 coal price sales realization was $65.78 per ton...$14.38 per ton higher vs. 2Q07 (a 28% price increase)
* Metallurgical coal prices increased by 52% year over year (2Q08's prices were higher by $37.42 per ton)
* Metallurgical coal made up 28% of 2Q08 MEE coal shipments (vs. 2Q07's 22%) and contributed to 46% of total coal revenues
* About 1/3 of MEE's total 2.3 billion tons of coal reserves are metallurgical (coking) coal
Data Courtesy: Reuters
Full Disclosure: I own shares of MEE.
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