Foresight reports $215 million net loss on debt charges, asset impairment charges

Foresight Energy LP reported a net loss of $215.2 million for 2017, wider than the mining company’s net loss of $178.8 million in 2016.

St. Louis-based Foresight, controlled by Murray Energy, said in its earnings report Wednesday that the 2017 net loss includes $95.5 million of debt restructuring charges and $42.7 million in asset impairment charges related to Foresight being forced to seal off part of its Deer Run mine, leading to the loss of some underground mining equipment.

Foresight CEO Robert Moore said in a conference call that the company has filed an insurance claim on that equipment and that updates will follow in future calls.

Foresight’s steeper losses came despite a 9 percent increase in total revenue in 2017. Coal sales for the year totaled $944.4 million, compared to $866.6 million in 2016. Foresight increased the volume of its coal sales, to 21.4 million tons in 2017 from 19 million in 2016.

The increase in sales was attributable to a strong export market, Moore said.

For the fourth quarter of 2017, which ended Dec. 31, Foresight reported a smaller net loss than it did in the fourth quarter of 2016, narrowing its quarterly loss to $74.2 million from $85 million.

Revenue increased to $284.6 million for the quarter, from $252.9 million in the fourth quarter in 2016.

Moore said the domestic thermal coal market is challenging due to natural gas prices remaining low and most electrical utilities appearing comfortable with their current inventory levels, especially considering current weather forecasts.

Physical demand for Foresight’s Illinois basin product is strong, according to Moore, who said coal-fired electric generation in Europe is at peak levels due to cold weather and natural gas shortages in certain countries. Foresight has also made progress in placing its product into India, Turkey, Egypt and several other countries around the world, the company said.

In the fourth quarter, Foresight exported 2.2 million tons. It finished the year with 5.8 million tons sold into the export market, representing 27 percent of its overall sales volume. That compares to 3.3 million tons exported, representing 17 percent of sales volume, in 2016.

With the increase in export sales and increase in sales volume, transportation costs jumped by $23.8 million in 2017 from $163.5 million in 2016.

In 2018, Foresight expects to sell between 21.5 and 22.8 million tons, with over 5 million tons expected to be sold into the international market again.

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