A top executive of St. Louis-based Peabody Energy Corp., which has produced 41% of the coal mined out of the energy-rich Powder River Basin this year, told a New York City investor conference Wednesday that the company is creating value through stock buybacks and development of “existing assets.”
The executive’s disclosure at the conference comes two weeks after a hedge fund in Texas acquired a 9.96% stake in Peabody Energy, which operates the North Antelope Rochelle, Rawhide and Caballo coal mines in northeast Wyoming. Since, the company has begun pushing for more to be done to create shareholder value.
The North Antelope Rochelle mine (NARM) is the largest and most productive coal mine in the world, located about 65 miles south of Gillette, Wyoming.
Production at the mine has plummeted 47% from a decade ago to 62 million tons of coal dug up in 2023.
The hedge fund, called Thomist Capital Management LP, told Peabody that it wants the coal company to use $1.46 billion in cash on its balance sheet to buy back shares and unlock value in Wyoming’s coal heartland in northeastern Wyoming.
Peabody Chief Financial Officer Mark Spurbeck said Wednesday in a presentation filed with the Securities and Exchange Commission (SEC) that Peabody has completed $430 million of share buybacks in Peabody’s stock. The company has $170 million left in the buyback program to purchase more shares.
A share repurchase program happens when a company buys back its own shares from the market, which increases demand for the shares and the price.
All About The Cash
Thomist said in the SEC filing last month that it wants Peabody to explore other ways to maximize shareholder value, including unlocking value in its Powder River Basin asset and selling down a stake in its Centurion metallurgical coal mine in Australia to free up cash flow for shareholder returns.
Thomist said it plans to engage in dialogue with Peabody’s management and board on the issues.
No further details have emerged in the discussions.
“We are not going to comment on the matter at this time beyond what we have included in required filings,” wrote Logan Moncrief, a partner and chief operating officer of Thomist Capital Management, in an email to Cowboy State Daily.
In the Wednesday presentation to investors meeting in New York at the Jefferies Institutional Investor Conference, Spurbeck said that the energy company believes it has opportunities to create additional value with “existing assets.”
Spurbeck cited 715 million tons of metallurgical coal buried at Peabody’s Centurion mine, the possibility of capturing 60,000 tons of methane gas annually from underground facilities and the potential sale of the commodity for energy generation.
Spurbeck also noted opportunities to develop 165,000 acres of reclaimed land for solar energy and storage projects, or for potential carbon capture for underground storage.
The company did not elaborate on the location of the land or where it might capture the methane gas.
The hedge fund investment in Peabody came Aug. 21, the same day that coal producers Consol Energy Inc., with headquarters in Pittsburgh, and Arch Resources Inc., the nation’s second largest coal producer with headquarters in St. Louis, said they’ve agreed to merge in an all-stock deal valued at about $5 billion.
In Wyoming, Arch operates the Black Thunder and Coal Creek mines in the Powder River Basin. Black Thunder borders the North Antelope Rochelle mine and is the second largest producing coal mine behind NARM.
Pat Maio can be reached at pat@cowboystatedaily.com.
