Peabody Energy's Powder River Basin mining operations were the standout success story for the coal giant during the first half of 2025, more than doubling profits while the company's overall business struggled.
The PRB segment, which operates primarily in Wyoming's coal-rich basin, generated $79.3 million in adjusted EBITDA — a measure of operating cash flow that excludes interest, taxes, depreciation and amortization — during the first six months of 2025. That represents a remarkable jump from $34.2 million in the same period of last year.
The performance contrasts sharply with Peabody's overall financial picture, as the company's net income plummeted 95% in the first half of 2025 to just $12 million amid collapsing international coal prices. That’s after posting more than $254 million of net income in the first half of last year.
University of Wyoming economics professor Rob Godby said the strong performance for PRB coal reflects a dramatic turnaround in coal market fundamentals that has particularly benefited Wyoming producers.
"As they report, margins have improved," Godby told Cowboy State Daily. "While the Q2 price (revenue per ton) is down from last year by about 1.4%, costs per ton are over 9.5% lower, leading to greater profits per ton."
Increased Demand
The improvement stems from economies of scale achieved through increased production, he said.
Coal-fired power plant operators had built massive stockpiles exceeding 150% of normal levels at plants during early 2024, causing orders to plummet as utilities burned through excess inventory. But market conditions shifted dramatically last summer, he said.
"Demand again increased due to relatively higher natural gas prices that reduced natural gas-fueled electricity production and higher electricity demand," Godby said. "This demand increase was sustained through winter 2025 (Q1) as cold weather events and strong gas prices kept the demand high for coal-generated electricity."
The sustained demand allowed Peabody's PRB operations, particularly its flagship North Antelope Rochelle Mine, to operate at optimal efficiency levels. Production in the second quarter of 2025 was reported to be over 25% higher than the same quarter in 2024, enabling cost reductions that weren't achievable at lower volumes.
Godby noted that Peabody appears to have bested other PRB operators, likely due to the higher Btu content of its coal.
"In 2025 though, Peabody appears to have outperformed the broader PRB in terms of sales, probably due to the higher Btu coal they mine relative to the rest of the basin, which is both demanded in higher quantity and worth more than most other PRB mine output,” said Godby.
Looking ahead, Godby said the sustainability of these profits will depend on maintaining demand levels, though he expects continued good news.
"It would not be surprising to see a strong Q3 2025 performance,” he said. “Although it will be tough to beat the numbers posted in Q2."
Exceeds Expectations
Emily Arthun, CEO of the American Coal Council, pointed to a July 31 report from B. Riley Securities showing the Powder River Basin thermal coal segment significantly outperformed projections across multiple metrics.
According to the B. Riley Securities analysis cited by Arthun, Peabody's overall second quarter adjusted EBITDA of $93.3 million came in above estimates of $84.1 million and in line with consensus forecasts.
However, the PRB segment was the standout performer, with particularly strong cost management driving results.
Peabody “significantly outperformed our estimates in the PRB segment," the B. Riley Securities report noted. PRB volumes reached 20 million tons versus analyst estimates of 19 million tons, while the company achieved better-than-expected cost performance.
The report also highlighted regulatory tailwinds supporting Wyoming coal.
"Peabody expects to see a $15M to $20M federal royalty reduction benefit this year, thanks to the recently passed One Big Beautiful Bill Act,” according to the report.
“The reduction in federal royalty rate of 7% is down from 12.5%. This is incredible for PRB producers,” said Arthun.
Such optimism extends to shipment activity, said Arthun, noting how quarterly reporting from Union Pacific Railroad shows “increased coal movement.”
Given the recent tax credits, clarity about royalties and funding for carbon capture, Arthun said there’s currently a “policy-market trifecta coal hasn’t seen in a decade. August will test how fast those tailwinds become dispatch hours and safer payrolls, but the summer pivot is unmistakable: dispatchable coal is no footnote — it’s the margin of safety.”
PRB Demand
The idea that Wyoming coal stands as a key and reliable source of electricity generation is something the Trump administration continues to promote, alongside Travis Deti, executive director of the Wyoming Mining Association.
Deti viewed Peabody's recent reporting as validation of broader positive trends for Wyoming's coal industry driven by favorable federal energy policies.
"I think in a nutshell, kind of what's happening in the United States coming from the Trump administration and their renewed focus on coal, gas and nuclear as part of our direction our energy policy needs to be going, to meet the projected demand," Deti said.
"I think it bodes well for Powder River Basin coal,” said Deti. “And I think Peabody's report shows that Powder River Basin coal is going to be more in demand as we look to extending the lives and curbing premature retirements of our coal fleet."
The PRB segment's success was driven by both volume growth and cost efficiency, according to analysts.
Second quarter shipments of 20 million tons represented a 26.6% increase over the same period last year, while costs per ton came in well below company targets at $11.66, according to Peabody Energy.
For the third quarter, the company expects a PRB volume of 23 million tons at an average price of $13.45 per ton with costs of about $11-$11.50 per ton.
David Madison can be reached at david@cowboystatedaily.com.
