tag:blogger.com,1999:blog-4815867514277794362.post5672194046877515320..comments2024-03-08T06:18:28.125+11:00Comments on Bronte Capital: Alliance Resources: astoundingly good - but why?John Hemptonhttp://www.blogger.com/profile/03766274392122783128noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-4815867514277794362.post-5713472952852712342013-03-12T03:34:44.706+11:002013-03-12T03:34:44.706+11:00Also, even though production declines, if demand g...Also, even though production declines, if demand goes up (and it looks like it will go up a bit in 2013 by about 20 million tons according to the feb. Citi report. Then even though production backs off, earnings can move higher, on margins and inventory reduction.<br /><br />Again, don't think it's a great short....think others are better....western coal especially....GW Petersonnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-38557801627193383872013-03-12T03:22:04.793+11:002013-03-12T03:22:04.793+11:00In the past years, most of the utilities in the Ce...In the past years, most of the utilities in the Central U.S. have retrofitted much of their existing base load generation to handle high sulphur coal related to new Clean Air regs and mercury. Ergo, the costs of underground mined Central App coal, even with higher BTU generation rate, is just not competitive with I-basin at many of these plants....I note that I-basin production is up at other companies too (RNO comes to mind) and also, ARLP has some of the most efficient mining ops in the biz and always has. Also, it's app coal is cross-over met. <br /><br />Below, I've listed a comment out of the Feb Citi ARLP report...<br /><br /><br />ARLP Takes DD&A Hit but EBITDA Outlook Improves – We are lowering our 2013 EPU estimate to $5.30 from $6.75 due to higher depreciation but our EBITDA<br />forecast improves to $643 mln from $623. The company anticipated coal sales of 38.5 mln tons reflects a 9.4% YoY improvement and is fully committed and priced as they take market share.<br /><br />Remember that these guys book in thirds (1/3 current year, 1/3 2 years and 1/3 three years out) like all big coal guys. Also, they are an MLP and pay huge, tax advantaged divy's on a quarterly basis. Good luck shorting that.<br /><br />Think you are barking up wrong tree. ARLP best of breed in MLP coal land. Have no current position. JMHO<br /><br />GWPGW Petersonnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-78145263846399119292013-03-12T03:18:42.173+11:002013-03-12T03:18:42.173+11:00Easy answers to your questions. (1) unlike most ot...Easy answers to your questions. (1) unlike most other coal companies, ARLP has been super conservative on contracting up volumes several years in advance. So the realized pricing you're seeing may not be market because they agreed to it in previous years. This strategy will see them lag any huge recovery in coal prices, but has made them by far the best performer in a declining market. Volume growth is coming from long-lead time mine projects where coal commitments have been locked up well in advance. ARLP has the best management team in the coal space (ask around) and is a preferred supplier to utilities, which also helps with contract pricing. So your "spidey sense" may be a little off here. Anonymousnoreply@blogger.com