Coal miner Walter Energy Inc. (WLT) provided details on the development of its Alabama expansion initiatives, which were announced earlier.
Walter Energy said its negotiations to lease nearly 75 million tons of recoverable Blue Creek coking coal reserves in Tuscaloosa County, Alabama, were successful. The company has agreed on favorable lease terms with a subsidiary of Chevron Corporation (CVX). Terms of the leases include royalty rates that are in line with existing agreements.
Additionally, Walter Energy executed a definitive purchase and sale agreement to acquire the existing North River steam coal mine in Fayette County and Tuscaloosa County, Alabama from a subsidiary of Chevron.
Total consideration for the transaction includes minimal cash due at closing and assumption of certain liabilities, which are not expected to be material to Walter Energy. The transaction is expected to be neutral-to-slightly accretive to earnings in the first year.
Walter Energy expects to close both transactions, pending certain customary closing conditions, on April 30, 2011.
As part of its long-term coking coal production plans in Alabama, in December 2010, Walter Energy had acquired the assets of Mobile River Terminal Co. in Mobile, Alabama.
The acquired facility will facilitate easy and low-cost mine-to-port transportation as it is located near the McDuffie Terminal, from where Walter Energy presently carries out its coal exports to customers in South America and Europe. This will also reduce the company’s dependence on third parties to export coal to its global consumers.
Tampa, Florida-based Walter Energy is one of the leading U.S. producers and exporters of premium metallurgical coal to the global steel industry in the United States.
Walter Energy currently retains a Zacks #3 Rank (short-term Hold rating). We maintain our long-tern Neutral rating on the stock.
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