Coal Age

JUN 2019

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4 June 2019 leading developments Peabody, Arch Coal Combine PRB, Colorado Assets Two of the top coal producers in the U.S. are joining forces. Peabody Energy and Arch Coal have entered into an agree- ment to combine their Powder River Basin and Colorado assets in a joint venture. The joint venture will strength- en "the competitiveness of coal against natural gas and renewables, while cre- ating substantial value for customers and shareholders," the companies said. The joint venture has a value of $820 million and will be 66.5% owned by Peabody and 33.5% owned by Arch Coal. The companies said they expect to generate $120 million per year over the first 10 years of operation. "The Peabody/Arch joint ven- ture is an extraordinary example of industrial logic targeted to strength- en the competitive position of our products and create significant value for multiple stakeholders in a low- cost combination with exceptional physical synergies," said Peabody President and CEO Glenn Kellow. "The transaction unites two strong, culturally aligned workforces with a commitment to core values such as safety and sustainability." The combination will create one of the lowest-cost thermal coal sup- pliers in the U.S., according to the two companies. "We are excited about this trans- action's potential to enhance the value of Arch's top-tier thermal coal assets," said Arch CEO John W. Eaves. "This new joint venture should allow us to realize the full potential of our valu- able assets in the Powder River Basin and Colorado and benefit our custom- ers in the process." The joint venture will combine Peabody's North Antelope Rochelle Mine (NARM) and Arch's Black Thun- der Mine into one complex. The com- panies said this synergy will allow the joint venture to reduce costs. Other assets included in the ven- ture are Arch's West Elk Mine, which the companies believe will enhance Peabody's Twentymile Mine in Colo- rado. The Caballo, Rawhide and Coal Creek mines will also be integrated. The joint venture will have a five-member board of managers ap- pointed by Peabody and Arch. Each party will have voting rights in pro- portion to its ownership percentage, with certain items requiring super- majority approval. Peabody will be the operator and manage all activi- ties, including the marketing of coal. Peabody and Arch will continue to operate the assets independently un- til the closing of the transaction. In 2018, on a combined basis, the assets shipped 206 million tons of coal and had a workforce of approx- imately 3,300, with combined proven and probable reserves totaling 3.4 bil- lion, as of December 31, 2018. Judge Approves Sale Schedule for Cloud Peak On June 12, a federal bankruptcy court judge approved the sale sched- ule for the assets of Cloud Peak En- Peabody Energy's NARM, which is a part of the new joint venture, sold 98.3 million tons of coal in 2018. (Photo: Peabody Energy) Profroma Production Figures for the Peabody-Arch JV (millions of tons) 2017 2018 North Antelope Rochelle Peabody PRB 101.6 098.3 Black Thunder Arch PRB 070.5 071.1 Caballo Peabody PRB 011.1 011.3 Rawhide Peabody PRB 010.3 009.5 Coal Creek Arch PRB 009.0 008.0 202.5 198.2 West Elk Arch Colorado 004.6 004.8 Twentymile Peabody Colorado 003.0 003.8 007.6 008.6

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