Meet the Contura Energy IPO — the Old Core Coal Assets of Alpha Natural Resources

Contura Energy is one of the two initial public offerings slated for the week of August 11, 2017. What is going to feel unique about this IPO is that Contura Energy is a coal miner. The Tennessee-based company has affiliate mining operations that are underground and surface coal mining in the major U.S. coal basins: Northern Appalachia, Central Appalachia, and the Powder River Basin. These are located in the states of Pennsylvania, Virginia, West Virginia and Wyoming. Contura also has customers around the globe, and it supplies both metallurgical coal to produce steel and thermal coal to generate power.

Note that Contura is effectively a repackaged company out of bankruptcy. The company was incorporated in the State of Delaware on June 10, 2016, to acquire and operate certain of Alpha’s core coal operations, as part of Alpha Natural Resources’ restructuring. The new company formally began operations on July 26, 2016, upon Alpha’s emergence from Chapter 11 bankruptcy protection.

Also worth consideration here is that all the common shares in this IPO are being offered by selling stockholders.

Contura’s shares are expected to trade on the New York Stock Exchange (NYSE) under the symbol CTRA.

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It goes without saying that coal has been and is currently a political issue of contention. President Obama targeted coal to be removed from the energy mix, and President Trump is trying to do what he can to keep coal alive in the future energy mix. While this may seem obvious at this time, the battle for and against coal likely will not disappear in the years ahead.

Contura’s IPO was indicated to be 6 million shares and the last proposed price range was seen at $23.00 to $27.00 per share. The underwriters have been granted an overallotment option of up to 900,000 shares. Citigroup, Jefferies, Credit Suisse, UBS, Barclays and BMO Capital Markets were listed in the underwriting syndicate.

As far as its operations, Contura has broken down it and its affiliates geographically. An asterisk denotes contract mine operations.

Northern Appalachia (Pa.):

• Cumberland – Underground

Central Appalachia (Va., W.Va.):

• Cabin Ridge – Surface (Va.)
• Deep Mine #26 – Underground (Va.)
• Deep Mine 41 – Underground (Va.)
• 88 Strip – Surface (Va.)
• Deep Mine #25* – Underground (Va.)
• No. 10 (Bear Ridge Upper Banner)* – Underground (Va.)
• Deep Mine 37* – Underground (Va.)
• Deep Mine 44* – Underground (Va.)
• OMM (Reedy Ridge)* – Underground (Va.)
• Jerry Fork Eagle – Underground (W.Va.)

Powder River Basin (Wyo.):

• Belle Ayr – Surface
• Eagle Butte – Surface

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Here is how Contura described its reserves in the first IPO filing for up to $100 million worth of common stock:

• Over 1.0 billion tons of proven reserves and approximately 310 million tons of probable reserves (average remaining mine life of approximately 30 years based on 2016 production).
• Its reserve base in CAPP consists of 71 million tons of proven and 22 million tons of probable reserves across the three mining complexes (substantially all met coal).
• Its reserve base in NAPP consists of 326 million tons of proven and 279 million tons of probable reserves, of which approximately 7% is met coal (substantially all of the remaining reserves principally characterized as high-BTU, Pittsburgh 8 seam steam coal).
• Its PRB reserves base is 614 million tons of proven and 10 million tons of probable low-sulfur steam coal reserves.

Stay tuned.

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