Rhino Resource Partners LP announced its financial and operating results for the quarter ended June 30th 2012. For the quarter, the Partnership reported adjusted EBITDA of USD 25.0 million and net income of USD 13.0 million, compared to adjusted EBITDA of USD 19.4 million and net income of USD 9.4 million in the Q2 of 2011. Diluted earnings per unit were USD 0.46 for the quarter compared to USD 0.37 for the Q2 of 2011. Total revenues for the quarter were USD 90.0 million with coal sales generating USD 72.2 million of the total. Financial results for the quarter ended June 30th 2012 were favorably impacted by USD 6.9 million of revenue and income from leasing Rhino's owned Utica Shale acreage.
On July 23th 2012, the Partnership announced a cash distribution of USD 0.445 per common unit or USD 1.78 per unit on an annualized basis. This distribution will be paid on August 14th 2012 to all common unit holders of record as of the close of business on August 2nd 2012. No distribution will be paid on the subordinated units.
Mr Dave Zatezalo president and CEO of Rhino's general partner said that "While our Q2 results were satisfactory, they reflect the continued weakness in the coal markets. EBITDA for the quarter was a record for the Partnership, in part due to USD 6.9 million of income from leasing our owned Utica Shale acreage. While maintaining our focus on safety and improved operating efficiency, our goal is to maximize cash flow and to work to reduce our bank debt. The actions we took to idle a majority of our Central Appalachia operations for five weeks helped to lower our overall inventory by more than 100,000 tonnes from peak levels. I am pleased that we managed to maintain the strength and integrity of our work force as substantially all of the furloughed employees returned when we restarted operations in Central Appalachia on July 9th 2012.”
Mr Zatezalo said that “We believe suspending the distribution on the subordinated units, which required reducing the distribution on the common units to the minimum quarterly level, is a very positive step for the long term health and liquidity of the Partnership. As we begin the process of contracting our 2013 met coal, which we expect to complete by the end of 2012, we have been concerned by the depth and severity of the market downturn. With this uncertainty, we and our board of directors determined that the prudent course is to conserve our cash by eliminating the subordinated distribution. We believe this is a strong show of support from our sponsor, Wexford Capital LP, whose investment funds hold substantially all of our subordinated units. We will continue to evaluate the outlook for Rhino and the appropriate level of distributions, while taking the necessary steps to support the long term health and success of the Partnership.”
He said that “Our steam coal at Hopedale and Castle Valley remains fully contracted through 2013 and 2014. As mentioned in our June operating update there was some pickup in met sales activity during the quarter, with 30,000 tons sold on a spot basis as a low quality met product and Castle Valley achieving its first 100,000 tonne plus sales month. In addition, we have seen a pickup from a steam customer that had previously delayed shipments in Northern and Central Appalachia. While the focus of our coal operations is in reducing costs and maximizing cash flow to reduce debt, we are encouraged by the results of our diversification efforts. The initial results from activity in the Utica are very encouraging. Our well site preparation business is up and running. We believe there will be further expansion opportunities in the region that will be within our budget."
Mr Zatezalo said that "Our Rhino Eastern joint venture showed positive results during the quarter as our ongoing efforts to improve safety, productivity and cost structure at this operation have resulted in positive returns. While the long term impact of the Patriot Coal Corporation bankruptcy filing on our joint venture is still uncertain, we have continued normal production operations at the joint venture and we are hopeful the bankruptcy filing will not have a material negative effect on Rhino Eastern."
Source - Rhino Resource Partners
(www.coalguru.com)
