For the period ended September 30, Patriot recorded a net loss of $US46 million, compared to a loss of $52.8 million in the same period last year.
Revenues were also down year on year from $506.2 million to $500.7 million.
"Third quarter production levels were disappointing at Patriot's underground operations, due to increased regulatory activities and geological issues,” president Richard Whiting said.
He highlighted some of the company’s bright spots, including operational and commercial improvements in its Appalachia segment that were marked for the 5th consecutive quarter.
The company also began production from its Black Oak metallurgical operation last month.
"The third quarter proved to be very demanding for Patriot,” chief financial officer Mark Schroeder notes, pointing out that the issues that cut into its numbers had caused the central issue – lower than anticipated production.
“Absolute costs were in line with our expectations, so the lower production resulted in a higher cost per ton for the third quarter," Schroeder said.
"Looking to the fourth quarter, we expect our production level to rebound, resulting in lower per-ton costs and improved margins."
Whiting also said Patriot was optimistic about 2011’s met market due to strong demand and pricing. The producer is currently negotiating for next year’s deliveries.
However, the Appalachian producer was less confident about the thermal side, noting that many factors were pointing to a much tighter market as the new year begins.
“The entire coal industry in the eastern US is seeing the impact of external forces on productivity levels, setting the stage for completely different market dynamics when utility buyers return to the marketplace for additional 2011 volume,” Patriot officials said.
“Coal is still the workhorse for US electricity generation, especially in the peak seasons, and current inventories are not positioned to absorb extra demand this coming winter."
The company highlighted its safety performance in the quarter, particularly the work of crews at its Wells preparation facility. Wells, which processes more than 3 million tons of met coal annually, earned the prestigious Sentinels of Safety award for the large processing plant group.
Looking ahead, Patriot said the changing regulatory environment has made it difficult to predict production levels from its Appalachian operations. However, a sales range of 8.0-8.4Mt is expected for the fourth financial quarter.
This figure range includes met coal sales of 1.9-2.1Mt at an average price of $116 per ton.
Appalachian thermal coal is expected to be 4.3-4.5Mt at an average sales price of $57/t, and Illinois Basin thermal coal sales are anticipated to be 1.7-1.9Mt at $40/t.
The producer has 4.5Mt of thermal coal for 2011 delivery still to be priced. On the metallurgical side, it has more than 5Mt for next year still unpriced amid a very tight market.
“Assuming that the met coal market remains strong, we anticipate continuing our expansion of met production in 2011,” officials said.
“As a result, we expect our total met sales in 2011 will exceed 8 million tons.”
