Net income increased to $US38.7 million, up slightly quarter-for-quarter from $38.6 million. Revenues jumped 6.5% over last year, to $260.5 million from $244.7 million, the result of which the company cited higher average coal sales prices.
The per ton sale price was at a record high for ARP, rising $1.79 to $38.91. The positive news was compounded by an increase in its synfuel-related operating revenues, which rose to $6.8 million in the period.
However, the company's high notes were flattened by operating expenses, which were also up for the producer. For the quarter, ARP reported $176.9 million in expenses over last year's reported third-quarter result of $162.2 million.
While those expenses were partial offset by $2.8 million in surplus equipment sales, ARP cited a few reasons for the increase. At its Mettiki mine, operating expenses increased $11.6 million in this year's quarter because of a higher cost structure from mining in Maryland to mining in West Virginia. ARP also finished its longwall transition at the Mountain View mine from the mined-out Mettiki operation at the end of the final 2006 quarter.
About $3.7 million of the upped expenses were due to an increased production capacity at the company's Elk Creek mine, which was undergoing development during the same quarter last year. Finally, the impact on the bottom line was due to increased labor-related expenses, costs for materials and supplies and regulatory compliance requirements, the company said.
"Buoyed by strong performance in the third quarter, ARP again delivered record operating and financial results through the first nine months of 2007," said company president Joseph W Craft III.
"These strong results are particularly gratifying as we continue to manage the operating and financial impacts of recent changes in the interpretation and enforcement of federal and state regulatory safety standards."
During the quarter the company recorded a net gain and reduced expenses resulting from an insurance claim settlement receipt for the Excel No. 3 mine fire.
Craft said looking forward coal prices overall will begin an upswing because of international demand, as well as supply reduction. That bodes well for the company, he added: "We continue to see improving coal market conditions and significant opportunities to execute on our organic growth strategies."
