SOURCE: Paragon Financial Limited

Paragon Financial Limited

October 03, 2012 08:20 ET

Coal Miners Look to Benefit From Rally in Natural Gas Prices

The Paragon Report Provides Stock Research on Peabody Energy and Walter Energy

NEW YORK, NY--(Marketwire - Oct 3, 2012) - The Coal Industry has been hit hard in 2012 as vast amounts of natural gas unlocked from shale deposits have made it a cheaper alternative to coal. Recent data released from the Energy Department has shown that the amount of gas used by power companies has risen 32 percent during the first half of the year, while coal usage has dropped 18 percent. The Paragon Report examines investing opportunities in the Coal Industry and provides equity research on Peabody Energy Corporation (NYSE: BTU) and Walter Energy, Inc. (NYSE: WLT).

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Slowing economies in Europe and Asia has led to steep drop in demand for coal. The Wall Street Journal recently reported that for the 12 months ended in June coal output in the U.S. surpassed consumption by 152 million tons, which was the largest surplus in roughly 30 years.

The recent rally in natural gas prices could prove beneficial to coal miners. The spread between the NYMEX Central Appalachian coal and Henry Hub natural gas futures on Thursday was the widest it has been in over a year. The gap on Thursday reached $1.25 per million British thermal units (mmBtu) according to data from Reuters. The cost of transporting Eastern coal is roughly $1 per mmBtu, so when the discount is above $1 per mmBtu it becomes more cost effective for utilities to burn coal instead of natural gas. Since April, natural gas has rebounded to $3.28 per mmBtu from $1.902, while coal has dropped to $2.13 per mmBtu from $2.03, according to Reuters.

Paragon Report releases regular market updates on the Coal Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at and get exclusive access to our numerous stock reports and industry newsletters.

Peabody Energy is the world's largest private-sector coal company and a global leader in sustainable mining and clean coal solutions. The company serves metallurgical and thermal coal customers in more than 25 countries on six continents. The company last month reported the closure of its Air Quality Mine in Vincennes, Indiana due to soft market conditions.

Walter Energy is the world's leading, publicly traded "pure-play" metallurgical coal producer for global industry with strategic access to high-growth steel markets in Asia, South America and Europe. The company also produces thermal coal, anthracite, metallurgical coke and coal bed methane gas. For the second quarter of 2012 the company reported metallurgical coal production of 2.91 million metric tons.

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