Monday, February 6, 2017
Doyle Trading Consultants
DTC Flash©: The Week Ahead – 06 FEB 2017
Catalysts We Are Watching

Ramaco IPO Update: Ramaco Resources (METC) began trading on the Nasdaq on Friday
with an initial market cap of $527 mm. METC priced its 6 mm share offer at $13.50 and
finished the trading day at $13.55, up 0.37% seq. The IPO is expected to be the first of
numerous offerings in 2017, which could see as many as six IPO’s, greater than 1995 when
four coal companies went public. The success of METC will influence the other company’s
decision to IPO or not. Some of the other listing prospects include Warrior Met Coal,
Blackhawk Mining, Contura Energy, Coronado Coal, and Paringa Resources. Private
equity interests poised to benefit from successful IPO’s include Apollo Global Management
(backer of Warrior) and Energy & Minerals Group (backer of Coronado).

Peabody and Blackhawk Launch High Yield Bond Offerings: Last week Peabody Energy
launched an offering of $1.5 billion in high-yield bonds and loans to pay off bank loans to pay
off its most senior lenders as a final measure before exiting bankruptcy. Meanwhile,
Blackhawk Mining is aiming to gain a $660 mm term loan in a means to extend out its
maturities by two-plus years. The Wall Street Journal notes that Arch Coal and Contura
Energy are looking to refinance high-interest debt as well.

Spot Coking Coal Market Silent: The spot coking coal market has been rather inactive in
recent weeks amidst China’s Lunar New Year Holiday. Bids on globalCOAL’s physical
trading platform finished the week at $166/MT against offers of $172/MT for March unbranded
cargoes. According to MetalBulletin, premium mid-vol cargoes were offered into Europe with
buying interested reported at around $165/MT FOB Australia. Its possible activity in the
market will pick up next week following the end of the Lunar New Year Holiday. All
participants are watching closely to see how the market stabilizes following the 41% drop on
th
globalCOAL to $184.50/MT on January 9 .

Seaborne Thermal Backwardation Weakens: Each of the seaborne thermal coal indexes
(API 2, API 4, and NEWC) declined slightly in the prompt month period, but increased
considerably in the back of the curve. Each index remains above the $80/MT threshold in the
March period, but only the NEWC index is above the $70/MT threshold in the outer 2020
period. The API 2 index rose 3.66% WoW in the 2019 period to $63.65/MT, the API 4 index
rose 4.07% to $70.25/MT, and the NEWC index rose 2.82% to $71.15/MT. The gains indicate
the market suspects prices may be more stable than previously believed, though each curve
remains significantly backwardated.

Australian Dollar Surging: The Australian dollar surged this past week as Australian
recession fears diminished due to their strong trade surplus. The AUD started the week at
0.7548 USD and finished the week at 0.7684 USD, a 1.8% gain for the week and up 6.66%
this year. The Australian trade surplus soared to a record high level of A$3.51 from a revised
A$2.04B, implying that economic growth has been stronger than expected and commodities
exports are expected to continue to perform well. The Reserve Bank of Australia (RBA) will
meet for its first policy decision of 2017 this week. While no action is expected from the RBA,
any hint that the bank will distance itself from further monetary easing should allow the AUD to
continue it resurgent streak.

Warmer Weather Weighs on Natgas: Both prompt month and day-ahead Henry Hub natgas
prices are hovering just above $3/mmBtu thanks to disappointing weather which will last
through early February. Friday’s $3.063/mmBtu settle price for March Henry Hub futures
marks the lowest price for both that contract and the rolling prompt month since late
November. Calendar Year 2018 Henry Hub is now flat with the prompt month, after falling
1.7% last week and 2.5% YTD. In the day-ahead market, natgas at the Henry Hub delivery
point traded at $3.001/mmBtu on Friday, down 8.8% WoW.

February Heating Demand Uncertain: Heating degree days came in below forecasted
levels last week, only to be followed by an exceptionally mild spell this week, damping
expectations for robust cold in February. According to WeatherBELL Analytics, colder
weather over the next five days will be limited to the far northwestern portions of SPP and
MISO, while the bulk of the rest of the country is looking at average temperatures 4°F – 15°F
above normal. Temperatures are likely to shift closer to normal across the eastern US next
week, but wide spread warmth is expected to dominate US weather for the first half of
February.

Q4 Coalco Earnings: As we await the announced release dates from Westmoreland (WLB)
and Foresight Energy (FELP), we will be online first thing Wednesday to crunch and report
on Arch Coal (ARCH). Cloud Peak Energy (CLD) and Teck Resources (TECK) will report
next week Wednesday.
o
ARCH/Wednesday: ARCH will release earnings premarket Wednesday with its call to
follow at 11 AM ET. Current EPS estimates stand at ($1.85) - $1.01 with an average
analyst estimate of $0.09.

Q4 Utility Earnings Continues: We continue to cover utilities this week for DTC’s Utility and
Natural Gas clients with the two notable releases this week. Exelon Corp (EXC) will release
on Wednesday and DTE Energy (DTE) on Thursday. Entergy (ETR), Ameren (AEE), and
Duke (DUK) report next week. If you are interested in receiving the utility earnings recaps,
please contact Steve Ristevski ([email protected]; +1.212.520.2774).

Feb Monthly Update/Monday: As announced last Thursday, we will publish the Feb ‘17
edition of our Monthly Update by end of today, which will include our latest Supply/Demand
forecast and all of the other coal market analysis. Stay tuned!

Dec IMEX Data/Tuesday: Complete US IMEX data for Dec will be released on Tuesday and
we will distribute our detailed analysis as soon as we crunch the numbers.
Notable DTC Coverage This Week
Monday
Utility Weekly and Natgas Report*
Feb Monthly Update
Tuesday
IM/EX Flash
Wednesday
EXC Results Flash*
ARCH Q4 Results
Exports by Basin**
Thursday
Natural Gas Update Flash*
DTE Results Flash*
Weekly Coal Production
Friday
Further Out
CLD Q4 Results (15th)
TECK Q4 Results (15th)
ETR Q4 Results* (15th)
AEE Q4 Results* (16th)
DUK Q4 Results* (16th)
*Weekly Utility and Natgas Subscribers only
**Quarterly Coal Report Subscribers only
Hans Daniels
Charles Dayton
Jim Dillon
CEO
VP – Market Analytics
Vice President- Research
[email protected]
[email protected]
[email protected]
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Phone: 970.256.1192
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