NEW YORK, NY -- (Marketwire) -- 10/30/12 -- Coal stocks have struggled in 2012 as abundant supplies and historically low prices have made natural gas a cheaper alternative for utilities. Natural gas futures in April plummeted to a 10 year low of $1.91 per thousand cubic feet. The Market Vectors-Coal ETF (KOL) -- which seeks to replicate the price and yield return performance of the Stowe Coal Index -- has fallen over 22 percent year-to-date. The Paragon Report examines investing opportunities in the Coal Industry and provides equity research on Peabody Energy Corporation (NYSE: BTU) and Patriot Coal Corporation (PINKSHEETS: PCXCQ).
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Coal companies, despite some reporting steep drops in their third quarter profits, have surged recently as they believe the market for coal is beginning to turn around. Arch Coal, Alpha Natural Resources, and Peabody Energy have all seen gains of at least 20 percent over the last month. According to Peabody's CEO Gregory Boyce coal's market share of electricity generated in the U.S. has risen from a low of approximately 30 percent in the second quarter to roughly 39 percent in September.
"While the global coal environment remains challenged, there are indications that markets are stabilizing through U.S. gas-to-coal switching, higher European coal-fueled generation and increased China infrastructure spending," Boyce said.
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As of December 31, 2011, the Company owned interests in 30 coal mining operations, including an interest in 29 coal operations located in the United States and a 50% interest in the Middlemount Mine in Australia. Shares of the company have rallied sharply in October despite reporting an 84 percent decline in third quarter profits. Revenues of $2.06 billion topped Wall Street's estimates of $1.96 billion.
Patriot Coal is a producer of thermal coal in the eastern United States, with operations and coal reserves in the Appalachia and the Illinois Basin coal regions. The company filed for bankruptcy in July. According to court papers Patriot Coal controls approximately 1.9 billion tons of coal reserves in 12 active mining complexes. The company in its Chapter 11 Bankruptcy filing listed debts of $3.07 billion as of May 31, 2012.
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