In a statement on Thursday Freepoint said its Commerce Coal subsidiary completed the transaction on May 31 with the view of expanding Freepoint’s merchant coal business.

"This transaction again demonstrates that Freepoint can deliver creative, streamlined solutions to commodity producers," Freepoint chief executive officer David A Messer said in the statement.

"Freepoint's merchant platform positions itself at the intersection of physical commodity markets and finance.

“We provide a one-stop solution to customers like Covenant looking for both finance and offtake services."

The recent tightening of government regulations has seen banks leave the commodities business, leaving room for energy merchants like Connecticut-based Freepoint to acquire assets such as natural gas wells and power plants.

Covenant said in the release that the deal would allow it to expand its operations in Pike County, KY.

"We are very excited about this opportunity to achieve our growth plan," Covenant CEO Jerry Tackett said.

"With this transaction, Covenant is in an excellent position to expand the scope of its coal mining operations.

“We look forward to continuing our relationship with Freepoint as we begin a new phase of operations."

The terms of the deal were not provided and neither Freepoint nor Covenant was available for comment at the time of publication.