AEP targets Q1 for sale of coal assets

AMERICAN Electric Power (AEP) hopes to sell its coal properties by the end of the first quarter, according to reports from Platts.

Staff Reporter

The electricity generator’s mining operations, owned by subsidiary AEO Coal, include surface and underground mines in Ohio, Kentucky, and Louisiana; associated facilities and coal reserves in Ohio and Kentucky; coal reserves in Pennsylvania; ownership interests in lignite reserves in northwestern Louisiana and east Texas; property interests in Colorado; and royalty interests in West Virginia.

The Ohio, Kentucky and Louisiana operations produce approximately 10 million tons of coal per year, and employ approximately 1,000 people.

AEP Coal is regarded as a non-core asset and only generated $US1 million in the third quarter.

Core utility operations had net earnings of $US394 million in the third quarter, compared to $US432 million in the same quarter last year.

"Despite unfavorable conditions, our utility operations performed well," Linn Draper, AEP president, chairman and CEO said. "However, we continue to be disappointed by the underperformance of our non-core investments and remain committed to divest these assets."

Subsidiary, UK Generation drained $US51 million from the company's bottom line in the third quarter, compared to a loss of $5 million in the third quarter a year ago.

"Our investments continue to be a drag on earnings," Draper said. "The quarter´s earnings were reduced by the negative impact of timing differences related to the accounting treatment of freight hedges in our UK operations and lower margins related to reduced activity in our domestic gas business."

Draper said that work continues to systematically dispose of non-core assets.