MARKETS

Xinergy closes Raven Crest deal

TENNESSEE-based Xinergy has acquired West Virginia operator Raven Crest Mining, scooping up the remaining 95% of the company for $US40 million.

Donna Schmidt
Xinergy closes Raven Crest deal

The deal made by Xinergy subsidiary Shenandoah Energy closed on April 28, while Xinergy flagged the purchase in early March.

Xinergy first got a 5% stake in Raven Crest when it acquired Shenandoah in December.

Raven’s portfolio included 17 million tons of recoverable high-quality reserves. The company operated surface complexes in Boone County, West Virginia.

"We are very pleased to complete this value-accretive acquisition that will have an immediate and positive impact on Xinergy's production profile at such a favorable time in the coal market,” company chief executive Jon Nix said.

“As market conditions continue to improve, we look forward to taking advantage of Raven Crest's short-term and long-term potential to even further expand the company's production."

Raven Crest had some 660,000 tons of coal contracted in 2010 and 2011 at prices of $US93.50 and $95/t, respectively.

Taking existing Xinergy sales into consideration, the now-expanded company has approximately 1 million tons remaining contracted in 2010 at a blended average sales price of $92/t and more than 1.2Mt next year at a blended average of $104/t.

Nix said in March that Xinergy’s plans included value creation for stakeholders by acquiring “immediately accretive” properties that also significantly increased the company’s permitted reserve base which it could bring online as the mark warranted.

“In addition to increasing the cash flow, the Raven Crest acquisition will increase the company's permitted reserves to over 14 million tons and increase its overall reserve base to 31 million tons," he said at the time.

Xinergy’s current active coal properties are located in eastern Kentucky and Alabama.

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