The Denver Post
Douglas County-based Westmoreland Coal Co. announced Friday that it has paid $64 million in cash for two Ohio coal companies, Oxford Resources GP and Buckingham Coal Co.
Westmoreland said it paid $30 million for Oxford Resources and $34 million for Buckingham.
Westmoreland is the oldest independent coal company in the United States. The Englewood company’s operations include sub-bituminous and lignite coal mining in the western U.S. and Canada, a char production facility and a 50 percent interest in an activated carbon plant.
Westmoreland had superlative year in 2014, with its stock up 72.2 percent. In late 2011, Westmoreland purchased Chevron Mining Inc’s Kemmerer Mine in southwest Wyoming for $179 million plus about $14 million in working capital.
Oxford Resources is a general partner of Columbus, Ohio-based Oxford Resource Partners LP, which is a low-cost producer of steam coal in Northern Appalachia. Oxford markets its coal primarily to large electric utilities with coal-fired power plants under long-term contracts.
Under the agreement, Westmoreland received 4,512,500 common units of the Oxford Resource Partners master limited partnership (MLP) and will contribute royalty-bearing coal reserves to it.
In connection with the closing, the MLP’s name was changed to Westmoreland Resource Partners LP. The MLP, now 77 pecent owned by Westmoreland Coal, will be traded on the New York Stock Exchange under the symbol WMLP.
The acquisition of Oxford and the contribution of the coal reserves provides Westmoreland with a platform to “implement a value-creating, drop-down strategy” in which it intends to periodically contribute certain U.S. and Canadian assets in exchange for a combination of cash and additional limited partnership interests, the company said in a statement.
The goal, said Westmoreland, is to have these transactions unlock value that is inherent in Westmoreland’s stable cash flow-generating business model, and benefit both Westmoreland’s stakeholders and Oxford MLP’s unitholders.