OK, Peabody Energy (NYSE:BTU) isn’t corporately headquartered in the Cowboy State (its HQ is in St. Louis). But the world’s largest publicly held coal company couldn’t live without Wyoming.
The company now serves “metallurgical and thermal coal customers in more than 25 countries on six continents”; however, its premier mining operations are in located under Wyoming’s big skies.
Peabody’s ticker says it all: BTU. Producing energy from coal is what the company is all about. That hasn’t been as easy recently (not that mining is ever easy) as it has been in the past. That’s mainly because of the rise of cheap natural gas, which in mid-2012 is often selling for less than what it costs gas companies to produce, thanks to a sudden overabundance of the stuff.
That’s a tough a market to compete in — and for the gas producers as well — when electric utilities everywhere are searching for the cheapest possible fuel to turn BTUs into electric power. For coal companies like Peabody, that puts an even bigger premium on being able to produce the cleanest coal possible. And that’s where Wyoming comes in.
Peabody’s Powder River Basin operations boast the lowest-sulfur coal in North America. The company’s North Antelope Rochelle Mine alone produces ”more coal than most companies and nations, shipping more than one billion tons since mining began in the early 1980s,” according to Peabody.
Its Caballo and Rawhide mines, also in the Powder River Basin, produce a combined 30 million tons of low-sulfur coal annually. All told, the company says its Wyoming operations “produce enough fuel to power 16 million U.S. household.”
Peabody’s full-year 2011 financials remained strong despite the increasing competition from natural gas (which has only intensified in 2012). Revenues rose 18.3% to $8 billion from $6.7 billion in 2010. Net income climbed 18% to $946 million from $802 million in 2010.
In 2012, though, Peabody’s stock price has been feeling the pressure, down 31% through June. Good thing Peabody has an ace in the hole with its sprawling coal operations in Wyoming.
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Mike Mercurio is Managing Editor of InvestorPlace. As of this writing, he did not hold a position in any of the aforementioned securities.