Cloud Peak Energy, BNSF amend transportation agreement

Cloud Peak Energy Inc., through Cloud Peak Energy Logistics LLC, has entered into an amended transportation agreement with BNSF Railway Co. to eliminate both parities' volume obligations for the period 2016 through 2018 in exchange for a series of payments, the coal producer announced yesterday.

Under the amended agreement, Cloud Peak Energy made an upfront payment to BNSF and has the right to make payments from 2016 through 2018, replacing previous take-or-pay commitments during the three-year timeframe, Cloud Peak officials said in a press release.

If Cloud Peak does not ship any export tons during the period, the aggregate reduction in potential payments is substantially comparable to the reduction under the export terminal throughput amendment that Cloud Peak announced in October. Except for the amendment, the original agreement remains in place through 2024's end.

Cloud Peak and BNSF will meet regularly to discuss market conditions, potential shipments and terms for any shipments. If no export shipments occur, it's expected that production volumes at Spring Creek Mine will be reduced, the press release stated. The mine is located in Montana.

"We appreciate our constructive relationship with BNSF and their willingness to work with us in recognition of current extremely depressed international prices," said Cloud Peak Energy President and Chief Executive Officer Colin Marshall.

Cloud Peak Energy is one of the largest U.S. coal producers and the only pure-play Powder River Basin coal company.