As the world works through how it is going to deal with cleaner energy needs, there is very little talk about where current energy is coming from. A light switch gets turned on and light is expected; the weather turns hot and people demand air conditioning. The power needs to come from somewhere, regardless of future considerations, and some are firmly positioned to profit handsomely.
Massey Energy Company, an Appalachian Mountain Basin coal supplier, provides high-quality/low-sulfur coal to utility companies, steel manufacturers and other customers requiring coal that, in certain instances, is considered meteorological grade. The company is currently experiencing the benefits of past strategic decisions. Some twenty years ago, the company committed to several long-term projects that have positioned the company as the fourth largest coal company in the U.S.
If one were to visualize a common perception of what a coal company might be, Massey Energy Company is that visualization. It operates a total of 19 mining complexes, 47 coal mines, 188 wells, over 200 miles of gathering line, and uses every form of transportation available from steamship and barge to rail. The company has been working in the Central Appalachian coal fields of the southern U.S. since 1916, and might be considered as a historic operation right alongside such historically significant companies as Standard Oil, Union Pacific and US Steel (current compositions notwithstanding.)
The company is currently experiencing a transition in agreements pricing to its benefit. In the first-quarter of 2008, utility agreements set at lower pricing levels were re-priced higher. This resulted in a 4.5% average gain for the company even as total shipments were reduced as a result of rail car availability. Additionally, this benefit was found in the higher grade coal types where coal produced revenue per/ton increased 9.4% over the first quarter 2007. From a general perspective, Massey Energy Company has made some wise choices in the past and is now finding those choices to be very profitable in a time of rising energy costs across the board.
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