2. ACQUISITION

Acquisition of San Juan

On January 31, 2016, Westmoreland San Juan, LLC (“WSJ”), a variable interest entity of the Company, acquired San Juan Coal Company (“SJCC”), which operates the San Juan mine in Farmington, New Mexico, and San Juan Transportation Company (“SJTC” and such transaction, the “San Juan Acquisition”) for a total cash purchase price of approximately $125.3 million, subject to post-closing adjustments. The San Juan mine is the exclusive supplier of coal to the adjacent San Juan Generating Station (“SJGS”) under a coal supply agreement through 2022. The San Juan operations are included in the Company’s Coal - U.S. segment.

WSJ financed the San Juan Acquisition principally with a $125.0 million loan from NM Capital Utility Corporation (the “San Juan Loan”), an affiliate of Public Service Company of New Mexico (one of the owners of SJGS).

The San Juan Acquisition has been accounted for under the acquisition method of accounting that requires the total purchase consideration to be allocated to the assets acquired and liabilities assumed based on estimates of fair value.

The allocation of the purchase price is preliminary pending the completion of various estimates. During the measurement period (which is not to exceed one year from the acquisition date), additional assets or liabilities may be recognized if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets or liabilities as of that date. The preliminary allocation may be adjusted after obtaining additional information regarding, among other things, asset valuations, liabilities assumed and revisions of previous estimates, and these adjustments may be significant. Certain estimates in the San Juan purchase price allocation are classified as Level 3 fair value estimates.

A preliminary allocation of the purchase consideration follows (in millions):



	Provisional as of September 30, 2016
Purchase price:
Cash paid	$	125.3

Preliminary allocation of purchase price:
Assets:
Inventories - coal and supplies	$	8.8
Other receivables	10.0
Contractual third-party reclamation receivable	4.6
Total current assets	23.4
Land and mineral rights	108.3
Plant and equipment	73.5
Contractual third-party reclamation receivable	66.8
Other assets	10.4
Total assets	282.4
Liabilities:
Trade payables and other accrued liabilities	14.1
Production taxes	2.0
Other liabilities	9.9
Asset retirement obligations	4.6
Total current liabilities	30.6
Asset retirement obligations, less current portion	66.8
Postretirement medical	1.9
Deferred income taxes	48.5
Other liabilities	9.3
Total liabilities	157.1
Net fair value	$	125.3

Pro Forma Information

The following pro forma information has been prepared for illustrative purposes only and assumes the San Juan Acquisition occurred on January 1, 2015. The unaudited pro forma results have been prepared based on estimates and assumptions, which the Company believes are reasonable, however, they are not necessarily indicative of the consolidated results of operations had the acquisitions occurred on the dates indicated above, or of future results of operations.



	Three Months Ended September 30,			Nine Months Ended September 30,
	2015			2016			2015
	(In thousands, except per share data)
Total revenues
As reported	$	349,796		$	1,081,651		$	1,070,240
Pro forma	$	423,350		$	1,107,926		$	1,296,561

Operating income (loss)
As reported	$	(15,307	)	$	31,739		$	(13,716	)
Pro forma	$	(5,179	)	$	32,834		$	17,784

Net loss applicable to common shareholders
As reported	$	(46,562	)	$	(3,304	)	$	(94,899	)
Pro forma	$	(39,429	)	$	(2,879	)	$	(73,542	)

Net loss per share applicable to common shareholders (basic and diluted)
As reported	$	(2.59	)	$	(0.18	)	$	(5.32	)
Pro forma	$	(2.19	)	$	(0.16	)	$	(4.12	)