Organization and Business	12 Months Ended
Dec. 31, 2015
Organization and Business
Organization and Business	1. Organization and Business We are one of the largest producers of coal in the United States of America (“U.S.”) and the PRB, based on our 2015 coal sales. We operate some of the safest mines in the coal industry. According to the most current MSHA data, we have one of the lowest employee all injury incident rates among the largest U.S. coal producing companies. We currently operate solely in the PRB, the lowest cost region of the major coal producing regions in the U.S., where we own and operate three surface coal mines: the Antelope Mine, the Cordero Rojo Mine, and the Spring Creek Mine. Our Antelope Mine and Cordero Rojo Mine are located in Wyoming and our Spring Creek Mine is located in Montana. Our mines produce subbituminous thermal coal with low sulfur content, and we sell our coal primarily to domestic and foreign electric utilities. We do not produce any metallurgical coal. Thermal coal is primarily consumed by electric utilities and industrial consumers as fuel for electricity generation. In 2015, the coal we produced generated approximately 3% of the electricity produced in the U.S. On August 24, 2015, we entered into a surface rights agreement that provided our Cordero Rojo Mine with access to approximately 95 million tons of additional coal contained within a federal coal lease controlled by the mine. These additional tons were evaluated as part of the year-end reserve reporting process and were determined to be proven and probable reserves as of December 31, 2015. The agreement involved a land exchange and production payments from any future sales of the underlying coal, including certain recoupable advance production payments. In addition, we have two development projects. The Youngs Creek project, an undeveloped surface mine project in the Northern PRB region, is located in Wyoming, approximately 13 miles north of Sheridan, Wyoming, seven miles south of our Spring Creek Mine and seven miles from the mainline railroad, contiguous with the Wyoming-Montana state line. We have not been able to classify the Youngs Creek project mineral rights as proven and probable reserves as they remain subject to further exploration and evaluation based on market conditions. We also have an option to lease agreement and a corresponding exploration agreement with the Crow Tribe of Indians (the “Big Metal project”). The Big Metal project is located on the Crow Indian Reservation in southeast Montana and is near the Youngs Creek project. We are in the process of evaluating development options for the Youngs Creek project and the Big Metal project and believe that their proximity to the Spring Creek Mine represents an opportunity to optimize our mine developments in the Northern PRB. For purposes of this report, the term “Northern PRB” refers to the area within the PRB that lies within Montana and the northern part of Sheridan County, Wyoming. In 2015, we addressed the impact of current low seaborne thermal coal prices for international coal sales and mitigated our associated losses and take-or-pay exposure in our logistics business. On October 28, 2015, we announced an amended agreement with Westshore Terminals Limited Partnership (“Westshore”) providing an upfront payment during the fourth quarter of 2015 and quarterly payments from 2016 through 2018 in lieu of the previous take-or-pay commitments during this three-year period. Except as amended, the throughput agreement remains in place through the end of 2024. On December 1, 2015, we announced a similar amendment to our transportation agreement with BNSF. We will continue to meet regularly with Westshore and BNSF during the next several years to discuss market conditions, potential shipments, and the terms for such shipments. Spring Creek Mine production volumes will be reduced as export shipments do not occur. In addition to our agreement with Westshore, we hold option contracts to potentially increase our future export capacity through two proposed Pacific Northwest export terminals. We have a throughput option agreement, which provides us with an option for up to 17.6 million tons of capacity per year through the planned dry bulk cargo Gateway Pacific Terminal (“GPT”) at Cherry Point in Washington State. We also have a throughput option for up to 7.7 million tons per year at the proposed Millennium Bulk Terminals (“MBT”) coal export facility in Washington State. Our options in each of these proposed terminals are exercisable following the successful completion of the ongoing permit process, each of which is currently in the environmental impact statement phase. The timing and outcome of these permit processes, and therefore the construction of the terminals, are uncertain. On August 13, 2015, we announced that we and the Crow Tribe joined SSA Marine as 49% partners in GPT. Under the new ownership structure, SSA Marine remained the majority owner, retaining 51% of the equity. The Crow Tribe has an option to secure up to 5%, with a corresponding reduction in our ownership. For our 49% ownership interest, we paid $2 million upon signing and will pay all future permitting expenses up to $30 million, which we anticipate will cover such expenses through 2019. Thereafter, the owners will share any permitting expenses in excess of $30 million in proportion with their ownership interests. As of December 31, 2015, we have paid $6.6 million toward permitting expenses as a partner in GPT. We have the right to exit the partnership, at our discretion at any time during the permitting phase, with no further obligation, beyond any pending capital calls requested by the joint venture prior to our exit of the partnership.

1. Organization and Business

We are one of the largest producers of coal in the United States of America (“U.S.”) and the PRB, based on our 2015 coal sales. We operate some of the safest mines in the coal industry. According to the most current MSHA data, we have one of the lowest employee all injury incident rates among the largest U.S. coal producing companies. We currently operate solely in the PRB, the lowest cost region of the major coal producing regions in the U.S., where we own and operate three surface coal mines: the Antelope Mine, the Cordero Rojo Mine, and the Spring Creek Mine.

Our Antelope Mine and Cordero Rojo Mine are located in Wyoming and our Spring Creek Mine is located in Montana. Our mines produce subbituminous thermal coal with low sulfur content, and we sell our coal primarily to domestic and foreign electric utilities. We do not produce any metallurgical coal. Thermal coal is primarily consumed by electric utilities and industrial consumers as fuel for electricity generation. In 2015, the coal we produced generated approximately 3% of the electricity produced in the U.S.

On August 24, 2015, we entered into a surface rights agreement that provided our Cordero Rojo Mine with access to approximately 95 million tons of additional coal contained within a federal coal lease controlled by the mine. These additional tons were evaluated as part of the year-end reserve reporting process and were determined to be proven and probable reserves as of December 31, 2015. The agreement involved a land exchange and production payments from any future sales of the underlying coal, including certain recoupable advance production payments.

In addition, we have two development projects. The Youngs Creek project, an undeveloped surface mine project in the Northern PRB region, is located in Wyoming, approximately 13 miles north of Sheridan, Wyoming, seven miles south of our Spring Creek Mine and seven miles from the mainline railroad, contiguous with the Wyoming-Montana state line. We have not been able to classify the Youngs Creek project mineral rights as proven and probable reserves as they remain subject to further exploration and evaluation based on market conditions. We also have an option to lease agreement and a corresponding exploration agreement with the Crow Tribe of Indians (the “Big Metal project”). The Big Metal project is located on the Crow Indian Reservation in southeast Montana and is near the Youngs Creek project. We are in the process of evaluating development options for the Youngs Creek project and the Big Metal project and believe that their proximity to the Spring Creek Mine represents an opportunity to optimize our mine developments in the Northern PRB. For purposes of this report, the term “Northern PRB” refers to the area within the PRB that lies within Montana and the northern part of Sheridan County, Wyoming.

In 2015, we addressed the impact of current low seaborne thermal coal prices for international coal sales and mitigated our associated losses and take-or-pay exposure in our logistics business. On October 28, 2015, we announced an amended agreement with Westshore Terminals Limited Partnership (“Westshore”) providing an upfront payment during the fourth quarter of 2015 and quarterly payments from 2016 through 2018 in lieu of the previous take-or-pay commitments during this three-year period. Except as amended, the throughput agreement remains in place through the end of 2024. On December 1, 2015, we announced a similar amendment to our transportation agreement with BNSF. We will continue to meet regularly with Westshore and BNSF during the next several years to discuss market conditions, potential shipments, and the terms for such shipments. Spring Creek Mine production volumes will be reduced as export shipments do not occur.

In addition to our agreement with Westshore, we hold option contracts to potentially increase our future export capacity through two proposed Pacific Northwest export terminals. We have a throughput option agreement, which provides us with an option for up to 17.6 million tons of capacity per year through the planned dry bulk cargo Gateway Pacific Terminal (“GPT”) at Cherry Point in Washington State.

We also have a throughput option for up to 7.7 million tons per year at the proposed Millennium Bulk Terminals (“MBT”) coal export facility in Washington State. Our options in each of these proposed terminals are exercisable following the successful completion of the ongoing permit process, each of which is currently in the environmental impact statement phase. The timing and outcome of these permit processes, and therefore the construction of the terminals, are uncertain.

On August 13, 2015, we announced that we and the Crow Tribe joined SSA Marine as 49% partners in GPT. Under the new ownership structure, SSA Marine remained the majority owner, retaining 51% of the equity. The Crow Tribe has an option to secure up to 5%, with a corresponding reduction in our ownership. For our 49% ownership interest, we paid $2 million upon signing and will pay all future permitting expenses up to $30 million, which we anticipate will cover such expenses through 2019. Thereafter, the owners will share any permitting expenses in excess of $30 million in proportion with their ownership interests. As of December 31, 2015, we have paid $6.6 million toward permitting expenses as a partner in GPT. We have the right to exit the partnership, at our discretion at any time during the permitting phase, with no further obligation, beyond any pending capital calls requested by the joint venture prior to our exit of the partnership.