November 6, 2017 - Contura Energy, Inc., a leading U.S. coal supplier, today announced updated production, cost and sales guidance for full-year 2017. 

The company now expects total shipments to be in the range of 45.2 to 49.4 million tons across all operations, including 3.7 to 4.1 million tons of captive Central Appalachia (CAPP) coal and 30 to 33 million tons of Powder River Basin (PRB) coal. Contura is reducing its Northern Appalachia (NAPP) shipment guidance to 6.9 to 7.3 million tons, due to temporary production delays resulting from a mid-September roof fall at its Cumberland underground longwall mine in Greene County, Pennsylvania.  No injuries occurred as a result of the roof fall and, due to the installation of additional support in the headgate area, the company believes the issue has been successfully mitigated.  Full production resumed at Cumberland in mid-October.  

In addition, total shipments through the company's Trading and Logistics segment have increased from previously reported guidance, and are now expected to be between 4.6 million and 5.0 million tons in 2017.

As of October 25, 2017, 85% of the midpoint of anticipated 2017 CAPP coal shipments were committed and priced at an average expected per-ton realization of $119.39, with the remaining 15% committed under an indexed pricing model.  Based on the midpoint of guidance, 100% of anticipated 2017 NAPP steam coal shipments were committed and priced at an average expected per-ton realization of $43.79, and 99% of the midpoint of anticipated 2017 PRB shipments were committed and priced at an average expected per-ton realization of $10.92. 

Contura now expects its 2017 CAPP cost of coal sales per ton to range from $72.00 to $74.00.  PRB cost of coal sales per ton is estimated at a range of $9.50 to $10.50, while NAPP cost estimates are increased to a range of $33.00 to $37.00 per ton due to the aforementioned production delay.  Additionally, costs related to the company's idle operations are expected to be between $13 and $15 million for full-year 2017.

Capital expenditures estimates for 2017 are reduced to a range of $80 million to $90 million, while SG&A guidance is now estimated at $35 million to $38 million, excluding one-time and non-recurring items.  Depreciation, depletion and amortization for 2017 is expected to be between $60 million and $80 million.  The company expects 2017 cash interest expense to be between $38 million and $41 million.  This level of cash interest expense reflects $19.25 million of cash interest payments that occurred in 2017, of which $12.9 million were accrued in 2016, on account of Contura's secured notes, which were refinanced during the year with Contura's lower cost term loan.  The company expects fourth quarter cash interest expense at approximately the current run-rate of $6.25 million per quarter. 

Notes

• Based on committed and priced coal shipments as of October 25, 2017.  Committed percentage based on the midpoint of shipment guidance range.

• Actual average per ton realizations on committed and priced tons recognized in future periods may vary based on actual freight expense in future periods relative to assumed freight expense embedded in projected average per-ton realizations.

• Includes estimates of future coal shipments based upon contract terms and anticipated delivery schedules.  Actual coal shipments may vary from these estimates.

• CAPP committed tons and price information represent captive Contura production and does not include Trading and Logistics.

• Excludes expenses related to the company's previous filing of a registration statement with the SEC, company formation expenses including non-cash stock compensation from formation-related stock plans, accrual of incentive bonus, costs associated with the special dividend, and non-recurring business development expenses.

• In addition to updating its 2017 guidance, Contura also announced reduced liability obligations associated with its prior acquisition of certain core coal assets from Alpha Natural Resources on July 26, 2016.

On October 24, 2017, Alpha announced the completion of a transaction with Lexington Coal Company (LCC), which included the transfer by Alpha to LCC of certain idle and non-active assets and other real and personal properties located in Kentucky, Tennessee and West Virginia. 

As a result of that transaction, Contura eliminated approximately $35 million of Contingent Reclamation Funding liabilities, which had already been reduced from a face value of $50 million at the time of the acquisition.  In addition, the Contingent Credit Support Commitment, which provided borrowing capacity to Alpha of $35 million, was terminated.  Lastly, approximately $2.8 million in cash has been released from restricted cash to operating cash on Contura's balance sheet.

Extension of Tender Offer

In addition, Contura announced today that it is extending the expiration date of its previously announced modified "Dutch Auction" tender offer to repurchase up to $31.8 million of its common stock from 12:00 midnight, New York City time, at the end of the day on November 15, 2017 to 12:00 midnight, New York City time, at the end of the day on December 15, 2017.

As of November 3, 2017, based on the preliminary count by Computershare Trust Company, N.A., the depositary for the tender offer, approximately 863,558 shares of common stock were properly tendered and not withdrawn.  Stockholders who have already tendered their shares do not have to re-tender their shares or take any other action as a result of the extension of the expiration date of the tender offer.

The tender offer consideration remains the same.  Contura stockholders may tender all or a portion of their shares (1) at a price specified by the tendering stockholder of not less than $58.00 per share and not more than $64.00 per share or (2) without specifying a purchase price, in which case their shares will be purchased at the purchase price determined in accordance with the tender offer.  When the tender offer expires, Contura will determine the lowest price within the range of prices specified above that allows it to purchase up to an aggregate of $31.8 million of its common stock.

Stockholders will receive the purchase price in cash, subject to applicable withholding and without interest.  The stockholders' shares must have been tendered at prices equal to or less than the purchase price determined after the tender offer window closes, subject to conditions of the offer.  These conditions include provisions related to proration, "odd lot" priority and conditional tenders in the case that the total cost to purchase all of the shares tendered at or below the purchase price is more than $31.8 million.

As previously announced, Contura will fund the tender offer with existing cash on its balance sheet.

The full provisions of the tender offer are described in the Offer to Purchase and the Letter of Transmittal, which can be obtained as described below.  Contura also reserves the right to purchase up to an additional two percent of its shares outstanding without further extending the tender offer.  All shares purchased by Contura will be purchased at the same price.  All shares tendered at prices higher than the purchase price will be promptly returned to stockholders at Contura's expense.

The tender offer is not conditioned on any minimum number of shares being tendered; however, the tender offer is subject to a number of other terms and conditions specified in the Offer to Purchase.

Tenders of shares must be made prior to the expiration of the tender offer and may be withdrawn at any time prior to the expiration of the tender offer.  Stockholders wishing to tender their shares but who are unable to deliver them physically or by "book-entry transfer" prior to the expiration of the tender offer, or who are unable to make delivery of all required documents to the depositary prior to the expiration of the tender offer, may tender their shares by complying with the procedures set forth in the Offer to Purchase for tendering by notice of guaranteed delivery.  D.F. King & Co., Inc. is serving as information agent for the tender offer and can be reached at (800) 309-2984.  Jefferies LLC and Stifel, Nicolaus & Company, Incorporated are acting as dealer managers.  Computershare Trust Company, N.A. is acting as the depositary for the tender offer.

Contura's board of directors has authorized the tender offer.  However, none of Contura, its board of directors, the dealer managers, the information agent, the depositary or any of their affiliates makes any recommendation to stockholders as to whether to tender or refrain from tendering their shares or as to the price or prices at which stockholders may choose to tender their shares.  No person is authorized to make any such recommendation.  Stockholders must make their own decision as to whether to tender their shares and, if so, how many shares to tender and the price or prices at which their shares should be tendered.  In doing so, stockholders should read carefully the information in, or incorporated by reference in, the Offer to Purchase and the Letter of Transmittal (as they may be amended or supplemented), including the purposes and effects of the offer.  Stockholders are urged to discuss their decisions with their own tax advisors, financial advisors and/or brokers.