By Heather Richards

July 11, 2018 - The CEO that obtained Wyoming’s Eagle Butte and Belle Ayr coal mines last year is being sued for alleged unpaid royalties in Appalachia, the second lawsuit that Jeff Hoops’ West Virginia-based company, Revelation Energy, is facing in under a year.

Hoops formed Blackjewel LLC, a sister company to Revelation, to take over the Wyoming mines in 2017. The latest lawsuit is one of a number of troubles the Eastern businessman has encountered since becoming one of Wyoming’s coal producers.

According to court documents filed in the Western District of Virginia, Pocahontas Resources LLC is seeking nearly a half million dollars in royalties and interest from Revelation based on allegations Hoops’ firm committed fraud.

Revelation has denied the claims and is seeking $75,000 plus legal fees because the company argues that Pocahontas broke contract first by prohibiting Revelation from building a coal plant on the premises. Without the treatment plant, the coal sold at a lesser value, reducing Revelation’s income by $75,000, the company argues in court documents.

Hoops said in an email that the dispute comes down to how royalties are defined.

“We have paid all royalties that are due on the gross sales price we were paid for the coal,” he said.

Pocahontas asserts Revelation is being underhanded in its reporting of coal sales. It has asked for a slew of documents from Hoops’ company to prove its claim, much of which the company has refused to provide. Pocahontas filed a request to compel Revelation to release that information earlier this month. The judge had not responded as of Tuesday.

Hoops has hit a few snags since arriving in the Powder River Basin.

Blackjewel was delayed in obtaining leases for Eagle Butte and Belle Ayr until Hoops addressed outstanding environmental offenses at his Eastern coal mines. Blackjewel has yet to obtain permits to mine in Wyoming, though Hoops said Blackjewel has the required reclamation bonds in-hand and would seek permits this week, a claim he also made in an email to the Star-Tribune in February.

The Wyoming Department of Environmental Quality has not yet received those applications, a spokesman for the department said Monday.

Blackjewel has dealt with some of its issues of late. Campbell County, where the company owed about $4 million in late taxes on the two mines, received a check from Blackjewel covering that debt Monday, according to the county treasurer’s office.

Revelation is also defending against a lawsuit filed by a Midwestern bank. That suit alleges that Revelation defaulted on its loans and breached a contract by transferring Eagle Butte and Belle Ayr to Blackjewel. According to the bank, Fifth Third Bank of Ohio, the Wyoming mines could be collateral against Revelation’s debt with the bank and should not have been passed to a sister company. Revelation has claimed that it was the bank’s lack of engagement that caused the default.

The 500 miners at Eagle Butte and Belle Ayr have known various owners in the last few years. The mines were once called the crown jewels of Alpha Natural Resources’ portfolio. As a result of Alpha’s bankruptcy in 2016, the mines were obtained by an offshoot of Alpha, newly-formed Contura Energy. A little over a year later, Contura announced that it would unload the mines again and merge with Alpha.

Contura paid Blackjewel more than $20 million to cover upcoming taxes due at the mines. In return, Contura received rights to $50 million in deferred royalty payments from Eagle Butte and Belle Ayr production. The no-cash sale surprised many in the Powder River Basin given the mines’ low price tag in the deal.

Despite headwinds against the coal industry from low natural gas prices, coal-fired plant retirements and increasing renewable energy sources, the sector has stabilized since the downturn. But the success of Wyoming’s mines in the new normal of lower production has been varied. Mines that produce lower heat value coal, like both Eagle Butte and Belle Ayr, are more vulnerable in the new market, Wyoming experts and financial analysts agree.

In an email Monday, Hoops said his company remains committed to the long-term investment it’s made in Wyoming.

“We have increased production and sales into new markets PRB coal has not been sold into in the past,” Hoops said in the email. “We could not be more pleased with our investment and the outstanding team of people at the Blackjewel West Operations.”

Hoops declined to comment on the new markets his company is pursuing for Wyoming coal, but has in the past noted Blackjewel’s partnership with a British marketing firm and a German utility to address the challenging market for coal. 

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