Cloud Peak Energy, one of the largest U.S. coal producers and the only pure-play Powder River Basin (PRB) coal company, announced that Cloud Peak Energy Logistics entered into an amended transportation agreement with BNSF Railway to eliminate both parties’ volume obligations for the period 2016 through 2018 in exchange for a series of payments.
Under the amended agreement, Cloud Peak Energy made an upfront payment to BNSF and has the right to make payments from 2016 through 2018 replacing the previous take-or-pay commitments during this three-year period. The aggregate reduction in potential payments if they do not ship any export tons during this three-year period is substantially comparable to the reduction under the export terminal throughput amendment announced in October 2015 by Cloud Peak Energy. Except as amended, the original transportation agreement remains in place through the end of 2024.
The parties will continue to meet regularly going forward to discuss market conditions and any potential shipments and the terms for any shipments. If export shipments do not occur, it is expected that Spring Creek mine production volumes will be reduced accordingly.