Massey Energy blames regulators for expected third-quarter loss, lower profit

Massey warns of impending third-quarter loss

CHARLESTON, W.Va. — Massey Energy Co. warned investors to brace for another quarterly loss Thursday, citing tougher enforcement by federal regulators following the deadly explosion at the company’s Upper Big Branch mine.

Massey said it expects to ship 39 million tons of coal at an average of $71 a ton this year. That’s at the low end of estimates provided in late July. Costs are expected to average $60 a ton — the high end of estimates.

The company blamed its problems on stricter enforcement by the Mine Safety and Health Administration following the April 5 explosion, which killed 29 miners and injured two. The blast was the deadliest in a U.S. coal mine since 1970 and is the subject of criminal and civil investigations.

“Our operations have continued to struggle since April,” Massey Chief Executive Don Blankenship said in a statement. “Increasingly stringent enforcement actions by MSHA across our operations and throughout the Central Appalachian region have resulted in lost shifts and loss of productivity.”

Massey also has been unable to produce coal at its Revolution mine in West Virginia since June. The company said it has been waiting for MSHA to approve a new ventilation plan. Revolution uses a highly productive longwall mining machine — the same type of equipment used at Upper Big Branch — to produce about 1.3 million tons of higher-priced metallurgical coal used to make steel.

“As a result of these and other factors, we now expect our third quarter shipments to approximate 10 million tons and we expect to report an operating loss for the quarter,” Blankenship said. Massey lost $88.7 million, or 88 cents per share, in the second quarter.

Analysts surveyed by Thomson Reuters expected, on average, Massey to earn 36 cents per share in the third quarter this year. Richmond, Va.-based Massey is scheduled to release third-quarter results on Oct. 15.