There's been nowhere for coal companies to hide ever since the price of natural gas fell off a cliff as 2012 approached. Coal companies have been waiting for an inflection point and are hoping it's finally arrived, as natural gas prices close in on $4 per million BTU.
At this price, coal in both the Powder River and Illinois basins should now be economically viable for utilities to use. Peabody Energy is a leading producer in both regions, so any continuation in natural gas' price momentum will add to coal's resurgent competitiveness.
Why focus solely on the North American market? That's a question Peabody asked itself a while back, and it's clear they couldn't come up with a reason. Record exports from the U.S. in 2012 helped buoy the company's financial performance, and if it can combine a growing Asian market with increased U.S. demand, investors could finally start to be rewarded.
The Fool's Taylor Muckerman has more in the following video.
Exports and low-cost domestic production will determine Peabody's fate
The coal industry in the United States has been in a state of flux since the drop in natural gas prices. Exports are becoming a much bigger part of the domestic coal landscape, and Peabody Energy has deals in place to get its cheaper coal from the Powder River and Illinois basins to India, China, and the EU. For investors looking to capitalize on a rebound in the U.S. coal market, The Motley Fool has written a special new premium report detailing why Peabody Energy is perhaps most worthy of your consideration. Don't miss out on this invaluable resource -- simply click here now to claim your copy today.
This article was originally published as Will "King Coal" Benefit From Rising Natural Gas Prices?on Fool.com
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