Atlantic Richfield Co. agreed Monday to sell its coal operations in Utah and Colorado to Arch Coal Inc. for $1.14 billion, making the St. Louis-based company the nation's second-largest coal producer.
The deal comes just nine months after Arch Coal completed a merger with Ashland Coal Inc., and gives it operations in the western United States to complement its actvities in the eastern U.S.With the latest acquisition, Arch Coal will have annual coal sales of close to 110 million tons, or roughly 10 percent of the nation's coal supply, and annual revenues of nearly $2 billion, Arch Coal officials said.
It would be the second biggest U.S. coal producer after Peabody Coal, which is owned by Britain's Energy Group PLC.
Atlantic Richfield will sell its coal operations in Utah and Colorado to Arch and merge its coal operations in Wyoming with Arch's operations in Wyoming under the banner Arch Western Resources LLC.
Arch Western will be 99 percent owned by Arch Coal and 1 percent owned by Atlantic Richfield.
Steven F. Leer, Arch Coal's president and chief executive, said the deal would make Arch better able to meet growing demand from electric utilities to compete in a deregulated marketplace.
The deal must still be approved by federal regulators and shareholders. The transaction is expected to close before July.
Atlantic Richfield's U.S. coal operations include Thunder Basin Coal Co. LLC; Mountain Coal Co. and a 65 percent interest in Canyon Fuel Co. LLC.
In 1997, Arco's U.S. coal operations generated revenues of $537 million. Its domestic coal reserves are estimated at 1.3 billion tons.
Arch Coal's domestic coal reserves are estimated at 2.1 billion tons.