Arch Coal Inc. Earnings Call Nuggets: Met Coal, Portfolio Management
Shneur Gershuni – UBS: Just a clarification before I start my questions. John, just can you clarify with the financial package everything is actually in place or you just got cross and t’s and dots and i’s with respect to proceeding with everything?
John T. Drexler – SVP and CFO: Shneur, essentially everything is in place. There are some ongoing things to kind of close transactions on the credit amendment. We have received signed agreement commitments from over the majority of the banks that participate on that facility. That process will continue, but at 6% that’s a successful execution so that has been completed. The term loan is fully underwritten and we have signed commitment papers for the underwriting of that given that process –I am limited on what I can say there, but we have described in my comments and in the press release everything we can discuss there. So, yes, everything is in place. As we saw the market continuing to evolve, it was important to us to be proactive and work with the banks and address some of the issues and concerns we saw developing with the markets and as we move forward and we think we’ve been successful in doing that here at this point.
A Closer Look: Arch Coal Earnings Cheat Sheet>>
Shneur Gershuni – UBS: My question, the first is on coal production segment on met coal. You’ve definitely done a sizeable production cut. Obviously it was definitely needed. I doubt that your crystal ball is probably a little murky at this stage right now, but are there any ongoing discussions that still have to be settled or is this guidance cut kind of – your best guess of all the information that you have available or kind of – are we going to go through another round of this later on in the year? And then secondly on met coal, I was wondering if you can talk about the ICO met coal assets, about how they’re performing? Are any of them idled or is it primarily the pullback just on legacy Arch, just given the fact you have the opportunity with the longwall already done at Mountain Laurel?
John W. Eaves – President and CEO: Shneur on the cuts, I mean these decisions are not easily and we’ve gone through every operation we have and taken a pretty thorough look. We think we hopefully made the last cuts. The last call we indicated we had cut about 5 million tons, now we have cut another 20 million tons. A big part of those would be in the PRB. Given the soft demand that we see in that market right now we just don’t think it makes sense, so therefore we’re idling the three draglines during the second quarter. The Eastern thermal market continues to be soft, so we’ve made some further cuts there. No further cuts in Western Bit. We wouldn’t anticipate any additional cuts there. Continue to be encouraged by what we’re seeing in the international market particularly out of our Western Bit. On the met if you remember our midpoint last call was about 9.5 million tons, we pulled that back to 8.25 given the softness we saw first quarter the fact that the longwall in Mountain Laurel was down. We thought that was prudent. If something materializes the back half of the year on the met side we had probably try to take advantage of that. We are seeing capacity factors continue to improve it’s about 81% right now in the U.S., globally it’s about 81%, 82%. We are forecasting about 5%, 6% growth in steel production for the year. So we are cautiously encouraged by what we are seeing on the met market. In terms of your question on the ICG assets, I would tell you if you look at the top four to five properties in terms of cash margins and EBITDA contributions certainly the met mines that we got from ICG are in there. I will talk about Beckley, Sentinel clearly making major contributions to our EBITDA and cash margins. Some of the mines that we have closed in Central App on the thermal side were some of the ICG mines that we just didn’t think made sense in this marketplace. But we are very pleased with the met assets that we have gotten from ICG. The build out that we have got on the Leer mine starting in 2013. We are very excited about it from a cost standpoint, from a quality standpoint, from the ability to access the global markets, as well as the U.S. market. So that’s why as we pull back capital we continue to spend capital on these projects that create real margins. We think the Leer mine is one of those and its going to be a big part of our future.
Mitesh Thakkar – FBR: Can you talk a little bit about, you just mentioned about managing the portfolio and divesting some non-core assets. Can you just talk a little bit about what areas you are looking at, more thermal, met, Illinois based in western bit. How do you think about that.
John W. Eaves – President and CEO: There’s been a lot of room we’ve got in the press. And we just don’t comment on that M&A room versus the stand up in the ranks what I will tell you is that of the last 20 plus years Arch has always looked at their portfolio, we buyers, we are sellers of assets we’ll continue to do that. So if we have a nonstrategic assets, somebody else can come in and provide more value we are willing to potentially monetize that, but it’s always an ongoing process if we don’t get appropriate values we keep those assets. So other than that, we just really wouldn’t care to comment any further on that.
Mitesh Thakkar – FBR: Just looking at your CapEx spend it looks like you are pulling out some more CapEx and are postponing some discretionary spending. How should we think about its impact on some of the growth projects I think as you mentioned in the press release probably Tygart Valley Phase 1 looks like it’s still a goal how should we think about the other projects and where does that CapEx start coming out of.
John W. Eaves – President and CEO: I would tell you right now. We took another $45 million of capital out and the focus is as you said the Leer mine and growing that met supply we pulled back a little bit on some potential continuous minor production in that area but can bring that on fairly quickly. The balance of our capital would be maintenance capital I mean really no meaningful growth capital beyond the Leer mine right now. We would expect to kind of monitor that as we move into 2013 but wouldn’t expect to see major step up in capital as we go into 2013. Given what we see right now but the real focus being on getting the Leer mine production in the market in ’13 get it developed with U.S. and international customers and as you see that happen you are going to see a major step up in our margin expansion as an organization.