This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

CSX, Norfolk Southern Thumped by Patriot Coal Idlings (Update 2)

Stocks in this article: PCXCSXNSC

Update 2 from 3:44 p.m. ET with closing share prices and a CSX spokesman's comment

Update 1 from 2:29 p.m. ET with analyst comments and latest share action

NEW YORK ( TheStreet) -- Patriot Coal's (PCX) decision to idle some of its operations due to an unseasonably warm winter that has smacked thermal coal demand thumped shares of two of its major rail carriers.

Patriot Coal idled some operations at its Rocklick and Wells complexes, where CSX (CSX) and Norfolk Southern (NSC) are the two main transporters of the coal mined there.

Shares of CSX fell to $22.94, down 74 cents, or 3.1%, while Norfolk Southern shares dipped to $76.50, down $1.74, or 2.2% on Friday. Patriot Coal was slammed as its shares slid to $7.87, down $1.15, or 12.8%.

"These production cuts, in conjunction with other cost-reduction measures being implemented concurrently, are aimed at lowering our mining costs, aligning production with identified sales, and preserving high-quality reserves for a stronger market," Patriot Coal said in a statement.

All coal mined at the Rocklick mining complex located in West Virginia has only sold on the metallurgical coal market, and the company said that it would idle two subsidiary-operated production units there.

According to Patriot Coal's Web site, the company expected one of the mines at Rocklick to end its projected life and be closed by the end of last year. It also pointed out that CSX and Norfolk Southern are the two railroads that transport coal from the complex.

"It's not appropriate for Norfolk Southern to comment on this at this time," Dave Pidgeon, Norfolk Southern's public relations manager, said in a phone call.

The Wells complex, which produces thermal as well as metallurgical coal, will idle two contractor-operated mines, according to Patriot Coal. CSX transports the coal to customers from the Wells location in southern West Virginia.

"We do not have any comment at this time," Gary Sease, a CSX spokesman, said in an email.

"We believe that the strong negative reaction to Patriot's announcement is indicative of investors' concerns about more production cuts at other producers in the coming weeks," Jason Seidl, director of rail coverage at Dahlman Rose & Co., said in a note.

Seidl said in his note that Patriot Coal hasn't quantified output reduction, but said that hypothetical declines in export coal volume in 2012 for CSX of 10%, 20% and 30% would have per share downside of 2 cents, 5 cents and 7 cents. Norfolk Southern in the same decline scenario would have per share downside of 8 cents, 16 cents and 24 cents.

Patriot Coal didn't immediately return requests for comment.

-- Written by Joe Deaux in New York.

>Contact by Email.

>Follow Joe Deaux on Twitter. Subscribe on Facebook.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,828.24 +0.49 0.00%
S&P 500 2,067.56 -5.27 -0.25%
NASDAQ 4,791.63 +4.3130 0.09%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs