Patriot Coal’s shares surge on rising expectations

Shares of Patriot Coal Corp. surged Wednesday as investors looked past a fourth-quarter loss, partially caused by production interruptions at two West Virginia mines, and focused on an increasingly tight global coal market, which is helping lift U.S. prices for the power plant fuel.

Patriot’s net loss was $57.7 million, or $2.17 per share, compared with $22.7 million in same quarter of 2006. Sales fell about 3 percent to $254.2 million. Creve Coeur-based Patriot was spun off from Peabody Energy Corp. on Oct. 31. The 2006 quarterly results assume Patriot was operated as a standalone company.

Patriot benefitted from certain transactions related to the spinoff, including revenue from the repricing of a coal supply agreement; lower operating costs related to the assumption of retiree health care liabilities by Peabody; and a reduction of selling and administrative costs. On that basis, the net loss was $30.2 million, or $1.14 a share.

Coal shipments fell about 10 percent to 5.1 million tons. But Patriot was helped by higher prices - a trend that company officials see continuing.”The fundamentals driving the U.S. and global coal markets are the best we’ve seen in 30 years,” Chief Executive Richard Whiting said during a conference call with analysts and investors.

Patriot expects to earn 95 cents to $1.30 a share in 2008. Sales are forecast to total 23 million to 25 million tons compared with 22.1 million tons last year.

The coal producer’s shares rose $2.97, or 7 percent, to a new high of $47.48 on the New York Stock Exchange. The stock has gained more than 48 percent since it began trading four months ago.