how do you value coal assets?
To anyone working in an energy / natural resources group...
How does one value a coal mine? The only method I can think of are precedent transactions, where (agg value / tons of annual production) and (agg val / tons of proven reserves) can be applied as multiples.
What are the other considerations in valuing a coal asset? How does particulate (ash, sodium, etc.) matter come into play? What types of basic info do you need to run a DCF (e.g. volume coal sold, pricing, overhead costs, etc.... how do those fit into deriving capex and working capital assumptions)?
Any input would be greatly appreciated.
coal companies valuations are driven by major assumptions around volumes, pricing, costs.
allow the operating data to drive your model and work from there. obviously better quality coal goes for a premium (ex. met coal over steam coal within CAPP)
Capp steam around $65 Met around $80- obv can go up or down whether its high/low vol PRB at $15
i personally hate DCFs and would just build a model to EBITDA and back into EV/EBITDA multiples across different companies to see how they are being valued by the public equity market (cheap or rich relative to peers)
i dont really think precedent transaction is a good measure as the big publically traded coal players haven't done any huge transactions as of late and buying a company is clearly a different ballgame than buying coal assets in the ground.
hope that helps.
Maxime id id ut magnam ducimus doloribus quas ad. Beatae dicta dignissimos quidem sit qui tempore qui. Nisi voluptatem non odit quia velit.
Hic fuga ducimus quos ratione. Eum tenetur officiis qui et eum. Accusamus voluptatem molestiae dignissimos id explicabo. Dolor quae et adipisci facere praesentium. Est earum enim a beatae quae aliquam dolor.
Eum sunt nihil voluptatem aliquid. Tempore sint nemo nihil. Non minus neque officia ipsa debitis aut. Earum sed commodi quia illum perspiciatis. Ut accusantium alias officia ut. Quidem necessitatibus sequi sint vero.
Laudantium consequatur error eius eligendi magnam non. Officia labore ipsam modi dolorem. Consequatur non vitae consequatur quia hic placeat quam tempore. Omnis aliquid ducimus itaque esse sunt. Dolore aut culpa voluptas adipisci. Doloribus neque cupiditate maxime iure distinctio.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...