Cloud Peak earnings

A wall of coal towers over a haul truck at the Cordero Rojo mine in Campbell County in 2005.

Cloud Peak Energy reported Wednesday a $205 million loss for 2015, as coal shipments fell and weak prices ate into the company's profits.

The Gillette-based firm is the most financially stable of the publicly traded mining companies in the Powder River Basin. The company has not encountered the concerns over its debt that have plagued Alpha Natural Resources, Arch Coal and Peabody Energy. 

But a historically weak market weighed on Cloud Peak's earnings nevertheless. The deteriorating conditions were particularly evident in the company's export business. 

Slumping Asian demand and a strong U.S. dollar prompted Cloud Peak to write off $53 million in port access rights at three terminals in the Pacific Northwest. Those write-offs were in addition to a $6 million loss on Cloud Peak's stake in the planned Gateway Pacific Terminal in Bellingham, Washington.

The company said it would suspend Asian exports sent through Westshore Terminals in British Columbia during 2016, unless market conditions resumed. Cloud Peak struck a deal with Westshore last year, agreeing to pay for a space at the Canadian docks even as shipments are halted. 

“Westshore is a critical part of our effort to build a viable long-term Asian export business," Cloud Peak CEO Colin Marshall said in a statement. "We value our strong relationship with Westshore and appreciate their willingness to work with us in recognition of extremely depressed international prices. We believe in the long-term opportunity for Asian exports of Powder River Basin coal as oversupplies of seaborne thermal coal are rationalized."

Analysts are increasingly wary of those prospects, however. Two conditions must exist for U.S. producers to make money on Asian shipments, Andy Roberts, an analyst at Wood Mackenzie, wrote in a recent blog post. 

Asian coal demand must exceed the continent's coal supply, or U.S. producers must sell their product for less than their international competitors. Neither looks likely given a strong dollar and a 35 percent drop in Chinese demand for thermal coal used in power generation. 

"Building new Pacific Northwest coal ports, once seen as essential, is now viewed as nothing more than a risky long-term bet," Roberts concluded. 

The domestic market was similarly grim. Cloud Peak executives estimated U.S. coal consumption fell 100 million tons to 750 million tons in 2015, as a warm winter and competition from natural gas and renewables resulted in reduced demand. 

The impact was felt across Cloud Peak's balance sheet. 

Total shipments for 2015 were down 10 million tons to 75 million tons, as Cloud Peak implemented long-planned production cutbacks at its Cordero Rojo mine. 

Revenues declined from $225 million in 2014 to $186 million in 2015. Cash flow from operations was $41.6 million, compared to $98.2 million for 2014.

Cloud Peak executives signaled they expected output to decline further in 2016. The company's guidance estimates mining between 64 million tons and 70 million tons of coal this year.

The earnings were announced after the market closed Wednesday. Cloud Peak shares were down 3.7 percent Thursday to $1.56. 

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Follow energy reporter Benjamin Storrow on Twitter @bstorrow