By Taylor Kuykendall

The market value of most publicly traded U.S. coal companies has begun to contract again after a short-lived rebound from a recent free fall.

According to an SNL Energy analysis, the total market capitalization of 14 major publicly traded coal companies is about $25.76 billion. Excluding Foresight Energy LP, which became a publicly traded company after SNL Energy's last analysis of coal company market capitalization in April, major public producers' market value has fallen about 3.8% to $23.31 billion.

The continued decline follows a steep drop from April 2011 when current publicly traded coal companies were valued at $64.00 billion. Despite a slight rebound between July 2013 and April, the coal companies' aggregate market value remains 63.6% lower than it was in April 2011.

The loss in market value — about $40.69 billion — at the current publicly traded coal companies excluding Foresight, is larger than the gross domestic product of several small countries, such as Yemen, Jordan and Tanzania.

The domestic coal industry suffers from a number of challenges including regulatory uncertainty, competition from natural gas, declining productivity, weak pricing and the effects of an overall sluggish economy. The result has been increased layoffs as companies idle mines, cut costs and reduce their capital investment in new projects.

Companies that bet big on Central Appalachia or metallurgical coal are having a particularly difficult time as Illinois Basin coal is capturing market share from Central Appalachia and thermal coal and global met coal prices languish. James River Coal Co. and Patriot Coal Corp., both major Central Appalachia producers turned to Chapter 11 bankruptcy reorganization over the challenges hitting the industry.

The largest market capitalization decline since April was at Arch Coal Inc. where market value dropped 36.8% from $1.06 billion to $666.6 million as of Aug. 14. The company recently reported a net loss of $96.9 million in the second quarter and said it was pulling back on its 2014 coal sales volume projections. On their second-quarter earnings call, the company focused on its efforts to control its costs and withstand ongoing market concerns.

"We have positioned the company well to withstand the cyclical downturn and provide substantial upside as markets recover," Arch CEO and President John Eaves said. "As our second-quarter results demonstrate, we are taking aggressive steps to control costs and improve operational efficiencies. We're also focused on managing our liquidity position and reshaping our operating mine portfolio to a smaller and more sustainable low cost platform."

Mitesh Thakkar, an analyst with FBR Capital Markets & Co. wrote in a July 30 note that Arch has a number of reserves that provide the company growth opportunity as well as potential to monetize its assets to accelerate value creation.

"While the commodity markets remain unsupportive, management continues to improve its operations and position for an eventual recovery," Thakkar said. "We remain cautiously optimistic on an eventual recovery in the metallurgical coal market and ACI's ability to navigate the tough challenges given its liquidity position."

Oxford Resource Partners LP's market value declined another 29.8% since April, to just $20.2 million. The company reported a net loss of $3.4 million in the second quarter. BB&T Capital Markets recently dropped coverage of the company, citing the decline of its per-share value and uncertainty related to the company's long-term liquidity sources.

Following large growth in market value from July 2013 to April, Cloud Peak Energy Inc.'s value fell back down to below $1 billion by August. The company's market capitalization slid 28.5% to $937.1 million.

Alpha Natural Resources Inc., which recently announced it was planning a major restructuring of its Central Appalachia coal operations in West Virginia, has said it is preparing for a " perfect storm" in coal markets. Alpha, with a portfolio heavy with Central Appalachia assets, has lost about 10.4% of its market value since April. Since April 2011, Alpha's value has slid from $7.28 billion to $857.0 million, a decline of 88.2%.

BB&T analyst Mark Levin wrote in an Aug. 8 note that Central Appalachia steam coal will "shrink away in the coming years" and the company will only have one low-cost, cash-producing longwall left in Northern Appalachia by the end of 2015. Levin said that for Alpha, "it's all about met prices."

Rating the company as "hold," Levin noted that there could be some opportunity if met coal prices improve, though a recovery is not expected soon. He said BB&T estimates Alpha has at least 2.5 years of real cash on the balance sheet at zero EBITDA.

Bucking the downward trend in market capitalization was at Westmoreland Coal Co., which recently purchased a new set of Canadian coal mines formerly held by Sherritt International Corp. The company's market value swelled 60.5% to $728.4 million since April. Brean Capital LLC analyst Lucas Pipes recently called the company "a highly attractive investment" within the coal industry.

Illinois Basin coal-producer Hallador Energy Co., in the midst of acquiring Vectren Corp.'s coal mining assets, also saw its market value grow since April. The company's market capitalization grew 54.3% to $401.1 million.

Pipes encouraged investors to accumulate shares of Hallador on any weakness that may have resulted from the company missing its second quarter earnings estimate.

"Overall, on the company's solid cash-flow from its Illinois Basin operations and the upside from the pending acquisition of Vectren Fuels coal mines, we believe that Hallador continues to trade at an attractive valuation," Pipes wrote in the Aug. 4 note.

Rhino Resource Partners LP, Natural Resource Partners LP and Alliance Resource Partners LP all maintained roughly flat market value since April.

The two largest companies by market value — CONSOL Energy Inc. and Peabody Energy Corp. — both have declined only slightly in market value since April. CONSOL, by far the largest company by market value at $9.20 billion, is also a major natural gas producer.

"Recent financial metrics illustrate our strategic shift in practice, specifically if you take a look at EBITDA from 2013 compared with early 2014," said Kate O'Donovan, a spokeswoman for CONSOL. "In 2013, EBITDA was roughly 68% coal versus 32% gas. In Q1 2014, it was roughly 50/50 and is expected to continue to shift toward gas moving forward. Our mix of natural gas and coal assets provides us tremendous optionality and flexibility to respond to shifting market demands."

Billionaire investor George Soros recently opened a $234.4 million equity stake in the company through his Soros Fund Management LLC fund. The company recently sold a number of its coal operations in West Virginia to Murray Energy Corp., but maintains some of the top-producing coal mines in both Central and Northern Appalachia.

"The coal assets that were retained within CONSOL Energy following our recent strategic shift are best-in-class and built to compete for the long term," O'Donovan told SNL Energy. "They are fully capitalized and some of the safest, lowest cost, most productive and profitable mines in the world."

Thakkar wrote in a July 31 note that CONSOL has done a good job of accelerating value creation by monetizing some of its assets since 2010.

"We continue to believe that sum of the parts is the right approach to CNX's valuation given the significant growth inscribed in its gas business and the company's commitment to pull forward that growth," Thakkar wrote. "However, many investors remain concerned on its valuation relative to its coal peers. … We believe this premium is well deserved given (a) CONSOL's growing gas exposure, (b) more stable earnings profile, and (c) more conservative balance sheet relative to peers."

Peabody, the top public coal company by market value in April 2011 at $19.68 billion, has slid to a market cap of $4.32 billion as of Aug. 14. The company mines coal from the Powder River Basin in Wyoming, among other regions, and in recent quarters has been struggling with ongoing railroad bottlenecks affecting its coal shipments.

Walter Energy Inc., primarily a met coal operator, saw its market cap shrink about 6.8% to $422.6 million since April. A Walter executive recently said that the oversupplied met coal market may come into balance soon and that he does not foresee additional "large chunks" of met coal cuts being necessary.