Logan Bonacorsi - Director of External Affairs John Eaves - Chief Executive Officer Paul Lang - President & Chief Operating Officer John Drexler - Chief Financial Officer & Senior Vice President Deck Slone - Senior Vice President, Strategy and Public Policy

Jeremy Sussman - Clarksons Platou Securities Mark Levin - Seaport Global Securities Lucas Pipes - FBR Capital Markets Paul Forward - Stifel Nicolaus John Bridges - JPMorgan David Gagliano - BMO Capital Markets Daniel Scott - MKM Partners Michael Dudas - Vertical Research Amer Tiwana - Cowen and Company Patrick Marshall - Cowen and Company Wayne Cooperman - Cobalt Capital

Good morning from St. Louis.

Thank you for joining us today. Before we begin, let me remind you that certain statements made during this call, including statements relating to our expected future business and financial performance, may be considered forward-looking statements according to the Private Securities Litigation Reform Act.

Forward-looking statements by their nature address matters that are, to different degrees, uncertain. These uncertainties, which are described in more detail in the annual and quarterly reports that we file with the SEC, may cause our actual future results to be materially different than those expressed in our forward-looking statements.

We do not undertake to update our forward-looking statements whether as a result of new information, future events, or otherwise except as may be required by law. I'd also like to remind you that you can find a reconciliation of the non-GAAP financial measures that we plan to discuss this morning at the end of our press release, a copy of which we have posted in the Investors section of our website at archcoal.com.

Additionally, I would like to call your attention to a couple of changes in our operating segments. Going forward, our Coal-Mac, Arch’s only pure-thermal mine in Appalachia will reside in the other thermal segment.

With this move, we have created a new metallurgical segment which includes all of our coking coal complexes as well as our PCI complex. You will notice for that segment we have broken out our volumes, costs, and average realization results by coal type to deepen the level of detail provided.

On the call this morning, we have John Eaves, Arch's CEO; Paul Lang, Arch's President and COO; and John Drexler, our Senior Vice President and CFO. John, Paul, and John will begin the call with some brief formal remarks and thereafter, we'll be happy to take your questions.

John?

Good morning. It feels good to be back.

As everyone on this call knows 2016 was a transformative year for Arch Coal. In the span of just nine months we completed a sweeping financial restructuring, an exceptionally rapid pace for any measure.

The restructuring has fundamentally reshaped our balance sheet, cut our debt and interest expense to fractions of what they were prior to Chapter 11 process and eliminated another -- a number of other burdensome drags on our performance. We’re a dramatically stronger company today as a result.

During the restructuring process we received great support from our many stakeholders, and particularly from our employees, customers and vendors. I want to thank them all for their patience, commitment and trust.

We are, without a doubt, excited to move past the restructuring and begin a new chapter for our company. In a few minutes, I'll ask John Drexler to walk you through some additional details of the restructuring.

However its many benefits should be apparent to everybody on the call today. Today we reported our first financial results following our emergence achieving fourth quarter EBITDAR of $94.5 million.

In addition we grew our cash position by $84 million during the quarter ending the year with $393 million in cash and short term investment. This performance provides a clear evidence of the strength of our cash generating capabilities going forward.

We fully expect to deliver more of this thing in the future period. I can assure you that the new board considers identifying the most optimal uses for this cash to be a top priority and we will be spending a great deal of time on that topic in the weeks ahead.

For now, however, Arch remains sharply focused on ensuring that we deliver on the company's great potential. So our near term goals are simple: to execute, take full advantage of today's metallurgical markets and prepare for what we expect to be a solid recovery in thermal markets in the relatively near future.

Turning to the marketplace. There's been a dramatic shift in the global met market as you well know.

That shift was driven by several events. First, multi-year period rationalization under investment in the global met supply; second, a long awaited recovery in the global steel markets; and third, policy changes in China that led to supply constraints and higher domestic coking coal prices there.

We believe these events set the stage for a prolonged period of market strength. In recent weeks, international coking coal prices have come down from the highs reached in the fourth quarter.

However we believe these prices should stabilize at levels well above those prevailed for most of last year -- levels that should provide a very healthy margin for a low cost operation. Looking ahead we expect seaborne met markets to continue to grow.

In China, relatively high prices for domestic coking coal and the expected resumption of supply rationalization there should lead to continued robust import levels going forward. In India, the government is seeking to bolster steel output and domestic supply of high quality met coal is in extremely short supply.

And rounding out the picture in Asia we expect moderate increases in demand for seaborne met coal from both Japan and South Korea -- countries where we have cultivated good relationships with customers who value our high quality product. In the West the outlook is favorable as well, with demand growth projected in the United States, Europe and Brazil all of which are key markets for Arch.

Of course, the much improved pricing of recent months would spur a supply response and in fact, it already had. But we believe it will take time for significant volumes to return to the market and when they do we expect much of that volume to be higher cost and lower quality.

That should keep market stronger for longer particularly for the kinds of high quality products that we produce. In particular, we believe the scarcity of high-vol A coal is likely to persist for some time to come.

Roughly 60% of our met output is high-vol A quality, and such products are earning a premium in the marketplace currently. Turning now to the thermal market.

Despite the disappointing winter weather thus far as well as still high generator stockpiles, coal consumption at electric power plants increased by projected 13 million tons or 9% in the fourth quarter compared to the same period a year ago. Moreover the US coal plant stockpiles declined by a projected 35 million tons during 2016 ending the year at just over 160 million tons or 83 days of supply.

That's a sizable reduction and clear evidence that the market is getting fixed. Of course, stockpiles are still well above targeted levels and it could take several more months of stockpile liquidation to bring them in line.

But if natural gas prices hold at recent levels and weather for the remainder of the winter is more or less normal, we could see generators returning to the market in a more significant way by mid-year. Before turning the call over to Paul, let me say again how enthusiastic we are about the company's future prospects.

In the wake of restructuring we are definitely well equipped to compete and excel in our key market segments. We have streamlined and highly competitive operating portfolio, a very clean balance sheet, substantial free cash flow generating capabilities, proven management team and an outstanding workforce.

We're happy to be back and ready to deliver long term value for our shareholders. With that, I'll turn the call over to Paul for a discussion of Arch’s fourth quarter operating performance and marketing outlook for 2017.

Paul?

Thanks, John and good morning everyone. As John stated, we’re a far stronger company today than we were prior to our restructuring.

Even before entering Chapter 11 process, we'd taken aggressive steps to streamline our operating portfolio, cut capital spending and drive down costs in countless ways. As a result of those efforts, we were able to maintain positive cash flow in each of our regions through the very depths of the market cycle, demonstrating the cost competitiveness of our operations.

That was a good story when the markets were at their most challenging point and it's even a better story now as we look to optimize margins in a much improved metallurgical market and in a thermal market that appears to be on its way to an upturn. Our story is particularly compelling in our metallurgical segment where we've maintained an average cash cost below $53 a ton while also achieving significantly higher realizations which internally [ph] the significantly higher sale sensitive costs.

We believe this cost structure places us at the very end of the U.S. cost curve, an accomplishment made more impressive by the fact we also have exceptionally high quality coking coal.

In the Powder River Basin, we delivered an outstanding cost performance as well. Our average cash cost for the quarter was $9.88 per ton which is well below historic level.

Looking ahead we expect our Powder River Basin costs to normalize in the $10.20 to $10.70 range, still quite strong particularly given our plans to operate Black Thunder at 70 million to 80 million ton per year rate. As previously indicated we believe this volume is optimal for the mine given the changes in the marketplace and having completed the difficult task of rightsizing the operation to ensure we can maintain our competitive cost structure at such level.

As discussed, the other thermal segment now includes Coal-Mac which makes the historical comparisons difficult but here too, our cost performance was very solid. During the quarter we benefited from higher run rate at West Elk where we took advantage of the run up to seaborne thermal pricing last quarter and we locked in significant international commitments for the first two quarters of 2017.

Offsetting that benefit to some degree was a reduced volume at Viper. The shortfall was a result of several unplanned maintenance outages at Viper's largest customer, most of which were resolved in early January.

Turning to marketing, we systematically placed a significant volume of metallurgical coal into this resurgent market and strategically layered in some thermal volumes, while maintaining a healthy and committed position. On the metallurgical side, we sold and priced 1.7 million tons of coking coal for 2017 delivery at an average price of around 110 per short ton FOB mine and an additional 1.5 million tons on an indexed base, the majority of the fixed price sales were into the domestic market.

While international pricing has been so much stronger than domestic, we continue to view our domestic customers as highly important to our long term success. Given this, we believe we struck a healthy balance by maintaining a strategic position in the coke blends of domestic mill, while at the same time capitalizing on strong international market.

Moreover our domestic customers provide us with term business which gives us visibility on both volume and price for the full year. We view this positioning as prudent and advantageous for a percentage of our production.

As we look ahead we have about 1.8 million tons of coking coal to sell to achieve the midpoint of our guidance and we continue to have a positive view on metallurgical market. We're targeting the international market for nearly all of this open tonnage.

In addition, we have 1.7 million tons of committed but unpriced sales, all seaborne that will price during the course of the year. While international coking prices have come down from fourth quarter highs, we continue to expect them to stabilize at levels that will provide us with very healthy margins.

In the Powder River Basin, we committed around 11 million tons for delivery in 2017 which reflects a mix of about 70% Black Thunder and 30% Coal Creek at an average price of around $10.90 per ton. In addition, we priced about 700,000 tons of indexed sales for 2017 delivery.

We believe that the current utility stockpile overhang will be with us for a good portion of 2017. Consequently we’ve layered in some tons as part of our risk management strategy.

For the balance of the year we have 12 million to 15 million tons of Powder River Basin coal to sell in 2017 and hope to be placing that tonnage into a strengthening market environment. As for the other thermal segment, we have strong commitments in place that should ensure attractive margins and a significant contribution in 2017.

Along with this, we have a great opportunity to run our West Elk mine at a higher volume level should the international window open again or should domestic demand rally. As we proceed through 2017 we will continue to strategically place tons for the remainder of the current year and to layer in commitments for 2018 as well.

As John indicated, we expect the fundamentals in the domestic thermal market to improve steadily as stockpiles come down and we believe metallurgical market should remain in a healthy balance in the near to intermediate term. Consequently we believe the market environment could set up quite well for 2018.

Finally, we're providing 2017 CapEx guidance, including land and reserves of between $52 million and $60 million. This equates to $0.50 to $0.60 per ton across all of our operations and is a demonstration of our continued discipline in this area as well as the benefit of right-sizing our Powder River Basin operation.

With that, I'll turn the call over to John Drexler for some comments on Arch’s financial position. John?

Thanks, Paul. As John and Paul have described, we are excited to move Arch into a new era.

We are confident that our strategy of focusing on low cost tier 1 assets in key markets combined with the pristine balance sheet that will serve our needs across the full coal market cycle is a strategy that will deliver value for our shareholders for the long term. Arch entered the restructuring process with an exceptional operating portfolio that had already been streamlined and conditioned to succeed in the challenging market environment that prevailed.

Consequently our restructuring process was one that was acutely focused on the balance sheet and uneconomic contract. On October 5, 2016 we exited bankruptcy with significantly reduced debt level, no uneconomic contracts and non-existent take or pay obligations.

In short, we have emerged with a simplified, rightsized balance sheet, abundant liquidity and healthy cash flow. With regard to our capital structure, we eliminated approximately $4.8 billion of debt and $330 million of annual interest expense.

Our remaining low leverage levels consist of a $326 million term loan with a five year maturity along with approximately $37 million of capital lease obligations and equipment financing. The term loan bears interest at LIBOR plus 900 basis points, has no financial maintenance covenant and maybe most importantly is pre-payable at par.

Our total debt is expected to generate approximately $38 million of net interest expense on an annual basis. We also continue to have a $200 million accounts receivable securitization facility.

This facility which we had prior to and through bankruptcy has been instrumental in providing capacity for letters of credit to support a portion of our financial assurance requirement. At December 31, we had $154 million of outstanding LCs and a borrowing base of $83 million associated with the securitization facility, resulting in $71 million of cash that is classified as restricted on the face of the balance sheet.

One other item to note is that Arch successfully managed to transition from self-bonding in Wyoming to a third party surety program. With the successful transition we are no longer utilizing self-bonding at any of our operation.

At December 31, total reclamation bond obligation was $583 million for which we have posted $69 million of collateral, a very manageable level reflecting the strength of our operations and good confidence from our surety providers. With the restructuring we are required by accounting rules to apply fresh start accounting.

In other words, we are required to value each and every asset in liability of the company based on its fair value during the time of bankruptcy. Because the fresh start accounting applied to the financial statements at October 1, the successor financial statements are not comparable to the predecessor financial statements.

In fact, accounting rules restrict us from showing the combined results of predecessor and successor period. Also, as discussed, we have provided a new format to present operational results along with updated guidance that reflects the new format.

We believe the new format is more meaningful and aligns with our strategic direction. Similar to the information we presented at the time of our emergence from bankruptcy, we reconcile this regional information to consolidated EBITDAR.

It should also be noted that in the reconciliation to EBITDAR, the other category consists of a variety of income and expenses with the largest being cost to maintain and reclaim idled operations across our portfolio. I don't plan to reiterate guidance for 2017 which is included in the press release but I will highlight a few items.

One of the biggest impacts of fresh start accounting is the impact of the revised valuation on the company's asset. After the application of fresh start accounting we expect DD&A to be in the range of $124 million to $132 million.

This does not include sales contract amortization which we expect to be between $50 million and $58 million. We expect our SG&A expenses to be between $85 million and $89 million.

This includes $9 million of non-cash equity compensation resulting from equity grants made shortly after emerging. In order to make our metrics comparable to those of our competitors, we have also excluded from the definition of EBITDA the non-cash cost of accretion on our reclamation obligation, that is expected to be between $30 million and $32 million.

As a result of the bankruptcy and the substantial reduction in debt, we utilized a significant amount of our deferred tax asset. Any remaining deferred tax assets have a full valuation applied against them.

Looking ahead, as a result of the continuing benefit the industry receives from percentage depletion as well as the impact of timing differences in utilization of deferred tax assets, we expect to have cash taxes and a tax provision between 5% and 10% in 2017. Longer term over the next several years we expect a similar rate for our provision and cast taxes.

In conclusion, we are excited to have been able to manage through the restructuring process successfully and expeditiously. Our operational platform of large scale, low cost complexes, combined with a clean balance sheet and healthy liquidity puts the company in an enviable position to generate meaningful cash across the full market cycle and to generate substantial value into the future.

With that, we are ready to take questions. Operator I'll turn the call back over to you.

Hey, thanks very much for taking my question. So I mean the past couple of quarters, you mentioned that, have been strange in the sense that domestic market has been well below the international market in terms of pricing.

I guess, first of all, if we assume those markets normalize, what sort of rough percentage of the benchmark should we see you get going forward and do you see -- how do you see these two markets kind of playing out going forward?

Jeremy, certainly the markets have been fairly quiet recently and I couldn't really speak to the spread between the international and domestic. I think when you look at our capabilities we typically look at the Platts East Coast Index.

And when you look at the low-vol right now, I think it's about 171, the high-vol A is about 176, and then the high-vol B is about 150, 151. So we think that’s kind of -- what we look at, as I said, the volumes have been kind of quiet recently but as Paul said in his opening comments, we have tried to keep a pretty healthy balance between the domestic and international markets and try to look for the long term value.

And we think it's healthy to have both of those markets. We said in the past we typically have 40% to 60%in that domestic market and I think that will be the case this year.

But we're pleased with the domestic business we have, we think it's important to have that because as you know, Jeremy, those guys price that volume for the full calendar year, they give us the volume ratably each month which allows Paul and his guys to run their operations more efficiently. So we think a healthy balance is good and if you go back six or eight years, I think all but a couple years of those the pricing in the domestic markets have actually been better than they have in the international market.

So I don't know, Paul if you got anything to add.

Yeah, I think, John, you covered it well. The one thing I would point out, Jeremy, is that I think the perceived differential between domestic and international may have typically been overplayed.

As you think about it, when the domestic customer started coming out last summer, the international prices had yet to run up. So some of the artifact I think people saw or perceived was simply just a result of timing and as the year went on I think that differential closed considerably.

And I think probably more importantly as John said, what our focus is on is really the Platts East Coast pricing anyway.

Jeremy, if you think about the volumes that Paul talked about and then we've got the indexed volumes that are committed but yet unpriced, and then we've got the open tons. So we've got roughly 3.5 million tons that are exposed to the international markets as we move forward.

For all intents and purposes, we don't have any more domestic business that will be put in the bed for 2017, that's all been placed and everything is really dependent on what prices do in the international market.

So that's great color and no doubt this has been a little bit of a strange year and I agree with your comments that historically the domestic market’s actually gotten a bit of a premium. So maybe to that point, still very very good margins of course, what are your priorities for cash?

Would it be a dividend? Would it be share buybacks?

Would it be M&A? The credit markets look like they're open again for coal.

I guess how do you think about all those various options?

Well, Jeremy, let me say I mean we're about four months out of restructuring. So we're just kind of getting our legs under, so we accomplished a whole lot in the first four months.

But we're having serious discussions with our board as you can imagine to be debt reduction, dividends, debt buybacks. I mean those are the focus right now and those will be the discussions that we have with the board over the coming weeks.

And as we make decisions on those various options I'll come back to you guys and keep you updated. But I mean those are kind of the three options that we're focused on and we will make the right business decision and come back to you and keep you updated.

But we do think that we're well positioned to be making those decisions, take the company forward in 2017 and beyond. John, you got anything to add to that?

I think John very well said, always we will be evaluating ways to be generating shareholder value as we move forward.

Hey guys, just a couple of just quick questions. The first is around the remaining 3.5 million tons of met, that have yet to price.

Is that all high-vol A or is that mostly high-vol A?

Mark, as you can imagine majority of that would be high-vol A. I think Paul can probably give you a little bit more detail.

When you look at our portfolio really we've got Beckley which is producing low vol and everything else is either high vol A or high vol B or PCI which we've already placed, so Paul, you want to --

I think I'll give you kind of the best snapshots, it’s about 40% high vol A, about 40% high vol B and 20% low vol.

40% high vol A, 40% high vol B and 20% low vol. Got it.

And then in terms of calculating the netback and the transportation costs, I’ve heard a myriad of different numbers from a lot of different producers. When we try to arrive as analysts back at that -- sort of back at the mine price, is the right transportation cost number $30 a ton, is it lower or is it higher, maybe some help there as well?

As we've discussed in the past, transportation costs, specifically the railroad tend to move with prices. And in general the railroads in our view are trying to maintain I would call the same margin across any increase or decrease.

So as price goes up 20%, we assume rail prices will go up about 20%. And in some instances we've had actual rail agreements that were tied to indexes.

But as you go forward the full year 2017 we expect transportation on our export business will be, I'd call it, in the $25 to $30 range depending on the loadout and the destination and frankly what the index prices are.

That makes sense, that makes sense. And then on the PRB, I know you’ve mentioned 12 million to 15 million tons yet to price and if I look at kind of where you price or what you reported this morning versus maybe where the curve is today, it’s a little bit weaker than that.

But when you think of that 12 million to 15 million tons and I think having priced to $12.50 maybe the curve is weaker than that. Can we assume just based on the tons that you would be -- around where you've priced, where you've previously priced or should we be thinking about something weaker on that 12 million to 15 million tons yet to price?

Let me give you a little color on that. As you look forward or you look at what we priced in Q4, obviously it was a pretty high percentage of the 8400 coal.

So that clearly brought our average down. Now I think if you look across, and look at the differential we were pretty well on the marks through the quarter.

Going forward I think the one advantage we’ll have is that just about everything that remains open for us is out of Black Thunder.

I wanted to follow up on the met coal pricing contract for 2017, appreciate all the detail there. I was wondering if, this table is as of the end of 2016 or is this as of last week, that would be helpful.

That table is, Lucas, was 12/31/16.

And then there was a reference about roughly 35% being indexed tons. Could you maybe give us additional detail as to how much of the export business specifically is indexed tons for 2017, and then give us a flavor in terms of the period that it would cover, is it more back end loaded or are we seeing the price [indiscernible]

As I said in my comments, which is just everything we have remaining and just about all of the remaining open sales as well as the index is all linked to international pricing. It's all for the seaborne market.

And I am sorry, I had trouble hearing your second question.

No, that's fair enough. And then John -- John Eaves, I have a question for you that’s little bit more higher level.

There's been a lot of interest in the market for met coal specifically. You have this dual structure, very big thermal coal position, very large met coal position as well.

When you think about that dual structure, where do you see more opportunity, is it both in met and in thermal, is this maybe more in met? How do you think about this?

Lucas, it’s a good question and you've heard me say a number of times and we've got very two distinct business lines but at the same time they complement each other. And we like our thermal position.

We think we're on the low end of the cost curve. We think there will be demand for those products in any type of regulatory environment and they will do well clearly on the met side, that's really what we've been focused on the last couple years and building out that portfolio.

So I think we like both of the business lines. I think they are important.

We think that they're in areas that there will be solid demand going forward. And I think the unique thing for us is we've been able to generate cash margins even in the most difficult market and we position the company to capture those improving margins as we've seen the markets improve.

And then if you look at our position on the met side in Appalachia we have tremendous organic opportunity to actually replicate what we're doing at Leer. Not that we're in a hurry to do that but clearly in Tygart Valley we've got over 130 million tons, so they are on in sea [ph], they are high vol A quality, we can start operations that are longwallable, its cost structure is comparable to what we're seeing at the Leer operation currently.

So I like our portfolio, I think we're well positioned. I think we've got good access to domestic and international customers, good transportation options.

So we have streamlined this organization over the last three or four years and we think we've got a portfolio that really stand the test of time.

That's very helpful. And maybe one quick follow up on the Tygart Valley.

Would you say those are all growth volumes or some of that replacement volumes to your current met coal production?

Lucas, I didn’t -- what was that?

The question was, as it relates to Tygart Valley, are those growth volumes or is there also some replacement of existing production in the mix of that?

I mean as we look at it now, those would most likely be growth volumes. We are in the process over the next twelve months of getting those permits in place doing mine planning.

Like I said, I mean there's nothing that we're focused on the near term. We just want to make sure if met market is above like we think they will, that we’re in a position to bring that production on at the appropriate time.

Paul, you’ve got anything to add?

The only thing I’d add is, as you know, as John pointed out early on, the quality of coal and demand right now particularly high vol A, and the Tygart reserve is high vol A, and it's a tremendous asset, long term it will be a great growth potential for us.

Good morning and welcome back. Well, just I want to follow up on that last question on capital spending.

I guess you've given a $52 million to $60 million guidance for 2017. Is there any growth spending in that at all?

And is there any ability as these met markets stay strong to consider some deployment of additional capital above that $60 million level to push your met coal volumes toward the high end or above or low end of the range this year?

Paul, obviously this is -- the CapEx is a great story, we've done I think just an outstanding job the team has done the last couple years handling the CapEx situation. As you look at our 2017 spend, we do include costs that are related to some land and reserve acquisitions both in Colorado as well as in West Virginia.

Frankly we're continuing the work on the permitting and the engineering and evaluation of the Tygart Reserve.

And well I guess, Paul, as you think along those lines, when having been through a number of just major ups and downs in the coal markets that have been pretty devastating over the past couple of cycles, I was just wondering how are you ever going to get comfortable with the commitment of the amount of capital that it would take to develop an additional longwall? And I know it's got some pretty appealing features but at the same time the lack of visibility on metallurgical coal pricing means that you can't take a lot of risk on in order to bring a three year project up to speed, if that's how long it takes.

How do you think about that relative to other opportunities, for example, M&A and trying to consolidate this very fragmented U.S. met coal market?

Paul, let me jump in, this is John. And then Paul can tag on.

I think when we look at our Tygart Valley, in particular it's a high vol A product, we think it's going to be low cost. And I think we referenced a couple times the scarcity of premium that we're seeing with that product and as we look around the world, and even with the recent uptick in market and some of the volume that might be coming back on we don't see a whole lot of high vol A coal coming back on over the coming years.

And when we look at our customer base, whether it's in Europe or even in Korea, the high vol A has become a very important component in their blast furnace blends. And we think that will continue and the lack of that product we think will serve us very well going forward.

So as we think about those decisions we're going to be very prudent in spending that kind of capital but certainly I like our position in our portfolio and our cost structure going forward which probably would make that decision a little bit easier for us and maybe kind of figure [ph], Paul?

Yeah, I mean I think, Paul, your question is I think one of the more greater issues we all have going forward on, we've all come through this terrible period. And I think we're going to all be very cautious as we enter into these kind of deals going down the road.

Betting $400 million, $500 million on a five year out met curve is pretty tough. What that means down the road, I think, could be a variety of things but it may mean that the way these are financed or the way they are partnered may not be the same they've been done in the past.

And frankly we've had a lot of those discussions with customers and they're going to continue.

Hi morning everybody. Congratulations on emerging and particularly you're getting the private bonding that's very impressive.

Just following on on the capital. What innovations have you come up with because I'm used to the ideas of $0.50 a ton, sustaining capital on the PRB mines and sold for $5 a ton for your underground mines which doesn't get me to 60 million for the year.

John, I'll give you my perspective. And John can jump in, but we entered the downturn with very well capitalized mines and we had the added benefit of idle equipment and we've been able to deploy -- redeploy a lot of equipment across the company.

The other thing that’s out there is we've been able to buy a tremendous amount of what I'd call partially used equipment, there was a lot of equipment sitting idle throughout the U.S. But I would also tell you that as you look back the last couple of years it's been lost in the numbers but we've been able to run Black Thunder at CapEx levels that were probably about $0.10 to $0.15 a ton.

And as we move forward clearly cash costs are always going to be a main driver in the PRB. But I've been looking at this also from the perspective of cash cost less CapEx And if you look at our numbers we're probably running some of the most enviable numbers in the basin.

John, I think Paul mentioned a redeployment of equipment and when you think back over the last couple years and we've closed over 32 coal mines and we've been able to take a lot of good equipment and redeploy that equipment to existing operation, that served us well and allowed us to keep our capital levels pretty low. And I think not just for ‘17 we think we can do that maybe going into ‘18 as well.

John, look, at some point this is going to revert to a norm but look it's not going to happen in ’16, it may start -- or ’17, and it may start reverting in ’18 but this is going to be a transition of two or three years.

Or do you consider to be a norm then closer to 100?

Yeah I think what you'll see -- if I were to call it -- and I think we had this discussion prior to bankruptcy. Maintenance CapEx for us, a company our size, assuming all things being equal, there's probably about a dollar a ton.

But I’d like to say the sector has been in a downturn now for several years. So it’s surprising that you haven't developed a backlog of things that need to be fixed or replaced.

We've also, John, had the great benefit of down-sizing. If there was a good thing about downsizing Black Thunder, we have the ability to keep CapEx way down.

Great, thank you for taking my question. First of all I would also like to congratulate the team on the Arch side for what’s been a really incredible turnaround for you in terms of navigating the bankruptcy process and emerging with such a strong financial position, really impressive from a corporate perspective in my view.

I have two questions. First on the 3.3 million tons of met coal that actually was already locked in for 2017.

Can you break down the quality of the volumes that are locked in -- that are already locked in and roughly when was that locked in and how much of that is domestic?

So on the locked in business, we have about, I’d call it, about 60% of that was high vol A, about 30% was high vol B and about 10% was low vol. For all intents and purposes we’re sold out on PCI business.

If you recall we entered 2017 or 2016 -- excuse me, 2017 we had a two year deal on about a 1.5 million of met. So we came into the year with a two year deal which was relatively low price in today's market but was real strong twelve months ago.

So as you look at the way most of that coal has been sold, that made up the 1.7 we sold in the fourth quarter. That was pretty well evenly spread through the quarter.

And just how much of -- is there a split between domestic and export for that 1.7? Or is that all domestic or --

No, that 1.7 was predominantly domestic.

All right. Then my follow up question, on the thermal coal side, you did touch on this a bit in your prepared remarks.

And I'm wondering if you can expand a bit more on Arch’s approach, towards contracting unpriced volumes in the PRB moving forward, way back when -- obviously way back when Arch was the, I would argue, the bituminous producer in the PRB. But I think that changed a bit when the balance sheet became strained.

So essentially what I'm wondering now is, now that you have this pristine balance sheet, how do you view the balance between locking in future volumes in the PRB versus exercising the pricing business?

This is John. I’ll let Paul jump in.

I mean we've said, we're not smart enough to catch the tops of these markets. So we need to always be in the market, we think we've focused on our costs, we’ve got those costs in a good area.

And I think it’s up to us to be in the market and participate. I mean we’re going to be selective.

But as Paul said, most of everything that 12 million to 15 million tons that we have to place for 2017, most of that’s from Black Thunder which is our higher Btu mine.

As I look at the last twelve months, these down-sizings are tough, and we did what we had to, to bring Black Thunder into a production range where we could maintain strong costs and not push a lot of tons out the door into a market that just didn't want them. We’ve seen fairly well that right now and I'm very comfortable about our position, we will continue to layer in sales, David, but I think what you see is a pretty effective approach as far as maintaining a good cost structure at the mine.

Want to talk about the stockpile comments you guys made earlier about -- over the next few months before we get back to a normal or I think maybe in the release you said third quarter. What normal is that?

I mean I think back to kind of the most recent data has, is at kind of ten year ago level but that was when we had a billion tons a year burn and now we're down about 30%. So is the new normal -- does that need to be down 30% from the old normal and do we need to be closer to 100 million tons before we can get real pricing respond?

Dan, I mean I think that depends on who you talk to, I guess, as we look at the market. We came in 2016 with almost 200 million tons, we drew that down about 35 million in 2016 and we're coming into the year about 83 days of supply.

We think more normalized level is somewhere in that 55 to 60 day level. And we think with normalized weather I mean we've had a pretty rough start to the winter, certainly here in St.

Louis. But if we get normal weather through the spring and summer, we think about third quarter we actually could be approaching those levels and by the end of the year be in that low 100 level or 55 plus or minus days.

So that's certainly the way we're looking at it, feel like if that happens that, as Paul was saying earlier I mean we will sell into an improving market particularly with the PRB coal.

And Coal Trends [ph] last week there was -- one of the speakers had an interesting observation about reserve lives in the PRB and how the major producers had basically -- it's getting a little shorter and they'd have to start thinking about leases again. At what point do you have to start thinking about that when you look at your capital deployment?

Our last filing which was 12/31/15 we had about 1.3 billion tons in the PRB. If you take the midpoint of our numbers of about in the mid 80s between the two mines of production.

That's 12, 15 years of reserves. Clearly reserve replacement dollar is going to be a big issue but right now it's on the list but it's not on the top of the list.

They implemented a moratorium on leasing. We think over time that probably goes away.

I mean as Paul said, we're in good shape for the next 10, 12 years. Any time you are producing the volumes we are in the PRB, you want to replenish your reserves.

We were fortunate that actually the North High Light LBA was outside that moratorium. So as that comes up sometime in the future certainly we'll take a look at it but we feel good at that 70 million to 80 million ton production level for quite a while.

Could you just also let us know your longwall move schedule is for this year?

Yeah, we have two longwall moves at Leer and Mountain Laurel. The Mountain Laurel longwall moves are in Q1 and Q2, so Leer moves are in Q2 and Q4 and West Elk in Q2.

Good morning gentlemen and Logan.

Hello Michael, how are you?

I'm wonderful. Your comeback has nothing to what the pitch [ph] did it on Sunday.

That's for sure.

We're trying.

I know you are. You lost the football team but gained another coal company.

So two questions, one maybe for Paul. How do you view productivity performance of your major operations, let's call, Leer and say Black Thunder, where they are today, where they've been going through the restructuring?

And is there room for visible improvement as we go forward? And my second question maybe for John is, any thoughts on how Department of Labor is going to handle new -- with the new ministration, how they handle mine inspections and processes et cetera and can that be helpful going forward to Arch in general and/or in particular on the industry in general?

I'll start off with Leer. I'll say I think Leer, as I’ve said in the past is one of those rare mine development one sees in their career.

It came in below cost, its operating costs were below, its productivity has been higher. But with that we're clearly focused on it, I visited the mine a couple weeks ago and the longwall frankly can outrun the development.

And it’s typically at longwall mines but at Leer it's particularly pronounced. And so we're heavily focused on what we could do to improve development rates at Leer and see if we can do to improve productivity overall but that's clearly the key at Leer.

At Black Thunder, we went through this pretty tough downsizing and rightsizing at the mine. We shed about 20% or 25% of our employees and in doing so we were able to also idle back on some of the older smaller shelf.

One of the advantages we'll see going forward besides CapEx and one of the reasons why I think you're seeing costs on a comparative basis, even though volume’s down about 20%, we're still running lower costs than we did historically. We have been able to pull back on some of the older smaller equipment.

Clearly cost and productivity will always be a huge factor in the PRB.

The Department of Labor inspection, I missed the third question.

I guess, it’s going to be better, right?

So Michael, it's Deck. I'm on the line as well.

Deck Slone. We really haven't had any issues -- on the production side really we don't have any significant concerns other than the stream protection rule and that was clearly beneficial.

We saw the Congressional Review Act action and the resolution of disapproval there. That certainly should be helpful.

We thought that was a redundant rule that was going to potentially make permitting lengthier and more challenging without any real benefit. So on the production side I would say that there may be some changes, we really don't have any significant concerns as you know our operations are run exceptionally well.

And so those costs are just part of doing business from our perspective. Clearly on the clean power plan, that's another benefit for us as we look forward and as we think about long term thermal demand.

As John said, the moratorium on federal coal leasing is beneficial but on the production side we've been in a good position there and don't see any real benefits.

Michael, I think the benefit is more long term. I mean the immediate benefit I think is probably pretty minimal.

But if you think about the clean power plan being enacted in the cliff that we've faced as an industry for 2020, 22, I think that's probably gone away now. So we're never going to see probably the coal consumption we saw six or eight years ago, 1.1 billion but I think it's 750 plus or minus going forward and pretty stable.

I think with the asset base we have we should be pretty successful in that environment. So we're pleased with the administration, we hope they continue to be pro-energy and pro-fossil fuel and we’ll see where it ends up.

Hi guys, my question is more general about the met coal space. You guys have put out a presentation when you emerged that there was about 86 million tons of production in 2013, came down to about 56 million in ‘16.

Just in terms of how much of that can potentially come back -- you talked about capital is going to be constrained in the near term. So just in terms of what are the balances here, where do you expect that number to go?

And basically, following up on that, it has put your projection head on and give us some sort of normalized range for met coal rate?

Well, I will take the first piece of that, I might give the second one to Paul. But the slide you are referring to -- yes, since 2013, we've had about 30 million tons of met production coming off in North America.

Those were smaller mid-sized mines, people [indiscernible] they decided they couldn't do it any longer. As we look at that 30 million that came up in that timeframe we think two-thirds of that volume has gone more on a permanent basis.

A lot of mines where they pulled the belt system out, put supporting the roof, that volume is not coming back. As we think about 2017 our forecasts have about 6 million tons coming back this year.

I would say that that's running additional shifts, restarting mines that were on hot idle and then some new mine development. I think the one challenge -- you mentioned capital -- certainly capital is a challenge but I think labor's a challenge as well.

We were talking about it a few days ago in trying to replace about ten people at one of our operations in the east and we're having a lot of trouble finding skilled labor out there. So we think that's going to be pretty indicative in the industry, maybe not just in these but across the industry.

So I think a lot of those people the last downturn started they were going to move on and look to other industries for employment. So I think that will be a challenge but we -- in short we see about 6 million tons coming back in 2017.

Most of that 6 million tons will hit the seaborne met market a little bit, it will hit the domestic. Paul, you want to touch on the pricing?

It’s good to be boss. Look, I think the issue on the pricing going forward was the question I was asked earlier about, how do you justify these projects longer term, and how do you convince the board and shareholders to go out and risk $400 million, $500 million on a four year curve, that’s five years out.

I think what prices are going to have to do is stabilize where, first, we'll get a return on the existing assets and we can argue that number but that's probably somewhere in the 120 to 120, 135 range. Then for new investment that number is going to have to be $10 or $15 higher.

So I think that's kind of my general sense of how I am looking at it.

Hi guys, just one quick housekeeping question. On your committed tonnage, so you had 3.3 million tons this quarter, prior quarter was 2.1 million.

Did the prior quarter include the PCI tonnage?

Yes, it is. Going forward we'll break it out for you.

Two quick questions, just on the way you’ve changed around the reporting, is the only real change due to Coal-Mac out of East and put it in thermal? And if that's true, could you just kind of put some parameters on the size of Coal-Mac and potentially on your 2017 thermal guidance, just break it down between East PRB and other?

And as long as I am talking, but the other question was just your guidance is for $38 million of interest expense yet we have net cash on the balance sheet, I assume that you guys don't plan on leaving all that debt out there all year. Could you talk about that a little bit?

Wayne, this is John Drexler. Couple of good questions; one, the primary difference from how we reported previously was the movement of Coal-Mac into other thermal.

As I described in my prepared remarks there are some other items as we reconcile down below to EBITDAR that take in some idle costs, things like that. But yeah for the vast majority of the change we've moved Coal-Mac into other thermal.

I think we're giving that breakout of the volume commitment on the thermal side, Coal-Mac is roughly 2 million tons a year on an annual basis. And so that's all now included down below.

On your question about the cash and the debt on the balance sheet. As John indicated the management team, the board will be absolutely proactively looking at the opportunities that are out there but clearly aware that we've got debt on the balance, that’s got high interest rate.

And we've got a strong market right now. So we will evaluate everything and do what we think ultimately is generating value for the company moving forward.

I mean is there anything stopping you from just sending all the cash over to the banks tomorrow? It sounds like there's no penalty and you can prepay whatever you want.

Wayne, yes, it’s all prepayable at par. That’s correct.

So my guess my question is what's stopping you from just paying off -- paying it off now with your cash and --

Wayne, I think one thing to make sure that we're going to be prudent in all the actions that we take, and one thing that we need to make sure everyone understands is our liquidity is in the form of cash, right? And so at December 31, we had $393 million of cash on the balance sheet.

We're going to be generating meaningful cash moving forward and in so we're going to be evaluating all of that. But if we were to go pay off all that debt right now, it would leave us with very low levels of cash, very low levels of liquidity if we were to do that today.

Just to be clear that is -- is it an all or nothing thing or could you just -- could you pay off $50 million of the term loan tomorrow if you want to?

We can do portions of it and so clearly, Wayne, we're evaluating all of that and discussing that with our board.

Can I ask a last follow up? Just I think if I take $2 million out of your eastern coal and look at your guidance, it looks a little bit low, am I missing something else because you guys used to do like 12 million or 13 million tons of total Eastern coal?

Wayne, I think all of our guidance is aligned with us pulling Coal-Mac into that other thermal region. So any of the projections that we have in the guidance that we have is broken out between the metallurgical segment which excludes Coal-Mac, PRB and then other -- by two minutes and if you have further questions we can follow up with you offline on that.

End of Q&A

Thank you. I’d like to thank you guys for joining the call today.

We certainly appreciate your interest in Arch Coal. We're excited about the way the company is positioned.

This management team is laser focused on executing and creating long term shareholder value. So we look forward to updating you on our first quarter call in April.

Thank you.