CASPER — Wyoming’s third largest coal producer, Cloud Peak Energy, may sell, a fracture in Wyoming coal’s newfound stability after years of layoff s and bankruptcies.

The firm, which employs about 850 miners at the Cordero Rojo and Antelope mines in Campbell County, announced that it had launched a “strategic alternatives” review that would include options like selling the company. Cloud Peak also filed financial reports Tuesday in which the firm outlined plans to potentially double its executives’ compensation between now and 2020 as part of a strategy to retain its leadership team.

CEO Colin Marshal said in a statement Tuesday that Cloud Peak would focus on its operations and revenue while considering its future.

“We will continue to adjust our business to the structural changes in the U.S. coal industry and to position our company for future growth opportunities,” he said.

The company declined to comment on the announcement beyond the press release.

Wyoming’s coal industry faced a dramatic downturn in 2015 and 2016, when three large coal firms filed for bankruptcy. Those companies were lugging billions in debt from chasing the boom in metallurgical coal and the promise of growth in Asian demand. The boom busted and U.S. utilities lurched towards natural gas-fired power, dramatically reducing buyers of Wyoming’s Powder River Basin rock.

While the basin has found a degree of stability since the downturn, the ramifications of a smaller coal market are still being felt across the industry.

Arch Coal announced earlier this year that it would voluntarily cut production at Black Thunder by 10 million tons. Black Thunder is of the largest open surface coal mines in the country.

Cloud Peak, a smaller player in the basin compared to giants like Black Thunder and Peabody Energy, has been responding in its own way.

Unlike the other players in the basin, Cloud Peak did not declare bankruptcy. However, the firm closed offices in Denver and Montana earlier this year to cut costs. It also announced recently that it would cut retiree benefits – a cost saver that protected the firm from a financial loss for the third quarter of 2018. It reported a $30 million loss for the second quarter of the year despite moderate good news on its export side.

Cloud Peak has been a bright spot in Wyoming’s long-time desire for Asian exports. The firm is the only player regularly sending Powder River Basin coal to Asia – from a port in Canada. However, the company does not send coal from its Wyoming mines, Antelope and Cordero Rojo, to the coast.

“It wouldn’t be rational first to dig up lower energy coal from Antelope and take it all the way past Spring Creek to export it,” Marshall said early this year in a call with investors, comparing the Wyoming mine to Cloud Peak’s Montana operation.

Wyoming provides about 30 percent of the country’s thermal coal – coal used for electricity production. Despite improvements since the downturn, when the changing market erased about 1,000 miners and one quarter of annual coal production from the state’s industry, the basin’s newfound stability has not fully incorporated structural changes.

Contura Energy — a spinoff of Alpha Natural Resources bankruptcy — announced in late 2017 that it would sell its Wyoming Eagle Butte and Belle Ayr mines to a small Appalachian firm. The two mines, which produce a lower heat coal than some of their competitors, were considered the crown jewels of the Alpha Natural Resources portfolio.

Wyoming’s Powder River Basin is changing, said Rob Godby, director of the Center for Energy Economics and Public Policy at the University of Wyoming, of the Cloud Peak announcement.

“It’s sort of like the last stages of a monopoly game when the people with the most money and/or best properties start buying up the smaller players to have greater control of the end game,” he said.

For those firms unlikely to be one of the big players, “there’s more value in selling than operating,” he said.

The consideration of a sale also illuminates the company’s decision to cut retiree benefits weeks ago, he noted. It would allow them to erase a liability and sell at a higher price. In the meantime, the company reaps those extra dollars, Godby said.

The market seemed to approve of Cloud Peak’s direction. Cloud Peak’s stock jumped 12 percent after hours Tuesday.

But, Cloud Peak’s financials have been struggling for years, said Clark Williams-Derry, financial analyst for Sightline Institute in Seattle, which advocates a transition to green energy. The company may see bankruptcy looming. In that sense, it’s getting out ahead, he said.

“It seems as if Cloud Peak sees the handwriting on the wall,” he wrote in an email Tuesday. “They have $290 million in debt due within three years, but have no clear plan to pay it off. Their profits are shrinking, costs are rising, sales volumes are falling, and many of the power plants they sell to are closing up shop.”

Williams-Derry also noted Cloud Peak’s direction could be troubling in terms of the Powder River Basin’s coal future, as other firms face the same market pressure that is squeezing Cloud Peak.

“I think we may find that some mines are awfully close to the ‘pain point’ where it costs more to keep them open than it does to close them,” he said.

Cloud Peak also announced on Tuesday that it would end its undrawn credit agreement, essentially a company credit card with an available borrowing limit tied to earnings. Last month, Cloud Peak noted in a call with investors that the credit agreement, once carrying a $400 million limit, had fallen to just $16.2 million.

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