8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 4, 2011

WESTMORELAND COAL COMPANY

(Exact name of registrant as specified in its charter)

Delaware	001-11155	23-1128670
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2 North Cascade Avenue, 2nd Floor, Colorado Springs, CO	80903
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (719) 442-2600

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On August 4, 2011, Westmoreland Coal Company (the “Company”) issued a press release announcing its financial results for the three months ended June 30, 2011. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

On August 4, 2011, beginning at 10:00 a.m. Eastern Time, the Company hosted a conference call with investors to discuss the Company’s financial and operating results for the three months ended June 30, 2011. The conference call was made available to the public via conference call and webcast. The transcript of the conference call is attached hereto as Exhibit 99.2.

The information in this Current Report on Form 8-K and the Exhibits attached hereto are being furnished and shall not be deemed “filed” for purpose of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

Exhibit No.		Description
	99.1	Press Release dated August 4, 2011
	99.2	Transcript of Investor Conference Call

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	WESTMORELAND COAL COMPANY
Date: August 8, 2011	By:	/s/ Kevin A. Paprzycki
		Kevin A. Paprzycki,
		Chief Financial Officer (a duly authorized officer)

EXHIBIT INDEX

Exhibit No.		Description
	99.1	Press Release dated August 4, 2011
	99.2	Transcript of Investor Conference Call

EX-99.1

EXHIBIT 99.1

Westmoreland Coal Company	2 N. Cascade Ave., 2nd Floor
(719) 442-2600 — Telephone	Colorado Springs, CO 80903

Westmoreland Reports
Second Quarter 2011 Results

Colorado Springs, CO — August 4, 2011 — Westmoreland Coal Company (NasdaqGM:WLB) today reported its second quarter results for 2011.

Highlights:

• Q2 2011 coal tons sold decreased 1.7 million tons from Q2 2010 due to the effects of a prolonged hydro-electric season, flooding in Montana and North Dakota, and the expiration of an unprofitable coal contract in December 2010.

• Operating income decreased $2.3 million from $1.3 million in Q2 2010 to an operating loss of $1.0 million in Q2 2011. Year to date 2011 operating income was $6.4 million compared to 2010 year to date operating income of $6.6 million.

• Adjusted EBITDA decreased $2.2 million during Q2 2011 to $14.2 million as compared to $16.4 million in Q2 2010. Year to date 2011 Adjusted EBITDA was $37.5 million compared to year to date 2010 Adjusted EBITDA of $37.6 million.

• Net loss applicable to common shareholders of $7.7 million ($0.59 per basic and diluted share) for Q2 2011 compared to Q2 2010 net income of $0.9 million ($0.09 per basic and diluted share). Second quarter 2010 net income included $4.3 million of income on a fair value adjustment for the conversion feature in the Company’s convertible debt. Year to date net loss for 2011 was $25.7 million compared to a year to date 2010 net loss of $2.3 million. The 2011 net loss includes $17.0 million in charges related to the refinancing of debt in February 2011 and $3.2 million of expense on the conversion feature’s fair value adjustment.

• Westmoreland again continued its strong safety performance achieving reportable and lost time incident rates approximately 38.5% and 45.2%, respectively, of the national averages for surface operations for the second quarter of 2011.

• During the second quarter of 2011, Westmoreland’s Beulah Mine received the Rocky Mountain Coal Mining Institute Surface Mine Safety Award, small mine category, for the surface mine with the lowest reportable rate of incidents in the eight-member state region.

“The story of the quarter was water; unprecedented amounts of it,” said Keith E. Alessi, Westmoreland’s President and CEO. “Record snow pack in the Cascade Mountains led to one of the longest hydroelectric seasons in history and negatively impacted sales at three of our mines. Year to date we estimate that we experienced a volume reduction of 1.5 million tons as a result of these conditions. In addition, late in the quarter, historic flood levels were experienced in North Dakota which disrupted rail service out of our WRI mine. These conditions have now abated and we expect our tonnage sales to return to normal during the third quarter. During the quarter our power operation performed extremely well and we did an excellent job of managing controllable costs.”

“We are very pleased with the continuation of our strong safety performance during the second quarter of 2011. We again beat the national surface mine averages and take great pride in the Beulah Mine receiving the Rocky Mountain Coal Mining Institute Surface Mine Safety Award.”

Westmoreland’s second quarter 2010 income included $4.3 million of income from the fair value adjustment on the conversion feature in the Company’s convertible debt. Excluding the fair value adjustment, second quarter 2011 net loss increased by $4.4 million. 2011 year to date net income includes $17.0 million of charges related to the refinancing of debt in February 2011 and $3.2 million of expense on the conversion feature’s fair value adjustment. 2010 year to date net income includes $0.5 million of expense on the fair value adjustment of the conversion feature. Excluding those items, net loss increased by $3.7 million.

The Company’s revenues in Q2 2011 decreased to $112.1 million compared with $127.6 million in Q2 2010. This revenue decrease was driven by lower tonnage sales due to the unusually long hydroelectric season, the flooding conditions, and the December 2010 expiration of an unprofitable coal contract.

Westmoreland’s Adjusted EBITDA decreased to $14.2 million in Q2 2011 from $16.4 million in Q2 2010.

Coal Segment Operating Results

The following table summarizes the Company’s Q2 2011 and Q2 2010 coal segment performance:

	Three Months Ended June 30,
					Increase / (Decrease)
	2011		2010		$			%
Revenues (in thousands)	$	90,776	$	106,458	$	(15,682	)		(14.7	)%
Operating income (in thousands)		2,080		5,721		(3,641	)		(63.6	)%
Adjusted EBITDA (in thousands)		13,906		17,675		(3,769	)		(21.3	)%
Tons sold — millions of equivalent tons		4.4		6.1		(1.7	)		(27.9	)%
Operating income per ton sold	$	0.47	$	0.94	$	(0.47	)		(50.0	)%

Westmoreland’s coal revenues for the second quarter of 2011 decreased to $90.8 million compared with $106.5 million in the second quarter of 2010. This $15.7 million decrease was primarily due to favorable hydropower conditions, which displaced Westmoreland’s customers’ coal-generated power. Coal revenues also decreased due to flooding conditions which disrupted rail service to the Absaloka Mine and the expiration of an unprofitable coal contract at the Rosebud Mine.

The Company expects the hydropower conditions impacting its operations to return to normal during the third quarter of 2011.

Power Segment Operating Results

The following table summarizes the Company’s Q2 2011 and Q2 2010 power segment performance:

	Three Months Ended June 30,
					Increase / (Decrease)
	2011		2010		$		%
	(In thousands)
Revenues	$	21,364	$	21,174	$	190		0.9	%
Operating income		2,450		1,307		1,143		87.5	%
Adjusted EBITDA		5,363		4,002		1,361		34.0	%
Megawatts hours		402		368		34		9.2	%

The Company’s power segment revenues for the second quarter of 2011 increased to $21.4 million compared to $21.2 million in second quarter 2010. This $0.2 million increase is primarily from increased megawatt hours sold as a result of shorter planned outages.

Power segment operating income increased to $2.5 million in Q2 2011 compared to $1.3 million in Q2 2010 due to decreased maintenance costs.

Heritage Segment Operating Results

The Company’s second quarter 2011 heritage operating expenses of $3.8 million are comparable to the operating expenses for the second quarter of 2010.

Corporate Segment Operating Results

The Company’s corporate segment operating expenses for the second quarter of 2011 of $1.7 million is comparable to $1.9 million in the second quarter of 2010.

Nonoperating Results

The Company’s interest expense for the second quarter of 2011 increased to $7.6 million compared with $5.8 million for the second quarter of 2010. This increase was primarily due to the issuance of the Company’s new notes in February 2011.

The Company’s other income for the second quarter of 2011 decreased to $0.2 million compared with $4.7 million of income for the second quarter of 2010. Excluding the $4.6 million impact of the fair value adjustment on derivatives, other income increased $0.2 million primarily due to gains on sales of securities during the second quarter of 2011.

Cash Flow from Operations and Liquidity

Cash provided by operating activities increased $4.5 million in the six months ended June 30, 2011 compared to the six months ended June 30, 2010, primarily due to favorable changes in working capital.

Safety

Safety performance at Westmoreland mines continued to be significantly better than the national average for surface operations.

	Reportable		Lost Time
Westmoreland Coal		0.75		0.57
National Surface Mine Average		1.95		1.26

Conference Call

A conference call regarding Westmoreland Coal Company’s second quarter 2011 results will be held on Thursday, August 4, 2011, at 10:00 a.m. Eastern Time. Call-in instructions are available on the Company’s web site and have been provided in a separate news release.

Additional Information

Westmoreland Coal Company is the oldest independent coal company in the United States. The Company’s coal operations include coal mining in the Powder River Basin in Montana and lignite mining operations in Montana, North Dakota and Texas. Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina. For more information visit www.westmoreland.com.

Cautionary Note Regarding Forward-Looking Statements

This news release contains “forward-looking statements.” Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods. Examples of forward-looking statements include, but are not limited to the Company’s expectation that its tonnage sales will return to normal during the third quarter and that hydropower conditions impacting its operations will return to normal during the third quarter of 2011.

Forward-looking statements are based on the Company’s current expectations and assumptions regarding its business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. The Company’s actual results may differ materially from those contemplated by the forward-looking. The Company cautions you therefore against relying on any of these forward-looking statements. They are statements neither of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include political, economic, business, competitive, market, weather and regulatory conditions and the following:

• changes in the Company’s postretirement medical benefit and pension obligations and the impact of recently enacted healthcare legislation;

• changes in the Company’s black lung obligations, changes in the Company’s experience related to black lung claims, and impact of the recently enacted healthcare legislation;

• the Company’s potential inability to expand or continue current coal operations due to limitations in obtaining bonding capacity for new mining permits;

• the Company’s potential inability to maintain compliance with debt covenant requirements;

• the potential inability of the Company’s subsidiaries to pay dividends to them due to restrictions in the Company’s debt arrangements, reductions in planned coal deliveries or other business factors;

• the Company’s potential inability to enter into new coal supply agreements with existing customers due to the unfavorable result of competitive bid processes or the shutdown of a power facility due to new environmental legislation or regulations;

• risks associated with the structure of ROVA’s contracts with its lenders, coal suppliers and power purchaser, which could dramatically affect the overall profitability of ROVA;

• the effect of Environmental Protection Agency inquiries and regulations on the operations of ROVA;

• the effect of prolonged maintenance or unplanned outages at the Company’s operations or those of its major power generating customers, including unplanned outages at its customers due to the impact of weather-related variances;

• future legislation and changes in regulations, governmental policies and taxes, including those aimed at reducing emissions of elements such as mercury, sulfur dioxides, nitrogen oxides, particulate matter or greenhouse gases; and

• the other factors that are described in “Risk Factors” in the Company’s Form 10-K for fiscal year 2010.

Any forward-looking statements made by the Company in this news release speaks only as of the date on which it was made. Factors or events that could cause the Company’s actual results to differ may emerge from time-to-time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law.

# # #
Contact: Kevin Paprzycki (719) 442-2600

Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Operations (Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In thousands, except per share data)
Revenues	$	112,140		$	127,632		$	239,904		$	254,071
Cost, expenses and other:
Cost of sales		91,289			104,481			188,799			202,158
Depreciation, depletion and amortization		11,004			11,078			22,249			22,471
Selling and administrative		9,035			9,673			18,340			19,648
Heritage health benefit expenses		3,441			3,394			7,219			7,309
Loss (gain) on sales of assets		241			19			324			90
Other operating income		(1,870	)		(2,346	)		(3,467	)		(4,252	)
		113,140			126,299			233,464			247,424
Operating income (loss)		(1,000	)		1,333			6,440			6,647
Other income (expense):
Interest expense		(7,645	)		(5,767	)		(14,612	)		(11,490	)
Loss on extinguishment of debt		—			—			(17,030	)		—
Interest income		329			367			711			777
Other income (loss)		240			4,726			(2,777	)		891
		(7,076	)		(674	)		(33,708	)		(9,822	)
Income (loss) before income taxes		(8,076	)		659			(27,268	)		(3,175	)
Income tax benefit from operations		(161	)		(47	)		(621	)		(137	)
Net income (loss)		(7,915	)		706			(26,647	)		(3,038	)
Less net loss attributable to noncontrolling interest		(508	)		(553	)		(1,630	)		(1,443	)
Net income (loss) attributable to the Parent company		(7,407	)		1,259			(25,017	)		(1,595	)
Less preferred stock dividend requirements		340			340			680			680
Net income (loss) applicable to common shareholders	$	(7,747	)	$	919		$	(25,697	)	$	(2,275	)
Net income (loss) per share applicable to common shareholders:
Basic	$	(0.59	)	$	0.09		$	(2.01	)	$	(0.21	)
Diluted		(0.59	)		0.09			(2.01	)		(0.21	)
Weighted average number of common shares outstanding:
Basic		13,200			10,654			12,789			10,588
Diluted		13,200			10,704			12,789			10,588
Net income (loss) (from above)	$	(7,915	)	$	706		$	(26,647	)	$	(3,038	)
Other comprehensive income (loss):
Amortization of accumulated actuarial gains or losses, pension		385			436			770			664
Amortization of accumulated actuarial gains or losses and transition obligations and prior service costs, postretirement medical benefits		(72	)		(70	)		(144	)		(138	)
Tax effect of other comprehensive income gains		(57	)		—			(167	)		—
Unrealized and realized gains and losses on available-for-sale securities		(161	)		(108	)		(191	)		(607	)
Comprehensive income (loss)	$	(7,820	)	$	964		$	(26,379	)	$	(3,119	)

See accompanying Notes to Consolidated Financial Statements.

Westmoreland Coal Company and Subsidiaries
Summary Financial Information (Unaudited)

	Six Months Ended June 30,
	2011			2010
	(In thousands)
Cash Flow
Net cash provided by operating activities	$	24,320		$	19,848
Net cash used in investing activities		(14,477	)		(7,896	)
Net cash provided by (used in) financing activities		26,120			(11,785	)

	June 30,			December 31,
	2011			2010
	(In thousands)
Balance Sheet Data (Unaudited)
Total assets	$	772,369		$	750,306
Total debt	$	290,669		$	242,104
Working capital deficit	$	(8,641	)	$	(35,793	)
Total deficit	$	(180,207	)	$	(162,355	)
Common shares outstanding		13,237			11,161

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In thousands)
Adjusted EBITDA by Segment
Coal	$	13,906		$	17,675		$	35,191		$	37,913
Power		5,363			4,002			12,715			10,883
Heritage		(3,817	)		(3,761	)		(7,987	)		(8,016	)
Corporate		(1,204	)		(1,532	)		(2,387	)		(3,167	)
Total	$	14,248		$	16,384		$	37,532		$	37,613

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In thousands)
Reconciliation of Adjusted EBITDA to net loss
Net income (loss)	$	(7,915	)	$	706		$	(26,647	)	$	(3,038	)
Income tax benefit from continuing operations		(161	)		(47	)		(621	)		(137	)
Other loss (income)		(240	)		(4,726	)		2,777			(891	)
Interest income		(329	)		(367	)		(711	)		(777	)
Loss on extinguishment of debt		—			—			17,030			—
Interest expense		7,645			5,767			14,612			11,490
Depreciation, depletion and amortization		11,004			11,078			22,249			22,471
Accretion of ARO and receivable		2,700			2,837			5,400			5,840
Amortization of intangible assets and liabilities		164			151			327			236
EBITDA		12,868			15,399			34,416			35,194
Loss on sale of assets		241			19			324			90
Share-based compensation		1,139			966			2,792			2,329
Adjusted EBITDA	$	14,248		$	16,384		$	37,532		$	37,613

EBITDA and Adjusted EBITDA are supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. EBITDA and Adjusted EBITDA are included in this news release because they are key metrics used by management to assess the Company’s operating performance and the Company believes that EBITDA and Adjusted EBITDA are useful to an investor in evaluating the Company’s operating performance because these measures:

• are used widely by investors to measure a company’s operating performance without regard to items excluded from the calculation of such terms, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors; and

• help investors to more meaningfully evaluate and compare the results of the Company’s operations from period to period by removing the effect of the Company’s capital structure and asset base from its operating results.

Neither EBITDA nor Adjusted EBITDA is a measure calculated in accordance with GAAP. The items excluded from EBITDA and Adjusted EBITDA are significant in assessing the Company’s operating results. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation from, or as a substitute for, analysis of the Company’s results as reported under GAAP. For example, EBITDA and Adjusted EBITDA:

• do not reflect the Company’s cash expenditures, or future requirements for capital and major maintenance expenditures or contractual commitments;

• do not reflect income tax expenses or the cash requirements necessary to pay income taxes;

• do not reflect changes in, or cash requirements for, the Company’s working capital needs; and

• do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on certain of the Company’s debt obligations.

In addition, although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. Other companies in the Company’s industry and in other industries may calculate EBITDA and Adjusted EBITDA differently from the way that the Company does, limiting their usefulness as comparative measures. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to the Company to invest in the growth of its business. The Company compensates for these limitations by relying primarily on its GAAP results and using EBITDA and Adjusted EBITDA only as supplemental data.

EX-99.2

EXHIBIT 99.2

Transcript of
Westmoreland Coal (WLB)
Investor Conference Call
August 4, 2011

Participants
Keith E. Alessi, President and Chief Executive Officer
Kevin A. Paprzycki, Chief Financial Officer
Douglas P. Kathol, Executive Vice President

Presentation

Operator

Good morning ladies and gentlemen and welcome to the Westmoreland Coal Investor teleconference. At this time, all telephone participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press *0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Keith Alessi, President and Chief Executive Officer. Thank you, sir. You may begin.

Keith Alessi – Westmoreland Coal Company – President & CEO

Good morning and welcome to the Q2 call. Most of you have had a chance to review the press release that went out this morning along with our earnings and I would like to give you some color on those results and then of course open it up for questions. With me this morning I have got Doug Kathol our EVP and Kevin Paprzycki our CFO as well as Jen Grafton, our General Counsel if you have any questions you would like to direct to them. As noted in the press release and as previewed when we chatted about our first quarter results, the story of the quarter really turned out to be the high growth season in the North West. We saw record snow pack in the Cascades. I saw last week that the last ski resort in the Sierras just closed last week. The latest in the season that that has ever occurred and that had the effect of essentially taking the largest facility that we service, the Colstrip plant, offline for the entire quarter. When we chatted at the end of the first quarter, we were hopeful that they would get back up and running, certainly by the beginning of June or so but it turned out that outage extended almost until here in August. The impact of that was about 1.5 million tons. Those are tons we don’t get to make back up because it’s kind of like hotel rooms. If you rent them, you rent them, if you don’t, you don’t. We also saw disruption late in the quarter at WRI due to the rail service interruptions in North Dakota that were a result of the record flooding that occurred around the Minot area and along the rail routes. Those tons really get shifted out of Q2 into Q3 but rail service has been restored and we are seeing good tonnage coming out of the WRI operation.

That said, it was a pretty good quarter. We had told you last quarter we expected to see our streak of uninterrupted, better over year over year quarters broken this quarter. We missed last year by $2 million. In light of the events that occurred, we were pretty satisfied. The good results we did put up were a function of very good control of controllable expenses, a strong quarter by our power plant and a control of our heritage costs also. So we were pretty satisfied in light of the conditions that we met. Looking forward to the third and fourth quarters, I think there are really two major themes, the first of which is, we had chatted earlier this year about the fact that the company is working diligently on acquiring additional coal reserves around our facilities. That work continues. I expect that the work will culminate in some announcements here over the back half of the year as we successfully wrap up some of these negotiations, but we are dealing with large enterprises and regulatory agencies and what not and it takes a while. We are also working with our investment bankers, looking at acquisitions of companies that look similar to the kinds of mines that we run, mine mouth operations, and we will continue if those kinds of opportunities present themselves to look at those kinds of situations.

As many of you know, because you own other coal stocks, it has not been a particularly strong market for coal stocks. If you track our stock price, we have been tracking very closely with the rest of the industry. I see this morning that most of them have opened up down around 5%. We tend to trade in sympathy with them. ANR, BTU, ACI, they have all been down 25, 30 to 40% from their highs of earlier this year. We tend to track with that. We are satisfied with these results. We are thrilled with our safety record. Our Beulah facility was recognized once again for its outstanding safety record. During the quarter also we received recognition down in Texas for our reclamation efforts, so we continue to be good stewards of the environment. We continue to work safe and that will continue to be a priority and emphasis of the organization going forward. With those brief comments, I would like to open it up and talk about what you folks would like to chat about. So operator, why don’t you go ahead and take questions.

Operator

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the * keys. Once again, that is *1 to register your questions at this time. One moment please while we poll for questions. Thank you. Our first question is coming from Brian Taddeo of Gleacher & Company. Please proceed with your question.

<Q>: Hey, good morning.

Keith Alessi – Westmoreland Coal Company – President & CEO

Good morning.

<Q>: Just a quick one with regard to the new EPA regulations, for the Casper rulings including Texas. Just curious if you can comment what your conversations have been with NRG at the Jewett Mine for lignite going forward. Have they given any indication that they are going to be lowering the amount of lignite they are going to be burning given the new rules?

Keith Alessi – Westmoreland Coal Company – President & CEO

Doug that’s one probably you should handle and the short story is no, we don’t think it is going to affect Texas lignite because of the chemistry of that coal but Doug why don’t you go and give it a little more detail.

Doug Kathol – Westmoreland Coal Company – Executive Vice President

Yeah, the Texas plants have already got themselves set up anticipating some of this. In Texas they burn a blend of lignite and Powder River basin coal. In North Dakota, it may be more problematic because of the chemistry of the coal. We are not sure what the ultimate outcome is but we know that it will be more difficult in North Dakota to meet new EPA rules.

<Q>: In which plants specifically, I guess in North Dakota are going to be the biggest issue?

Doug Kathol – Westmoreland Coal Company – Executive Vice President

Yeah, most likely it will be the Coyote plant among the others up there and it relates to the chemistry of the coal and particularly the sodium content. So we are not sure long term whether lignite supply will be the answer for some of these North Dakota plants.

<Q>: Got you, okay. And can you talk about were there any distributions from WML up to the parent in the quarter? And if you could also give a breakout on the coal side actually how much of the EBITDA was WML versus WRI?

Keith Alessi – Westmoreland Coal Company – President & CEO

Sure. I’m going to have Kevin give you that level of detail but from a corporate treasury standpoint, it is really a function of what is available for distribution versus what we choose to distribute. So Kevin?

Kevin Paprzycki – Westmoreland Coal Company – CFO

Hi Brian. Because of the hydro impact at WECo, that reduced WML’s EBITDA, that combined with their capital and their initial debt payments, we did not have a distribution from WML in Q2.

<Q>: Okay. Do you have, by chance, the breakout between WML and WRI of the EBITDA for the coal segment?

Kevin Paprzycki – Westmoreland Coal Company – CFO

I do. The WML EBITDA for the quarter was just under $12 million and for WRI was a little over $2 million.

<Q>: Got you. Okay, thank you very much.

Kevin Paprzycki – Westmoreland Coal Company – CFO

Yep.

Keith Alessi – Westmoreland Coal Company – President & CEO

You know Brian, one of the ways to look at this and the way we are looking at it internally when we started this year, if you’ll recall last year we had record EBITDA and operating income and the thought moving into 2011 was that we were going to benefit from the discontinuance of the Minnesota Power Contract at Colstrip which was a contract that was under water and we had lost between $6 and $8 million a year on. I think the net effect of the hydro season means that this year is going to be flat versus last year where we had initially hoped that we would pick up all the benefits of the negative contract that went our way. So as we sit here today we are probably projecting a pretty flat performance versus a year ago which was record performance.

<Q>: Okay, thank you.

Operator

Thank you. Our next question is coming from Bob Clutterbuck of the Clutterbuck funds.

Keith Alessi – Westmoreland Coal Company – President & CEO

Morning Bob.

Operator

Please proceed with your question.

<Q>: Hi Keith. How are you?

Keith Alessi – Westmoreland Coal Company – President & CEO

Great.

<Q>: Keith, last quarter you said at that time that you thought you would probably have within the next quarter some discussion on reserves. Could you give any guidance on that?

Keith Alessi – Westmoreland Coal Company – President & CEO

Yeah. We have made progress on a number of funds. I am not at liberty to disclose exactly how much and with who. It has taken longer than we had hoped. In one situation I think we had a total of a dozen signatures which within the other organization it needed to be gathered in order to get it done and I think we are down to the last couple. So you know I expect here, yeah I have been saying it for a quarter, but hopefully this quarter we will have something to talk about, if not this quarter certainly by the end of the year. But we have adequate reserves to service the accounts that we have got for the foreseeable future. These would be extensions of ten and more years on the ends of the period of time that we are already reserved through.

<Q>: All right, and that is all I have for now.

Keith Alessi – Westmoreland Coal Company – President & CEO

Okay, thanks Bob.

Operator

Thank you. Our next question is coming from Paul Stewart of Calypso Management. Please proceed with your question.

<Q>: Hi guys, good morning.

Keith Alessi – Westmoreland Coal Company – President & CEO

Morning.

<Q>: Good morning. I was wondering given the rolling nature of your coal contracts, if you had any notable customer discussions in the past quarter at any of the mines.

Keith Alessi – Westmoreland Coal Company – President & CEO

Yeah, we are currently in conversations with the Coyote facility up at the Beulah power plant in North Dakota, that’s Dakota Westmoreland. They put out for a competitive bid situation for North Dakota lignite earlier this year. There is another party involved in that conversation. Those conversations I think have been more difficult than we had originally anticipated. The other party, this is a contract that currently expires in 2016 so we are out five years. The other party at the table is a large organization that we know well who is notorious for underbidding these kinds of situations and then subsequently getting themselves in trouble with the client organizations and often getting dismissed but this is a situation where if we were not to prevail, being able to say I told you so five years after the fact wouldn’t be a wonderful place to be. If in fact that conversation did not work out to our benefit, the short term impact really on us is probably increased cash flows as we would substantially change the mining plan because clearly if we didn’t renew that contract then the future of that mine would be at risk. The mine is currently operated on the assumption that that contract would be extended. If that did not work out we would take appropriate measures and mine responsibly for a different scenario. If that didn’t work out, it is not the end of the world. Those assets are extraordinarily valuable. We would probably redeploy them up at WRI. We would also look at moving those tons perhaps somewhere else. So, that’s the only significant conversation we have had. All our other contracts are buttoned up and long term.

<Q>: Okay, great. Thanks, that is all I had for now.

Operator

Once again ladies and gentlemen, if you do have a question, please press *1 on your telephone keypad at this time. One moment please while we poll for additional questions. Once again ladies and gentlemen, please press *1 if you do have a question at this time. Our next question is coming from Wayne Heilman of Springs Gazette.

<Q>: Keith, Wayne Heilman. Just one question about the move, is that still on track for October? Do you have a date yet?

Keith Alessi – Westmoreland Coal Company – President & CEO

Yeah, good morning Wayne. As we announced earlier, the intent is to move the company offices to the Denver area here in November. They have started construction on the space that we have leased up in the, just south of the Denver metro area. I am glad you asked the question because we did announce that there in the quarter and I didn’t comment on it in my earlier comments. As we noted at the time we announced that move, there are 90 some public companies in the state of Colorado. Only a handful of them are not in the Denver area, we were one of them. Twenty four of those companies are power and/or energy companies and we have always found ourselves, when we are looking for talent, having to go into the Denver market. Our accountants, our lawyers, our banks, everybody is up in Denver. So it is actually an economical move for us to move there. It is a mid November move at this point.

<Q>: Thank you very much.

Keith Alessi – Westmoreland Coal Company – President & CEO

If there are no other questions, I would encourage you if you have one-on-one conversations, to give Kevin a call. Now that the heat of summer is upon us, we are obviously seeing a much stronger revenue quarter here in Q3 and we are optimistic when we are talking to you and 12 weeks from now we’ll be able to talk about those results.

Operator

Gentlemen, we are showing no further questions at this time. Do you have any additional closing comments?

Keith Alessi – Westmoreland Coal Company – President & CEO

No, that would be it.

Operator

Ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day.