JONES DAY 

North Point 

901 Lakeside Avenue 

Cleveland, Ohio 44114 

Telephone: (216) 586-3939 

Facsimile: (216) 579-0212 

David G. Heiman (pro hac vice pending) 

Carl E. Black (pro hac vice pending) 

Thomas A. Wilson (pro hac vice pending) 

Proposed Attorneys for Debtors 

and Debtors in Possession 

HUNTON & WILLIAMS LLP 

Riverfront Plaza, East Tower 

951 East Byrd Street 

Richmond, Virginia 23219 

Telephone: (804) 788-8200 

Facsimile: (804) 788-8218 

Tyler P. Brown (VSB No. 28072) 

J.R. Smith (VSB No. 41913) 

Henry P. (Toby) Long, III (VSB No. 75134) 

Justin F. Paget (VSB No. 77949) 

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE EASTERN DISTRICT OF VIRGINIA 

RICHMOND DIVISION 

In re: 

Project Thunder Run, et al., 

 Debtors. 

Chapter 11 

Case No. 15-_____ (___) 

(Joint Administration Requested) 

DECLARATION OF KEVIN S. CRUTCHFIELD, CHIEF EXECUTIVE 

OFFICER AND CHAIRMAN OF THE BOARD OF DIRECTORS OF 

DEBTOR ALPHA NATURAL RESOURCES, INC., IN SUPPORT OF 

FIRST DAY PLEADINGS OF DEBTORS AND DEBTORS IN POSSESSION 

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 I, Kevin S. Crutchfield, hereby declare under penalty of perjury: 

1. I am the Chief Executive Officer and Chairman of the Board of Directors 

of Alpha Natural Resources, Inc. ("ANR"), one of the debtors and debtors in possession in the 

above-captioned chapter 11 cases (collectively, the "Debtors"). I have held these positions at 

ANR since July 31, 2009 and May 17, 2012, respectively. Prior to holding my current positions, 

I served as (a) ANR's president from January 2007 until July 31, 2009; (b) ANR's executive vice 

president from November 2004 until January 2007; (c) executive vice president of Alpha Natural 

Resources, LLC beginning in March 2003; and (d) executive vice president of ANR Holdings, 

LLC from November 2003 until ANR Holdings, LLC was merged with another of ANR's 

subsidiaries in December 2005. Additionally, I am currently a director and/or officer of 12 of 

ANR's subsidiary Debtors. As part of my employment and service in these capacities, I am 

generally familiar with the Debtors' history, day-to-day operations, business and financial affairs, 

and books and records, as well as the Debtors' restructuring efforts. I have been employed in the 

coal industry since the early 1980s. 

2. On the date hereof (the "Petition Date"), each of the Debtors filed 

voluntary petitions for relief under chapter 11 of title 11 of the United States Code 

(the "Bankruptcy Code"). 

3. To minimize the potential adverse effects of filing for chapter 11 

protection and to enhance their ability to consummate a successful restructuring and confirm a 

chapter 11 plan, the Debtors have filed a number of pleadings requesting various kinds of "first 

day" relief (collectively, the "First Day Pleadings") concurrently with the filing of this 

declaration (this "Declaration"). I am familiar with the contents of each First Day Pleading 

(including the exhibits and other attachments to such motions) and, to the best of my knowledge, 

insofar as I have been able to ascertain after reasonable inquiry, believe the relief sought in each 

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First Day Pleading: (a) is necessary to enable the Debtors to operate in chapter 11 with 

minimum disruptions; (b) is important to the Debtors' achievement of a successful restructuring; 

and (c) best serves the Debtors' estates and creditors' interests. Further, it is my belief that the 

relief sought in the First Day Pleadings is narrowly tailored and necessary to achieve the goals 

identified above. 

4. I submit this Declaration in support of the 150 Debtors' petitions for relief 

under chapter 11 of the Bankruptcy Code. Except as otherwise indicated, all statements set forth 

in this Declaration are based upon: (a) my personal knowledge; (b) information supplied to me 

by other members of the Debtors' management or the Debtors' professionals; (c) my review of 

relevant documents; or (d) my opinion based upon my experience and knowledge of the Debtors' 

operations and financial conditions. If called upon to testify, I could and would testify to the 

facts set forth in this Declaration. I am authorized by the Debtors to submit this Declaration. 

5. Part I of this Declaration provides a brief overview of the history of 

Debtor ANR through its merger with Massey Energy Company and certain of its affiliates 

(collectively, "Massey"). Part II describes the industry-wide pressures that have led the Debtors 

(and many of their competitors) to seek chapter 11 relief. Part III describes the Debtors' current 

operations. Finally, Part IV describes the Debtors' ultimate decision to seek chapter 11 relief and 

their strategy for using these chapter 11 cases to restructure their operations and maximize value 

for all stakeholders.1 

 

1

 The Declaration of Philip J. Cavatoni, Executive Vice President and Chief Financial and Strategy Officer of 

Debtor Alpha Natural Resources, Inc., in Support of First Day Pleadings of Debtors and Debtors in 

Possession, filed contemporaneously with this Declaration, contains, among other things, detailed 

descriptions of (a) the Debtors' capital structure (including their long term debt and other material 

obligations), (b) the Debtors' declining financial performance (including declining sales, revenues and 

liquidity) in light of the macroeconomic and regulatory pressures weighing on the domestic coal industry 

and (c) the Debtors' efforts to right-size their business and maximize profitability in an extraordinarily 

challenging environment for coal producers. 

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PART I 

OVERVIEW OF THE DEBTORS' BUSINESSES 

& THE HISTORY OF ANR THROUGH THE MASSEY MERGER

A. Organizational Structure

6. In addition to Debtor ANR, the Debtors consist of 149 entities, all of 

which are direct or indirect subsidiaries of Debtor ANR, a Delaware corporation.2

 The Debtors' 

corporate headquarters are located in Bristol, Virginia, and 13 of the Debtors are incorporated or 

otherwise formed in Virginia. Many of the Debtors are effectively single-purpose entities, 

comprising specific operations tied to specific geographical locations within the Debtors' overall 

organizational structure. 

B. A Decade of Success

7. The enterprise that now comprises the Debtors and their global, 

multi-platform energy businesses began in 2002 with just seven employees. Slightly over two 

years later, Alpha Natural Resources, Inc. (a prior entity formed in 2004 and legally distinct from 

Debtor ANR) ("Former Alpha") became publicly traded, operated in five states, had 

approximately $1.27 billion in annual revenues and employed approximately 2,600 people. 

8. Less than half a decade later, on July 31, 2009, Former Alpha – by then a 

$2.5 billion company with more than 3,750 employees following a series of thoughtful and 

well-timed accretive acquisitions – merged with Foundation Coal Holdings, Inc. (collectively 

with its then-affiliates, "Foundation"). At the time of the merger, Foundation was a major 

 

2

 All wholly owned domestic direct and indirect subsidiaries of ANR have commenced chapter 11 cases 

except for ANR Second Receivables Funding, LLC, a special purpose, bankruptcy-remote indirect 

subsidiary of ANR that is party to the Credit and Security Agreement (the "A/R Facility") with General 

Electric Capital Corporation ("GECC"), as administrative agent and a lender, swing line lender and 

LC Lender (as defined in the A/R Facility) and Webster Business Credit Corporation, as a lender and 

LC Lender. In addition to ANR Second Receivables Funding, LLC, the Debtors have 12 other non-Debtor 

domestic and foreign affiliates and related entities. 

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domestic producer of thermal (or "steam") coal for utilities and industrial plants and had 

operations in Pennsylvania, West Virginia and Wyoming. Following the merger: (a) Foundation 

was left as the surviving entity and renamed "Alpha Natural Resources, Inc." (i.e., the same 

entity as current Debtor ANR); (b) the renamed Foundation's common stock replaced the 

common stock of Former Alpha on the New York Stock Exchange (the "NYSE");3

 and (c) the 

combined company had pro forma 2009 revenues of approximately $4.0 billion, employed 

6,400 people and was the nation's largest exporter of metallurgical (or "met") coal, i.e., a very 

high quality coal primarily used to make coke, an essential component in the steelmaking 

process. In 2010, the combined Company sold approximately 84.8 million tons of coal at a 

margin of $11 per ton, generating net income of $95.6 million and free cash flow of 

$384.7 million. 

9. With a stock price at approximately $45 per share, on June 1, 2011, ANR 

completed its acquisition by merger (the "Massey Acquisition") of Massey for approximately 

$6.7 billion, funding the acquisition primarily with its common stock. At the time of the Massey 

Acquisition, Massey was one of the nation's largest coal producers, with approximately 

 

3

 Prior to July 17, 2015, ANR's common stock traded publicly on the NYSE under the ticker "ANR". On 

July 16, 2015, ANR received notice (the "Delisting Notice") from the NYSE that the staff of NYSE 

Regulation, Inc. ("NYSE Regulation") had determined to commence proceedings to de-list ANR's common 

stock, and the trading thereof was suspended at the market open on the same day. NYSE Regulation 

determined that ANR was no longer suitable for listing on the NYSE pursuant to Section 802.01D of the 

NYSE Listed Company Manual, based on a finding that the trading price of the Company's common stock 

was "abnormally low." NYSE Regulation's application to the United States Securities and Exchange 

Commission to de-list ANR's common stock is pending. ANR's common stock resumed trading on the 

OTC Pink market under the ticker symbol ANRZ on July 17, 2015 and, as of the Petition Date, there were 

approximately 5,000 registered holders thereof. 

 Prior to ANR's receipt of the Delisting Notice, on April 16, 2015, ANR was notified by the NYSE that the 

average closing price of ANR's common stock had fallen below $1.00 per share over a period of 

30 consecutive trading days, which is the minimum average share price required by the NYSE under 

Section 802.01C of the NYSE Listed Company Manual ("Section 802.01C"). Under Section 802.01C, the 

Company has six months following receipt of the notification to regain compliance with the minimum 

share price requirement. If ANR does not regain compliance with Section 802.01C by October 15, 2015, 

its shares will be subject to suspension and de-listing by the NYSE. 

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2.4 billion tons of proven and probable reserves, 84 operating mines and associated processing 

and loading facilities in Central Appalachia. Following the Massey Acquisition, the combined 

Company (a) was the second-largest producer of coal in the United States, (b) possessed one of 

the world's largest and highest quality reserves, and had further solidified its position as the 

nation's leading supplier, of met coal, (c) generated approximately $7 billion in revenue, 

(d) operated 145 mines and 35 coal preparation plants, (e) had approximately 14,500 employees 

and (f) supplied approximately 10% of the nation's aggregate electricity demand. 

PART II 

THE UNPRECEDENTED MARKET CHALLENGES FACING THE COAL INDUSTRY

10. Shortly after the Massey Acquisition, the coal industry began to face 

unprecedented market challenges, leading to a historic decline. During the past several years, 

American coal producers have encountered a confluence of macroeconomic headwinds, 

competitive pressures and regulatory obstacles that, collectively, have distressed the domestic 

coal industry. These adverse trends have included: (a) rapidly falling coal prices due to, among 

other things, the substantially expanded ability of North American energy companies to produce 

vast quantities of natural gas; (b) weak demand and significant oversupply for both thermal and 

metallurgical coal due to slower than expected economic growth in both the United States and 

overseas markets (such as Europe, where the Debtors are the largest exporter of U.S. coal, and 

China, the largest user of thermal and met coal in the world); (c) the increasing use and 

government subsidization of renewable energy technologies, both in the United States and 

abroad; and (d) the imposition of restrictive federal and state regulations on coal producers and 

operators of coal-fired power plants, which regulations (i) constrain the use of coal to make 

electricity, (ii) have precipitously reduced domestic demand for thermal coal and (iii) have 

sharply increased the costs of maintaining regulatory compliance. Although the coal industry 

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historically has been subject to cyclical trends, and the Debtors anticipate that coal prices and 

global demand for coal will eventually recover, the current situation is structural and will take 

the Debtors and the entire industry time to reorient. 

11. Plummeting Coal Prices and Weak Demand. Global coal prices generally 

correlate to the overall economic condition of the world's leading industrial and developing 

economies. As the United States has struggled to recover from the Great Recession and many 

other leading coal-consuming countries have suffered economic downturns or constrained 

growth in recent years, coal prices have not come close to reaching pre-recession levels. After 

briefly spiking in 2011 (immediately after the Japanese Fukushima nuclear disaster and multiple 

typhoons striking Australia), global coal prices have been mired in a trend of steady decline. 

Even as the United States has enjoyed modest annual gross domestic product growth during the 

past five years, demand for coal along with coal prices have fallen sharply over the past four 

years, reaching a 10-year low during the summer of 2015. As set forth on the following charts, 

(a) prices for met coal and thermal coal have respectively fallen by approximately 72% and 44% 

since 2011 and (b) central appalachian coal production has declined by approximately 50% since 

2008 and by approximately 37% since 2011. 

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12. A variety of factors have contributed to the recent decline of coal prices, 

including slowing economic growth in China, the world's leading coal consumer.4

 The recent 

development of new technologies enabling the production of large quantities of domestic natural 

gas also has driven coal prices lower (e.g., between 2008 and 2013, domestic shale gas 

production more than quadrupled). As a result, natural gas prices have fallen approximately 75% 

from their peak in 2008 and are now well below historical averages. The availability of cheap 

natural gas has caused the annual share of total domestic electricity generation attributable to 

 

4

 Timothy Puko & Chuin-Wei Yap, Falling Chinese Coal Consumption and Output Undermine Global 

Market, The Wall Street Journal (Feb. 26, 2015, 11:27 p.m.), http://www.wsj.com/articles/chinas-coalconsumption-and-output-fell-last-year-1424956878. Moreover, China – historically, a significant net 

importer of coal – has in recent years both introduced an import tariff on coal and removed export tariffs. 

Fayen Wong, China to Again Levy Coal Import Tariffs After Nearly a Decade, Reuters (Oct. 9, 2014; 

7:03 a.m.), http://www.reuters.com/article/2014/10/09/china-coal-idUSL3N0S41QP20141009; China 

Revamps Commodity Tariffs to Balance Supply Amid Slowdown, BloombergBusiness 

(December 17, 2014; 2:23 a.m.), http://www.bloomberg.com/news/articles/2014-12-17/china-revampscommodity-tariffs-to-balance-supply-amid-slowdown. 

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coal to drop from 47% in 2010 to 39% in 2014.5

 In April 2015, domestic electricity generation 

powered by natural gas overtook that powered by coal on a monthly basis for the first time in 

American history: 31% for natural gas (a 21% increase from April 2014) and 30% for coal (a 

19% decrease from April 2014).6

 Accordingly, although domestic electricity generation 

powered by coal is projected to provide 37.2 percent of U.S. electricity in 2015 and 36.6 percent 

in 2016 (and the Debtors expect to remain leaders in a downsized industry going forward),7

 the 

market environment remains challenging. 

13. Tightening Regulatory Standards and Subsidization of Competing Forms 

of Energy. The macroeconomic challenges facing American coal producers in recent years have 

been compounded by the promulgation of new environmental regulations, and stricter 

enforcement of existing federal and state regulations, affecting the coal and electrical power 

industries. For example: 

 in 2014, the United States Supreme Court upheld the "Cross State Air 

Pollution Rule" recently promulgated by the United States Environmental 

Protection Agency (the "EPA") that sharply limits allowable emissions of 

sulfur dioxide and nitrogen oxides from coal-fired power plants in 28 states;8

 

5

 U.S. Energy Information Administration, Coal's Share of Total U.S. Electricity Generation Falls Below 

40% in November and December (Mar. 9, 2012), http://www.eia.gov/todayinenergy/detail.cfm?id=5331#; 

U.S. Energy Information Administration, What Is U.S. Electricity Generation By Energy Source?

(Mar. 31, 2015), http://www.eia.gov/tools/faqs/faq.cfm?id=427&t=3. 

6

 Tom Murphy, Natural Gas Surpasses Coal as Biggest U.S. Electricity Source, Associated Press 

(July 13, 2015), http://www.wvgazette.com/apps/pbcs.dll/article?AID=/20150713/GZ01/150719762 

/1102&template=.printart. 

7

 American Coalition for Clean Coal Electricity, Coal Facts, March 20, 2015, at 1. 

8

 U.S. Environmental Protection Agency, Cross-State Air Pollution Rule (CSAPR), 

http://www.epa.gov/airtransport/CSAPR/index.html; see EPA v. EME Homer City Generation, L.P., 

134 S. Ct. 1584 (2014). 

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 the EPA also recently issued new rules, known as the Mercury and Air Toxics 

Standards ("MATS"), limiting mercury emissions from power plants 

nationwide;9

 the EPA (at the direction of President Barack Obama) has proposed new rules 

to reduce carbon dioxide emissions from new and existing power plants, 

including a strict new carbon emissions rule – the Clean Power Plan – that 

would force operators of coal-fired power plants to either install costly 

emission-control technology or close such plants altogether.10 Moreover, any 

new coal-fired plant must employ carbon capture and storage technology 

(CCS), a perhaps prohibitively expensive and as-yet unproven technology. 

These new regulations (MATS, in particular) have already contributed to the retirement of 

approximately 400 coal-fired electricity generating units and the loss of over 62,000 megawatts 

(or approximately 20%) of electric generating capacity.11 Moreover, it is expected that these 

new rules and regulations will (a) force the closure of approximately 468 additional existing 

coal-fired units with approximately 73,000 megawatts of electric generating capacity, 

(b) disincentivize utilities from constructing new coal-fired plants and (c) further reduce 

domestic demand for thermal coal, thereby putting increasing economic pressure on coal 

producers such as the Debtors.12 

 

9

 U.S. Environmental Protection Agency, Fact Sheet: Mercury and Air Toxics Standards for Power Plants, 

http://www.epa.gov/mats/pdfs/20111221MATSsummaryfs.pdf. I am informed that, on June 29, 2015, the 

United States Supreme Court ruled that the EPA improperly failed to consider the cost to power companies 

when it promulgated MATS, reversed a decision upholding MATS and required further consideration of 

certain challenges thereto. It is my understanding that MATS will remain in effect pending such further 

consideration, however, and that the EPA likely will continue to implement MATS to the extent 

permissible under applicable law. See Janet McCabe, Acting Assistant Administrator for the Office of Air 

and Radiation, In Perspective: The Supreme Court's Mercury and Air Toxics Rule Decision, EPA Connect: 

The Official Blog of the EPA Leadership (June 30, 2015), https://blog.epa.gov/blog/2015/06/inperspective-the-supreme-courts-mercury-and-air-toxics-rule-decision/. 

10 Barack Obama, Presidential Memorandum: Power Sector Carbon Pollution Standards (June 25, 2013), 

https://www.whitehouse.gov/the-press-office/2013/06/25/presidential-memorandum-power-sector-carbonpollution-standards. 

11 American Coalition for Clean Coal Electricity, Status of Major EPA Regulations Affecting Coal-Fired 

Electricity Generation, January 25, 2015, at 1-2; American Coalition for Clean Coal Electricity, Coal Unit 

Shutdowns, June 18, 2015, at 1. 

12 See, e.g., Coral Davenport, Court Gives Obama a Climate Change Win, The New York Times 

(June 9, 2015), http://www.nytimes.com/2015/06/10/us/coal-epa-clean-power-plan.html ("If enacted, the 

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14. In recent years, the federal government and many state governments also 

have enacted new laws designed to subsidize and promote the development and use of alternative 

energy sources in place of traditional fossil fuels such as coal. The federal American Recovery 

and Reinvestment Act of 2009, for example, provided $90 billion for "clean energy" programs, a 

substantial portion of which was earmarked for the development of renewable energy 

technologies. President Obama's administration has signaled its intention to continue subsidizing 

and promoting the growth of the alternative energy sector, while removing economic benefits 

currently available to coal and other fossil fuel producers. President Obama's 2016 budget, for 

example, proposes to eliminate certain tax deductions for coal, oil and natural gas producers – 

totaling approximately $50 billion over the next decade – and allocates billions of dollars to 

various alternative energy programs.13 In addition, most states have implemented regulatory 

mandates known as "renewable portfolio standards," which generally require that a certain 

percentage of the electricity produced in the state must be generated from one or more renewable 

energy sources. These efforts place coal producers such as the Debtors under increasing 

economic pressures and at competitive disadvantages relative to heavily subsidized alternative 

energy industries. 

(continued...) 

[Clean Power Plan] could shutter hundreds of [coal-fired power] plants, freeze construction of future plants 

and slow demand for coal production in the United States."); American Coalition for Clean Coal Electricity, 

Coal Unit Shutdowns, June 18, 2015, at 1. 

13 Fiscal Year 2016 Budget of the U.S. Government, 

https://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/budget.pdf; Amy Harder, Obama 

Budget Would Pour Funds Into Climate, Renewable Energy, The Wall Street Journal (Feb. 3, 2015, 

7:43 a.m.), http://www.wsj.com/articles/obama-budget-would-pour-billions-into-climate-renewableenergy-1422903421. 

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15. Intensity of Competition Within Coal Industry. In addition to the external 

challenges facing the coal industry from declining demand, alternative energy sources and a 

difficult regulatory environment, the Debtors are further subject to intense competition within the 

coal industry. With respect to their domestic customers, the Debtors compete with numerous 

coal producers based in the Appalachian region and Illinois basin and with a significant number 

of western coal producers. Moreover, the recent strength of the U.S. dollar has made domestic 

coal more expensive relative to foreign coal production from Australia, Indonesia, South Africa 

and Columbia.14 Long-expected consolidation in the coal industry has yet to materialize, 

resulting in excess production capacity and, thus, depressed prices for the Debtors' coal. 

PART III 

THE DEBTORS' CURRENT BUSINESSES & OPERATIONS

16. The Debtors Today. As of the Petition Date, the Debtors are the among 

the largest domestic producers of coal by volume in the United States, with (a) total assets and 

liabilities of $10.1 billion and $7.1 billion, respectively, and (b) consolidated 2014 revenues of 

$4.3 billion ($3.7 billion of which are attributable to coal sales). They remain the nation's 

leading supplier and exporter – and one of the world's largest suppliers – of met coal for steel 

producers and a major supplier of steam coal to electric utilities and manufacturing industries 

across the country. 

17. The Debtors currently employ slightly fewer than 8,000 full-time 

employees (down approximately 45% from their post-merger peak). Of the Debtors' full-time 

employees, approximately (a) 5,700 are paid hourly, (b) 2,300 are salaried and (c) 88% are 

 

14 Clifford Krauss, Coal Miners Struggle to Survive in an Industry Battered by Layoffs and Bankruptcy, The 

New York Times (July 18, 2015), http://www.nytimes.com/2015/07/18/business/energy-environment/coalminers-struggle-to-survive-in-an-industry-battered-by-layoffs-and-bankruptcy.html?_r=0. 

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directly engaged in mining operations. As of the Petition Date, approximately 1,000 of the 

Debtors' employees (or 12.5%) are represented by the United Mine Workers of America 

(the "UMWA"). The Debtors' unionized workforce is located in Virginia, West Virginia and 

Pennsylvania, and 13% of the Debtors' 2014 coal production came from mines operated by 

UMWA-represented employees. 

 

18. The Debtors sell coal to domestic and foreign electric utilities, steel 

producers and industrial users, and maintain solid long-term relationships with numerous power 

plants operated by a diverse group of domestic electricity generators. The Debtors' (a) status as 

the only coal producer with mines and reserves in both Northern Appalachia and the Powder 

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River Basin and (b) access to international shipping points on the east and gulf coasts of the 

United States allow them to maximize flexibility in response to customer demand and facilitate 

the most economical means of product transportation, providing them with a significant strategic 

advantage over their competitors. Approximately 39% of the Debtors' total revenue for 2014 

was derived from sales made to customers outside the United States. 

19. Measured by volume, steam coal accounted for 78% of the Debtors' 

2014 coal sales (approximately 66 million tons), with met coal accounting for nearly the entirety 

of the remaining 22% of coal sales (approximately 18.6 million tons). Measured by revenue, met 

coal accounted for approximately 43% of the Debtors' 2014 coal sales (as met coal sells at a 

premium due to its higher quality) and steam coal accounted for approximately 57%. The 

Debtors produce and process approximately 98.7% of the coal they sell,15 and are a recognized 

leader in safety and environmental performance within the coal industry. 

 

15 Approximately 1.1% of the coal sold by the Debtors is purchased from third parties and either (a) processed 

by the Debtors, (b) blended with the Debtors' coal to produce precise product mixtures desired by 

customers or (c) shipped directly to customers. 

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78%

22%

57%

43%

0%

20%

40%

60%

80%

100%

Steam Coal Met Coal

Met and Steam Coal Sales 

as a Percentage of 2014 Total Coal Sales

Tons (%) Revenue (%)

20. As of the Petition Date, the Debtors (a) operated in three major coal 

producing basins: Northern Appalachia and Central Appalachia (i.e., southwestern 

Pennsylvania; West Virginia; eastern Kentucky; and western Virginia) and Wyoming's Powder 

River Basin and (b) own or control approximately 2.35 billion tons of proven coal reserves and 

another 1.20 billion tons of probable reserves.16 The Debtors' operations include 22 coal 

preparation plants, each of which receives, blends, processes and ships coal produced at one or 

more of the Debtors' 54 active mines. The Debtors' coal extraction operations generally employ 

 

16 According to guidelines promulgated by the United States Securities and Exchange Commission, "proven" 

coal reserves are reserves for which (a) the quantity of potential coal is computed from dimensions revealed 

in outcrops, trenches, workings or drill holes; (b) the grade and/or quality of potential coal are computed 

from the results of detailed sampling; and (c) the sites for inspection, sampling and measurement are spaced 

so closely, and the geologic character so well-defined, that size, shape, depth and mineral content of 

reserves are well-established. "Probable" coal reserves are reserves for which quantity and grade and/or 

quality are computed from information similar to that used for proven reserves, but the sites for inspection, 

sampling and measurement are farther apart or are otherwise less adequately spaced. 

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five different mining techniques: (a) longwall mining; (b) room-and-pillar mining; 

(c) truck-and-shovel mining; (d) front-end loader mining; and (e) highwall mining. 

21. North Appalachian Operations. The Debtors' Northern Appalachia 

("NAPP") operations (a) consist of their Cumberland and Emerald mining complexes and two 

preparation plants and (b) encompass approximately 709.7 million tons of reserves (55.8 million 

of which are currently assigned to active mines). In 2014, the Debtors shipped approximately 

11 million tons of coal from their NAPP operations (7.6 million from Cumberland and 

3.4 million from Emerald). Steam coal comprised approximately 86% of this total (shipped 

primarily to utilities located in the eastern United States) and met coal comprised the remaining 

14% (primarily marketed to export customers). As of the Petition Date, there were 

approximately 1,080 salaried and hourly employees at the Debtors' NAPP operations, with the 

entire hourly workforce (i.e., 825 employees) being represented by the UMWA. During 2014, 

the Emerald operation neared the completion of its life-of-mine plan, and the Debtors currently 

expect Emerald to cease mining activities during 2015. 

22. Central Appalachian Operations. The Debtors' Central Appalachian 

operations ("CAPP") consist of 50 underground and surface mines and 20 preparation plants and 

encompass approximately 2.5 billion tons of proven and probable reserves (approximately 

1.16 billion of which are currently assigned to active mines). Collectively, the Debtors' CAPP 

operations (a) shipped approximately 34.1 million tons of coal in 2014, primarily to eastern 

utilities (steam coal) and steel companies (met coal), and (b) employ approximately 6,000 

salaried and hourly workers, with 130 hourly employees being represented by the UMWA. 

23. Western Coal Operations. The Debtors' western coal operations located in 

the Powder River Basin consist of their Belle Ayr and Eagle Butte surface mining operations, 

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which collectively shipped approximately 36.5 million tons of steam coal (15.8 million tons from 

Belle Ayr; 20.7 million from Eagle Butte) in 2014, primarily to utility companies located 

throughout the western, midwestern and southern United States. The Debtors' western 

operations (a) control approximately 700.1 million tons of coal reserves, all of which are 

currently assigned to active mines, and (b) employ approximately 580 salaried and hourly 

workers (none of whom are union-represented). 

24. Natural Gas Operations. The Debtors further control – through Debtor

Pennsylvania Land Resources Holding Company, LLC ("PLR") – approximately 25,000 acres in 

the Marcellus Shale natural gas field of Southwestern Pennsylvania, and are currently engaged in 

efforts to prove and develop natural gas resources within such acreage. Debtor Pennsylvania 

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Services Corporation's ("PSC") recent acquisition, on July 1, 2015, of the 50% of PLR not 

previously owned by PSC allowed the Debtors to take sole control of their operations within the 

most profitable and productive region of one of the largest and most concentrated natural gas 

fields in the United States. In addition, through PLR, the Debtors further control rights to 

develop natural gas resources located at other depths, including the deep Utica Shale, on certain 

of the leased acreage and adjoining properties. 

25. Other Operations. The Debtors engage in a limited amount of operations 

outside of their core coal production, processing and sales operations, including: (a) mining 

equipment sales and repair conducted by Debtor Maxxim Rebuild Company, LLC; (b) a 41% 

interest in Dominion Terminal Associates, a 20 million ton annual capacity coal export terminal 

located in Newport News, Virginia and unique deep water port; and (c) certain other 

miscellaneous activities. 

26. Idled Operations. Since July of 2011, the Debtors have idled or closed 

more than 80 mines, impacting the livelihood of approximately 7,000 employees and their 

families, primarily in CAPP. These idled mines impose substantial annual costs upon the 

Debtors of approximately $175 million, including costs related to reclamation obligations, 

employee-related legacy obligations and maintenance and legal costs. 

27. Based on its mining footprint, the Debtors generally report financial 

results from two segments: (a) Eastern Coal Operations (consisting of the Debtors' Appalachian 

mines and certain coal brokerage activities) and (b) Western Coal Operations (consisting of its 

two Powder River Basin mines). The Debtors also report financial results from certain ancillary 

segments of their business under the category of "All Other" (e.g., an idled underground coal 

mine in Illinois; expenses associated with closed mines; revenues and royalties from the sale of 

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natural gas; mineral leasing rights; general corporate overhead). For the year ended 

December 31, 2014, the Debtors incurred a loss from operations of $875 million. 

PART IV 

THE DECISION TO SEEK CHAPTER 11 RELIEF 

& THE DEBTORS' STRATEGY GOING FORWARD

28. The unprecedented changes facing the coal industry run deep and are 

occurring at a frenetic and unpredictable pace. Coal, at its peak, represented roughly 52% of the 

nation’s electricity output. In April of 2015, the market share had decreased to about 30%, a 

major shift over a relatively short period of time, especially given the relatively high fixed cost 

nature of the business and intensive sustaining capital requirements. The U.S. coal industry as 

currently structured is unsustainable. Multiple major producers (as well as more than 20 smaller 

coal companies) have been, and will continue to be, driven to the brink of insolvency by, among 

other factors, (a) precipitous declines in demand and pricing resulting from a progressively 

burdensome regulatory environment that severely constrains the use of coal, 

(b) transformationally cheap and abundant natural gas, (c) a plethora of legacy retirement, 

pension and restoration costs (e.g., black lung and workers' compensation liabilities), 

(d) substantial environmental and restoration obligations that only accelerate as the industry 

contracts and mine closures proliferate and (e) reclamation bonding demands from state 

regulators that constrain available liquidity. Since the collapse in coal pricing began in 2012, 

several major coal producers have sought bankruptcy protection, including (a) Patriot Coal 

Company, first in 2012 (annual revenues at the time of $2.33 billion) and again in May 2015 

(annual revenues of $1.46 billion); (b) Walter Energy, Inc. (annual revenues of $1.4 billion); 

(c) Edison Mission Energy (annual revenues of $1.29 billion); and (d) James River Coal 

Company (annual revenues of $660 million). 

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29. Because of the pressures placed on the Debtors' profitability by steadily 

falling coal prices and demand, and the substantial negative cash flow resulting therefrom, it is 

the business judgment of the Debtors that commencement of these chapter 11 cases is the best 

course to preserve and maximize value for their stakeholders. It is the Debtors' belief that the 

relief provided by chapter 11 will enable them to continue to restructure their operations and 

balance sheet while weathering the storm that has beset the coal industry. 

30. As described above, the malaise experienced in the coal industry over the 

past few years has only worsened. The fall has been precipitous and the effect on the Debtors 

has been extreme – more so than anyone could have anticipated even a year ago. But there can 

be no question that coal will remain a critical commodity in the United States and abroad and 

that, while the industry may currently suffer from economic and political forces that have 

resulted in significant oversupply and concomitantly plummeting prices, the metrics necessary 

for profitable coal mining and production will ultimately materialize. The global steel industry, 

of which almost 70% depends on coal, has limited alternatives to the use of coke – and thus to 

the use of met coal – in its steel manufacturing processes; and, even with the gradual shift of 

utilities to renewable and natural gas energy sources, thermal coal-fired plants are still expected 

to supply 30% to 40% of domestic demand for electricity for the foreseeable future. Following 

the adaptation to necessary structural changes within the industry, there will be survivors once 

pricing again turns favorable, and our management is confident that the Debtors will be among 

them. 

31. The Debtors enjoy substantial structural advantages over many of their 

competitors. They are the nation's leading supplier – and one of the world's largest suppliers – of 

premium met coal. They have geographically dispersed operations, and the performance of their 

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NAPP Cumberland and Powder River Basin operations have been largely successful, even in the 

current environment. They own significant percentages of critical industry infrastructure assets – 

e.g., the coal export terminal owned by Dominion Terminal Associates – that provide them with 

material cost efficiencies. They have an experienced and dedicated management team 

committed to maximizing the Debtors' long term enterprise value. And, finally but importantly, 

they have begun to diversify their energy portfolio, expanding into natural gas with substantial 

holdings in the Marcellus Shale and actively seeking further opportunities. The Debtors and the 

coal industry – like their coal miners – are resilient. The Debtors believe that, with an 

appropriately de-leveraged balance sheet, their valuable core operations will position them to 

participate – profitably – in the coal and broader energy industries going forward, providing 

thousands of jobs for their employees and necessary natural resources to their customers to help 

them provide electricity to homes and businesses and steel for building infrastructures. These 

chapter 11 cases – during which the Debtors seek to implement a new business plan, currently in 

development, suitable for downsized and profitable operations – are the first step in that process, 

a process that has the support of the Debtors' prepetition secured lenders (as evidenced by the 

Debtors' proposed debtor-in-possession financing).

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 I, Kevin S. Crutchfield, the undersigned Chief Executive Officer and 

Chairman of the Board of Directors of ANR, declare under penalty of perjury that the foregoing 

is true and correct. 

Dated: August 3, 2015 

/s/ Kevin S. Crutchfield

Kevin S. Crutchfield 

Chief Executive Officer and Chairman of the Board 

of Directors of Alpha Natural Resources, Inc. 

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