Illinois Basin coal production among the top 25 producers was flat in the second quarter from the year-ago period despite low export thermal coal prices and logistical issues that plagued exporters in the region.

The basin's 25 best-producing coal mines produced about 24.1 million tons during the recent period, a 0.8% increase from the year-ago quarter, according to data compiled by S&P Global Market Intelligence. The Illinois Basin saw a substantial uptick in coal exports in 2018, but miners saw a sharp decline in international shipments during the recent period, likely due to the lower price on thermal coal being sold into Europe.

Flooding resulting from Midwestern storms earlier this year also continued to impact coal miners in the region as high and swift waters on the Mississippi River delayed shipments to the Gulf of Mexico. Conditions are expected to normalize in the coming weeks.

Foresight Energy LP's and Murray Energy Corp.'s MC No. 1 mine produced the most coal in the region during the recent period with 3.3 million tons, a 2.7% increase from the year-ago quarter. The companies' Mach No. 1 mine rounded out the basin's top-five operations with about 1.6 million tons, roughly a 6.4% year-over-year decrease.

Foresight President and CEO Robert Moore said on an Aug. 7 earnings call that the Illinois Basin, as well as the other U.S. coal regions, would benefit from consolidation, adding that he thinks some companies are considering mergers or joint venture opportunities. While Foresight is not actively engaged in such discussions, he said, the industry seems to be considering those options more closely than in the past, which may lead to more consolidation of some sort in the coming months.

If the export market does not improve in the near-term, coal producers may be forced to sell more coal in the domestic market instead. Moore said Foresight's low-cost operations could compete with every other basin.

"If these export markets aren't there, then we're poised to take domestic share," Moore said. "And that's what we're going to do."

Alliance Resource Partners LP's River View coal mine, the basin's second-largest, produced nearly 2.8 million tons of coal during the recent period, a 20.7% increase from the second quarter of 2018. But the company's next three largest mines in the region saw a year-over-year decrease in output during the period. The company's Gibson South mine produced about 1.4 million tons while its No. 1 mine produced about 1.3 million tons during the period, respective declines of 14.3% and 26.5% from the year-ago quarters.

The coal miner announced on its first-quarter call that it needed to reduce its expectations for export sales and growth plans in the Illinois Basin in 2019. President and CEO Joseph Craft said on Alliance's second-quarter call that domestic and international coal markets fell even further than the company anticipated during the recent period, and it lowered its 2019 full-year coal sales and production volume guidance.

"The combination of persistent transportation challenges in the United States, which disrupted export shipments, and excessive stockpiles in Europe, moderate springtime temperatures and competition from low natural gas and LNG prices have pressured coal demand and prices," Craft said. "... Today, market conditions are fluid and volatile, creating uncertainty throughout the entire coal industry."

Alliance and Peabody Energy Corp. both recently announced that they will shutter a coal mine in the region, which experts said may signal the start of consolidation in the Illinois Basin. Peabody will close its Somerville Central mine in Indiana, and Alliance will shut down its Dotiki mine in Kentucky.

Peabody's President and CEO Glenn Kellow said earlier this year that the company will scale back some of its Illinois Basin operations because of pricing in the region. The company has focused more on its metallurgical coal assets this year as well.

CFO Amy Schwetz said on the company's second-quarter earnings call that its Midwestern assets are fully committed this year.

"We're not heavily dependent, in fact, we export little to no coal out of the Illinois basin that would factor into our sales plans," she said.

Hallador Energy Co.'s two best mines in the basin, Oaktown Fuels No. 1 and Oaktown Fuels No. 2, both produced significantly less coal during the recent quarter than in the year-ago period, decreasing by 9.6% and 34.2%, respectively. CEO Brent Bilsland said that though the producer shipped 15% less volume in the second quarter compared with the first, Hallador is still on track to reach its 8 million-ton target for the year. The company has 77% of its sales contracted over the next 3.5 years, he said.