Westmoreland Reports Third Quarter 2010 Results

Westmoreland Coal Company (NYSE Amex:WLB) reports its third quarter 2010
results.

Highlights:

• Total revenues were $124.1 million for the quarter, 10.4% higher
  than revenues for the same period in the prior fiscal year. Year to
  date revenues increased 11.6% over 2009, from $339.0 to $378.2 million.
• Third quarter 2010 net income applicable to common shareholders was
  $2.5 million ($0.23 per basic and diluted share), compared to a net
  loss applicable to common shareholders in the third quarter 2009 of
  $7.8 million ($0.77 per basic and diluted share), an increase of
  132.1%.Year to date 2010 net income was $0.2 million, compared
  to a year to date net loss of $20.7 million in 2009 (an improvement of
  $2.12 per basic and diluted share).
• Operating income increased $17.6 million (180.4%) during the
  quarter from a loss of $9.8 million to an operating profit of $7.8
  million. Year to date operating income increased $34.9 million
  (171.0%) from a loss of $20.4 million to an operating profit of $14.5
  million.
• The company recorded a net expense of $0.4 million during the third
  quarter 2010 related to the valuation of the conversion feature in its
  convertible debt.In the third quarter of 2009, the Company
  recorded income of $1.2 million on the conversion feature. The company
  recorded a net expense of $0.9 million during the first nine months of
  2010 related to the conversion feature valuation, compared to $5.2
  million of income on the conversion feature in 2009.
• Westmoreland continued its strong safety performance into the third
  quarter of 2010 with reportable and lost time incident rates better
  than the national average for surface operations.

'I am pleased to announce that the third quarter was our second straight
profitable quarter and third straight quarter where operating income
increased over the prior year quarter,? said Keith E. Alessi,
Westmoreland′s President and CEO. 'All of our mining operations
increased their financial performance over the second quarter due to
productivity improvements and cost control. Our ROVA power facilities
also turned in a strong performance for the quarter. The results
generated by our operations, combined with cost reductions in heritage
costs, contributed to a $2.5 million net income for the third quarter
and a positive net income for the year to date. During the quarter we
successfully performed a major upgrade to our computer systems, on time
and under budget. This combined with other initiatives performed earlier
in the year, has resulted in all of our mining operations being on a
common and up-to-date information technology platform. During the
quarter, two of our mines received safety awards from the state of
Montana and after quarter end we were pleased that our ROVA power
facilities were also recognized for their outstanding safety record. We
are committed to running a safe and efficient business.?

Coal Segment

The following table shows comparative coal revenues, operating income
(loss) and production between periods:

Our coal segment revenues increased primarily due to an increase in tons
sold due to customer shutdowns in 2009, price increases under existing
coal supply agreements, and the start of new agreements including the
new cost-plus contract with our Rosebud Mine′s Unit 1&2 buyers.

Coal segment′s operating income was $8.9 million in the third quarter of
2010 compared to an operating loss of $0.1 million in the third quarter
of 2009. This $8.9 million increase was primarily driven by the factors
increasing revenue described above and strong cost management
performance.

Power Segment

The following table shows comparative power revenues, operating income
and production between periods:

Third quarter 2010 power segment revenues increased to $23.6 million
compared to $20.7 million in third quarter 2009. This $2.9 million
increase is primarily from increased megawatt hours sold as a result of
a planned maintenance outage occurring in the third quarter of 2009. A
comparable outage did not occur in 2010.

Power segment′s operating income increased to $5.1 million in the third
quarter of 2010 compared to $0.7 million in the third quarter of 2009.
This $4.4 million increase was primarily from increased megawatt hours
sold and decreased maintenance expenses as a result of the planned
maintenance outage discussed above.

Heritage Segment

Third quarter 2010 heritage operating expenses were $4.7 million
compared to $8.3 million in the third quarter of 2009. This $3.6 million
decrease was primarily due to the agreement we entered into to modernize
the method by which prescription drugs are provided to our retirees. In
addition, while we continue to work towards further heritage cost
reductions, selling and administrative costs decreased due to reduced
expenses associated with cost containment efforts. Finally, we
experienced a favorable change in the valuation of our Black Lung
liabilities due to changes in discount rates.

Corporate Segment

Corporate segment′s operating expenses for the third quarter of 2010
decreased to $1.4 million compared to $2.1 million in the third quarter
of 2009, primarily as a result of ongoing cost control efforts.

Other Income (Expense) and Income Tax Expense (Benefit)

The Company′s other expense for the third quarter of 2010 increased to
$5.1 million compared with $3.4 million of expense for the third quarter
of 2009. This is primarily due to the $0.4 million of 2010 expense and
the $1.2 million of corresponding income recognized in 2009 from the
valuation of the conversion feature in our convertible debt, and related
amortization of debt discount.

The Company′s third quarter 2010 income tax expense was $0.3 million
compared with $4.2 million of benefit in the third quarter of 2009. This
is primarily due to a $4.5 million non-cash tax benefit recognized in
2009.

Cash Flow from Operations

Cash provided by operating activities increased $10.1 million in the
nine months ended September 30, 2010, compared to the nine months ended
September 30, 2009. The $23.5 million increase in net income
significantly contributed to the increase in cash provided by operating
activities in the nine months ended September 30, 2010, which was offset
by a $15.1 million decrease in cash receipts due to a scheduled decrease
in the payments ROVA collects from its customer.

Liquidity

As a result of significant increases in operating profits, a decrease in
the Company′s heritage health benefit costs, its ability to access funds
from WRI′s revolving line of credit and an increase in WRI′s term debt,
the Company anticipates that its cash from operations and available
borrowing capacity will be sufficient to meet its cash requirements for
the foreseeable future. The Company projects that the margin by which it
will be able to meet its cash requirements will increase over the
remainder of 2010 and into 2011. The Company′s projections assume WRI′s
renewal of its revolving line of credit prior to its November 18, 2010
expiration. WRI is currently in discussions with its lender concerning
this renewal.

The Company believes it can satisfy its liquidity needs for the
foreseeable future without relying on proceeds from sales of assets or
securities or other capital-raising transactions.

Safety

Safety performance at Westmoreland mines continues to be significantly
better than the national average for surface operations. Westmoreland
mines had reportable and lost time incident rates year to date through
the third quarter of 0.98 and 0.74 versus the national surface mine
rates of 1.89 and 1.29, respectively. The reportable incident rate for
2010 compared favorably to the third quarter 2009 rate of 1.40. The lost
time rate for the third quarter of 2009 was slightly better than 2010 at
0.64.

Additional Information

Investors should refer to the attached Consolidated Statements of
Operations and Summary Financial Information, and the Company′s Form
10-Q for the period ended September 30, 2010, for additional information.

Westmoreland Coal Company is the oldest independent coal company in the
United States. The Company′s coal operations include coal 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 about Westmoreland Coal Company, visit www.westmoreland.com.

Forward-Looking Information

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, statements we make regarding our
projection that the margin by which we will be able to meet our cash
requirements will increase over the remainder of 2010 and into 2011, our
expectation that we will not need to rely on proceeds from the sale of
assets or securities or participate in other capital raising
transactions to satisfy liquidity needs for the foreseeable future and
our expectation that our cash from operations and available borrowing
capacity will be sufficient to meet our cash requirements for the
foreseeable future.

Forward-looking statements are based on our current expectations and
assumptions regarding our 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. Our actual results may
differ materially from those contemplated by the forward-looking
statements. We caution you therefore against relying on any of these
forward-looking statements. They are neither statements 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 our postretirement medical benefit and pension obligations
  and the impact of the recently enacted healthcare legislation;
  
• 
  changes in our black lung obligations, changes in our experience
  related to black lung claims, and the impact of the recently enacted
  healthcare legislation;
  
• 
  our potential inability to renew WRI′s revolving line of credit by
  November 18, 2010;
  
• 
  our potential inability to expand or continue current coal operations
  due to limitations in obtaining bonding capacity for new mining
  permits;
  
• 
  our potential inability to maintain compliance with debt covenant and
  waiver agreement requirements;
  
• 
  the potential inability of our subsidiaries to pay dividends to us due
  to restrictions in our debt arrangements, reductions in planned coal
  deliveries or other business factors;
  
• 
  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 EPA inquiries and regulations on the operations of ROVA;
  
• 
  the effect of mark-to-market accounting on the conversion feature of
  our convertible debt due to volatility in our stock price;
  
• 
  the effect of prolonged maintenance or unplanned outages at our
  operations or those of our major power generating customers;
  
• 
  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? under Part II,
  Item 1A of our third quarter 2010 Form 10-Q and under Part I, Item 1A
  of the 2009 Form 10-K.
  

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 them 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.

Westmoreland Coal Company

Keith Alessi, 719-442-2600