Westmoreland Reports First Quarter 2011 Results

Westmoreland Coal Company (NASDAQ:WLB) today reported its first quarter
results for 2011.

Highlights:

• 
  Operating income increased $2.1 million (40.0%) from $5.3 million in
  Q1 2010 to $7.4 million in Q1 2011.
  
• 
  Adjusted EBITDA increased $2.1 million (9.7%) during Q1 2011 to $23.3
  million as compared to $21.2 million in Q1 2010.
  
• 
  Net loss applicable to common shareholders of $18.0 million ($1.45 per
  basic and diluted share) for Q1 2011 which included $17.0 million of
  losses on the extinguishment of debt and a $3.2 million conversion
  premium on the Company′s convertible notes pursuant to the first
  quarter bond issuance and refinancing. The Q1 2010 net loss was $3.2
  million ($0.30 per basic and diluted share).
  
• 
  Total revenues were $127.8 million for Q1 2011, 1.0% higher than
  revenues for Q1 2010. This was accomplished on lower volume due to the
  expiration of an unprofitable coal contract.
  
• 
  Westmoreland again continued its strong safety performance achieving
  reportable and lost time incident rates approximately 20.0% and 29.8%,
  respectively, of the national averages for surface operations for the
  first quarter of 2011.
  
• 
  During the first quarter of 2011, Westmoreland′s Beulah Mine received
  the Lignite Energy Council′s Safety Excellence Award for the mine or
  plant with the lowest accident incident rate in the lignite industry
  and Westmoreland′s Jewett Mine received the 2011 Railroad Commission
  of Texas Coal Mining Reclamation Award for its 'Wilkerson Springs
  Creek Relocation.?
  

'The first quarter of 2011 was the sixth straight quarter in which we
increased our operating profit and adjusted EBITDA over the prior year
quarter,? said Keith E. Alessi, Westmoreland′s President and CEO. 'As
previously announced, we incurred substantial charges during the quarter
related to the refinancing of debt and placement of our senior
subordinated debt issuance in February 2011. The expiration of an
unfavorable coal contract led to improved results in our coal operation
despite lower sales. Strong hydro-power conditions combined with
scheduled maintenance shutdowns by our coal customers and our ROVA plant
will negatively impact our Q2 2011 versus the Q2 2010 results. However,
this is in line with our expectations.?

'We are very pleased with our safety performance during the first
quarter of 2011. We once again beat the national surface mine averages
by a significantly large margin due to the continuation of our Beulah
Mine′s award winning safety performance. We are also extraordinarily
proud of the reclamation award that our Jewett Mine recently received
from the Railroad Commission in Texas. These achievements underscore our
commitment to safe and responsible mining practices.?

Westmoreland′s Q1 2011 net loss includes $17.0 million of losses on the
extinguishment of debt and $3.2 million of mark-to-market expense from
the conversion of the Company′s previously outstanding convertible
notes. Westmoreland′s Q1 2010 net loss included $4.8 million of expense
related to the valuation of the conversion feature in the Company′s
convertible notes. Excluding the $20.2 million of refinancing and debt
conversion expense in Q1 2011 and the $4.8 million of mark-to-market
expense on the convertible debt in Q1 2010, the Company′s net loss
decreased by $0.6 million.

The Company′s revenues in Q1 2011 increased to $127.8 million compared
with $126.4 million in Q1 2010. This revenue increase was driven by
stronger tonnage sales and favorable pricing at the Company′s Absaloka
Mine which offset the expiration of an unprofitable coal contract at its
Rosebud Mine.

Westmoreland′s Adjusted EBITDA increased to $23.3 million in Q1 2011
from $21.2 million in Q1 2010.

Coal Segment Operating Results

The following table summarizes the Company′s Q1 2011 and Q1 2010 coal
segment performance:

The Company′s coal revenues for the first quarter of 2011 were $104.1
million. Sales increased on stronger tonnages by its Absaloka Mine that
offset the expiration of an unprofitable coal contract at the Rosebud
Mine. The expiration of the unprofitable coal contract also drove Q1
2011 increases in the Company′s coal segment operating income and
Adjusted EBITDA.

Power Segment Operating Results

The following table summarizes the Company′s Q1 2011 and Q1 2010 power
segment performance:

The Company ′s power segment revenues for the first quarter of 2011
increased to $23.6 million compared to $22.9 million in first quarter
2010. This $0.7 million increase is primarily from contractual price
increases, which also drove the increases in operating income and
Adjusted EBITDA.

Heritage Segment Operating Results

The Company′s first quarter 2011 heritage operating expenses remained
comparable to the reduced first quarter 2010 levels of $4.3 million.
Heritage segment Adjusted EBITDA remained at a negative $4.2 million in
Q1 2011 and Q1 2010.

Corporate Segment Operating Results

The Company′s corporate segment operating expenses for the first quarter
of 2011 were $1.8 million, which was comparable to $1.9 million in the
first quarter of 2010. Corporate segment Adjusted EBITDA improved to a
negative $1.2 million in Q1 2011 from a negative $1.6 million in Q1 2010.

Nonoperating Results

The Company′s interest expense for the first quarter of 2011 increased
to $7.0 million compared with $5.7 million for the first quarter of 2010
due to the higher overall debt levels resulting from the Company′s bond
offering.

The Company′s other expense for the first quarter of 2011 decreased to
$3.0 million compared with $3.8 million of expense for the first quarter
of 2010. Excluding the impact of the expense on the conversion feature
in the Company′s convertible debt, its other expense increased $0.6
million primarily due to gains on sales of securities during the first
quarter of 2010.

Cash Flow from Operations and Liquidity

Cash provided by operating activities increased by $2.9 million during
Q1 2011 compared to Q1 2010 driven by the Company′s increase in
operating profit.

Following Westmoreland′s first quarter bond offering and improved
profits, the Company anticipates that its cash flows from operations,
cash on hand and available borrowing capacity will be sufficient to meet
its investing, financing, and working capital needs for several years.

Conference Call

A conference call regarding Westmoreland Coal Company′s first quarter
2011 results will be held on Monday, May 9, 2011, at 10:00 a.m. Eastern
Time. Call-in instructions are available on the Company′s website and
have been provided in a separate news release.

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 first quarter of 2011 of 0.37 and 0.37 versus the national surface
mine rates of 1.85 and 1.24, respectively. The reportable incident rate
and lost time rate for the first quarter of 2011 compared favorably to
the first quarter 2010 rates of 0.65.

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 cash
flows from operations, cash on hand and available borrowing capacity
will be sufficient to meet its investing, financing, and working capital
needs for the next several years.

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 statements. 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 and waiver agreement 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;
  
• 
  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.

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.

Westmoreland Coal Company

Kevin Paprzycki, 719-442-2600