Westmoreland Reports 2011 Year End Results

Westmoreland Coal Company (NasdaqGM:WLB) today reported its results for
2011.

Highlights:

• 
  Adjusted EBITDA decreased $8.5 million (10.4%) during 2011 to $73.1
  million as compared to $81.6 million in 2010. The decrease was due to
  the prolonged hydro electric power season and subsequent flooding that
  affected the first three quarters of the year and approximately $4.4
  million in black lung and worker′s compensation charges that were
  recorded in the fourth quarter, caused by changes in discount rates
  and medical cost projections.
  
• 
  Net loss applicable to common shareholders of $34.5 million ($2.61 per
  basic and diluted share) for 2011 compared to 2010 net loss of $1.9
  million ($0.17 per basic and diluted share). The 2011 net loss
  includes $17.0 million in charges related to the refinancing of debt,
  and a $3.2 million fair value adjustment expense on the conversion of
  convertible debt, associated with $150 million of senior secured notes
  issued by the company during the first quarter. The 2011 net loss also
  includes the aforementioned $4.4 million of black lung and workers′
  compensation expenses. The majority of the remaining difference was
  due to the impact of the hydro electric power season and approximately
  $1.1 million in costs related to relocating the company headquarters
  to the Denver area.
  
• 
  Westmoreland′s 2011 safety results set new performance bests for the
  company as it achieved lost time and reportable incident rates of
  51.2% and 52.8%, respectively, of the national averages for surface
  operations for the year.
  
• 
  During the fourth quarter of 2011, Westmoreland announced it had
  signed an agreement to purchase Chevron′s Kemmerer, WY coal mine. The
  acquisition of the Kemmerer Mine and related financing transaction
  were closed in January 2012.
  

'2011 presented numerous unexpected adversities for our customers that
negatively impacted our operations,? said Keith E. Alessi,
Westmoreland′s President and CEO. 'The year started off with
unprecedented snow pack in the Cascades which led to one of the longest
hydro electric generation seasons on record. This was followed by
flooding across the Northern tier, which delayed and disrupted rail
movements. Finally, in November, one of our customers experienced a fire
at one of their units, which forced it to shut down, pending repairs.
The first $2.0 million in losses, which will impact us primarily in the
first quarter of 2012, is covered by our captive insurance company, and
we expect remaining losses to be covered by our business interruption
insurance. I am proud of the fact that we not only reacted quickly and
prudently to these issues, but we were able to post very respectable
results as measured by EBITDA. Our EBITDA for the year was only down
10.4% in the face of these significant adverse events, from 2010, which
was a record year. This is strong testimony to the strength of our cost
plus business model and the tenacity of the management team in managing
costs.

We were also able to make significant progress on a number of strategic
fronts during the year. We improved our liquidity with a February senior
secured note offering. This set the stage for us to acquire additional
coal reserves at our WRI operation and allowed us to successfully enter
into an agreement with Chevron Mining Inc., late in December, to acquire
the Kemmerer Mine. We seamlessly relocated the corporate headquarters to
the Denver area during the year and we are extremely proud that we had a
record safety performance year.

We closed on the Kemmerer acquisition and the related financing in
January 2012. We are encouraged by the early results at Kemmerer and the
integration is going well. We look forward to continuing to execute our
strategic initiatives, and improving our overall results during 2012.?

Safety

We received state and industry safety awards during the year. The 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 Rocky Mountain Coal Mining Institute Surface Mine Safety
Award, small mine category, for the surface mine with the lowest
reportable rate of incidents. The Rosebud Mine received the 2011
President′s Safety Award. During 2011, we continued to maintain
reportable and lost time incident rates significantly below national
averages as indicated in the table below.

Financial Results

Westmoreland′s 2011 net loss income includes $17.0 million of charges
related to the refinancing of debt in February 2011 and $3.2 million of
expense on the fair value adjustment on the conversion feature in the
company′s convertible debt that was converted to common stock and
retired in February 2011. Fiscal year 2011 also includes $1.1 million of
expense related to the company′s corporate office relocation. Fiscal
year 2010 net loss included $4.8 million of expense related to the
impact of the fair value adjustment of the conversion feature and the
related debt discount amortization. Excluding those items, net loss
increased by $16.1 million.

The company′s revenues in 2011 decreased to $501.7 million compared with
$506.1 million in 2010. Westmoreland′s Adjusted EBITDA decreased to
$73.1 million in 2011 from $81.6 million in 2010. These decreases were
primarily driven by record hydro electric power conditions that
displaced customers′ coal-generated power, flooding conditions that
disrupted rail service, and to a lesser degree, a fire at a key
customer′s plant.

Coal Segment Operating Results

The following table shows comparative coal results between 2011 and 2010:

The company′s coal revenues for 2011 decreased to $414.9 million
compared with $418.1 million in 2010. Coal segment revenues decreased
primarily because of the favorable hydro electric power conditions,
which displaced Westmoreland′s customers′ coal-generated power. Coal
revenues also decreased due to flooding conditions, which disrupted rail
service at the Absaloka Mine and, to a lesser degree, a fire at a key
customer′s plant in late 2011.

Coal segment operating income decreased to $27.5 million in 2011
compared to $32.9 million in 2010. Coal segment operating income
decreased primarily from the same factors that decreased coal segment
revenues discussed above.

Coal segment Adjusted EBITDA decreased to $76.8 million in 2011 compared
to $81.7 million in 2010.

Power Segment Operating Results

The following table shows comparative power results between 2011 and
2010:

The company′s power segment revenues for 2011 decreased to $86.8 million
compared to $88.0 million in 2010. Power segment revenues for 2011
decreased primarily due to longer planned maintenance outages.

Power segment operating income increased to $12.1 million in 2011
compared to $11.7 million in 2010. Operating income increased due to the
fact that in 2010, ROVA executed a planned major maintenance project
which occurs every five years. Maintenance expenses were therefore
significantly lower in 2011 and the decrease in maintenance expense was
partially offset by the reduction in revenues discussed above.

Power segment Adjusted EBITDA increased to $23.2 million in 2011
compared to $22.7 million in 2010.

Heritage Segment Operating Results

The company′s 2011 heritage costs were $19.7 million compared to $16.0
million in 2010. Heritage segment operating expenses for 2011 increased
primarily due to updated cost projections and unfavorable discount rate
changes related to black lung and workers′ compensation benefit
liabilities.

Heritage segment Adjusted EBITDA increased to a negative $19.7 million
in 2011 from a negative $16.0 million in 2010.

Corporate Segment Operating Results

Corporate segment operating expenses for 2011 increased $1.1 million
compared with expenses for 2010 primarily due to office relocation
expenses. Corporate segment Adjusted EBITDA increased to a negative $7.2
million in 2011 from a negative $6.8 million in 2010.

Nonoperating Results (including interest expense,
interest income, other income (loss), income tax benefit, and net loss
attributable to noncontrolling interest)

Interest expense for 2011 increased to $29.8 million compared with $23.0
million for 2010 primarily due to the higher overall debt levels
resulting from the offering of senior secured notes in February 2011.
Interest income for 2011 decreased to $1.4 million compared with $1.7
million for 2010 due to lower interest rates. Other loss for 2011 was
comparable to 2010. Income tax benefit for 2011 increased to $0.4
million compared with $0.1 million for 2010 due to lower taxable income.
Noncontrolling interest for 2011 increased to $3.8 million compared with
$2.6 million for 2010 due to an increase in the noncontrolling interest
adjustment to reduce losses from a partially owned consolidated coal
segment subsidiary.

Cash Flow from Operations

Cash provided by operating activities in 2011 remained consistent with
cash provided by operating activities in 2010. The decreases caused by
record hydroelectric power conditions, flooding conditions that
disrupted rail service, and a fire at a key customer′s plant were offset
with decreases in payments for postretirement medical, pension and asset
retirement obligation liabilities.

Cash used in investing activities increased $4.5 million in 2011
compared to 2010 primarily as a result of the $4.0 million deposit paid
for the Kemmerer Mine acquisition. Additions to property, plant and
equipment increased to $27.6 million in 2011 compared to $22.8 million
in 2010.

Cash provided by financing activities increased by $34.8 million in 2011
compared to 2010, primarily as a result of the offering of senior
secured notes in February 2011.

Westmoreland′s working capital deficit at December ?31, 2011 decreased by
$14.1 million to $21.7 million compared to a $35.8 million deficit at
December ?31, 2010 primarily as a result of a $25.0 million increase in
cash and cash equivalents primarily due to the offering of senior
secured notes in February 2011.

Conference Call

A conference call regarding Westmoreland Coal Company′s 2011 results
will be held on Thursday, March ?1, 2012, 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.

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, Mr. Alessi′s comments that we expect
our results to continue to improve in 2012, we expect remaining losses
to be covered by our business interruption insurance, and Mr. Alessi′s
comments relating to the results at and integration of Kemmerer.

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:

• 
  uncertainties related to performance of the Kemmerer Mine following
  completion of the Kemmerer acquisition and the integration of the
  Kemmerer Mine into our operations;
  
• 
  unforeseen liabilities associated with the Kemmerer acquisition or the
  risk that liabilities assumed in the Kemmerer acquisition will exceed
  our current estimates;
  
• 
  effective management of the Company′s expanded operations following
  the Kemmerer acquisition;
  
• 
  risks associated with our estimated postretirement medical benefit and
  pension obligations, including those we are assuming in the Kemmerer
  acquisition, and the impact of regulatory changes on those obligations;
  
• 
  changes in our black lung obligations, including those we are assuming
  in the Kemmerer acquisition, changes in our experience related to
  black lung claims, and the impact of the Patient Protection and
  Affordable Care Act;
  
• 
  our potential inability to maintain compliance with debt covenant
  requirements;
  
• 
  whether and when we will enter into the new revolving credit facility;
  
• 
  competition with natural gas and other non-coal energy resources,
  which may be increased as a result of energy policies, regulations and
  subsidies or other government incentives that encourage or mandate use
  of alternative energy sources;
  
• 
  coal-fired power plant capacity, including the impact of environmental
  regulations, energy policies and other factors that may cause
  utilities to phase out or close existing coal-fired power plants or
  reduce construction of any new coal-fired power plants;
  
• 
  railroad, export terminal capacity and other transportation
  performance, costs and availability;
  
• 
  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;
  
• 
  our 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 Westmoreland Energy LLC′s and
  its subsidiaries, collectively referred to herein as ROVA, contracts
  with its 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 our
  operations or those of our major power generating customers, including
  unplanned outages at our customers due to the impact of
  weather-related variances or catastrophic events;
  
• 
  the potential that insurance proceeds from our business interruption
  claim relating to the unexpected shutdown of one of the Absaloka mine
  customers will not be sufficient to cover our losses associated with
  the business interruption;
  
• 
  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
  
• 
  other factors that are described in 'Risk Factors? herein
  

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.

About Westmoreland Coal Company

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, sub-bituminous mining in Wyoming, 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.

Westmoreland Coal Company and Subsidiaries

Summary Financial Information (Unaudited)

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, 720-354-4489