Arco Venture to Buy Coal Operations From Coastal

Atlantic Richfield Co. said Thursday that its venture with Japan’s Itochu Corp. will buy Western coal operations from Coastal Corp. for $615 million.

Houston-based Coastal said the sale of the operations--now held by Coastal States Energy Co.--will let it pay down debt and focus on petroleum exploration and production and natural gas transmission.

“The proceeds will provide enhanced financial flexibility to take advantage of higher-growth opportunities,” said David A. Arledge, Coastal’s chief executive.

Shares of Coastal fell $1.125 to close at $44. Arco shares fell $1.625 to close at $132.275.

The operations, composed primarily of three underground coal mines in Utah, would be held in a limited-liability company owned by subsidiaries of Arco, which would hold a 65% interest, and Itochu, which would hold a 35% interest.

The sale includes Coastal’s three Utah mines and a 9% stake in Los Angeles Export Terminal Co., which is building a terminal in the port of Los Angeles to ship coal to Pacific Rim countries.

Arco Coal Co., a division of L.A.-based Arco that operates the Black Thunder and Coal Creek surface mines in Wyoming and the West Elk underground mine in Colorado, would manage the new firm.

Coastal’s Western coal businesses include about 300 million tons of reserves. They sold 9.8 million tons of coal in 1995.

The sale is subject to regulatory approvals.