Patriot Coal Corp. (PCX) Tuesday said its fourth-quarter net income surged, as the coal producer's revenues grew from higher prices and increased production.

But the St. Louis company reported unused borrowing capacity could drop to $60 million by the end of next month, and earnings fell short of analysts' expectations after being adjusted for below-market contracts from the acquisition of Magnum Coal Co., which closed last year.

Shares of Patriot were recently up 2.4% to $5.91 apiece.

Patriot, a producer in Appalachian and Illinois Basin, reported net income of $65.2 million, or 85 cents a share, up from a loss of $57.7 million, or $2.17 a share, a year earlier. Revenue climbed 113% to $541 million.

Analysts forecast, on average, a per-share loss of 70 cents on revenue of $499 million, according to a poll by Thomson Reuters. Analyst estimates were based on a purchase price accounting adjustment, which results in an actual quarterly loss of an estimated 81 cents a share.

U.S. coal producers are cutting production in an attempt to support prices that have fallen sharply as demand from power producers and steelmakers has slumped.

Patriot suffered reduced production levels at two mines because of geological conditions, but expects conditions to return to normal in the coming months. Tons sold for the quarter increased 85%, but the company said it faces customer deferral and cancellations for coal delivery for steel production.

Patriot estimates sales will grow this year 26% to 32% with cost per ton for Appalachian coal ranging from $56 to $59. The company projects its unused borrowing capacity at the end of the fourth quarter at $126 million, but expects it will drop to $60 million to $95 million by the end of the first quarter of this year.

"Bad news generally outweighed good in this morning's release," wrote Dan Scott, an analyst with Dahlman Rose & Co., in a note to clients Tuesday. "Major cuts to previously contracted met tonnage and pricing as well as tight liquidity in the (first quarter of this year) are of particular concern,"

Patriot plans to keep capital spending flat for the year. Patriot announced plans to idle four mines in Central Appalachia and cut 400 jobs last month in response to market conditions.

-By Mark Peters, Dow Jones Newswires; 201-938-4604; mark.peters@dowjones.com