Westmoreland Forms Absaloka Coal LLC To Monetize Tax Credits

Westmoreland Coal Company (NYSE Alternext US:WLB) announced today that its Westmoreland Resources, Inc. (“WRI”) subsidiary, which owns and operates the Absaloka Mine, has formed Absaloka Coal, LLC (“Absaloka Coal”) and partnered with an East Coast financial institution. Absaloka Coal will serve as the producer and seller of coal leased from the Crow Indian Tribe in Montana, and will benefit from Indian Coal Production Tax Credits available through Section 45(e) of the Internal Revenue Code provided under the Federal Energy Policy Act of 2005. Based on current forecasts of future production, the usage of the tax credits is expected to result in net pre-tax cash flows to Westmoreland of approximately $37 million through 2012. The transaction is subject to receipt of a favorable private letter ruling from the U.S. Internal Revenue Service (“IRS”) to confirm the qualification for the credits, and other contingencies.

D.L. Lobb, Westmoreland’s President and CEO, commented: “This cooperative transaction is a very unique opportunity that will benefit all parties involved. Westmoreland’s tax position has limited the benefit from the Indian Coal Production Tax Credits and a significant portion of the credits would expire unused. The Company recognized the need for an appropriate financial structure with a partner who had demonstrated success in similar tax credit arrangements. Today’s transaction provides the tool that we hope will allow more value of the credits to be realized. I want to recognize the long-standing relationship between Westmoreland and the Crow Tribe and the Tribe’s efforts to facilitate this transaction.”

“We will work diligently to pursue the necessary ruling, as well as continue to analyze potential improvements at the Absaloka Mine that could further increase the production of coal and therefore the tax credits available. However, while we believe that our private letter ruling request is reasonable, we cannot guarantee that the IRS will issue a favorable response,” added Lobb.

Investors are encouraged to review additional information regarding this announcement contained in a Form 8-K to be filed with the Securities and Exchange Commission.

Westmoreland Coal Company is the oldest independent coal company in the United States and a developer of highly clean and efficient independent power projects. 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. Westmoreland is dedicated to meeting America’s dual goals of low-cost power and a clean environment. For more information visit www.westmoreland.com.

Forward Looking Statements

Throughout this press release, the Company makes statements which are not historical facts or information and that may be deemed “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include, but are not limited to, the information set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations. For example, words such as “may,”"will,”"should,”"estimates,”"predicts,”"potential,”"continue,”"strategy,”"believes,”"anticipates,”"plans,”"expects,”"intends,” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, levels of activity, performance or achievements, or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions; the material weaknesses in the Company’s internal controls over financial reporting identified in the Annual Report on Form 10-K for the year ended December 31, 2007, or our 2007 Form 10-K, and the associated ineffectiveness of the Company’s disclosure controls; health care cost trends; the cost and capacity of the surety bond market; the Company’s ability to pay the preferred stock dividends that are accumulated but unpaid; the Company’s ability to retain key senior management; the Company’s access to financing; the Company’s ability to maintain compliance with debt covenant requirements or obtain waivers from its lenders in cases of non-compliance; the Company’s ability to achieve anticipated cost savings and profitability targets; the Company’s ability to successfully identify new business opportunities; the Company’s ability to negotiate profitable coal contracts, price reopeners and extensions; the Company’s ability to predict or anticipate commodity price changes; the Company’s ability to maintain satisfactory labor relations; changes in the industry; competition; the Company’s ability to utilize its deferred income tax assets; the ability to reinvest cash, including cash that has been deposited in reclamation accounts, at an acceptable rate of return; weather conditions; the availability of transportation; price of alternative fuels; costs of coal produced by other countries; the demand for electricity; the performance of ROVA and the structure of ROVA’s contracts with its lenders and Dominion Virginia Power; the effect of regulatory and legal proceedings; environmental issues, including the cost of compliance with existing and future environmental requirements; the risk factors set forth in our 2007 Form 10-K and our Form 10-Q for the quarter ended June 30, 2008; and the other factors discussed in Note 18 to our Form 10-Q for the period ended June 30, 2008. As a result of the foregoing and other factors, no assurance can be given as to the future results and achievement of the Company’s goals. The Company disclaims any duty to update these statements, even if subsequent events cause its views to change.