Judging by the heavy action and soaring stock prices at two coal miners on Thursday, an observer may be forgiven for thinking that all the natural gas in the U.S. had suddenly evaporated. Arch Coal Inc. (NYSE: ACI) closed at $2.77 a share on Wednesday and soared nearly 60% to an intraday high of $4.43 before closing Thursday at $3.81, up a mere 37.5%. Volume of about 7.3 million was more than five times better than the daily average of 1.4 million.

Peabody Energy Co. (NYSE: BTU) closed at $1.13 on Wednesday and jumped 27% to $1.44 on Thursday, before settling at $1.41 at the closing bell. Share volume was close to 18.5 million, more than double the average of 8.2 million.

Even at their current depressed prices, these are big moves, and some is surely due to momentum. Once respectably valued stocks these two still retain some of that respectability among investors who appear to believe that both are strong enough to weather the extended downturn in coal demand.

There do appear to be a couple of variations on one reason for the jump in both stocks. Arch Coal has once again extended the deadline for its proposed debt swap, which had been set to expire on September 23. The new deadline to restructure some $5.1 billion in debt is October 26.

As long as the debt holders who oppose the debt swap hold out, stockholders have at least an even chance of recovering their investment, and that’s why the stock price jumps whenever Arch announces an extension. If the company is able to effect the swap, the odds rise that a bankruptcy will follow and that stockholders will be left with nothing.

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Peabody shareholders voted last week in favor of a reverse stock split at a ratio of one for 15 on shares of its common stock to be effective at the opening bell on October 1, reducing the number of outstanding shares from about 278 million to approximately 19 million. Then on Wednesday, Bloomberg reported that Peabody had hired the law firm of Davis Polk & Wardwell to begin discussions leading to the restructuring of Peabody’s $6.3 billion of debt.

Creditors holding about $1.17 billion of the first-lien term loan are concerned, as are the debt holders at Arch Coal, that any restructuring will result in dilution in the value of the assets that secure their loan. Peabody has not confirmed that it is seeking to restructure its debt, but the company did say in presentation last week that it has a deleveraging goal.

Coal miners Walter Energy and Alpha Natural Resources restructured their debt and still filed for bankruptcy within 12 months. That fate most likely awaits both Arch and Peabody.

To add insult to injury, on Wednesday a federal court in Wyoming tossed out a suit by Peabody to have the lyrics from a well-known John Prine song struck from a federal lawsuit against the company. The chorus to Prine’s song has been a thorn in Peabody’s side practically since the tune was first released in 1971:

Oh, daddy won’t you take me back to Muhlenberg County,
Down by the Green River where Paradise lay.
Well I’m sorry my son but you’re too late in asking,
Mr. Peabody’s coal train has hauled it away.

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Arch appears to be hanging on to most of its Thursday gains, trading down just 2% midday Friday, at $3.72 in a 52-week range of $1.00 to $29.30.

Peabody’s shares were down more than 11% to $1.25, in a 52-week range of $0.99 to $12.53.

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