SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    Form 10-Q

            [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                  For the Quarterly Period Ended March 31, 1998

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the transition period from ____ to ____
                         Commission file number 1-13105

                                 ARCH COAL, INC.
             (Exact name of registrant as specified in its charter)


             Delaware                               43-0921172
  (State or other jurisdiction of                (I.R.S. Employer
  incorporation or organization)                Identification No.)

CityPlace One, Suite 300, St. Louis, Missouri          63141
(Address of principal executive offices)            (Zip Code)

CityPlace One, Suite 300, St. Louis, Missouri          63141
         (Mailing Address)                          (Zip Code)


        Registrant's telephone number, including area code (314) 994-2700

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ___

At May 11,  1998,  there were  39,664,202  shares of  registrant's  common stock
outstanding.





                                      INDEX


PART I.  FINANCIAL INFORMATION                                PAGE

    Item 1.     Financial Statements

    Condensed Consolidated Balance Sheets as of March 31, 1998 and
    December 31, 1997...........................................1

    Condensed  Consolidated  Statements  of  Income  for the  Three
    Months Ended March 31, 1998 and 1997........................2

    Condensed Consolidated Statements of Cash Flows for the
    Three Months Ended March 31, 1998 and 1997..................3

    Notes to Condensed Consolidated Financial Statements........4

    Item 2.   Management's Discussion and Analysis of
                    Financial Condition and Results of Operations
    7

    Item 3.   Quantitative and Qualitative Disclosures About
                          Market Risk..........................16

PART II.  OTHER INFORMATION

    Item 1.   Legal Proceedings................................17

    Item 4.   Submission of Matters to a Vote of Security
               Holders ........................................17

    Item 6.   Exhibits and Reports on Form 8-K.................18




                         PART I - FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
                                            March      December
                                              31,        31,
                                              1998       1997
                                            ---------  ---------
Assets                                      (Unaudited)
  Current assets
    Cash and cash equivalents               $ 12,605   $  9,177
    Trade accounts receivable                131,450    133,810
    Other receivables                         18,372     14,046
    Inventories                               60,226     50,419
    Prepaid royalties                         16,789     17,745
    Deferred income taxes                      8,506      8,506
    Other                                      7,814      9,475
                                            ---------  ---------
               Total current assets          255,762    243,178
                                            ---------  ---------

  Property, plant and equipment, net       1,099,947  1,149,926
                                            ---------  ---------

  Other assets
    Prepaid royalties                         36,269     20,826
    Coal supply agreements                   178,945    185,306
    Deferred income taxes                     46,123     44,023
    Other                                     12,568     13,065
                                            ---------  ---------
                 Total other assets          273,905    263,220
                                            ---------  ---------
                 Total assets             $1,629,614  $1,656,324
                                            =========  =========

Liabilities and stockholders' equity
  Current liabilities
    Accounts payable                      $  103,256   $ 84,692
    Accrued expenses                          94,575     88,082
    Current portion of long-term debt          7,510     29,500
                                            ---------  ---------
                 Total current liabilities   205,341    202,274
  Long-term debt                             193,125    248,425
  Accrued postretirement benefits other
     than pension                            325,586    323,115
  Accrued reclamation and mine closure       117,202    116,199
  Accrued workers' compensation               98,104     97,759
  Accrued pension cost                        22,829     21,730
  Other noncurrent liabilities                44,560     35,324
                                            ---------  ---------
                  Total liabilities        1,006,747  1,044,826
                                            ---------  ---------

  Stockholders' equity
    Common stock                                 397        397
    Paid-in capital                          472,534    472,425
    Retained earnings                        149,936    138,676
                                            ---------  ---------
             Total stockholders' equity      622,867    611,498
                                            ---------  ---------
             Total liabilities and 
               stockholders' equity        1,629,614  1,656,324
                                            =========  =========

See notes to condensed consolidated financial statements.




Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
                                                 Three Months Ended
                                                      March 31,
                                                  -----------------
                                                    1998     1997  
                                                  -------- --------
Revenues
  Coal sales                                      $298,964 $192,328
  Other revenues                                    13,600    6,133
                                                  -------- --------
                                                   312,564  198,461
                                                  -------- --------

Costs and Expenses
  Cost of coal sales                               270,905  171,540
  Selling, general and administrative expenses       7,510    4,898
  Amortization of coal supply agreements             6,361    2,116
  Other expenses                                     5,429    3,594
                                                  -------- --------
                                                   290,205  182,148
                                                  -------- --------
      Income from operations                        22,359   16,313

Interest expense, net:
  Interest expense                                 (3,804)  (3,553)
  Interest income                                      66      260
                                                  -------- -------
                                                   (3,738)  (3,293)
                                                  -------- -------
      Income before income taxes                   18,621   13,020
Provision for income taxes                          2,800    2,600
                                                  -------- -------
      Net income                                  $15,821  $10,420
                                                  ======== =======

Basic and diluted earnings per common share       $  0.40  $  0.50
                                                  ======== =======

Weighted average shares outstanding                39,659   20,948
                                                  ======== =======

Dividends declared per share                      $ 0.115  $ 0.108
                                                  ======== =======

See notes to condensed consolidated financial statements.




Arch Coal, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                  Three Months Ended
                                                       March 31,
                                                  ----------------
                                                   1998     1997
                                                  -------  -------
Operating activities
  Net income                                      $15,821  $10,420
  Adjustments to reconcile to cash
  provided by operating activities:
    Depreciation, depletion and amortization       38,868   28,296
    Prepaid royalties expensed                      4,241      975
    Net gain on disposition of assets              (8,350)    (377)
    Changes in:
      Receivables                                  (1,976)  (5,190)
      Inventories                                  (9,807)  (2,188)
      Accounts payable and accrued expenses        19,790   (1,902)
      Income taxes                                  3,173    2,568
      Accrued postretirement benefits               2,471    1,270
      Accrued workers' compensation benefits          345   (1,908)
      Accrued reclamation and mine closure          1,003   (2,043)
      Other                                         1,789    5,258
                                                  -------  -------
    Cash provided by operating activities          67,368   35,179
                                                  -------  -------

Investing activities
  Additions to property, plant and equipment      (17,340) (11,546)
  Proceeds from dispositions of property, plant
    and equipment                                   8,428      717
  Additions to prepaid royalties                  (18,728) (2,248)
                                                  -------  -------
    Cash used in investing activities             (27,640) (13,077)
                                                  -------  -------

Financing activities
  Payments on revolver and lines of credit        (70,150) (15,018)
  Payments on senior notes                         (7,140)  (7,140)
  Proceeds from sale and leaseback of equipment    45,442        -
  Dividends paid                                   (4,561)       -
  Proceeds from sale of common stock                  109        -
                                                   -------  -------

    Cash used in financing activities             (36,300) (22,158)
                                                  -------  -------

Increase (decrease) in cash and cash equivalents    3,428     (56)
Cash and cash equivalents, beginning of period      9,177   13,716
                                                  -------  -------
Cash and cash equivalents, end of period          $12,605  $13,660
                                                  =======  =======

See notes to condensed consolidated financial statements.





Arch Coal, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 1998
(Unaudited)

Note A - General
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting and Securities and Exchange Commission regulations,  but are
subject to any year-end  adjustments  which may be necessary.  In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  Results of operations for
the period ended March 31, 1998, are not necessarily indicative of results to be
expected  for the year ending  December  31, 1998.  These  financial  statements
should be read in conjunction  with the annual report of Arch Coal,  Inc. ("Arch
Coal" or the "Company"),  on Form 10-K for the year ended December 31, 1997. The
Company  produces  steam and  metallurgical  coal from surface and deep mines in
Illinois,  Kentucky,  West  Virginia,  Virginia and Wyoming for sale to utility,
industrial  and export  markets.  Some members of the  Company's  workforce  are
represented   by   various   labor   organizations.   Significant   intercompany
transactions and accounts have been eliminated in consolidation. Certain amounts
in the 1997  financial  statements  have been  reclassified  to conform with the
classifications  in the 1998 financial  statements  with no effect on previously
reported net income or stockholders' equity.

Note B - Acquisition Agreement

The Company has signed an agreement  to acquire  Atlantic  Richfield's  ("ARCO")
Colorado and Utah Coal  operations  and to  simultaneously  combine the acquired
ARCO  operations  and the  Company's  Wyoming  operations  with  ARCO's  Wyoming
operations  in a new joint  venture to be known as Arch Western  Resources,  LLC
("Arch  Western").  Arch  Western will be 99% owned by Arch Coal and 1% owned by
ARCO. The transaction is valued at approximately  $1.14 billion.  Arch Coal will
manage the joint venture. Closing has been scheduled for June 1, 1998.

Note C - Inventories

Inventories are comprised of the following:
                               March 31, 1998       December 31, 1997
                                          (In thousands)

      Coal                           $34,695       $25,359
      Repair parts and supplies       25,531        25,060
                                      ------        ------
                                     $60,226       $50,419
                                     =======       =======





Note D - Debt

Debt consists of the following:
                                           March 31, 1998   December 31, 1997
                                                   (In thousands)
   Indebtedness to banks under revolving 
    credit agreement, expiring in 2002         $125,000      $ 190,000
   Indebtedness to banks under lines of credit   31,872         36,302
   7.79% senior unsecured notes, payable
    annually through January 31, 2003            35,720         42,860
   Other                                          8,043          8,763
                                                  -----          -----
                                                200,635        277,925
   Less current portion                           7,510         29,500
                                                  -----         ------
   Long-term debt                               $193,125      $248,425
                                                ========      ========

On July 1, 1997,  concurrently with the Company's combination with Ashland Coal,
Inc.  ("Ashland  Coal"),  the Company entered into a new $500 million  revolving
credit  agreement and, on July 2, 1997, the Company  terminated the $200 million
facility.  The new revolving credit agreement has a five year term, and the rate
of interest on borrowings  under this agreement is, at the Company's  option,  a
money-market  rate  determined by a competitive  bid process,  the PNC Bank base
rate or a rate based on LIBOR.  The  Company is  currently  borrowing  under the
LIBOR option.

In connection with the transactions referred to in Note B, the Company requested
PNC  Markets,   Inc.  and  J.P.  Morgan  Securities,   Inc.   (collectively  the
"Arrangers")  to  arrange  a $1.575  billion  financing  for Arch  Coal and Arch
Western,  in the  aggregate.  While  the  facilities  for each  company  will be
structured to stand alone with no  cross-guarantees,  they will be structured to
allow for a substantially free flow of funds between Arch Western and Arch Coal.
In  support  of the  transaction,  PNC Bank,  National  Association  and  Morgan
Guaranty Trust Company of New York have committed $975 million and $600 million,
respectively,  for a total commitment of $1.575 billion. The financing, which is
currently  being  negotiated,  will consist of three 5-year  facilities:  a $675
million  non-amortizing  term  loan  to  Arch  Western,  a  $300  million  fully
amortizing term loan to Arch Coal, and a $600 million revolver to Arch Coal.

Borrowings under the new Arch Coal credit facilities will be used to finance the
acquisition of ARCO's Colorado and Utah coal operations, to pay related fees and
expenses,  to  refinance  existing  corporate  debt  and for  general  corporate
purposes. Borrowings under the Arch Western credit facility will be used to fund
a portion of a $700 million  cash  distribution  by Arch Western to ARCO,  which
distribution will occur  simultaneously  with ARCO's contribution of its Wyoming
coal  operations  to Arch  Western.  The Arch  Western  credit  facility  is not
guaranteed by the Company.

Note E - Contingencies

The Company is a party to numerous  claims and lawsuits  with respect to various
matters.  The Company  provides for costs  related to  contingencies,  including
environmental  matters,  when a loss is  probable  and the amount is  reasonably
determinable. The Company estimates that its probable aggregate loss as a result
of such claims is $5.2 million (included in Other Nonconcurrent Liabilities) and
believes that probable  insurance  recoveries of $.8 million  (included in Other
Assets) related to these claims will be realized. The Company estimates that its
reasonably  possible  aggregate  losses  from  all  material  currently  pending
litigation  could be as much as $ .9  million  (before  taxes)  in excess of the
probable loss previously  recognized.  After conferring with counsel,  it is the
opinion of  management  that the ultimate  resolution  of these  claims,  to the
extent not previously  provided for, will not have a material  adverse effect on
the consolidated financial position,  results of operations, or liquidity of the
Company.



A customer of the Company has  informed the Company that one of its power plants
will no longer provide baseload capacity to a public utility and instead will be
used to provide  peak  demand  only and,  as a result,  the plant  will  require
substantially less coal under the customer's existing above-market contract with
the Company.  The Company has filed a civil action in Federal  District court in
the Southern  District of West  Virginia  alleging  breach of contract and other
causes of action  against the customer in respect of the  customer's  failure to
comply  with the terms of this  contract.  As of March 31,  1998,  the  carrying
amount  of  acquisition   costs  allocated  to  this  coal  supply  contract  is
approximately  $16.2 million.  The Company's  current  estimates of undiscounted
cash  flows  indicate  the  carrying  amount  of this  asset is  expected  to be
recovered.

Note F - Change in Estimate and Other Non-Recurring Revenues and Expenses

The  Company's  operating  results for the three  months  ended March 31,  1998,
reflect  pre-tax  gains on the sale of surplus land  totaling $7.9 million and a
$5.3 million  operating  loss  (including  termination  benefits  totaling  $1.3
million ) at the  Company's  Mine No. 37 in  eastern  Kentucky  which  closed in
January  1998.  The  first  quarter  of 1997  results  included  a $3.3  million
reduction in the reclamation and mine closure reserve at the Company's  Illinois
operation  due to a change  in permit  requirements  and $3.1  million  in costs
associated  with  the  October  1996   impoundment   failure  at  Lone  Mountain
Processing, Inc.

Note G - Sale and Leaseback

On January 29, 1998, the Company sold mining equipment for  approximately  $74.2
million and leased back the  equipment  under an operating  lease with a term of
three years.  This included the sale and leaseback of equipment  purchased under
an existing  operating  lease that  expired on the same day. The proceeds of the
sale were used to  purchase  the  equipment  under the  expired  lease for $28.3
million and to pay down debt. The lease  provides for annual rental  payments of
approximately  $9.1 million,  $11.6  million,  $11.2 million and $2.7 million in
1998,  1999,  2000 and 2001,  respectively.  At the end of the lease  term,  the
Company has the option to renew the lease for two additional one year periods or
purchase the equipment  for  approximately  $51.1  million.  Alternatively,  the
equipment may be sold to a third party. In the event of such a sale, the Company
will be required to make payment to the lessor in the event,  and to the extent,
that the sale  proceeds  are less than $40.0  million.  The gain on the sale and
leaseback of $10.7 million was deferred and will be amortized over the base term
of the lease as a reduction of rental expense.






ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS

Reference is made to the "Contingencies,"  "Certain Risk Factors" and "Impact of
Year 2000" and "Factors  Routinely  Affecting  Results of  Operations"  sections
below for a  discussion  of  factors  that may cause  actual  results  to differ
materially from the  forward-looking  statements  (within the meaning of Section
27A of the Securities and Exchange Act of 1933 and Section 21E of the Securities
and Exchange Act of 1934) in the "Outlook" and "Liquidity and Capital Resources"
sections below, and elsewhere herein.

Results of Operations

Merger With Ashland Coal

On July 1, 1997,  Ashland  Coal merged with a  subsidiary  of the  Company,  and
18,660,054 shares of Company common stock were issued in the merger.  The merger
was accounted for as a purchase.

At the time of the merger,  Ashland  Coal was engaged in the mining,  processing
and  marketing of low-sulfur  bituminous  coal  primarily in the eastern  United
States, and Ashland Inc. ("Ashland") owned stock representing  approximately 57%
of the voting  power of Ashland Coal and 50% of the voting power of the Company.
Ashland  currently owns  approximately 55% of the Company's  outstanding  common
stock.

Comparisons  of 1998 to 1997 have been  materially  affected  by the merger with
Ashland Coal effective July 1, 1997.

Quarter Ended March 31, 1998, Compared
    to Quarter Ended March 31, 1997

Net income for the quarter ended March 31, 1998, was $15.8 million,  compared to
net income of $10.4  million for the quarter  ended March 31, 1997.  The results
for the  first  quarter  of  1998  were  impacted  by the  previously  announced
expiration of the high margin contract with Georgia Power at the end of 1997 and
the depletion of the longwall  reserves at the Company's  Mine No. 37 in eastern
Kentucky in September  1997. The current  quarter's  results were also adversely
affected by the January  closing of Mine No. 37 which had an  operating  loss of
approximately $5.3 million during the quarter,  including  termination  benefits
totaling $1.3 million.  The Company  decided to close the mine  primarily due to
poor  geologic  conditions.  In  addition,  the current  quarter's  results were
negatively  affected by reduced  shipments on a high margin  contract and severe
snow storms in West Virginia.

The reduced  shipments on the high margin contract  occurred upon the previously
announced  change of a customer's plant from a base load to a peak demand plant.
This  adversely  effected  net  income by  approximately  $1.0  million  for the
quarter.  These negative effects were offset,  in part, by pre-tax gains of $7.9
million on the sales of surplus land during the quarter.

Gross profit on coal sales (selling price less cost of sales) on a per-ton basis
decreased  $.40  from the first  quarter  of 1997.  The  average  selling  price
decreased $.27 per ton from the same quarter a year ago primarily reflecting the
aforementioned  Georgia  Power  contract  expiration.  The average  cost per ton
increased $.13 when compared to the quarter ended March 31, 1997.  Costs related
to closing Mine No. 37, the severe snow storms in West Virginia during the first
quarter of 1998 and the 1997 completion of  amortization on a 1993  unrecognized
net gain  related to  pneumoconiosis  (black  lung)  liabilities  were the chief
factors in the higher average per-ton cost.



Other  revenues were $7.5 million higher in 1998 than the same period in 1997 as
a result of the $7.9 million pre-tax gains from the sale of surplus land.

Selling,  general and  administrative  expenses increased $2.6 million primarily
due to the effects of the Ashland Coal merger.

Amortization  of  coal  supply  agreements   increased  $4.2  million  from  the
comparable  period in 1997.  That  increase was  primarily  attributable  to the
amortization of the carrying value of the Ashland Coal sales contracts  acquired
in the merger.

Other  expenses  increased  $1.8 million from the quarter  ended March 31, 1997.
This increase is principally  attributable  to higher  expenses at the Company's
Ark Land subsidiary, resulting from the merger with Ashland Coal.

First quarter 1998 interest  expense was $.3 million  higher than the comparable
period in 1997. The increase is attributable to the debt acquired in the Ashland
Coal merger offset by  substantial  debt  repayments  since March 1997 and lower
interest rates since March 1997.

The  estimated  annual  effective  income tax rate for 1998 is 5% lower than the
first  quarter  1997 rate.  Changes in  estimates  of annual  profitability  and
percentage  depletion  are  generally  the  primary  factors  in  the  Company's
effective income tax rate.

EBITDA  (income from  operations  before net  interest  expense,  income  taxes,
depreciation,  depletion  and  amortization)  was $61.2  million for the quarter
ended March 31, 1998  compared to $44.6 million for the same quarter a year ago.
The increase in EBITDA is primarily  attributable  to the additional  sales that
resulted  from the  merger  with  Ashland  Coal.  EBITDA  is a  widely  accepted
financial indicator of a company's ability to incur and service debt, but EBITDA
should not be  considered  in  isolation  or as an  alternative  to net  income,
operating income, or cash flows from operations,  or as a measure of a company's
profitability,  liquidity or performance  under  generally  accepted  accounting
principles.  The Company's  method of computing  EBITDA also may not be the same
method used to compute similar measures  reported by other companies,  or may be
computed  differently  by  the  Company  in  different  contexts  (i.e.,  public
reporting versus computations under financing agreements).

Outlook

The Company has signed an  agreement  to acquire  ARCO's  Colorado and Utah coal
operations and to  simultaneously  combine the acquired ARCO  operations and the
Company's  Wyoming  operations  with ARCO's  Wyoming  operations  in a new joint
venture to be known as Arch  Western  Resources,  LLC.  Arch Western will be 99%
owned  by Arch  Coal  and 1%  owned  by  ARCO.  The  transaction  is  valued  at
approximately  $1.14 billion,  and Arch Coal will manage the joint venture.  The
transaction will be accounted for as a purchase.  Closing has been scheduled for
June 1, 1998, and is subject to regulatory approvals and other customary closing
conditions.

Assuming the completion of this acquisition,  Arch Coal will become the nation's
second  largest coal  producer  with annual sales of nearly 110 million tons, or
roughly  10% of the  nation's  total coal  supply.  In 1997,  ARCO's  U.S.  coal
operations,  including  its 65% interest in Canyon Fuel,  generated  revenues of
$537 million and after-tax  operating  income of $51 million on the sale of 53.2
million tons of low-sulfur coal. On a pro forma basis assuming completion of the
ARCO transaction,  Arch Coal would have had total 1997 revenues of approximately
$1.8  billion,  total  assets at December  31, 1997 of $2.8  billion and debt at
December 31, 1997 of approximately  $1.4 billion.  ARCO's domestic  measured and
indicated coal reserves are currently  estimated to be approximately 1.3 billion
tons.  The  Company  believes  this  acquisition  would  place  Arch  Coal in an
excellent  position to serve the changing needs of Arch Coal's primary customers
- - the nation's electric utilities - as they prepare for more stringent clean air
requirements and a deregulated market place.



All of ARCO's domestic coal production to be acquired is compliance  coal, which
means that it meets the sulfur dioxide emissions requirements of Phase II of the
Clean Air Act. ARCO's U.S. coal  operations  include Thunder Basin Coal Company,
LLC ("Thunder Basin");  Mountain Coal Company,  LLC ("Mountain Coal"); and a 65%
interest in Canyon Fuel Company, LLC ("Canyon Fuel"). Thunder Basin operates the
Black  Thunder and Coal Creek mines in the Powder River Basin of Wyoming.  Black
Thunder is one of the nation's  largest coal mines with 1997  production of 37.7
million tons of low-sulfur compliance coal. Coal Creek produced 2.9 million tons
of coal in 1997. Mountain Coal operates the West Elk Mine in Colorado. With 1997
production  of 5.6 million tons of  low-sulfur  compliance  coal,  West Elk is a
highly productive longwall mine in the Mountain Bituminous Region.  During 1997,
Canyon Fuel produced  10.6 million tons of  low-sulfur  coal from three mines in
Utah.

In  connection  with  the ARCO  transactions  referred  to  above,  the  Company
requested PNC Markets, Inc. and J.P. Morgan Securities,  Inc.  (collectively the
"Arrangers")  to  arrange  a $1.575  billion  financing  for Arch  Coal and Arch
Western,  in the  aggregate.  While  the  facilities  for each  company  will be
structured to stand alone with no  cross-guarantees,  they will be structured to
allow for a substantially free flow of funds between Arch Western and Arch Coal.
In  support  of the  transaction,  PNC Bank,  National  Association  and  Morgan
Guaranty Trust Company of New York have committed $975 million and $600 million,
respectively,  for a total commitment of $1.575 billion. The financing, which is
currently  being  negotiated,  will consist of three 5-year  facilities:  a $675
million  non-amortizing  term  loan  to  Arch  Western,  a  $300  million  fully
amortizing term loan to Arch Coal, and a $600 million revolver to Arch Coal.

Borrowings under the new Arch Coal credit facilities will be used to finance the
acquisition of ARCO's Colorado and Utah coal operations, to pay related fees and
expenses,  to  refinance  existing  corporate  debt  and for  general  corporate
purposes. Borrowings under the Arch Western credit facility will be used to fund
a portion of a $700 million cash  distribution by Arch Western to ARCO. The Arch
Western credit facility is not guaranteed by the Company.

With respect to existing  operations,  management  has decided to  substantially
scale  back  coal  mining  operations  during  1998  at  the  Company's  Wyoming
operations  as a result of  oversupply  of competing  coals in this  market.  In
addition,  the Hobet 07 Complex and the Captain  Mine are  scheduled to close in
mid-1998  upon  depletion of their  economical  dedicated  reserves.  Production
losses as a result of mine  closures,  scaled-back  production and depletion are
expected  to be offset to some degree by Mingo  Logan's new surface  mine in the
Phoenix reserves, and an additional unit at Lone Mountain's Darby Fork mine.

Liquidity and Capital Resources

The  following is a summary of cash provided by or used in each of the indicated
types of activities during the three months ended March 31, 1998 and 1997:




                                          1998     1997
                                          ----     ----
       Cash provided by (used in):        (In thousands)
          Operating activities           $67,368  $35,179
          Investing activities           (27,640) (13,077)
          Financing activities           (36,300) (22,158)

Cash  provided by  operating  activities  increased in the first three months of
1998 from the level in the same period of 1997 due primarily to additional sales
resulting from the Ashland Coal merger and a significant increase in the balance
of  accounts  payable in the first  quarter of 1998.  The  increase  in accounts
payable resulted from an annual royalty payment of $16 million due at the end of
March, 1998, that was included in accounts payable at March 31, 1998.

The increase in cash used for  investing  activities  from the first  quarter of
1997 primarily  resulted from the $16 million annual royalty  payment  described
above.  This royalty  payment is on a lease that  Ashland  Coal  acquired in its
Dal-Tex Coal Corporation acquisition in 1992.

Cash used in financing  activities  reflects a reduction in  borrowings of $77.3
million  in the first  quarter of 1998 and $22.2  million in the same  period in
1997. A large portion of the increased debt repayments was due to the previously
announced  January 1998 sale and  leaseback of equipment  which  resulted in net
proceeds of $45.4 million.  The remaining increase resulted from a higher amount
of cash generated by operations in the first quarter of 1998 versus 1997.

The Company's capital expenditures in the three months ended March 31, 1998 were
$17.3  million.  Approximately  $3 million of these  expenditures  were to add a
third section to Lone Mountain's Darby Fork mine.  Equipment  purchased to start
up Mingo Logan's new surface mine in the Phoenix reserves totaled  approximately
$3 million  during the quarter.  The total cost of the equipment to start up the
mine is  estimated  to be $12  million.  The Company  estimates  that during the
remainder of 1998, capital expenditures will be approximately $94 million.

The Company entered into a five year, $500 million  revolving  credit  facility,
effective  July 1,  1997,  with a group  of  banks.  The  rate  of  interest  on
borrowings under the agreement is, at the Company's  option, a money-market rate
determined by a competitive bid process,  the PNC Bank base rate or a rate based
on LIBOR.  At March 31, 1998,  the Company had $125 million  borrowed  under the
revolving credit agreement.  The Company is negotiating a new credit facility in
connection  with the  acquisition of ARCO's U.S. coal  operations,  as discussed
above in Outlook.

The Company  periodically  establishes  uncommitted  lines of credit with banks.
These agreements generally provide for short-term borrowings at market rates. At
March 31, 1998,  there were $95 million of such  agreements  and  borrowings  of
$31.9 million outstanding under these agreements.

The Company also has  indebtedness  of $35.7  million at March 31,  1998,  under
senior  notes that were issued on January 29,  1993,  with  scheduled  principal
payments of  approximately  $7.1  million  that began on January 31,  1997,  and
continue on each January 31 thereafter until final maturity on January 31, 2003.

The Company has  historically  satisfied its working capital  requirements,  its
capital   expenditures   (excluding  major   acquisitions)  and  scheduled  debt
repayments from its operating cash flow. Cash  requirements  for the acquisition
of new business  operations  have generally been funded through a combination of
cash  generated  from  operating  activities,  utilization  of revolving  credit
facilities and the issuance of long-term  debt.  The Company  believes that cash
generated  from  operations  will  continue  to be  sufficient  to meet its 1998
working capital requirements,  anticipated 1998 capital expenditures  (excluding
major acquisitions) and scheduled 1998 debt repayments.




Contingencies

Reclamation

The Federal Surface Mining Control and Reclamation Act of 1977 and similar state
statutes  require that mine  property be restored in accordance  with  specified
standards and an approved reclamation plan. The Company accrues for the costs of
final mine closure  reclamation  over the  estimated  useful  mining life of the
property.  These  costs  relate to  reclaiming  the pit and  support  acreage at
surface  mines and  sealing  portals at deep  mines.  Other  costs of final mine
closure  common to both types of mining are  related  to  reclaiming  refuse and
slurry ponds.  The Company also accrues for reclamation that is completed during
the mining process prior to final mine closure.  The  establishment of the final
mine closure reclamation  liability and the other ongoing reclamation  liability
is  based  upon  permit   requirements  and  requires   various   estimates  and
assumptions, principally associated with costs and productivities.

The  Company  reviews  its entire  environmental  liability  annually  and makes
necessary  adjustments,  including  permit  changes and  revisions  to costs and
productivities to reflect current  experience.  These recosting  adjustments are
recorded to cost of coal sales. No adjustments were recorded in the three months
ended March 31, 1998. A favorable adjustment of $3.3 million was recorded in the
first  quarter of 1997 at the  Company's  Illinois  operation due to a change in
permit  requirements.  The Company's  management  believes it is making adequate
provisions for all expected reclamation and other associated costs.

Legal Contingencies

The Company is a party to numerous  claims and lawsuits  with respect to various
matters.  The Company  provides for costs  related to  contingencies,  including
environmental  matters,  when a loss is  probable  and the amount is  reasonably
determinable.  The  Company  estimates  that at  March  31,  1998  its  probable
aggregate  loss as a result of such claims is $5.2  million  (included  in Other
Noncurrent  Liabilities) and believes that probable insurance  recoveries of $.8
million (included in Other Assets) related to these claims will be realized. The
Company  estimates  that  its  reasonably  possible  aggregate  losses  from all
material  currently  pending  litigation could be as much as $.9 million (before
taxes) in excess of the probable loss previously  recognized.  After  conferring
with counsel,  it is the opinion of management  that the ultimate  resolution of
these  claims,  to the  extent  not  previously  provided  for,  will not have a
material  adverse  effect on the  consolidated  financial  position,  results of
operations, or liquidity of the Company.

On October 24, 1996, the rock strata  overlaying an old,  abandoned  underground
mine adjacent to the coal-refuse  impoundment used by an Arch Coal  subsidiary's
preparation plant failed,  resulting in an accidental discharge of approximately
6.3 million gallons of water and fine coal slurry into a tributary of the Powell
River  in Lee  County,  Virginia.  At the  request  of  the  U.S.  Environmental
Protection  Agency and the U.S.  Fish &  Wildlife  Service,  the  United  States
Attorney   for  the  Western   District  of  Virginia   has  opened  a  criminal
investigation  of  the  1996  incident.   Arch  Coal  is  cooperating  with  the
investigation,  the results of which are not expected  until sometime later this
year.

Certain Risk Factors

Credit risk - The Company markets its coal principally to electric  utilities in
the United States. As a group,  electric  utilities  generally are stable,  well
capitalized entities with favorable credit ratings.  Credit is extended based on
an evaluation of each  customer's  financial  condition,  and  collateral is not
generally required. Historically, the Company's credit losses have been minimal.



Price  risk - Selling  prices  for the  Company's  products  are  determined  by
long-term contracts and the spot market. Selling prices in many of the Company's
long-term  contracts are subject to adjustment,  including for changes in market
conditions.  Falling  market prices raise the price risk under these  contracts.
Spot prices fluctuate  primarily  because of changes in demand for and supply of
coal. Demand for coal in the short term is primarily driven by changes in demand
for electricity in the areas serviced by the utilities  purchasing the Company's
coal.  Demand for electricity in turn depends on the level of economic  activity
and other factors such as prolonged temperature extremes.  The supply of coal in
the spot  market  has  historically  been most  affected  by  excess  productive
capacity in the industry and short-term  disruptions,  sometimes  labor-related.
The coal  industry is highly  competitive,  and Arch Coal  competes with a large
number of other  coal  producers.  Factors  such as the  availability  of sulfur
dioxide emissions  allowances issued by the EPA, utility  deregulation,  and new
clean air regulations have had, or will have, the effect of further intensifying
interregional and international  competition  between producers.  Some competing
producers,  because of geological  conditions,  local labor costs,  or access to
inexpensive transportation modes, are able to produce and deliver coal into some
markets at a lower cost than the  Company.  These  competitive  factors  have an
impact on the Company's pricing.

Arch Coal's operating  subsidiaries purchase substantial amounts of power, fuel,
and  supplies,  generally  under  purchase  orders at current  market  prices or
purchase agreements of relatively short duration.

The Company's Apogee Coal Company  ("Apogee") and Hobet Mining,  Inc.  ("Hobet")
subsidiaries are covered by the National  Bituminous Coal Wage Agreement of 1998
("Wage  Agreement"),  which  provides  for  certain  wage  rates  and  benefits.
Employees of two other operating  subsidiaries  are covered by other  collective
bargaining  organizations,  and  employees  at  the  Company's  other  operating
subsidiaries  are not covered by a union  contract but are  compensated at rates
representative  of  prevailing  wage  rates in the  local  area.  Among  factors
influencing such wage rates are the wage rates paid under the Wage Agreement.

Although the Company cannot predict  changes in its costs of production and coal
prices  with  certainty,  Arch  Coal  believes  that  in  the  current  economic
environment of low to moderate inflation, the price adjustment provisions in its
older long-term  contracts will largely offset changes in the costs of providing
coal  under  those  contracts,  except  for those  costs  related  to changes in
productivity. However, the increasingly shorter terms of sales contracts and the
consequent  absence of price  adjustment  provisions  in such shorter  long-term
contracts  also makes it more likely that  increases  in mining costs during the
contract  term  will not be  recovered  by the  Company  through  a later  price
adjustment.  Further,  because  levels of general  price  inflation  are closely
linked to levels of economic  activity,  it is expected that changes in costs of
producing coal for the spot market may be offset in part by changes in spot coal
prices.  The Company  attempts to limit exposure to depressed spot market prices
which result from industry  overcapacity  by entering into long-term coal supply
agreements, which ordinarily provide for prices in excess of spot market prices.
In the event of a  disruption  of supply,  the Company  might,  depending on the
level of its sales commitments, benefit from higher spot prices if its own mines
were not affected by the disruption.

Interest  rate  risk - Arch  Coal  has  significant  debt  which  is  linked  to
short-term interest rates. If interest rates rise, Arch Coal's costs relative to
those  obligations  would also rise.  Because an increase  in interest  rates is
usually  an  outgrowth  of a  higher  level of  economic  activity  and  because
increased economic activity would likely lead to a higher demand for electricity
and  consequently  to higher spot prices for coal,  Arch Coal  believes that the
negative  effects of higher  interest  rates on Arch  Coal's  earnings  could be
partially  offset,  depending on the level of its sales commitments at the time,
by higher spot prices.



The Company  enters into  interest-rate  swap  agreements to modify the interest
characteristics  of  outstanding  Arch Coal debt. At March 31, 1998, the Company
had one  interest-rate  swap  agreement  having  a total  notional  value of $25
million.  This  agreement was used to convert  variable-rate  debt to fixed-rate
debt.  Under this agreement,  the Company pays a weighted  average fixed rate of
6.03% and is receiving a weighted average variable rate based upon 30-day LIBOR.
The remaining life on the swap at March 31, 1998, was approximately 55 months.

Impact of Year 2000

At the time of the  merger  of  Ashland  Coal  into the  Company,  the  entities
utilized  different  computer  systems.  In order to standardize  key financial,
informational and operational  computer systems, the Company is currently in the
process of replacing  its key systems.  The new  systems,  including  associated
software,  will be Year  2000  compliant.  The  system  replacement  project  is
estimated to be  completed  not later than the third  quarter of 1999,  which is
prior to any anticipated impact of year 2000 on the Company's operating systems.
The  Company  believes  that  with   modifications  to  existing   software  and
conversions  to new  software,  the Year 2000  issue  will not pose  significant
operational  problems for its computer systems.  However,  if such modifications
and conversions at the Company's  principal  operations are not made, or are not
completed on a timely basis, the current system's  inability to properly process
year 2000 data could have a material  adverse  effect on the  operations  of the
Company.

The total cost of these new systems is  estimated at  approximately  $5 million,
which  includes the purchase of new software and consulting  services.  All such
costs will be  capitalized.  As of March 31,  1998,  the  Company  has  incurred
approximately  $2.2  million in  software  and  consulting  costs.  The  Company
believes  that the total costs  associated  with  replacing  and  modifying  its
current  systems  will not have a  material  adverse  effect on its  results  of
operations.  Additional  systematic  efforts  are  being  made to  identify  and
evaluate  within  the  Company,  and  with  respect  to the  Company's  vendors,
suppliers,  and other entities with which it exchanges  electronic  information,
Year 2000 risk and  appropriate  steps to  eliminate  such risk at a  reasonable
cost.

The costs of the  project  and the date on which the  Company  believes  it will
complete the Year 2000  modifications  are based on management's best estimates,
which were derived utilizing  numerous  assumptions of future events,  including
the continued  availability  of certain  resources and other  factors.  However,
there can be no guarantee  that these  estimates  will be  achieved,  and actual
results could differ materially from those anticipated.

Factors Routinely Affecting Results of Operations

The  Company  sells a  substantial  portion of its coal  production  pursuant to
long-term  coal  supply   agreements,   and  as  a  consequence  may  experience
fluctuations in operating results in the future, both on an annual and quarterly
basis,   as  a  result  of  expiration  or   termination   of,  or  sales  price
redeterminations   or  suspensions  of  deliveries   under,   such  coal  supply
agreements.  Other short and long-term contracts define base or optional tonnage
requirements by reference to the customer's  requirements,  which are subject to
change  as  a  result  of  factors  beyond  the  Company's  (and  sometimes  the
customer's)  control,   including  utility  deregulation.   In  addition,  price
adjustment  provisions  permit a periodic  increase or decrease in the  contract
price to  reflect  increases  and  decreases  in  production  costs,  changes in
specified  price  indices or items such as taxes or  royalties.  Price  reopener
provisions  provide for an upward or downward  adjustment in the contract  price
based on market  factors,  and from time to time the  Company  has  renegotiated
contracts  after  execution to extend  contract term or to accommodate  changing



market  conditions.  The contracts also typically  include stringent minimum and
maximum coal quality  specifications  and penalty or termination  provisions for
failure  to  meet  such   specifications,   force  majeure  provisions  allowing
suspension of  performance  or termination by the parties during the duration of
certain  events  beyond the  control of the  affected  party,  and  occasionally
include  provisions that permit the utility to terminate the contract if changes
in the law  make it  illegal  or  uneconomic  for the  utility  to  consume  the
Company's  coal or if the utility has unexpected  difficulties  in utilizing the
Company's coal.  Imposition of new nitrous oxide emissions  limits in connection
with Phase II of the Clean Air Act in 2000 could result in price adjustments, or
in affected  utilities  seeking to  terminate or modify  long-term  contracts in
reliance  on  such  termination  provisions.  If the  parties  to any  long-term
contracts with the Company were to modify, suspend or terminate those contracts,
the Company could be adversely  affected to the extent that it is unable to find
alternative customers at the same or better level of profitability.

From time to time,  disputes with customers may arise under long-term  contracts
relating to, among other things, coal quality, pricing and quantity. The Company
may thus become  involved in  arbitration  and legal  proceedings  regarding its
long-term contracts.  There can be no assurance that the Company will be able to
resolve such disputes in a satisfactory manner.

The Company's  customers  frequently combine various qualities of coal, nuclear,
natural  gas and other  energy  sources  in their  generating  operations,  and,
accordingly,  their demand for coal of the kind  produced by the Company  varies
depending on price and transportation, regulatory, and other factors.

The Company's coal  production and sales are subject to a variety of regulatory,
operational,   geologic,   transportation,   and  weather-related  factors  that
routinely cause production to fluctuate.

Coal  mining is  subject  to strict  regulation  by  federal,  state,  and local
authorities.  The scope of the regulation includes  environmental and health and
safety matters, and permits are required to be obtained by mining companies, the
terms of which  permits  strictly  regulate  the  environmental  effects of coal
mining by the permittee.  Numerous  permits are required for mining  operations.
The Company believes all permits  required to conduct present mining  operations
have been obtained.  The Company  believes that, upon the filing of the required
information with the appropriate  regulatory agencies, all permits necessary for
continuing operations will be obtained. Nevertheless, the regulatory authorities
exercise considerable discretion in the timing of permit issuance.  Because both
private  individuals  and the public at large  possess  rights to comment on and
otherwise engage in the permitting  process,  including through  intervention in
the courts, no assurance can be made that all permits will be issued in a timely
manner or that permitting requirements will not be changed in a manner adversely
affecting the Company.

Geologic  conditions  within  mines are not  uniform.  Overburden  ratios at the
surface  mines  vary,  as do roof and floor  conditions  and seam  thickness  in
underground  mines.  These  variations  can be either  positive or negative  for
production.

Operational  factors affecting  production include anticipated and unanticipated
events. For example,  at Mingo Logan's  Mountaineer Mine, the longwall equipment
must be  dismantled  and  moved  to a new  area of the  mine  whenever  the coal
reserves in a segment of the mine, called a panel, are exhausted.  The size of a
panel varies, and therefore, the frequency of moves can also vary. Unanticipated
events,  such as the unavailability of essential  equipment because of breakdown
or unscheduled  maintenance,  could  adversely  affect  production.  Permits are
sometimes  delayed by unanticipated  regulatory  requests or processing  delays.
Timely completion of improvement  projects and equipment  relocation depend to a
large degree on availability of labor and equipment, timely issuance of permits,
and the weather.  Sales can be adversely  affected by fluctuations in production
and  by  transportation   delays  arising  from  equipment   unavailability  and
weather-related events, such as flooding.

Changes in  transportation  rates and service also  significantly  influence the
Company's results.  If lower costs are realized and freight rates are lowered as
a consequence of mergers among railroads,  operational changes or other factors,
the coal of some  producers  could  become less costly on a delivered  basis and
therefore  gain  competitive  advantage over the Company's coal in some markets.
Service disruptions and railcar shortages also may have an adverse effect on the
Company's sales and production.

Weather  conditions  can  also  have  a  significant  effect  on  the  Company's
production,  depending  on the  severity  and  duration  of the  condition.  For
example,   extremely  cold  weather  combined  with  substantial  snow  and  ice
accumulations  may  impede  surface  operations   directly  and  all  operations
indirectly  by making it difficult  for workers and  suppliers to reach the mine
sites.



The results of the third quarter of each year are normally adversely affected by
lower  production  and  resultant  higher costs  because of  scheduled  vacation
periods.  In addition,  costs are  typically  somewhat  higher  during  vacation
periods because of maintenance  activity carried on during those periods.  These
adverse  effects on the third quarter may make the third quarter not  comparable
to the other  quarters and not indicative of results to be expected for the full
year.

Apogee and Hobet operations are parties to the Wage Agreement. From time to time
in the past,  strikes and work stoppages have adversely  affected  production at
Apogee's and Hobet's mining  complexes.  Any future strike or work stoppage that
affected  these  operations  for a  prolonged  period  would have a  significant
adverse effect on the Company's results of operations.

Any  one or a  combination  of  changing  demand;  fluctuating  selling  prices;
contract  terminations;  unexpected  regulatory  changes;  routine  operational,
geologic,  transportation and weather-related factors; results of litigation; or
labor  disruptions  may occur at times or in a manner  that  causes  current and
projected  results of operations to deviate from  projections and  expectations.
Any  event  disrupting  substantially  all  production  at any of the  Company's
principal mines or preventing  expansion of existing mines or development of new
mines for a prolonged  period  would have a  significant  adverse  effect on the
Company's current and projected  results of operations.  Decreases in production
from anticipated levels usually lead to increased mining costs and decreased net
income.






ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
           RISK

The quantitative and qualitative disclosures of market risk under SEC Regulation
S-K, Item 305, will be provided, in accordance with the SEC's requirements,  for
the Company's  fiscal periods  ending after June 15, 1998.  Reference is made to
the second paragraph under the Interest rate risk subsection of the Certain Risk
Factors discussion beginning at page 11 of this report for information about the
Company's current derivatives positions.  The Company accrues amounts to be paid
or  received  under  its  interest  rate swap  agreements  over the lives of the
agreements, thereby adjusting the effective interest rate on the Company's debt.
The  Company's  accounting  policies  with  respect to its  current  derivatives
positions do not  materially  affect the  Company's  determination  of financial
position, cash flows or results of operations.





                           PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

The second paragraph of the Legal Contingencies  subsection of the Contingencies
section of  Management's  Discussion  and  Analysis of Financial  Condition  and
Results of Operations in this report is incorporated herein by reference.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)   The Company's  Annual Meeting of Stockholders  was held on April 22, 1998,
      at the  Company's  headquarters  at CityPlace  One,  Suite 300, St. Louis,
      Missouri, at 10:00 a.m.

(b)   At such Annual Meeting,  the holders of the Company's Common Stock elected
      the following nominees for director:

           Nominee                             Votes
           -------                             -----

           James R. Boyd                    38,252,770
           Paul W. Chellgren                38,252,798
           Thomas L. Feazell                38,251,647
           Juan Antonio Ferrando            38,254,694
           John R. Hall                     38,253,316
           Robert L. Hintz                  38,255,201
           Douglas L. Hunt                  38,253,816
           Steven F. Leer                   38,252,790
           James L. Parker                  38,255,869
           J. Marvin Quin                   38,251,067

At such Annual Meeting, the Company's stockholders,  by a vote of 34,181,086 for
and 2,399,978  against,  with 83,273 abstentions and 1,623,474 broker non-votes,
ratified by the requisite 51% majority the adoption of the Company's  1997 Stock
Incentive  Plan.  The Company's  stockholders,  by a vote of 38,282,167  for and
3,373 against, with 2,271 abstentions,  also ratified the appointment of Ernst &
Young LLP as the Company's independent auditors for 1998.





ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)

     2.1  Agreement  and Plan of  Merger  dated as of April 4,  1997,  among the
          Company, Ashland Coal and AMC Merger Corporation  (incorporated herein
          by  reference  to Exhibit 2.1 to the  Registration  Statement  of Arch
          Mineral Corporation on Form S-4, registration 333-28149 (AS-4@)).

     3.1  Restated Certificate of Incorporation of Arch Coal, Inc. (incorporated
          herein by reference to Exhibit 3.1 to the S-4).

     3.2  Restated and Amended By-Laws of Arch Coal, Inc.  (incorporated  herein
          by reference to Exhibit 3.4 to the S-4).

     4.1  Stockholders  Agreement,  dated  as of April 4,  1997,  among  Carboex
          International,   Ltd.,  Ashland  Inc.  and  Arch  Mineral  Corporation
          (incorporated herein as reference to Exhibit 4.1 to the S-4).

     4.2  Registration  Rights Agreement,  dated as of April 4, 1997, among Arch
          Mineral Corporation, Ashland Inc., Carboex International, Ltd. and the
          entities listed on Schedules I and II thereto  (incorporated herein by
          reference to Exhibit 4.2 to the S-4).

     4.3  Agreement  Relating  to  Nonvoting  Observer,  executed as of April 4,
          1997, among Carboex  International,  Ltd., Ashland Inc., Ashland Coal,
          Inc. and Arch Mineral Corporation (incorporated herein by reference to
          Exhibit 4.3 to the S-4).

     4.4  Agreement  for  Termination  of the Arch  Mineral  Corporation  Voting
          Agreement and for Nomination of Directors,  dated as of April 4, 1997,
          among  Hunt  Coal  Corporation,  Petro-Hunt  Corporation,  each of the
          trusts  listed on Schedule I thereto,  Ashland  Inc.  and Arch Mineral
          Corporation  (incorporated  herein by  reference to Exhibit 4.4 to the
          S-4).

     4.5  Credit  Agreement  dated as of July 1,  1997,  by and among Arch Coal,
          Inc.,  the banks party thereto,  PNC Bank,  National  Association,  as
          Administrative and Syndication Agent and Morgan Guaranty Trust Company
          of New York, as  Documentation  and  Syndication  Agent  (incorporated
          herein by Reference to Exhibit 4.1 to the Current Report of Arch Coal,
          Inc. on Form 8-K filed July 15, 1997).

     27   Financial Data Schedule

(b)      Reports on Form 8-K

         A report on Form 8-K dated March 23,  1998,  reporting  the  definitive
         agreements, subject to customary closing conditions, among the Company,
         ARCO and  certain of their  subsidiaries  pursuant to which the Company
         would acquire ARCO's U.S. coal operations,  was filed during the period
         covered by this report.





                                   SIGNATURES


      Pursuant to the  requirements of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                          ARCH COAL, INC.
                                          (Registrant)


Date: May 15, 1998                      /s/-------------------------
                                          Patrick A. Kriegshauser
                                          Senior Vice President,
                                          Chief Financial
                                          Officer and Treasurer
                                          (Principal Financial Officer)


Date: May 15, 1998                      /s/------------------------
                                          Jeffry N. Quinn
                                          Senior Vice President,
                                          General Counsel
                                          and Secretary
                                          (Duly Authorized Officer)





                                 Arch Coal, Inc.
                   Form 10-Q for Quarter Ended March 31, 1998


                                INDEX TO EXHIBITS


     2.1  Agreement  and Plan of  Merger  dated as of April 4,  1997,  among the
          Company, Ashland Coal and AMC Merger Corporation  (incorporated herein
          by  reference  to Exhibit 2.1 to the  Registration  Statement  of Arch
          Mineral Corporation on Form S-4, registration 333-28149 (AS-4@)).

     3.1  Restated Certificate of Incorporation of Arch Coal, Inc. (incorporated
          herein by reference to Exhibit 3.1 to the S-4).

     3.2  Restated and Amended By Laws of Arch Coal, Inc.  (incorporated  herein
          by reference to Exhibit 3.4 to the S-4).

     4.1  Stockholders  Agreement,  dated  as of April 4,  1997,  among  Carboex
          International,   Ltd.,  Ashland  Inc.  and  Arch  Mineral  Corporation
          (incorporated herein as reference to Exhibit 4.1 to the S-4).

     4.2  Registration  Rights Agreement,  dated as of April 4, 1997, among Arch
          Mineral Corporation, Ashland Inc., Carboex International, Ltd. and the
          entities listed on Schedules I and II thereto  (incorporated herein by
          reference to Exhibit 4.2 to the S-4).

     4.3  Agreement  Relating  to  Nonvoting  Observer,  executed as of April 4,
          1997, among Carboex  International,  Ltd., Ashland Inc., Ashland Coal,
          Inc. and Arch Mineral Corporation (incorporated herein by reference to
          Exhibit 4.3 to the S-4).

     4.4  Agreement  for  Termination  of the Arch  Mineral  Corporation  Voting
          Agreement and for Nomination of Directors,  dated as of April 4, 1997,
          among  Hunt  Coal  Corporation,  Petro-Hunt  Corporation,  each of the
          trusts  listed on Schedule I thereto,  Ashland  Inc.  and Arch Mineral
          Corporation  (incorporated  herein by  reference to Exhibit 4.4 to the
          S-4).

     4.5  Credit  Agreement  dated as of July 1,  1997,  by and among Arch Coal,
          Inc.,  the banks party thereto,  PNC Bank,  National  Association,  as
          Administrative and Syndication Agent and Morgan Guaranty Trust Company
          of New York, as  Documentation  and  Syndication  Agent  (incorporated
          herein by Reference to Exhibit 4.1 to the Current Report of Arch Coal,
          Inc. on Form 8-K filed July 15, 1997).

     27   Financial Data Schedule
 


5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1998 MAR-31-1998 12605 0 149822 0 60226 255762 1800805 700858 1629614 205341 0 0 0 397 622867 1629614 298964 312564 270905 290205 0 0 3804 18621 2800 15821 0 0 0 15821 0.4 0.4