About Consol Energy Inc.

CONSOL Energy is one of the US's largest raw hydrocarbon producers, along with Peabody Energy and Arch Coal. The company has 6.3 trillion cubic feet equivalent of proved natural gas reserves and 2.4 billion tons of coal reserves, mainly in the Appalachian basin. CONSOL primarily mines high BTU coal, which burns cleaner than lower grades. Customers include electric utilities and steel mills. CONSOL delivers coal using its own railroad cars, terminals, and barges. The company also engages in natural gas exploration and production through CNX Gas.

Operations

CONSOL is divided into two business divisions: Exploration and Production (E&P) and Pennsylvania Mining Operations (PA).

E&P produces pipeline quality natural gas for sale to primarily gas wholesalers. It explores, develops, and operates in Appalachia (Pennsylvania, West Virginia, Ohio, Virginia, and Tennessee). It has 6.3 trillion cubic feet equivalents (Tcfe) in proved reserves of natural gas. E&P has four operating segments: Marcellus Shale, Utica Shale, Coalbed Methane, and Other Gas.

The PA Mining Operations mines, prepares, and markets thermal coal, sold primarily to power generators.

Natural Gas and Coal sales are split roughly 50:50.

Geographic Reach

CONSOL has operations in the US (Kentucky, Ohio, Pennsylvania, Tennessee, Utah, Virginia, and West Virginia) and Canada.

The US accounts for some 90% of sales but it also ships to customers in Canada and Western Europe.

Sales and Marketing

The company sells coal through agents and to brokers and unaffiliated trading companies. Coal is transported from CONSOL's mining complexes to customers by railroad cars and trucks. CONSOL purchases gas produced by third parties at market prices less a fee. The gas purchased from third party producers is then resold to end users or gas marketers at current market prices.

Around 75% of coal sales were to US electricity generators, over 20% were prices on export markets, and under 5% to other domestic consumers. Its four biggest coal customers account for over 40% of coal sales.

Over 65% of coal sales are under contracts with terms of more than one year.

Financial Performance

In fiscal 2016, CONSOL's revenue fell 25% to $2.0 billion. The sharp fall mostly related to fair value losses on commodity hedges, while coal sales also fell steeply amid a global price depression. Falls were offset by a $66.3 million increase in natural gas and oil sales.

CONSOL lost $848 million in fiscal 2016, a widening of loss by $473 million. The poor performance relates to the before mentioned unrealized loss on commodity derivatives and low coal prices.

Cash from operations decreased 7% to $469 million due to changes in operating assets.

Strategy

With the coal markets under a lot of political pressure in the US, CONSOL is looking to hedge its bets through diversification. It is seeking to grow its existing gas assets and make selective acquisition of gas and liquids acreage leases within its footprint, while continuing to maintain and grow its profitable thermal and metallurgical coal segments.

The VA Operations aggregated segment included the Buchanan Mine and its corresponding preparation plant facilities.

The company's primary focus is the continued development of their Marcellus Shale acreage and the exploration and development of its Utica Shale acreage. CONSOL expects to continue to make substantial capital expenditures in the development and acquisition of natural gas reserves.

It also continues to focus on monetization of assets to accelerate value creation to minimize the shortfall between operating cash flows and growth capital requirement.

Facing declining demand and high debt, the company is also selling noncore assets to generate cash.

In 2016 CONSOL made $420 million from the sale of its Buchanan Mine in southwestern Virginia and certain other metallurgical coal reserves. In 2015, the company sold its 49% interest in the Western Allegheny Energy (WAE) joint venture to Rosebud Mining Company.

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Consol Energy Inc.

1000 Consol Energy Dr
Canonsburg, PA 15317-6506
Phone: 1 (724) 485-4000
Fax: 1 (412) 831-4103

Stats

  • Employer Type: Public
  • Stock Symbol: CNX
  • Stock Exchange: NYSE
  • President and CEO: Nicholas J. DeIuliis
  • COO, Exploration and Production Division: Timothy C. Dugan
  • Chairman: William N. Thorndike
  • 2016 Employees: 2,307

Major Office Locations

  • Canonsburg, PA

Other Locations

  • Baltimore, MD
  • East Millsboro, PA
  • Washington, PA
  • Cedar Bluff, VA