By Melodie Warner
Consol Energy Inc. (CNX) agreed to sell its non-producing northern Powder River Basin assets for $170 million in cash to Cloud Peak Energy Inc. (CLD) as the coal and natural-gas producer continues to sell assets to fund its capital budget.
The company's northern PRB assets, including Youngs Creek Mining Co. and CX Ranch, both of which are 50% owned by Chevron Corp. (CVX), and additional related properties are in and around Sheridan, Wyo.
ConSuresol will retain an 8% production royalty interest on roughly 200 million tons of permitted fee coal.
The company paid $3.47 billion for Dominion Resources Inc.'s (D) Appalachian exploration and production business in April 2010. Consol said that since that time, it has "been organically growing our coal and gas businesses in Appalachia while divesting properties that are more naturally suited to others."
So far this year, Consol's asset sales have totaled $224 million. The company plans to put the cash towards its 2012 capital expenditure program, which includes both growth and maintenance projects.
None of the assets sold in 2012 generated revenue for Consol.
U.S. coal producers have battled stiff headwinds as natural gas prices dip to 10-year lows. But Consol Energy, which makes most of its income from coal, has seen strong profits in recent quarters, as its exports feed strong demand from steelmakers in emerging markets like China. Consol formed partnership with Hess Corp. (HES) to jointly developing its Utica Shale holdings in Ohio. But as natural gas prices continued to slide, the company said it was scaling back its development plans in the Marcellus Shale gas fields this year.
Shares closed Friday at $30.24 and were inactive premarket. The stock is down 18% so far this year.
Write to Melodie Warner at email@example.com