PITTSBURGH, Dec. 10, 2014 /PRNewswire/ -- CONSOL Energy Inc.
(NYSE: CNX) announced today that its Board of Directors has
authorized management to pursue the formation of a master limited
partnership (MLP) for the company's thermal coal business.
The purpose of the MLP would be to own interests in certain of
CONSOL Energy's thermal coal properties and related mining
operations located in Pennsylvania, including its Bailey Mine, Enlow
Fork Mine, Harvey Mine and the related preparation plant.
CONSOL Energy expects to commence an initial public offering of the
MLP in mid-2015. Following the closing of the initial public
offering by the MLP, CONSOL Energy would own the general partner of
the MLP, any incentive distribution rights and a majority of the
limited partner interests of the MLP.
CONSOL Energy also announced today that its Board of Directors
has authorized management to separately pursue the structuring and
formation of a subsidiary entity for the purpose of owning CONSOL
Energy's metallurgical coal properties and related mining
operations, with a view to conducting an initial public offering of
up to 20% of the subsidiary's equity in the second half of
2015. The subsidiary's assets would include CONSOL Energy's
Buchanan Mine and related preparation plant and its interest in its
Western Allegheny Energy joint venture.
CONSOL Energy believes that these transactions would achieve
four objectives: (i) they bring the value of its thermal and
metallurgical coal assets forward, thereby increasing CONSOL's net
asset value per share, (ii) they improve transparency into the
value of these assets, which will permit a more accurate
sum-of-the-parts valuation, (iii) they provide additional vehicles
for accessing the capital markets on favorable terms, and (iv) they
allow CONSOL to retain control of these assets so it can continue
to realize the operational synergies that exist between its natural
gas and coal businesses. CONSOL Energy would designate
separate management teams to run each of these businesses so as to
most effectively maintain operational focus.
After giving effect to these transactions, CONSOL Energy would
consist primarily of (i) its core oil and gas exploration and
production business, (ii) its interest in CONE Midstream Partners
LP (NYSE: CNNX), (iii) a
controlling interest in its cash flow generating thermal coal MLP
and (iv) a controlling interest in its metallurgical coal
subsidiary.
Separately, CONSOL Energy also announced that its Board of
Directors has approved a two-year share repurchase program of up to
$250 million. The repurchases
will be effected from time-to-time on the open market or in
privately negotiated transactions or under a Rule 10b5-1
plan. The timing of the repurchases will be based on a number
of factors, including the company's stock price, the company's
financial outlook and alternative investment options. The
share repurchase program and the Board's authorization of the
program may be modified, suspended or discontinued at any
time. The Board of Directors will continue to evaluate the
size of the stock repurchase program based on CONSOL's free cash
flow position, leverage ratio and capital plans.
"In addition to focusing on the steady execution of our core
businesses, we have been hard at work on creating structural
transparency, bringing value forward and taking advantage of
opportunities for share count reduction," commented CONSOL Energy
President and Chief Executive Officer Nick
DeIuliis. "The culmination of the structural moves completed
in 2014 and anticipated for 2015 are intended to improve CONSOL's
valuation by providing straightforward, sum-of-the-parts analytics
and reducing the risk to the E&P growth plan, which we continue
to target at 30% year-over-year growth in 2015 and 2016. The
stock repurchase program reaffirms our belief in the value inherent
in CONSOL Energy, and our commitment to returning value to our
shareholders."
Further, these restructuring transactions reaffirm CONSOL
Energy's commitment to our coal businesses," said Mr.
DeIuliis. "We will retain control so that we can continue to
offer our customers the same reliability that they have come to
expect from CONSOL Energy as well as the continued unique ability
to supply those customers with both coal and gas as their needs
demand and the market dictates."
If CONSOL Energy effects an initial public offering of a thermal
coal MLP, CONSOL anticipates that it would reduce or eliminate its
current regular dividend effective in the first quarter after the
initial public offering. The reason for this change in
dividend policy is twofold: (i) the stock repurchase program
announced today is a more efficient method to return capital to
shareholders than a dividend, and (ii) yield-oriented investors in
CONSOL will have other investment options through CONE Midstream
Partners LP and, if completed, the proposed thermal coal MLP and/or
its metallurgical coal subsidiary.
Whether and when CONSOL Energy proceeds with initial public
offerings of the thermal coal MLP and metallurgical coal subsidiary
are subject to a number of factors, including prevailing market
conditions and the approval of CONSOL Energy's Board of
Directors.
No registration statement relating to the securities that would
be sold in either offering has been filed with the Securities and
Exchange Commission or become effective. This press release does
not constitute an offer to sell, or the solicitation of an offer to
buy, any securities. Any offering will be made only by means of a
prospectus. This announcement is being issued pursuant to,
and in accordance with, Rule 135 under the Securities Act of 1933,
as amended.
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based producer of natural gas and
coal. The company is one of the largest independent natural gas
exploration, development and production companies, with operations
centered in the major shale formations of the Appalachian basin.
CONSOL Energy deploys an organic growth strategy focused on rapidly
developing its resource base of 5.7 trillion cubic feet of proved
natural gas reserves, while the company's premium coal assets are
sold to electricity generators and steelmakers both domestically
and internationally. CONSOL Energy is a member of the
Standard & Poor's 500 Equity Index and the Fortune 500.
Additional information may be found at www.consolenergy.com.
Forward-Looking Statements
Various statements in this release, including those that express
a belief, expectation or intention, may be considered
forward-looking statements (as defined in Section 21E of the
Securities Exchange Act of 1934, as amended) that involve risks and
uncertainties that could cause actual results to differ materially
from projected results. Accordingly, investors should not place
undue reliance on forward-looking statements as a prediction of
actual results. The forward-looking statements may include
projections and estimates concerning the timing and success of
specific projects and future production, revenues, income and
capital spending. Words such as "believe," "intend," "expect,"
"may," "should," "anticipate," "could," "estimate," "plan,"
"predict," "project," or their negatives, or other similar
expressions, may be used to identify forward-looking
statements.
The forward-looking statements in this press release, if any,
speak only as of the date of this press release (and there is no
obligation to update forward-looking statements should
circumstances or estimates or opinions change) and are not
statements of historical fact. Forward-looking statements are based
on current expectations, estimates and assumptions that involve a
number of risks and uncertainties that could cause actual results
to differ materially from those projected.
These risks include, without limitation, that the MLP or the
metallurgical coal subsidiary are not formed and that the initial
public offerings are not consummated, as well as the risk that the
share repurchase plan may be modified, suspended or discontinued at
any time.
Furthermore, the structure, nature, purpose, and proposed assets
and liabilities of the MLP or the met coal subsidiary may change
materially from those described herein. No assurance can be given
as to the value of the MLP or the metallurgical coal subsidiary,
the price at which any equity securities may be offered, or whether
a liquid market for such securities will develop or be maintained.
In addition, in evaluating strategic alternatives with respect to
assets that may be owned by the MLP or the metallurgical coal
subsidiary, CONSOL Energy will be subject to the risks normally
attendant to businesses in the coal industry, including, without
limitation, the volatility in commodity prices for coal, the
presence or recoverability of estimated reserves, the ability to
replace reserves, environmental risks, mining and operating risks,
exploration and development risks, competition, government
regulation or other actions.
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SOURCE CONSOL Energy Inc.