PITTSBURGH, July 26, 2016 /PRNewswire/ -- CONSOL Energy
Inc. (NYSE: CNX) reported net cash provided by operating activities
in the just-ended quarter of $95
million, compared to $66
million in the year-earlier quarter, which includes
$12 million and $24 million of net cash provided by discontinued
operating activities, respectively.
"During the quarter, CONSOL drove down E&P unit costs by
18%, compared to the prior-year quarter, generated $46 million in organic free cash flow from
continuing operations1, paid down approximately
$390 million in debt, and increased
estimated ultimate recoveries (EURs) in its prolific Marcellus Shale Green Hill field to 3.0-3.5
Bcfe," commented Nicholas J.
DeIuliis, president and CEO. "These accomplishments not only
helped us exceed our internal 18-month free cash flow plan, but
also drove our NAV per share and liquidity position higher. As a
result, we have made the decision to employ a two-rig program in
the second half of 2016 since expected rates of return nicely
exceed our cost of capital, while supporting our free cash flow
plan and liquidity goals. Despite the decision to resume modest
drilling activity, which will add approximately $25 million of capital expenditures in 2016,
CONSOL expects the annual E&P Division capital budget to
decrease to $190-$205 million due to
continued capital efficiency improvements. CONSOL's main focus
remains staying disciplined on deploying capital in order to grow
our NAV per share."
On a GAAP basis, the second quarter earnings included the
following pre-tax items attributable to continuing operations:
- Recorded a $279.7 million
unrealized loss on commodity derivative instruments, related to
changes in the fair market value of existing hedges on a
mark-to-market basis;
- Recorded a $13.7 million loss
related to pension settlement, caused by lump sum distributions
from the plan which increased due to the sale of the Buchanan Mine
in the first quarter of 2016;
- Recorded a $6.3 million gain
related to a customer's partial buyout of a coal contract;
and,
- Recorded $1.5 million in expense
related to severance in connection with the company's ongoing cost
reduction efforts.
Taking these items into account, the company reported a net loss
from continuing operations of $233
million for the quarter, or ($1.02) per diluted share. Including the loss
from discontinued operations, net of tax, of $236 million, less net income attributable to
noncontrolling interest, the company reported a net loss
attributable to CONSOL Energy shareholders of $470 million or ($2.05) per diluted share.
(Dollars in
thousands)
|
Q2
2016
|
Loss Before Income
Tax
|
$
|
(333,364)
|
|
Income
Taxes
|
(100,354)
|
|
Loss From
Continuing Operations
|
(233,010)
|
|
Loss From
Discontinued Operations, net
|
(235,639)
|
|
Net
Loss
|
(468,649)
|
|
Less: Net Income
Attributable to Noncontrolling Interest
|
1,179
|
|
Net Loss
Attributable to CONSOL Energy Shareholders
|
$
|
(469,828)
|
|
Earnings before deducting net interest expense (interest expense
less interest income), income taxes and depreciation, depletion and
amortization (EBITDA), from continuing operations1 were
a negative $151 million for the 2016
second quarter, compared to a negative $695
million in the year-earlier quarter.
After adjusting for certain items, which are listed in the
EBITDA reconciliation table, the company had an adjusted net loss
from continuing operations1 in the 2016 second quarter
of $49 million, or ($0.21) per diluted share. Adjusted EBITDA from
continuing operations1 was $136
million for the 2016 second quarter, compared to
$138 million in the year-earlier
quarter.
CONSOL Energy's Miller Creek Mining Complex and Fola Mining
Complex subsidiaries have entered into agreements for the sale of
those Central Appalachia mining operations. The Miller Creek
Complex, located in West Virginia,
has an active surface mining operation, which produced 2.1 million
tons in 2015, and two underground mines, which are idle. The Fola
Mining Complex is a closed surface mining operation in West
Virginia. The Miller Creek and Fola Mining Complexes each have
114 million tons of owned and leased coal reserves, and they have a
total of $103 million of mine closing
and reclamation liabilities on CONSOL's Consolidated Balance
Sheets. These assets and liabilities are classified as held for
sale in discontinued operations on the company's Consolidated
Balance Sheets, their results of operations are included in
discontinued operations on the Consolidated Statement of Income,
and the reclassification of these assets resulted in an impairment
charge of $356 million in the
quarter.
In the transaction, the buyer will acquire the Miller Creek and
Fola assets and will assume the Miller Creek and Fola mine closing
and reclamation liabilities; in order to equalize the value
exchange, CONSOL will pay the buyer $27
million cash at the closing, of which a portion will be held
in escrow for purposes of obtaining the surety bonds required for
the permits to transfer, and an additional $17 million in installments over the next four
years. These payments will result in an additional loss of
$44 million that CONSOL expects to
record during the third quarter of 2016. CONSOL Energy estimated a
negative EBITDA contribution for full year 2016 associated with
these assets. The transaction is expected to close in the
third quarter.
1The terms "adjusted net loss from continuing
operations," "EBITDA from continuing operations," "adjusted EBITDA
from continuing operations," "free cash flow," and "organic free
cash from continuing operations" are non-GAAP financial measures,
which are defined and reconciled to the GAAP net income below,
under the caption "Non-GAAP Financial Measures."
E&P Division:
CONSOL plans to add back two horizontal rigs to resume drilling
starting in August 2016. The company
expects to drill 8 dry Utica Shale wells, located in Monroe County, Ohio, where CONSOL maintains a
100% working interest, and 2 Marcellus Shale wells, located in
Washington County, Pennsylvania,
which fall within the joint venture where CONSOL maintains a 50%
working interest. The 2 new Marcellus
Shale wells are located on a 6-well pad that contains 4
existing drilled but uncompleted (DUC) wells. CONSOL expects to
finish drilling the remaining 2 wells in order to complete the pad.
CONSOL expects that the lateral length for the 10 wells to average
approximately 8,700 feet. Despite the planned increased drilling
activity, due to continued capital efficiency improvements, the
company reduced its E&P Division capital budget to $190-$205 million. CONSOL expects to see a
partial year production benefit from these new wells starting in
April 2017. Also, the company
anticipates its DUC well inventory to grow to 91 gross Marcellus
and Utica shale wells exiting
2016, which includes 76 wells that are located in the wet
areas.
During the second quarter of 2016, CONSOL's E&P Division
achieved record production of 99.3 Bcfe, or an increase of 32% from
the 75.5 Bcfe produced in the year-earlier quarter. The E&P
Division's total unit cash costs declined during the quarter to
$1.23 per Mcfe, compared to
$1.58 per Mcfe during the
year-earlier quarter, or an improvement of approximately 22%,
driven by reductions to lease operating and gathering,
transportation, and compression expenses.
Marcellus Shale production
volumes, including liquids, in the 2016 second quarter were 53.1
Bcfe, or 33% higher than the 39.9 Bcfe produced in the 2015 second
quarter. Marcellus Shale total unit
cash costs were $1.27 per Mcfe in the
just-ended quarter, which is a $0.31
per Mcfe improvement from the second quarter of 2015 cash costs of
$1.58 per Mcfe, which benefited in
part from the company requiring less processing by shifting more
towards drier gas.
CONSOL Energy's Utica Shale production volumes, including
liquids, in the 2016 second quarter were 23.3 Bcfe, up from 10.7
Bcfe in the year-earlier quarter. Utica Shale total unit cash costs
were $0.83 per Mcfe in the just-ended
quarter, which is a $0.39 per Mcfe
improvement from the second quarter of 2015 total unit cash costs
of $1.22 per Mcfe. The significant
cost improvements across the Utica Shale were primarily driven by
reductions to lease operating expenses and gathering and
transportation.
E&P Division capital expenditures declined further in the
second quarter to $23.4 million, when
compared to the first quarter of 2016, due to further efficiency
improvements and reduced activity.
E&P Division Second Quarter Operations Summary:
CONSOL's E&P activity continued to focus on completing the
company's DUC inventory in the second quarter.
During the quarter, CONSOL began completion operations on a
6-well pad in Greene County,
completing two of the wells. Also, CONSOL turned-in-line (TIL) 16
Marcellus Shale wells in Greene,
Washington, and Allegheny counties, Pennsylvania, which included the first pad
located at the company's Pittsburgh International Airport project.
CONSOL's Green Hill Marcellus Shale wells located in Greene County, Pennsylvania, continue to
outperform, with EURs now at 3.0-3.5 Bcfe per 1,000 feet of
lateral. In the Utica Shale CONSOL's joint venture partner
completed two wells and TIL five wells in Harrison County, Ohio.
CONSOL's previously completed 10-well GH53 pad, which was
completed in the first quarter of 2016 and incorporated plugless
completion technology, has now cumulatively produced over 4.8 Bcfe
in its first 60 days of production with 9 out of 10 wells in-line,
with one well shut-in due to an offset well completion. The
strongest well on the GH53 pad, the GH53F, has produced 0.83 Bcfe
in its first 60 days. Lastly, CONSOL's 12-well GH46 pad located in
Greene County, Pennsylvania, which
was previously completed and TIL in the first quarter of 2016, has
cumulatively produced 10.5 Bcfe in the first 90 days of
production.
CONSOL's confidence in the dry Utica program grows as time progresses and as
the company continues to monitor the performance of the dry Utica
Shale wells in Monroe County,
Ohio, and Greene and
Westmoreland counties,
Pennsylvania. CONSOL's Gaut 4I
well, in Westmoreland County,
Pennsylvania, remains the second strongest producing well in
the dry Utica across the industry.
The Gaut 4I well has cumulatively produced 3.4 Bcfe in its first
six months.
E&P DIVISION
RESULTS — Quarter-to-Quarter Comparison
|
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
June 30,
2016
|
|
June 30,
2015
|
|
March 31,
2016
|
Sales -
Gas
|
|
$
|
140.3
|
|
|
$
|
135.1
|
|
|
$
|
157.4
|
|
Gain on Commodity
Derivative Instruments - Cash Settlement
|
|
80.3
|
|
|
42.3
|
|
|
84.3
|
|
Sales -
Oil
|
|
0.7
|
|
|
1.2
|
|
|
0.5
|
|
Sales -
NGLs
|
|
19.2
|
|
|
15.0
|
|
|
19.9
|
|
Sales -
Condensate
|
|
7.8
|
|
|
8.7
|
|
|
3.9
|
|
Total Sales Revenue
($ MM)
|
|
$
|
248.3
|
|
|
$
|
202.3
|
|
|
$
|
266.0
|
|
|
|
|
|
|
|
|
Loss Before Income
Tax
|
|
$
|
(294.5)
|
|
1
|
|
$
|
(891.4)
|
|
2
|
$
|
(23.5)
|
|
Net Cash Provided by
Operating Activities ($ MM)
|
|
$
|
19.1
|
|
|
$
|
297.9
|
|
|
$
|
58.6
|
|
Total Period
Production (Bcfe)
|
|
99.3
|
|
|
75.5
|
|
|
97.5
|
|
Average Daily
Production (MMcfe)
|
|
1,090.9
|
|
|
829.6
|
|
|
1,071.0
|
|
Capital Expenditures
($ MM)
|
|
$
|
23.4
|
|
|
$
|
289.2
|
|
|
$
|
62.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Adjusted loss before income tax for the
E&P Division of $14.3 million for
the three months ended June 30, 2016
is calculated as GAAP loss before income tax of $294.5 million plus total pre-tax adjustments of
$280.2 million. The $280.2 million adjustment is the pre-tax loss
related to the unrealized loss on commodity derivative
instruments and a pre-tax loss of $0.5
million related to severance
expense.
2 Includes an $828.9 million pre-tax impairment loss on shallow
oil and gas properties and a $24.9
million pre-tax loss related to the unrealized loss on
commodity derivative instruments. Adjusted loss before income tax
for the E&P Division for the three months ended June 30, 2015 is calculated as GAAP loss before
income tax of $891.4 million plus
total pre-tax adjustments of $853.8
million equals the adjusted loss before income tax of
$37.6 million.
CONSOL's E&P
Division production in the quarter came from the following
categories:
|
|
|
|
Quarter
|
|
Quarter
|
|
|
|
Quarter
|
|
|
|
|
Ended
|
|
Ended
|
|
|
|
Ended
|
|
|
|
|
June 30,
2016
|
|
June 30,
2015
|
|
%
Increase/(Decrease)
|
|
March 31,
2016
|
|
%
Increase/(Decrease)
|
GAS
|
|
|
|
|
|
|
|
|
|
|
Marcellus Sales
Volumes (Bcf)
|
|
47.2
|
|
|
34.6
|
|
|
36.4
|
%
|
|
45.1
|
|
|
4.7
|
%
|
Utica Sales Volumes
(Bcf)
|
|
18.7
|
|
|
7.1
|
|
|
163.4
|
%
|
|
17.7
|
|
|
5.6
|
%
|
CBM Sales Volumes
(Bcf)
|
|
17.1
|
|
|
18.8
|
|
|
(9.0)%
|
|
|
17.6
|
|
|
(2.8)%
|
|
Other Sales Volumes
(Bcf)1
|
|
5.7
|
|
|
5.9
|
|
|
(3.4)%
|
|
|
5.7
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
LIQUIDS2
|
|
|
|
|
|
|
|
|
|
|
NGLs Sales Volumes
(Bcfe)
|
|
9.0
|
|
|
7.2
|
|
|
25.0
|
%
|
|
9.7
|
|
|
(7.2)%
|
|
Oil Sales Volumes
(Bcfe)
|
|
0.1
|
|
|
0.2
|
|
|
(50.0)%
|
|
|
0.1
|
|
|
—
|
%
|
Condensate Sales
Volumes (Bcfe)
|
|
1.5
|
|
|
1.7
|
|
|
(11.8)%
|
|
|
1.6
|
|
|
(6.3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
99.3
|
|
|
75.5
|
|
|
31.5
|
%
|
|
97.5
|
|
|
1.8
|
%
|
Note: The increase in Marcellus sales volumes represents only
the gas portion of production. When including liquids, the increase
in Marcellus volumes was 33% compared to the year-earlier quarter.
Production results are net of royalties.
1. Other Sales Volumes: primarily related to shallow oil and
gas production and the Chattanooga
shale in Tennessee.
2. Liquids: NGLs, Oil, and Condensate are converted to Mcfe
at the rate of one barrel equals six Mcf based upon the approximate
relative energy content of oil and natural gas.
As a result of continuing to high-grade production away from wet
areas and shift more towards dry gas areas, in the quarter, liquids
production decreased to 10.6 Bcfe, or 11% of the total production
of 99.3 Bcfe.
E&P PRICE AND
COST DATA PER MCFE — Quarter-to-Quarter Comparison:
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
|
Ended
|
|
Ended
|
|
Ended
|
(Per Mcfe)
|
|
June 30,
2016
|
|
June 30,
2015
|
|
March 31,
2016
|
Average Sales Price -
Gas
|
|
$
|
1.58
|
|
|
$
|
2.03
|
|
|
$
|
1.83
|
|
Average Gain on
Commodity Derivative Instruments - Cash Settlement- Gas
|
|
$
|
0.91
|
|
|
$
|
0.64
|
|
|
$
|
0.98
|
|
Average Sales Price -
Oil*
|
|
$
|
5.62
|
|
|
$
|
7.69
|
|
|
$
|
5.14
|
|
Average Sales Price -
NGLs*
|
|
$
|
2.14
|
|
|
$
|
2.08
|
|
|
$
|
2.05
|
|
Average Sales Price -
Condensate*
|
|
$
|
5.28
|
|
|
$
|
5.21
|
|
|
$
|
2.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sales Price -
Total Company
|
|
$
|
2.50
|
|
|
$
|
2.68
|
|
|
$
|
2.73
|
|
Costs -
Production
|
|
|
|
|
|
|
Lifting
|
|
$
|
0.24
|
|
|
$
|
0.39
|
|
|
$
|
0.28
|
|
Ad Valorem, Severance
and Other Taxes
|
|
0.07
|
|
|
0.09
|
|
|
0.09
|
|
DD&A
|
|
0.96
|
|
|
1.07
|
|
|
1.00
|
|
Total Production
Costs
|
|
$
|
1.27
|
|
|
$
|
1.55
|
|
|
$
|
1.37
|
|
Costs -
Gathering
|
|
|
|
|
|
|
Transportation
|
|
$
|
0.74
|
|
|
$
|
0.85
|
|
|
$
|
0.79
|
|
Operating
Costs
|
|
0.18
|
|
|
0.25
|
|
|
0.17
|
|
DD&A
|
|
0.08
|
|
|
0.11
|
|
|
0.08
|
|
Total Gathering
Costs
|
|
$
|
1.00
|
|
|
$
|
1.21
|
|
|
$
|
1.04
|
|
|
|
|
|
|
|
|
Total
Costs
|
|
$
|
2.27
|
|
|
$
|
2.76
|
|
|
$
|
2.41
|
|
|
|
|
|
|
|
|
Margin
|
|
$
|
0.23
|
|
|
$
|
(0.08)
|
|
|
$
|
0.32
|
|
*Oil, NGLs, and Condensate are converted to Mcfe at the rate
of one barrel equals six Mcf based upon the approximate relative
energy content of oil and natural gas, which is not indicative of
the relationship of oil, NGLs, condensate, and natural gas
prices.
Note: "Total Costs" excludes selling, general administration,
incentive compensation, and other corporate expenses.
The average sales price per Mcfe within the E&P Division was
impaired in the just-ended quarter, when compared to the
year-earlier quarter due to depressed commodity prices.
The average sales price of $2.50
per Mcfe, when combined with unit costs of $2.27 per Mcfe, resulted in a margin
of $0.23 per Mcfe. This was an
increase when compared to the year-earlier quarter, with the
improvements in unit costs more than offsetting the decline in
price realizations.
During the quarter, total unit costs decreased to $2.27 per Mcfe, compared to the year-earlier
quarter of $2.76 per Mcfe, driven
primarily from reductions to lifting and gathering expenses.
E&P Marketing Update:
For the second quarter of 2016, CONSOL's average sales price for
natural gas, natural gas liquids (NGL), oil, and condensate was
$2.50 per Mcfe. CONSOL's average
price for natural gas was $1.58 per
Mcf for the quarter and, including cash settlements from hedging,
was $2.49 per Mcf. The average
realized price for all liquids for the second quarter of 2016 was
$15.73 per barrel.
In April, CONSOL began recovering and selling ethane primarily
via Sunoco Logistics' Mariner East project, which ships ethane to
the Marcus Hook Industrial Complex for export. Such ethane sales
are expected to improve NGL netbacks. On an equivalent basis,
during the second quarter of 2016 these ethane sales yielded a
significantly higher price than the Texas Eastern M2 market where
sales would generally have occurred had the volumes been rejected
into the natural gas stream. CONSOL expects further revenue
enhancement in 2016 and beyond as its recovered ethane volumes grow
and as the Mariner East project expands in 2017.
Coal Division:
CONSOL Energy's Pennsylvania Operations sold 6.2 million tons in
the 2016 second quarter, compared to 5.7 million tons during the
year-earlier quarter. The Board of Directors of CNX Coal Resources'
LP (NYSE: CNXC) General Partner declared a cash distribution of
$0.5125 per unit to the Partnership's
common unitholders for the second quarter of 2016. The distribution
will be made on August 15, 2016 to
the common unitholders of record at the close of business on
August 8, 2016. The General Partner
has elected to not pay a distribution to holders of subordinated
units, as a result of the current distribution coverage shortfall,
to preserve liquidity and maintain balance sheet strength. The
expected cash impact to CONSOL Energy is approximately $6 million starting in the third quarter of
2016.
Coal Division Second Quarter Summary:
During the second quarter of 2016, the Pennsylvania Operations
total unit costs were $34.46 per ton,
compared to $44.15 per ton in the
year-earlier quarter.
As reported by CNX Coal Resources LP (CNXC) in their second
quarter 2016 earnings press release, dated July 25, 2016, "From an operational standpoint,
the second quarter came in ahead of our expectations primarily due
to higher shipments. Our operational team delivered those tons
despite four longwall moves, difficult mining conditions at the
Enlow Fork Mine, and difficult longwall recovery conditions during
one of the Bailey longwall moves. The Harvey Mine, which was idled
in January 2016, was brought back
online during the second quarter to meet customer demands, while
the Bailey and Enlow Fork mines were undergoing longwall moves.
Based on our current outlook for shipment volumes, we expect to run
all five longwalls for the rest of 2016. Productivity for the
second quarter, as measured by tons per employee-hour, improved by
17% compared to the year-ago period, despite the higher number of
longwall moves negatively impacting production. For the third
quarter, CNXC expects coal shipments and average realized price per
ton to increase slightly, and cost of coal sold per ton to decrease
compared to the second quarter."
During the quarter, CONSOL's active coal operations generated
$78 million of cash from continuing
operations before capital expenditures.
COAL DIVISION
RESULTS BY PRODUCT CATEGORY - Quarter-To-Quarter
Comparison
|
|
|
|
PA
Ops
|
|
PA
Ops
|
|
PA
Ops
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
June
30,
|
|
June
30,
|
|
March
31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
|
|
|
|
|
|
Beginning Inventory
(millions of tons)
|
|
0.3
|
|
|
0.2
|
|
|
0.1
|
|
Coal Production
(millions of tons)
|
|
6.0
|
|
|
5.9
|
|
|
5.4
|
|
Ending Inventory
(millions of tons)
|
|
0.1
|
|
|
0.3
|
|
|
0.3
|
|
Sales - Company
Produced (millions of tons)
|
|
6.2
|
|
|
5.7
|
|
|
5.3
|
|
|
|
|
|
|
|
|
Sales Per
Ton
|
|
$
|
40.61
|
|
|
$
|
56.21
|
|
|
$
|
42.99
|
|
|
|
|
|
|
|
|
Total Production
Costs Per Ton
|
|
$
|
34.46
|
|
|
$
|
44.15
|
|
|
$
|
33.16
|
|
|
|
|
|
|
|
|
Average Margin Per
Ton Sold
|
|
$
|
6.15
|
|
|
$
|
12.06
|
|
|
$
|
9.83
|
|
Addback: DD&A Per
Ton
|
|
$
|
6.50
|
|
|
$
|
7.55
|
|
|
$
|
6.45
|
|
Average Margin Per
Ton, before DD&A
|
|
$
|
12.65
|
|
|
$
|
19.61
|
|
|
$
|
16.28
|
|
Cash Flow before Cap.
Ex ($ MM)
|
|
$
|
78
|
|
|
$
|
112
|
|
|
$
|
86
|
|
The Pennsylvania Operations include Bailey, Enlow Fork, and
Harvey mines. Total Production Costs per Ton include: operating
costs, royalty and production taxes and depreciation, depletion and
amortization. Sales tons times Average Margin Per Ton, before
DD&A is meant to approximate the amount of cash
generated by the Pennsylvania Operations. This cash generation
will be offset by maintenance of production (MOP) capital
expenditures. Table may not sum due to rounding.
E&P Division Guidance:
CONSOL Energy increases its annual 2016 E&P Division
production to 380-385 Bcfe, compared to previous quarter's guidance
of approximately 378 Bcfe.
Total hedged natural gas production in the 2016 third quarter is
75.6 Bcf. The annual gas hedge position is shown in the table
below:
E&P DIVISION
GUIDANCE
|
|
|
|
|
|
|
|
2016
|
|
2017
|
Total Yearly
Production (Bcfe)
|
|
380-385
|
|
TBD*
|
Volumes Hedged (Bcf),
as of 7/13/16
|
|
268.5**
|
|
224.2
|
|
* 2017 production will be a function of the second half of
2016 capital program, continued debottlenecking initiatives, and
the company's drilled but uncompleted (DUC) well inventory.
** Includes actual settlements of 128.1 Bcf.
CONSOL Energy's hedged gas volumes include a combination of
NYMEX financial hedges and index financial hedges (NYMEX plus
basis). In addition, to protect the NYMEX hedge volumes from basis
exposure, CONSOL enters into basis-only financial hedges and
physical sales with fixed basis at certain sales points. CONSOL
Energy's gas hedge position is shown in the table below:
GAS
HEDGES
|
|
|
|
|
|
|
|
|
|
Q3
2016
|
|
2016
|
|
2017
|
Total NYMEX +
Basis* (Bcf)
|
|
72.1
|
|
|
263.6
|
|
|
187.1
|
|
Average Hedge Price
($/Mcf)
|
|
$
|
2.79
|
|
|
$
|
3.04
|
|
|
$
|
2.61
|
|
|
|
|
|
|
|
|
NYMEX Only Hedges
Exposed to Basis (Bcf)
|
|
-
|
|
-
|
|
37.1
|
|
Average Hedge
Price ($/Mcf)
|
|
-
|
|
-
|
|
$
|
3.01
|
|
|
|
|
|
|
|
|
Physical Sales With
Fixed Basis Exposed to NYMEX (Bcf)
|
|
3.5
|
|
|
4.9
|
|
|
-
|
Average Hedge Basis
Value ($/Mcf)
|
|
$
|
(0.29)
|
|
|
$
|
(0.09)
|
|
|
-
|
* Includes physical sales with fixed basis in Q3 2016, 2016,
and 2017 of 18.3 Bcf, 77.0 Bcf, and 28.3 Bcf, respectively.
During the second quarter of 2016, CONSOL Energy added
additional NYMEX natural gas hedges of 17.6 Bcf for 2016 and 14.0
Bcf for 2017. In addition, to help mitigate basis exposure on NYMEX
hedges, in the second quarter, CONSOL added 18.8 Bcf and 70.6 Bcf
of basis hedges for 2016 and 2017, respectively. CONSOL also has
hedges in place for a portion of its 2018, 2019, and 2020
production.
CONSOL's 2016 NYMEX plus basis natural gas hedge position has
increased to 263.6 Bcf at an average hedge price of $3.04 per Mcf. NYMEX plus basis hedge volumes are
not exposed to basis differentials but instead have protected
revenue. As a result, in 2016, NYMEX plus basis gas hedges should
lock in revenue of approximately $800
million.
During the second quarter of 2016, CONSOL Energy continued to
add NGL (propane) hedges, along with direct sales contracts to
counterparties. Excluding actual 2016 settlements of 2.3 million
gallons, CONSOL currently has 10.4 million gallons of propane
directly hedged through March of 2017 at an average price of
$0.48 per gallon.
Coal Division Guidance:
CONSOL Energy's pro rata total Coal Division 2016 Adjusted
EBITDA is shown in the table below:
COAL DIVISION
GUIDANCE
|
|
|
2016
|
CNX Coal Resources LP
("CNXC") Adjusted EBITDA (20% undivided interest
of PA Operations)
|
|
$
|
59
|
|
-
|
$
|
69
|
|
x5 (@ 100%
interest)
|
|
$
|
295
|
|
-
|
$
|
345
|
|
Less: EBITDA
attributable to Noncontrolling Interest
|
|
(26)
|
|
-
|
(31)
|
|
Plus: CONSOL's
Other Coal Division EBITDA1
|
|
23
|
|
-
|
28
|
|
Plus: CONSOL's
Other Miscellaneous Coal EBITDA2
|
|
16
|
|
-
|
24
|
|
Less: CONSOL's
Other Coal Division Costs and Expenses (including Legacy
Liabilities' Costs)3
|
|
(108)
|
|
-
|
(116)
|
|
CONSOL Energy's Pro Rata
Coal Division Adjusted EBITDA
|
|
$
|
200
|
|
-
|
$
|
250
|
|
Note: CONSOL Energy is unable to provide a
reconciliation of projected CNXC Adjusted EBITDA, CONSOL's Other
Coal Division EBITDA, and CONSOL's Other Miscellaneous Coal EBITDA
to projected operating income, the most comparable financial
measure calculated in accordance with GAAP, due to the unknown
effect, timing and potential significance of certain income
statement items.
(1) Includes estimated contribution from Miller Creek
and Other Coal Operations for fiscal year 2016 and 1Q16 for
Buchanan, and excludes Loss on
Sale of Buchanan and the expected
Loss on Sale for the Miller Creek and Fola mines.
(2) Includes miscellaneous other income (net of
applicable expenses) associated with the company's Terminal
Operations, Rental Income, Coal Royalty Income, and other
miscellaneous land income.
(3) Includes Legacy Liability Costs of approximately
$80-85 million; Other Coal-Related
Corporate Expenses, and other miscellaneous items. Excludes
stock-based compensation and pension settlement charges.
CONSOL Energy's Pro Rata Coal Division Adjusted EBITDA for 2016
is net of all legacy liabilities associated with the Coal Division,
which are comprised of the following: long-term disability (LTD),
workers compensation (WC), Coal Workers' Pneumoconiosis (CWP),
Other Post-Employment Benefits (OPEB-retiree medical), salary
retirement and pension, and asset retirement obligations (ARO).
CONSOL Energy expects annual 2016 Pennsylvania Operations sales
to be approximately 22.5-25.5 million tons.
CONSOL Energy expects 2016 total Coal Division capital
expenditures to be between $105-$125
million, which includes Pennsylvania Operations capital
expenditures of $90-$100
million On a normalized basis, the Coal Division expects
maintenance of production capital of $5-$6 per ton.
Liquidity:
As of June 30, 2016, CONSOL Energy
had $1,313.7 million in total
liquidity, which is comprised of $88.7
million of cash, excluding the CNXC cash balance, and
$1,225.0 million available to be
borrowed under its $2.0 billion bank
facility. During the quarter, CONSOL's liquidity improved
$34.0 million due to $56.6 million of cash generated from operations
offset by an increase of $22.6
million in outstanding letters of credit. In addition,
CONSOL holds 12.7 million CNXC limited partnership units with a
current market value of approximately $138
million and 19.1 million CONE Midstream Partners LP ("CNNX")
limited partnership units with a current market value of
approximately $325 million, as of
July 19, 2016.
CONSOL Energy used the $66.3
million of free cash flow generated during the quarter and
the $426.7 million of the cash on
hand from March 31, 2016 to reduce
outstanding borrowings on the revolving credit facility, which
increased liquidity and de-levered the balance sheet.
"While we have seen the industry issue equity to improve
liquidity and manage leverage ratios, CONSOL has focused on cutting
costs, improving capital efficiencies, and monetizing assets,"
commented David M. Khani, executive
vice president and CFO. "Over the past two years, the company has
reduced administrative costs and legacy liabilities by several
hundred million dollars per year, reduced E&P operating cash
costs on a per unit basis by approximately 34%, and sold over
$1.3 billion of assets. Also, since
implementing our free cash flow plan in the second quarter of 2015,
we have paid down debt by approximately $650 million, which
excludes approximately $200 million
of CNXC revolver borrowings that are consolidated on CONSOL's
balance sheet."
About CONSOL
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based
energy producer, and one of the largest independent natural gas
exploration, development and production companies, with operations
centered in the major shale formations of the Appalachian basin.
The company deploys an organic growth strategy focused on
developing its substantial resource base. As of December 31,
2015, CONSOL Energy had 5.6 trillion cubic feet
equivalent of proved natural gas reserves. CONSOL
Energy is a member of the Standard & Poor's Midcap 400
Index. Additional information may be found at
www.consolenergy.com.
Non-GAAP Financial Measures
Definition: EBIT is defined as earnings before deducting
net interest expense (interest expense less interest income) and
income taxes. EBITDA is defined as earnings before deducting
net interest expense (interest expense less interest income),
income taxes and depreciation, depletion and amortization.
Adjusted EBITDA is defined as EBITDA after adjusting for the
discrete items listed below. Although EBIT, EBITDA, and Adjusted
EBITDA are not measures of performance calculated in accordance
with generally accepted accounting principles, management believes
that they are useful to an investor in evaluating CONSOL Energy
because they are widely used to evaluate a company's operating
performance. Investors should not view these metrics as a
substitute for measures of performance that are calculated in
accordance with generally accepted accounting principles. In
addition, because all companies do not calculate EBIT, EBITDA, or
Adjusted EBITDA identically, the presentation here may not be
comparable to similarly titled measures of other companies.
Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial
net income attributable to CONSOL Energy Shareholders is as follows
(dollars in 000):
|
|
Three Months
Ended
|
|
|
June
30,
|
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|
2015
|
Dollars in
thousands
|
|
E&P
Division
|
|
COAL
Division
|
|
Other1
|
|
Total
Company
|
|
Total
Company
|
Net (Loss)
Income
|
|
$
|
(294,499)
|
|
|
$
|
(212,235)
|
|
|
$
|
38,085
|
|
|
$
|
(468,649)
|
|
|
$
|
(603,301)
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Loss from
Discontinued Operations
|
|
—
|
|
|
235,639
|
|
|
—
|
|
|
235,639
|
|
|
26,078
|
|
Add: Interest
Expense
|
|
755
|
|
|
2,153
|
|
|
44,519
|
|
|
47,427
|
|
|
46,506
|
|
Less: Interest
Income
|
|
(320)
|
|
|
—
|
|
|
(227)
|
|
|
(547)
|
|
|
(364)
|
|
Add: Income
Taxes
|
|
—
|
|
|
—
|
|
|
(100,354)
|
|
|
(100,354)
|
|
|
(301,669)
|
|
Earnings Before
Interest & Taxes (EBIT)
|
|
(294,064)
|
|
|
25,557
|
|
|
(17,977)
|
|
|
(286,484)
|
|
|
(832,750)
|
|
|
|
|
|
|
|
|
|
|
|
|
Add:
Depreciation, Depletion & Amortization
|
|
105,151
|
|
|
30,069
|
|
|
1
|
|
|
135,221
|
|
|
138,135
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Before
Interest, Taxes and DD&A (EBITDA) from Continuing
Operations
|
|
$
|
(188,913)
|
|
|
$
|
55,626
|
|
|
$
|
(17,976)
|
|
|
$
|
(151,263)
|
|
|
$
|
(694,615)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Unrealized Loss(Gain)
on Commodity Derivative Instruments
|
|
279,715
|
|
|
—
|
|
|
—
|
|
|
279,715
|
|
|
24,936
|
|
Coal Contract
Buyout
|
|
—
|
|
|
(6,288)
|
|
|
—
|
|
|
(6,288)
|
|
|
—
|
|
Severance
Expense
|
|
525
|
|
|
26
|
|
|
900
|
|
|
1,451
|
|
|
—
|
|
Pension
Settlement
|
|
—
|
|
|
—
|
|
|
13,696
|
|
|
13,696
|
|
|
—
|
|
Impairment of E&P
Properties
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
828,905
|
|
Backstop Loan
Fees
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,334
|
|
Other Transaction
Fees
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,968
|
|
OPEB Plan
Changes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,649)
|
|
Loss on Debt
Extinguishment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
Total Pre-tax
Adjustments
|
|
280,240
|
|
|
(6,262)
|
|
|
14,596
|
|
|
288,574
|
|
|
832,511
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
91,327
|
|
|
$
|
49,364
|
|
|
$
|
(3,380)
|
|
|
$
|
137,311
|
|
|
$
|
137,896
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net Income
Attributable to Noncontrolling Interest
|
|
—
|
|
|
(1,179)
|
|
|
—
|
|
|
(1,179)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Attributable to Continuing Operations
|
|
$
|
91,327
|
|
|
$
|
48,185
|
|
|
$
|
(3,380)
|
|
|
$
|
136,132
|
|
|
$
|
137,896
|
|
Note: Income tax effect of Total Pre-tax Adjustments was
$104,855 and $313,327 for the three months ended June 30, 2016 and June 30,
2015, respectively. Adjusted net income attributable to
CONSOL Energy shareholders for the three months ended June 30, 2016 is calculated as GAAP net loss from
continuing operations of $233,010
plus total pre-tax adjustments of $288,574, less the tax benefit of $104,855, equals the adjusted net loss from
continuing operations of $49,291.
(1) CONSOL Energy's Other Division includes expenses
from various other corporate activities including income tax
expense that are not allocated to E&P or Coal
Divisions.
Free cash flow and organic free cash flow from continuing
operations are non-GAAP financial measures. Management believes
that these measures are meaningful to investors because management
reviews cash flows generated from operations and non-core asset
sales after taking into consideration capital expenditures due to
the fact that these expenditures are considered necessary to
maintain and expand CONSOL's asset base and are expected to
generate future cash flows from operations. It is important to note
that free cash flow and organic free cash flow from continuing
operations do not represent the residual cash flow available for
discretionary expenditures since other non-discretionary
expenditures, such as mandatory debt service requirements, are not
deducted from the measure.
Organic Cash
Flow From Continuing Operations
|
Three Months
Ended
June 30, 2016
|
Net Cash Provided by
Continuing Operations
|
$
|
83,571
|
|
|
|
Capital
Expenditures
|
(37,593)
|
|
Net Investment in
Equity Affiliates
|
—
|
|
Organic Free Cash
Flow from Continuing Operations
|
$
|
45,978
|
|
Free Cash
Flow
|
Three Months
Ended
June 30, 2016
|
Net Cash Provided by
Operating Activities
|
$
|
95,299
|
|
|
|
Capital
Expenditures
|
(37,593)
|
|
Capital Expenditures
of Discontinued Operations
|
(1,254)
|
|
Net Investment in
Equity Affiliates
|
—
|
|
Proceeds From Sales
of Assets
|
9,831
|
|
Free Cash
Flow
|
$
|
66,283
|
|
Cautionary Statements
Various statements in this release, including those that express
a belief, expectation or intention, may be considered
forward-looking statements under federal securities laws including
Section 21E of the Securities Exchange Act of 1934 (the "Exchange
Act") 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 our future production,
revenues, income and capital spending. When we use the words
"believe," "intend," "expect," "may," "should," "anticipate,"
"could," "estimate," "plan," "predict," "project," "will," or their
negatives, or other similar expressions, the statements which
include those words are usually forward-looking statements. When we
describe strategy that involves risks or uncertainties, we are
making forward-looking statements. The forward-looking statements
in this press release, if any, speak only as of the date of this
press release; we disclaim any obligation to update these
statements. We have based these forward-looking statements on our
current expectations and assumptions about future events. While our
management considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks, contingencies
and uncertainties, most of which are difficult to predict and many
of which are beyond our control. These risks, contingencies and
uncertainties relate to, among other matters, the following:
deterioration in economic conditions in any of the industries in
which our customers operate may decrease demand for our products,
impair our ability to collect customer receivables and impair our
ability to access capital; prices for natural gas, natural gas and
other liquids and coal are volatile and can fluctuate widely based
upon a number of factors beyond our control including oversupply
relative to the demand available for our products, weather and the
price and availability of alternative fuels; an extended decline in
the prices we receive for our natural gas, natural gas liquids and
coal affecting our operating results and cash flows; foreign
currency fluctuations could adversely affect the competitiveness of
our coal abroad; our customers extending existing contracts or
entering into new long-term contracts for coal on favorable terms;
our reliance on major customers; our inability to collect payments
from customers if their creditworthiness declines or if they fail
to honor their contracts; the disruption of rail, barge, gathering,
processing and transportation facilities and other systems that
deliver our natural gas, natural gas liquids and coal to market; a
loss of our competitive position because of the competitive nature
of the natural gas and coal industries, or a loss of our
competitive position because of overcapacity in these industries
impairing our profitability; coal users switching to other fuels in
order to comply with various environmental standards related to
coal combustion emissions; the impact of potential, as well as any
adopted environmental regulations including any relating to
greenhouse gas emissions on our operating costs as well as on the
market for natural gas and coal and for our securities; the risks
inherent in natural gas and coal operations, including our reliance
upon third party contractors, being subject to unexpected
disruptions, including geological conditions, equipment failure,
timing of completion of significant construction or repair of
equipment, fires, explosions, accidents and weather conditions
which could impact financial results; decreases in the availability
of, or increases in, the price of commodities or capital equipment
used in our mining and transportation operations; obtaining and
renewing governmental permits and approvals for our natural gas and
coal operations; the effects of government regulation on the
discharge into the water or air, and the disposal and clean-up of,
hazardous substances and wastes generated during our natural gas
and coal operations; our ability to find adequate water sources for
our use in natural gas drilling, or our ability to dispose of
water used or removed from strata in connection with our
natural gas operations at a reasonable cost and within
applicable environmental rules; the effects of stringent federal
and state employee health and safety regulations, including the
ability of regulators to shut down our operations; the potential
for liabilities arising from environmental contamination or alleged
environmental contamination in connection with our past or current
natural gas and coal operations; the effects of mine closing,
reclamation, gas well closing and certain other liabilities;
uncertainties in estimating our economically recoverable
natural gas, oil and coal reserves; defects may exist in our
chain of title and we may incur additional costs associated with
perfecting title for gas rights on some of our properties or
failing to acquire these additional rights may result in a
reduction of our estimated reserves; the outcomes of various legal
proceedings, which are more fully described in our reports filed
under the Securities Exchange Act of 1934; exposure to
employee-related long-term liabilities; lump sum payments made to
retiring salaried employees pursuant to our defined benefit pension
plan exceeding total service and interest cost in a plan year;
divestitures we anticipate may not occur or produce anticipated
benefits; the terms of our existing joint ventures restrict our
flexibility, actions taken by the other party in our natural gas
joint ventures may impact our financial position and various
circumstances could cause us not to realize the benefits we
anticipate receiving from these joint ventures; risks associated
with our debt; replacing our natural gas and oil reserves,
which if not replaced, will cause our natural gas and oil
reserves and production to decline; declines in our borrowing base
could occur for a variety of reasons, including lower natural gas
or oil prices, declines in natural gas and oil proved reserves, and
lending regulations requirements or regulations; our hedging
activities may prevent us from benefiting from price increases and
may expose us to other risks; changes in federal or state income
tax laws, particularly in the area of percentage depletion and
intangible drilling costs, could cause our financial position and
profitability to deteriorate; failure to appropriately allocate
capital and other resources among our strategic opportunities may
adversely affect our financial condition; failure by Murray Energy
to satisfy liabilities it acquired from us, or failure to perform
its obligations under various arrangements, which we guaranteed,
could materially or adversely affect our results of operations,
financial position, and cash flows; information theft, data
corruption, operational disruption and/or financial loss resulting
from a terrorist attack or cyber incident; operating in a single
geographic area; certain provisions in our multi-year sales
contracts may provide limited protection during adverse economic
conditions, and may result in economic penalties or permit the
customer to terminate the contract; our common units in CNX Coal
Resources LP and CONE Midstream Partners LP are subordinated, and
we may not receive distributions from CNX Coal Resources LP or CONE
Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal
assets to Coronado IV LLC - disruption to our business, including
customer, employee and supplier relationships resulting from this
transaction, and the impact of the transaction on our future
operating results; other factors discussed in the 2015 Form 10-K
under "Risk Factors," as updated by any subsequent Form 10-Qs,
which are on file at the Securities and Exchange Commission.
The SEC permits oil and gas companies, in their filings with the
SEC, to disclose only proved, probable, and possible oil and gas
reserves that a company anticipates as of a given date to be
economically and legally producible and deliverable by application
of development projects to known accumulations. We may use certain
terms in this press release, such as EUR (estimated ultimate
recovery), unproved reserves and total resource potential, that the
SEC's rules strictly prohibit us from including in filings with the
SEC. These measures are by their nature more speculative than
estimates of reserves prepared in accordance with SEC definitions
and guidelines and accordingly are less certain. We also note that
the SEC strictly prohibits us from aggregating proved, probable and
possible reserves in filings with the SEC due to the different
levels of certainty associated with each reserve category.
CONSOL ENERGY INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
INCOME
|
|
(Dollars in
thousands, except per share data)
|
Three Months
Ended
|
|
Six Months
Ended
|
(Unaudited)
|
June
30,
|
|
June
30,
|
Revenues and Other
Income:
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Natural Gas, NGLs and
Oil Sales
|
$
|
167,933
|
|
|
$
|
159,654
|
|
|
$
|
349,188
|
|
|
$
|
384,092
|
|
(Loss) Gain on
Commodity Derivative Instruments
|
(199,380)
|
|
|
17,322
|
|
|
(144,320)
|
|
|
107,467
|
|
Coal Sales
|
251,166
|
|
|
318,995
|
|
|
477,330
|
|
|
705,021
|
|
Other Outside
Sales
|
8,059
|
|
|
6,337
|
|
|
15,768
|
|
|
19,467
|
|
Purchased Gas
Sales
|
7,929
|
|
|
1,517
|
|
|
16,547
|
|
|
5,114
|
|
Freight-Outside
Coal
|
11,447
|
|
|
2,750
|
|
|
24,557
|
|
|
7,768
|
|
Miscellaneous Other
Income
|
33,032
|
|
|
34,687
|
|
|
81,163
|
|
|
71,208
|
|
Gain (Loss) on Sale
of Assets
|
5,614
|
|
|
4,312
|
|
|
(1,662)
|
|
|
6,286
|
|
Total Revenue and
Other Income
|
285,800
|
|
|
545,574
|
|
|
818,571
|
|
|
1,306,423
|
|
Costs and
Expenses:
|
|
|
|
|
|
|
|
Exploration and
Production Costs
|
|
|
|
|
|
|
|
Lease Operating
Expense
|
23,655
|
|
|
29,521
|
|
|
51,394
|
|
|
66,777
|
|
Transportation,
Gathering and Compression
|
90,983
|
|
|
83,196
|
|
|
184,957
|
|
|
158,717
|
|
Production, Ad
Valorem, and Other Fees
|
6,402
|
|
|
6,938
|
|
|
14,705
|
|
|
16,130
|
|
Depreciation,
Depletion and Amortization
|
105,151
|
|
|
89,850
|
|
|
210,866
|
|
|
177,294
|
|
Exploration and
Production Related Other Costs
|
2,823
|
|
|
2,324
|
|
|
5,231
|
|
|
4,364
|
|
Purchased Gas
Costs
|
8,884
|
|
|
1,061
|
|
|
16,752
|
|
|
4,018
|
|
Other Corporate
Expenses
|
30,656
|
|
|
20,622
|
|
|
58,350
|
|
|
39,718
|
|
Impairment of
Exploration and Production Properties
|
—
|
|
|
828,905
|
|
|
—
|
|
|
828,905
|
|
Selling, General, and
Administrative Costs
|
16,175
|
|
|
21,070
|
|
|
33,738
|
|
|
42,894
|
|
Total Exploration
and Production Costs
|
284,729
|
|
|
1,083,487
|
|
|
575,993
|
|
|
1,338,817
|
|
Coal
Costs
|
|
|
|
|
|
|
|
Operating and Other
Costs
|
217,465
|
|
|
213,022
|
|
|
401,834
|
|
|
474,765
|
|
Depreciation,
Depletion and Amortization
|
30,069
|
|
|
48,280
|
|
|
79,342
|
|
|
102,982
|
|
Freight
Expense
|
11,447
|
|
|
2,750
|
|
|
24,557
|
|
|
7,768
|
|
Selling, General, and
Administrative Costs
|
6,174
|
|
|
6,147
|
|
|
10,660
|
|
|
12,678
|
|
Other Corporate
Expenses
|
4,355
|
|
|
10,207
|
|
|
7,498
|
|
|
16,282
|
|
Total Coal
Costs
|
269,510
|
|
|
280,406
|
|
|
523,891
|
|
|
614,475
|
|
Other
Costs
|
|
|
|
|
|
|
|
Miscellaneous
Operating Expense
|
17,497
|
|
|
14,045
|
|
|
20,686
|
|
|
24,420
|
|
Depreciation,
Depletion and Amortization
|
1
|
|
|
5
|
|
|
1
|
|
|
12
|
|
Loss on Debt
Extinguishment
|
—
|
|
|
17
|
|
|
—
|
|
|
67,751
|
|
Interest
Expense
|
47,427
|
|
|
46,506
|
|
|
97,292
|
|
|
101,627
|
|
Total Other
Costs
|
64,925
|
|
|
60,573
|
|
|
117,979
|
|
|
193,810
|
|
Total Costs And
Expenses
|
619,164
|
|
|
1,424,466
|
|
|
1,217,863
|
|
|
2,147,102
|
|
Loss From
Continuing Operations Before Income Tax
|
(333,364)
|
|
|
(878,892)
|
|
|
(399,292)
|
|
|
(840,679)
|
|
Income
Taxes
|
(100,354)
|
|
|
(301,669)
|
|
|
(123,571)
|
|
|
(316,652)
|
|
Loss From
Continuing Operations
|
(233,010)
|
|
|
(577,223)
|
|
|
(275,721)
|
|
|
(524,027)
|
|
Loss From
Discontinued Operations, net
|
(235,639)
|
|
|
(26,078)
|
|
|
(289,391)
|
|
|
(244)
|
|
Net
Loss
|
(468,649)
|
|
|
(603,301)
|
|
|
(565,112)
|
|
|
(524,271)
|
|
Less: Net Income
Attributable to Noncontrolling Interest
|
1,179
|
|
|
—
|
|
|
2,293
|
|
|
—
|
|
Net Loss
Attributable to CONSOL Energy Shareholders
|
$
|
(469,828)
|
|
|
$
|
(603,301)
|
|
|
$
|
(567,405)
|
|
|
$
|
(524,271)
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
(CONTINUED)
|
(Dollars in
thousands, except per share data)
|
Three Months
Ended
|
|
Six Months
Ended
|
(Unaudited)
|
June
30,
|
|
June
30,
|
Loss Per
Share
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Basic
|
|
|
|
|
|
|
|
Loss from Continuing
Operations
|
$
|
(1.02)
|
|
|
$
|
(2.52)
|
|
|
$
|
(1.21)
|
|
|
$
|
(2.29)
|
|
Loss from
Discontinued Operations
|
(1.03)
|
|
|
(0.12)
|
|
|
(1.26)
|
|
|
—
|
|
Total Basic Loss
Per Share
|
$
|
(2.05)
|
|
|
$
|
(2.64)
|
|
|
$
|
(2.47)
|
|
|
$
|
(2.29)
|
|
Dilutive
|
|
|
|
|
|
|
|
Loss from Continuing
Operations
|
$
|
(1.02)
|
|
|
$
|
(2.52)
|
|
|
$
|
(1.21)
|
|
|
$
|
(2.29)
|
|
Loss from
Discontinued Operations
|
(1.03)
|
|
|
(0.12)
|
|
|
(1.26)
|
|
|
—
|
|
Total Dilutive
Loss Per Share
|
$
|
(2.05)
|
|
|
$
|
(2.64)
|
|
|
$
|
(2.47)
|
|
|
$
|
(2.29)
|
|
|
|
|
|
|
|
|
|
Dividends Paid Per
Share
|
$
|
—
|
|
|
$
|
0.0625
|
|
|
$
|
0.0100
|
|
|
$
|
0.1250
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(Dollars in
thousands)
|
June
30,
|
|
June
30,
|
(Unaudited)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net Loss
|
$
|
(468,649)
|
|
|
$
|
(603,301)
|
|
|
$
|
(565,112)
|
|
|
$
|
(524,271)
|
|
Other Comprehensive
Loss:
|
|
|
|
|
|
|
|
Actuarially
Determined Long-Term Liability Adjustments (Net of tax:
($5,008), ($4,875), ($4,326), ($4,785))
|
8,045
|
|
|
9,467
|
|
|
5,561
|
|
|
9,318
|
|
Reclassification of Cash Flow Hedges from OCI to Earnings (Net of
tax: $6,521, $12,103, $12,145, $23,316)
|
(11,203)
|
|
|
(20,804)
|
|
|
(21,017)
|
|
|
(40,118)
|
|
|
|
|
|
|
|
|
|
Other Comprehensive
Loss
|
(3,158)
|
|
|
(11,337)
|
|
|
(15,456)
|
|
|
(30,800)
|
|
|
|
|
|
|
|
|
|
Comprehensive
Loss
|
(471,807)
|
|
|
(614,638)
|
|
|
(580,568)
|
|
|
(555,071)
|
|
|
|
|
|
|
|
|
|
Less: Net Income
Attributable to Noncontrolling Interests
|
1,179
|
|
|
—
|
|
|
2,293
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Comprehensive Loss
Attributable to CONSOL Energy Inc. Shareholders
|
$
|
(472,986)
|
|
|
$
|
(614,638)
|
|
|
$
|
(582,861)
|
|
|
$
|
(555,071)
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
|
|
(Unaudited)
|
|
|
(Dollars in
thousands)
|
June 30,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and Cash
Equivalents
|
$
|
97,626
|
|
|
$
|
72,574
|
|
Accounts and Notes
Receivable:
|
|
|
|
Trade
|
153,977
|
|
|
151,383
|
|
Other
Receivables
|
94,125
|
|
|
121,735
|
|
Inventories
|
60,818
|
|
|
66,792
|
|
Recoverable Income
Taxes
|
—
|
|
|
13,887
|
|
Prepaid
Expenses
|
103,526
|
|
|
297,287
|
|
Current Assets of
Discontinued Operations
|
16,168
|
|
|
81,106
|
|
Total Current
Assets
|
526,240
|
|
|
804,764
|
|
Property, Plant and
Equipment:
|
|
|
|
Property, Plant and
Equipment
|
13,866,137
|
|
|
13,794,907
|
|
Less—Accumulated
Depreciation, Depletion and Amortization
|
5,360,046
|
|
|
5,062,201
|
|
Property, Plant, and
Equipment of Discontinued Operations, Net
|
103,085
|
|
|
936,670
|
|
Total Property,
Plant and Equipment—Net
|
8,609,176
|
|
|
9,669,376
|
|
Other
Assets:
|
|
|
|
Deferred Income
Taxes
|
175,929
|
|
|
—
|
|
Investment in
Affiliates
|
256,167
|
|
|
237,330
|
|
Other
|
214,079
|
|
|
214,388
|
|
Other Assets of
Discontinued Operations
|
3,166
|
|
|
4,044
|
|
Total Other
Assets
|
649,341
|
|
|
455,762
|
|
TOTAL
ASSETS
|
$
|
9,784,757
|
|
|
$
|
10,929,902
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
(Unaudited)
|
|
|
(Dollars in
thousands, except per share data)
|
June 30,
2016
|
|
December 31,
2015
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
Payable
|
$
|
171,359
|
|
|
$
|
250,609
|
|
Current Portion of
Long-Term Debt
|
4,368
|
|
|
4,988
|
|
Short-Term Notes
Payable
|
466,000
|
|
|
952,000
|
|
Accrued Income
Taxes
|
5,459
|
|
|
—
|
|
Other Accrued
Liabilities
|
479,255
|
|
|
421,827
|
|
Current Liabilities
of Discontinued Operations
|
24,938
|
|
|
51,514
|
|
Total Current
Liabilities
|
1,151,379
|
|
|
1,680,938
|
|
Long-Term
Debt:
|
|
|
|
Long-Term
Debt
|
2,723,004
|
|
|
2,708,320
|
|
Capital Lease
Obligations
|
31,494
|
|
|
34,884
|
|
Long-Term Debt of
Discontinued Operations
|
1,254
|
|
|
5,001
|
|
Total Long-Term
Debt
|
2,755,752
|
|
|
2,748,205
|
|
Deferred Credits and
Other Liabilities:
|
|
|
|
Deferred Income
Taxes
|
—
|
|
|
74,629
|
|
Postretirement
Benefits Other Than Pensions
|
619,220
|
|
|
630,892
|
|
Pneumoconiosis
Benefits
|
117,984
|
|
|
111,903
|
|
Mine
Closing
|
214,344
|
|
|
227,339
|
|
Gas Well
Closing
|
164,195
|
|
|
163,842
|
|
Workers'
Compensation
|
68,687
|
|
|
69,812
|
|
Salary
Retirement
|
87,321
|
|
|
91,596
|
|
Reclamation
|
246
|
|
|
25
|
|
Other
|
244,354
|
|
|
166,957
|
|
Deferred Credits and
Other Liabilities of Discontinued Operations
|
89,845
|
|
|
107,988
|
|
Total Deferred
Credits and Other Liabilities
|
1,606,196
|
|
|
1,644,983
|
|
TOTAL
LIABILITIES
|
5,513,327
|
|
|
6,074,126
|
|
Stockholders'
Equity:
|
|
|
|
Common Stock, $.01
Par Value; 500,000,000 Shares Authorized, 229,433,854 Issued and
Outstanding at June 30, 2016; 229,054,236 Issued and Outstanding at
December 31, 2015
|
2,298
|
|
|
2,294
|
|
Capital in Excess of
Par Value
|
2,445,840
|
|
|
2,435,497
|
|
Preferred Stock,
15,000,000 shares authorized, None issued and
outstanding
|
—
|
|
|
—
|
|
Retained
Earnings
|
2,008,514
|
|
|
2,579,834
|
|
Accumulated Other
Comprehensive Loss
|
(331,054)
|
|
|
(315,598)
|
|
Total CONSOL
Energy Inc. Stockholders' Equity
|
4,125,598
|
|
|
4,702,027
|
|
Noncontrolling
Interest
|
145,832
|
|
|
153,749
|
|
TOTAL
EQUITY
|
4,271,430
|
|
|
4,855,776
|
|
TOTAL LIABILITIES
AND EQUITY
|
$
|
9,784,757
|
|
|
$
|
10,929,902
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands, except per share data)
|
Common
Stock
|
|
Capital in
Excess
of Par
Value
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total CONSOL
Energy Inc.
Stockholders'
Equity
|
|
Non-
Controlling
Interest
|
|
Total
Equity
|
December 31,
2015
|
$
|
2,294
|
|
|
$
|
2,435,497
|
|
|
$
|
2,579,834
|
|
|
$
|
(315,598)
|
|
|
$
|
4,702,027
|
|
|
$
|
153,749
|
|
|
$
|
4,855,776
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss)
Income
|
—
|
|
|
—
|
|
|
(567,405)
|
|
|
—
|
|
|
(567,405)
|
|
|
2,293
|
|
|
(565,112)
|
|
Other Comprehensive
Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,456)
|
|
|
(15,456)
|
|
|
—
|
|
|
(15,456)
|
|
Comprehensive (Loss)
Income
|
—
|
|
|
—
|
|
|
(567,405)
|
|
|
(15,456)
|
|
|
(582,861)
|
|
|
2,293
|
|
|
(580,568)
|
|
Issuance of Common
Stock
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Treasury Stock
Activity
|
—
|
|
|
—
|
|
|
(1,621)
|
|
|
—
|
|
|
(1,621)
|
|
|
—
|
|
|
(1,621)
|
|
Tax Cost From
Stock-Based Compensation
|
—
|
|
|
(5,096)
|
|
|
—
|
|
|
—
|
|
|
(5,096)
|
|
|
—
|
|
|
(5,096)
|
|
Amortization of
Stock-Based Compensation Awards
|
—
|
|
|
15,439
|
|
|
—
|
|
|
—
|
|
|
15,439
|
|
|
615
|
|
|
16,054
|
|
Distributions to
Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,825)
|
|
|
(10,825)
|
|
Dividends ($0.01 per
share)
|
—
|
|
|
—
|
|
|
(2,294)
|
|
|
—
|
|
|
(2,294)
|
|
|
—
|
|
|
(2,294)
|
|
Balance at June
30, 2016
|
$
|
2,298
|
|
|
$
|
2,445,840
|
|
|
$
|
2,008,514
|
|
|
$
|
(331,054)
|
|
|
$
|
4,125,598
|
|
|
$
|
145,832
|
|
|
$
|
4,271,430
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(Dollars in
thousands)
|
Three Months
Ended
|
|
Six Months
Ended
|
(Unaudited)
|
June
30,
|
|
June
30,
|
Operating
Activities:
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net Loss
|
$
|
(468,649)
|
|
|
$
|
(603,301)
|
|
|
$
|
(565,112)
|
|
|
$
|
(524,271)
|
|
Adjustments to
Reconcile Net Loss to Net Cash Provided By Operating
Activities:
|
|
|
|
|
|
|
|
Net Loss from
Discontinued Operations
|
235,639
|
|
|
26,078
|
|
|
289,391
|
|
|
244
|
|
Depreciation,
Depletion and Amortization
|
135,221
|
|
|
138,135
|
|
|
290,209
|
|
|
280,288
|
|
Impairment of
Exploration and Production Properties
|
—
|
|
|
828,905
|
|
|
—
|
|
|
828,905
|
|
Non-Cash Other
Post-Employment Benefits
|
—
|
|
|
(40,559)
|
|
|
—
|
|
|
(50,925)
|
|
Stock-Based
Compensation
|
10,430
|
|
|
6,648
|
|
|
16,054
|
|
|
14,129
|
|
(Gain) Loss on Sale
of Assets
|
(5,614)
|
|
|
(4,312)
|
|
|
1,662
|
|
|
(6,286)
|
|
Loss on Debt
Extinguishment
|
—
|
|
|
17
|
|
|
—
|
|
|
67,751
|
|
Loss (Gain) on
Commodity Derivative Instruments
|
199,380
|
|
|
(17,322)
|
|
|
144,320
|
|
|
(107,467)
|
|
Net Cash Received in
Settlement of Commodity Derivative Instruments
|
80,335
|
|
|
42,258
|
|
|
164,666
|
|
|
72,399
|
|
Deferred Income
Taxes
|
(100,934)
|
|
|
(301,654)
|
|
|
(124,516)
|
|
|
(312,234)
|
|
Equity in Earnings of
Affiliates
|
(9,219)
|
|
|
(11,927)
|
|
|
(25,884)
|
|
|
(23,250)
|
|
Return on Equity
Investment
|
4,680
|
|
|
2,059
|
|
|
9,192
|
|
|
8,162
|
|
Changes in Operating
Assets:
|
|
|
|
|
|
|
|
Accounts and Notes
Receivable
|
32,934
|
|
|
65,415
|
|
|
18,101
|
|
|
93,180
|
|
Inventories
|
10,511
|
|
|
(9,228)
|
|
|
(7,947)
|
|
|
(8,118)
|
|
Prepaid
Expenses
|
28,156
|
|
|
45,315
|
|
|
47,136
|
|
|
83,570
|
|
Changes in Other
Assets
|
(5,434)
|
|
|
10,082
|
|
|
(15,298)
|
|
|
16,943
|
|
Changes in Operating
Liabilities:
|
|
|
|
|
|
|
|
Accounts
Payable
|
(35,955)
|
|
|
(82,433)
|
|
|
(45,781)
|
|
|
(93,870)
|
|
Accrued
Interest
|
(36,674)
|
|
|
(16,570)
|
|
|
(807)
|
|
|
26,149
|
|
Other Operating
Liabilities
|
(15,448)
|
|
|
(38,403)
|
|
|
(14,069)
|
|
|
(118,056)
|
|
Changes in Other
Liabilities
|
18,656
|
|
|
(46,182)
|
|
|
15,343
|
|
|
(56,340)
|
|
Other
|
5,556
|
|
|
48,892
|
|
|
9,648
|
|
|
56,800
|
|
Net Cash Provided by
Continuing Operations
|
83,571
|
|
|
41,913
|
|
|
206,308
|
|
|
247,703
|
|
Net Cash Provided by
Discontinued Operating Activities
|
11,728
|
|
|
23,932
|
|
|
17,433
|
|
|
46,512
|
|
Net Cash Provided by
Operating Activities
|
95,299
|
|
|
65,845
|
|
|
223,741
|
|
|
294,215
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
Capital
Expenditures
|
(37,593)
|
|
|
(329,878)
|
|
|
(115,257)
|
|
|
(616,484)
|
|
Proceeds from Sales
of Assets
|
9,831
|
|
|
4,823
|
|
|
18,284
|
|
|
6,931
|
|
Net Investments in
Equity Affiliates
|
—
|
|
|
(15,769)
|
|
|
(5,578)
|
|
|
(43,761)
|
|
Net Cash Used in
Continuing Operations
|
(27,762)
|
|
|
(340,824)
|
|
|
(102,551)
|
|
|
(653,314)
|
|
Net Cash (Used in)
Provided by Discontinued Investing Activities
|
(1,254)
|
|
|
(11,888)
|
|
|
394,511
|
|
|
(19,301)
|
|
Net Cash (Used in)
Provided by Investing Activities
|
(29,016)
|
|
|
(352,712)
|
|
|
291,960
|
|
|
(672,615)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
(Payments on)
Proceeds from Short-Term Borrowings
|
(385,500)
|
|
|
297,500
|
|
|
(486,000)
|
|
|
1,058,000
|
|
Payments on
Miscellaneous Borrowings
|
(2,364)
|
|
|
(1,592)
|
|
|
(4,459)
|
|
|
(4,029)
|
|
Payments on Long-Term
Notes, including Redemption Premium
|
—
|
|
|
(2,710)
|
|
|
—
|
|
|
(1,263,719)
|
|
Net (Payments on)
Proceeds from Revolver - CNX Coal Resources LP
|
(2,000)
|
|
|
—
|
|
|
13,000
|
|
|
—
|
|
Distributions to
Noncontrolling Interest
|
(5,412)
|
|
|
—
|
|
|
(10,825)
|
|
|
—
|
|
Proceeds from
Securitization Facility
|
—
|
|
|
6,000
|
|
|
—
|
|
|
38,669
|
|
Proceeds from
Issuance of Long-Term Notes
|
—
|
|
|
—
|
|
|
—
|
|
|
492,760
|
|
Tax Benefit from
Stock-Based Compensation
|
—
|
|
|
183
|
|
|
—
|
|
|
198
|
|
Dividends
Paid
|
—
|
|
|
(14,311)
|
|
|
(2,294)
|
|
|
(28,711)
|
|
Issuance of Common
Stock
|
1
|
|
|
6,552
|
|
|
4
|
|
|
8,288
|
|
Purchases of Treasury
Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(71,674)
|
|
Debt Issuance and
Financing Fees
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,257)
|
|
Net Cash (Used in)
Provided by Continuing Operations
|
(395,275)
|
|
|
291,622
|
|
|
(490,574)
|
|
|
211,525
|
|
Net Cash Used in
Discontinued Financing Activities
|
(28)
|
|
|
(42)
|
|
|
(75)
|
|
|
(83)
|
|
Net Cash (Used in)
Provided by Financing Activities
|
(395,303)
|
|
|
291,580
|
|
|
(490,649)
|
|
|
211,442
|
|
Net (Decrease)
Increase in Cash and Cash Equivalents
|
(329,020)
|
|
|
4,713
|
|
|
25,052
|
|
|
(166,958)
|
|
Cash and Cash
Equivalents at Beginning of Period
|
426,646
|
|
|
5,314
|
|
|
72,574
|
|
|
176,985
|
|
Cash and Cash
Equivalents at End of Period
|
$
|
97,626
|
|
|
$
|
10,027
|
|
|
$
|
97,626
|
|
|
$
|
10,027
|
|
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SOURCE CONSOL Energy Inc.