PITTSBURGH, Sept. 5, 2017 /PRNewswire/ -- CNX Coal
Resources LP (NYSE: CNXC), announced today that it is adjusting its
previously announced 2017 guidance ranges based on the third
quarter results to date and expectations for the rest of the year.
The revised 2017 outlook is as follows:
- Adjusted EBITDA1 of $95-$105
million
- Capital expenditure of $28-$30
million
Specifically, CNXC is reducing the top end of its adjusted
EBITDA range to reflect ongoing mild weather trends in the third
quarter of 2017 that have affected power demand in the PJM region.
This reduced demand has resulted in lower pricing than forecasted
in our contracts that are indexed to power prices. Crossover
met coal sales to date have also been lower than expected resulting
in somewhat lower realizations due to increasing discounts for our
crossover product compared to the benchmark quality. Finally, our
sales mix was also affected due to CSX-related logistics issues
that we foreshadowed on our second quarter earnings call. We
continue to work closely with our rail partners to effectuate
improved efficiency.
On the operational front, the Enlow Fork mine encountered some
unexpected geological conditions following a longwall move in the
third quarter. The Bailey and Harvey mines have performed well
during this time and Enlow Fork has been producing well since
mid-August. As a result, we expect to be well within our
sales guidance range of 6.4-6.9 million tons. While the Enlow Fork
longwall has now moved out of the difficult geology and resumed a
normal operational schedule, the resulting cash cost of coal sold
is now expected to be modestly higher than previously anticipated,
which also weighed on the EBITDA outlook. To reduce this adverse
cost impact, CNXC has taken various steps including temporarily
suspending the use of contractors, rationalizing other
discretionary spending at the mine and lowering capital
expenditures by approximately $3.0
million at the midpoint of the guidance range. Management is
evaluating additional revenue enhancing and cost saving
opportunities which it plans to discuss on its third quarter
earnings call.
As of midnight last night, the Pennsylvania Department of
Environmental Protection (DEP) has sought more time to review the
technical merits of the permit submittal for continued longwall
mining in the 4L panel at the company's Bailey Mine, in light of a
recent Environmental Hearing Board decision. As a result, the
longwall has been idled and workforce adjustments are being made.
This is the first time in the 35-year history of the Bailey Mine
that the company has failed to timely receive a needed mining
permit. The company maintains that this permit meets the necessary
criteria for approval, and the company is in ongoing communication
with Pennsylvania Governor Wolf's
office and the Secretary of the DEP asking that the permit be
issued in order to enable the company to get its miners back to
work and resume production. The Pennsylvania Mining Complex
will lose approximately 25,000 tons of production per day as a
result of this permit delay. While the company can make up some
lost production in the fourth quarter, if the permit is not issued
in the near future, additional layoffs will be likely and the
impact on the company could be material. The EBITDA guidance
provided above assumes that the permit is issued in the near
future. The company hopes that the DEP resolves this matter
quickly, and the company will provide updates as new information
becomes available.
1 Adjusted EBITDA is a non-GAAP financial measure
defined as (i) net income (loss) before net interest expense,
depreciation, depletion and amortization, as adjusted for (ii)
certain non-cash items, such as long-term incentive awards
including phantom units under the CNX Coal Resources LP 2015
Long-Term Incentive Plan ("Unit Based Compensation"). At this
time, CNXC is unable to provide a reconciliation of Adjusted EBITDA
guidance to Net 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.
About CNX Coal Resources LP
CNX Coal Resources is a growth-oriented master limited
partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and
further develop all of CONSOL's active coal operations in
Pennsylvania. Its assets include a 25% undivided interest in,
and operational control over, CONSOL's Pennsylvania mining complex, which consists of
three underground mines and related infrastructure. More
information is available on our website www.cnxlp.com.
Contacts:
Investor:
Mitesh Thakkar, (724) 485-3133
miteshthakkar@cnxlp.com
Media:
Zach Smith, (724) 485-4017
zacherysmith@cnxlp.com
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SOURCE CNX Coal Resources LP