NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
NOTE 1—BASIS OF PRESENTATION:
The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended
March 31, 2014
are not necessarily indicative of the results that may be expected for future periods.
The balance sheet at
December 31, 2013
has been derived from the Audited Consolidated Financial Statements at that date but does not include all the notes required by generally accepted accounting principles for complete financial statements. For further information, refer to the Consolidated Financial Statements and related notes for the year ended
December 31, 2013
included in CONSOL Energy Inc.'s Form 10-K.
Certain amounts in prior periods have been reclassified to conform with the report classifications of the year ended December 31, 2013, with no effect on previously reported net income or stockholders' equity.
Basic earnings per share are computed by dividing net income (loss) attributable to shareholders by the weighted average shares outstanding during the reporting period. Dilutive earnings per share are computed similarly to basic earnings per share except that the weighted average shares outstanding are increased to include additional shares from the assumed exercise of stock options, performance stock options, and CONSOL stock units, and the assumed vesting of restricted and performance share units, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options, performance share options, and CONSOL stock units were exercised, that outstanding restricted stock units and performance share units were released, and that the proceeds from such activities were used to acquire shares of common stock at the average market price during the reporting period. CONSOL Energy Inc. (CONSOL Energy or the Company) includes the impact of pro forma deferred tax assets in determining potential windfalls and shortfalls for purposes of calculating assumed proceeds under the treasury stock method. The table below sets forth the share-based awards that have been excluded from the computation of the diluted earnings per share because their effect would be anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2014
|
|
2013
|
Anti-Dilutive Options
|
359,488
|
|
|
5,011,771
|
|
Anti-Dilutive Restricted Stock Units
|
—
|
|
|
1,459,228
|
|
Anti-Dilutive Performance Share Units
|
—
|
|
|
700,040
|
|
Anti-Dilutive Performance Share Options
|
—
|
|
|
602,101
|
|
Anti-Dilutive CONSOL Stock Units
|
—
|
|
|
891,921
|
|
|
359,488
|
|
|
8,665,061
|
|
The table below sets forth the share-based awards that have been exercised or released:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2014
|
|
2013
|
Options
|
265,339
|
|
|
84,994
|
|
Restricted Stock Units
|
334,399
|
|
|
478,509
|
|
Performance Share Units
|
378,971
|
|
|
159,228
|
|
|
978,709
|
|
|
722,731
|
|
The weighted average exercise price per share of the options exercised during the three months ended
March 31, 2014
and
2013
was $
18.74
and $
10.65
, respectively.
The computations for basic and dilutive earnings per share are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2014
|
|
2013
|
Income (Loss) from Continuing Operations
|
$
|
121,690
|
|
|
$
|
(3,724
|
)
|
(Loss) Income from Discontinuing Operations
|
(5,687
|
)
|
|
1,903
|
|
Less: Net Income Attributable to Noncontrolling Interest
|
—
|
|
|
257
|
|
Net Income (Loss) Attributable to CONSOL Energy Inc. Shareholders
|
$
|
116,003
|
|
|
$
|
(1,564
|
)
|
Weighted average shares of common stock outstanding:
|
|
|
|
|
|
|
|
Basic
|
229,526,033
|
|
|
228,318,123
|
|
Effect of stock-based compensation awards
|
1,341,493
|
|
|
—
|
|
Dilutive
|
230,867,526
|
|
|
228,318,123
|
|
Earnings per share:
|
|
|
|
|
|
|
|
Basic (Continuing Operations)
|
$
|
0.53
|
|
|
$
|
(0.02
|
)
|
Basic (Discontinuing Operations)
|
(0.02
|
)
|
|
0.01
|
|
Total Basic
|
$
|
0.51
|
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
Dilutive (Continuing Operations)
|
$
|
0.53
|
|
|
$
|
(0.02
|
)
|
Dilutive (Discontinuing Operations)
|
(0.03
|
)
|
|
0.01
|
|
Total Dilutive
|
$
|
0.50
|
|
|
$
|
(0.01
|
)
|
Changes in Accumulated Other Comprehensive Income / (Loss) by component, net of tax, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains and Losses on Cash Flow Hedges
|
|
Postretirement Benefits
|
|
Total
|
Balance at December 31, 2013
|
$
|
42,493
|
|
|
$
|
(367,610
|
)
|
|
$
|
(325,117
|
)
|
Other comprehensive income before reclassifications
|
(46,965
|
)
|
|
—
|
|
|
(46,965
|
)
|
Amounts reclassified from accumulated other comprehensive income
|
16,313
|
|
|
5,119
|
|
|
21,432
|
|
Current period other comprehensive income
|
(30,652
|
)
|
|
5,119
|
|
|
(25,533
|
)
|
Balance at March 31, 2014
|
$
|
11,841
|
|
|
$
|
(362,491
|
)
|
|
$
|
(350,650
|
)
|
The following table shows the reclassification of adjustments out of Accumulated Other Comprehensive Loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
2014
|
|
2013
|
Derivative Instruments (Note 12)
|
|
|
|
Natural gas price swaps and options
|
$
|
27,264
|
|
|
$
|
(36,679
|
)
|
Tax (expense) benefit
|
(10,951
|
)
|
|
13,966
|
|
Net of tax
|
$
|
16,313
|
|
|
$
|
(22,713
|
)
|
Actuarially Determined Long-Term Liability Adjustments*(Note 3 and Note 4)
|
|
|
|
Amortization of prior service costs
|
$
|
(2,542
|
)
|
|
$
|
(8,212
|
)
|
Recognized net actuarial loss
|
10,646
|
|
|
25,188
|
|
Settlement loss
|
—
|
|
|
27,115
|
|
Total
|
8,104
|
|
|
44,091
|
|
Tax expense
|
(2,985
|
)
|
|
(16,831
|
)
|
Net of tax
|
$
|
5,119
|
|
|
$
|
27,260
|
|
*Excludes $
18,497
, net of tax, related to the remeasurement of the Actuarially Determined Long-Term Liabilities for the
three months
ended
March 31, 2013
.
NOTE 2—ACQUISITIONS AND DISPOSITIONS:
In March 2014, CONSOL Energy completed a sale-leaseback of longwall shields for the BMX Mine. Cash proceeds for the sale offset the basis of $
75,357
; therefore, no gain or loss was recognized on the sale. The lease has been accounted for as an operating lease. The lease term is five years.
In December 2013, CONSOL Energy completed the sale of its Consolidation Coal Company (CCC) subsidiary, which includes all five of its longwall coal mines in West Virginia, to a subsidiary of Murray Energy Corporation (Murray Energy). CONSOL Energy retained overriding royalty interests in certain reserves sold in the agreement. Murray Energy also assumed $
2,050,656
of CONSOL Energy's employee benefit obligations valued as of December 5, 2013 and its UMWA 1974 Pension Trust obligations. Murray Energy is primarily liable for all 1993 Coal Act liabilities. Cash proceeds of $
825,285
were received related to this transaction, which were net of $
24,715
in transaction fees. Proceeds are subject to adjustments related to working capital. A pre-tax gain of $
1,035,346
was included in Income from Discontinued Operations on the Consolidated Statement of Income. In the first quarter of 2014, there was a pre-tax reduction in gain on sale of $
7,044
related to the estimated working capital adjustment and various other miscellaneous items. Final settlement of working capital adjustments are currently being evaluated and are not expected to be material.
For all periods presented in the accompanying Consolidated Statements of Income, the sale of CCC was classified as discontinued operations. There were no other active businesses classified as discontinued operations in the presented periods.
In December 2013, CONSOL Energy acquired the gas drilling rights to approximately 90,000 contiguous acres from Dominion Transmission, a unit of Dominion Resources. The acreage, which is associated with Dominion’s Fink-Kennedy, Lost Creek, and Racket Newberne gas storage fields in West Virginia, lies in the northern portion of Lewis County and the southern portion of Harrison County. CONSOL Energy anticipates that over one-half of the acres will have wet gas. CONSOL Energy has acquired the gas rights to both the Marcellus Shale and the Upper Devonian formations in the storage fields. Consideration of up to $
190,000
will be paid by CONSOL Energy in two installments:
50%
was paid at closing and the balance is due over time as the acres are drilled. In addition, CONSOL Energy will pay an overriding royalty to Dominion Resources based on a sliding scale. Finally, CONSOL Energy has committed to be an anchor shipper on Dominion’s transmission system, with the specific terms to be negotiated at a future date. CONSOL Energy paid $
91,243
in 2013 related to this transaction. In the first quarter of 2014, CONSOL Energy made an additional bonus payment of $
12,000
to Dominion Transmission. Noble Energy, our joint venture partner, acquired
50%
of the acres and will reimburse CONSOL Energy for
50%
of the associated costs.
During the three months ended March 31, 2013, CNX Gas Company LLC (CNX Gas Company), a wholly owned subsidiary of CONSOL Energy, completed negotiations with the Allegheny County Airport Authority, which operates the Pittsburgh International Airport and the Allegheny County Airport, for the lease of the oil and gas rights on approximately
9.3
thousand acres. A majority of these contiguous acres are in the liquids area of the Marcellus Shale play. CNX Gas Company paid
$46,315
as an up-front bonus payment at closing. Approximately
7.6%
of the bonus payment was placed into escrow while negotiations continue for a portion of the acres associated with the Allegheny County Airport and other acres that have potentially defective title. CNX Gas Company must spud a well by February 21, 2015 and proceed with due diligence to complete the well or the lease terminates and CNX Gas Company foregoes the bonus. Our joint venture partner, Noble Energy, has reimbursed CNX Gas Company for
50%
of the associated costs during the year ended December 31, 2013.
In January 2013, CONSOL Energy completed a sale-leaseback of longwall shields for the Bailey Mine. Cash proceeds for the sale were
$71,166
. A loss of $
358
was recognized due to transaction fees and is included in Other Income in the Consolidated Statement of Income. The lease has been accounted for as an operating lease. The lease term is five years.
NOTE 3—COMPONENTS OF PENSION AND OTHER POST-EMPLOYMENT BENEFIT (OPEB) PLANS NET PERIODIC BENEFIT COSTS:
Components of net periodic costs (benefits) for the
three
months ended
March 31
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Post-Employment Benefits
|
|
Three Months Ended
|
|
Three Months Ended
|
|
March 31,
|
|
March 31,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Service cost
|
$
|
4,308
|
|
|
$
|
5,706
|
|
|
$
|
2,331
|
|
|
$
|
4,849
|
|
Interest cost
|
9,151
|
|
|
8,843
|
|
|
12,097
|
|
|
29,619
|
|
Expected return on plan assets
|
(12,747
|
)
|
|
(12,144
|
)
|
|
—
|
|
|
—
|
|
Amortization of prior service credits
|
(346
|
)
|
|
(408
|
)
|
|
(2,196
|
)
|
|
(7,804
|
)
|
Recognized net actuarial loss
|
5,891
|
|
|
12,175
|
|
|
6,369
|
|
|
17,595
|
|
Settlement loss
|
—
|
|
|
27,115
|
|
|
—
|
|
|
—
|
|
Net periodic benefit cost
|
$
|
6,257
|
|
|
$
|
41,287
|
|
|
$
|
18,601
|
|
|
$
|
44,259
|
|
Expenses attributable to discontinued operations included in net periodic cost above were
$2,862
and
$25,394
for the three months ended March 31, 2013 for the Pension Plans and the Other Post-Employment Benefit Plan, respectively.
For the
three
months ended
March 31, 2014
, $
6,197
was paid to the pension trust from operating cash flows. Currently, depending upon asset values and asset returns held in the trust, we expect to contribute
$24,000
to the pension trust in 2014. Net periodic benefit costs are allocated to Exploration and Production Costs - Direct Administrative and Selling Expenses and Coal Costs - Operating and Other Costs in the Consolidated Statements of Income.
According to the Defined Benefit Plans Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification, if the lump sum distributions made for the plan year, which for CONSOL Energy is January 1 to December 31, exceed the total of the projected service cost and interest cost for the plan year, settlement accounting is required. Lump sum payments exceeded this threshold during the three months ended March 31, 2013. Accordingly, CONSOL Energy recognized expense of
$27,115
for the three months ended March 31, 2013 in Other Costs - Miscellaneous Operating Expense in the Consolidated Statements of Income. The settlement charges represented a pro rata portion of the net unrecognized loss based on the percentage reduction in the projected benefit obligation due to the lump sum payments. The settlement charges noted above also resulted in a remeasurement of the pension plan at March 31, 2013. The March 31, 2013 remeasurement resulted in a change to the discount rate to
4.12%
at March 31, 2013 from
4.00%
at December 31, 2012. The remeasurement reduced the pension liability by
$29,916
. The settlement and corresponding remeasurement of the pension plan resulted in an adjustment of
$35,261
in Other Comprehensive Income, net of
$21,770
in deferred taxes. It is reasonably possible that CONSOL Energy will incur settlement charges in 2014, which would require the pension plan to be remeasured using updated assumptions.
CONSOL Energy does not expect to contribute to the other post-employment benefit plan in
2014
. We intend to pay benefit claims as they become due. For the
three
months ended
March 31, 2014
,
$14,842
of other post-employment benefits have been paid.
NOTE 4—COMPONENTS OF COAL WORKERS’ PNEUMOCONIOSIS (CWP) AND WORKERS’ COMPENSATION NET PERIODIC BENEFIT COSTS:
Components of net periodic costs (benefits) for the
three
months ended
March 31
, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CWP
|
|
Workers' Compensation
|
|
Three Months Ended
|
|
Three Months Ended
|
|
March 31,
|
|
March 31,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Service cost
|
$
|
1,419
|
|
|
$
|
2,135
|
|
|
$
|
2,445
|
|
|
$
|
3,533
|
|
Interest cost
|
1,384
|
|
|
1,808
|
|
|
894
|
|
|
1,655
|
|
Amortization of actuarial gain
|
(1,549
|
)
|
|
(4,213
|
)
|
|
(95
|
)
|
|
(699
|
)
|
State administrative fees and insurance bond premiums
|
—
|
|
|
—
|
|
|
1,111
|
|
|
1,659
|
|
Legal and administrative costs
|
—
|
|
|
—
|
|
|
—
|
|
|
591
|
|
Net periodic cost (benefit)
|
$
|
1,254
|
|
|
$
|
(270
|
)
|
|
$
|
4,355
|
|
|
$
|
6,739
|
|
Expenses (income) attributable to discontinued operations included in the net periodic cost (benefit) above were
$(164)
and
$2,535
for the three months ended March 31, 2013 for CWP and Workers' Compensation, respectively.
CONSOL Energy does not expect to contribute to the CWP plan in 2014. We intend to pay benefit claims as they become due. For the
three
months ended
March 31, 2014
, $
3,210
of CWP benefit claims have been paid.
CONSOL Energy does not expect to contribute to the workers’ compensation plan in 2014. We intend to pay benefit claims as they become due. For the
three
months ended
March 31, 2014
, $
4,627
of workers’ compensation benefits, state administrative fees and surety bond premiums have been paid.
NOTE 5—INCOME TAXES:
The effective tax rate for the
three
months ended
March 31, 2014
and
2013
was
6.5%
and
19.3%
, respectively.
The effective rate for the
three
months ended
March 31, 2014
differs from the U.S. federal statutory rate of
35%
primarily due to a
$27,422
income tax benefit for excess percentage depletion, a
$8,820
discrete income tax benefit related to the completion of the Internal Revenue Service audit of tax years 2008 and 2009, and a
$7,766
discrete income tax benefit as a result of changes in estimates of excess percentage depletion and Domestic Production Activities Deduction related to the prior-year tax provision.
For the three months ended
March 31, 2014
, CONSOL Energy recognized certain tax benefits as a result of changes in estimates related to a prior-year tax provision. The tax benefit of $
8,351
related to increased percentage depletion deductions offset by $
585
of tax expense related to changes in the Domestic Production Activities Deduction and various other estimates.
The effective rate for the three months ended
March 31, 2013
differs from the U.S. federal statutory rate of
35%
primarily due to a
$1,343
income tax charge for the effect of excess percentage depletion on annual profitability.
The total amounts of uncertain tax positions at
March 31, 2014
and
2013
were
$2,540
and
$22,770
, respectively. If these uncertain tax positions were recognized, approximately
$1,651
and
$2,071
, respectively, would affect CONSOL Energy’s effective tax rate. There were no additions to the liability for unrecognized tax benefits during the
three
months ended
March 31, 2014
and
2013
. The reduction in uncertain tax positions was due to the completion of the Internal Revenue Service audit of the 2008 and 2009 tax years.
CONSOL Energy recognizes interest accrued related to uncertain tax positions in its interest expense. As of
March 31, 2014
and
2013
, the Company reported an accrued interest liability relating to uncertain tax positions of $
1,351
and $
5,165
, respectively. The accrued interest liability includes
$4,849
of interest income and
$335
of interest expense that is reflected in the Company’s Consolidated Statements of Income for the three months ended
March 31, 2014
and
2013
, respectively.
CONSOL Energy recognizes penalties accrued related to uncertain tax positions in its income tax expense. As of
March 31, 2014
and
2013
, CONSOL Energy had no accrued liability for tax penalties.
CONSOL Energy and its subsidiaries file federal income tax returns with the United States and returns within various states and Canadian jurisdictions. With few exceptions, the Company is no longer subject to United States federal, state, local, or non-U.S. income tax examinations by tax authorities for the years before 2010. The Internal Revenue Service has issued its audit report related to the examination of CONSOL Energy’s 2008 and 2009 U.S. income tax returns during the three months ended
March 31, 2014
. As a result of these findings, CONSOL Energy paid federal income tax deficiencies of $
4,464
and $
1,001
, respectively. The deficiencies were the result of changes in the timing of certain tax deductions. The changes in timing of these tax deductions increased the tax benefit of percentage depletion by $
2,925
and $
4,493
in tax years 2008 and 2009, respectively. The Company also recognized additional tax benefits of $
1,402
primarily related to an increase in the Domestic Production Activities Deduction for the audited periods.
NOTE 6—INVENTORIES:
Inventory components consist of the following:
|
|
|
|
|
|
|
|
|
|
March 31,
2014
|
|
December 31,
2013
|
Coal
|
$
|
32,099
|
|
|
$
|
31,944
|
|
Merchandise for resale
|
36,069
|
|
|
38,263
|
|
Supplies
|
88,017
|
|
|
87,707
|
|
Total Inventories
|
$
|
156,185
|
|
|
$
|
157,914
|
|
Inventories are stated at the lower of cost or market. The cost of coal inventories is determined by the first-in, first-out (FIFO) method. Coal inventory costs include labor, supplies, equipment costs, operating overhead, depreciation, depletion and amortization, and other related costs.
Merchandise for resale is valued using the last-in, first-out (LIFO) cost method. The excess of replacement cost of merchandise for resale inventories over carrying LIFO value was $
19,424
and $
18,836
at
March 31, 2014
and
December 31, 2013
, respectively.
NOTE 7—ACCOUNTS RECEIVABLE SECURITIZATION:
CONSOL Energy and certain of our U.S. subsidiaries are party to a trade accounts receivable facility with financial institutions for the sale on a continuous basis of eligible trade accounts receivable. The facility allows CONSOL Energy to receive on a revolving basis up to
$125,000
. The facility also allows for the issuance of letters of credit against the
$125,000
capacity which was reduced from
$200,000
on March 28, 2014. At
March 31, 2014
, there were letters of credit outstanding against the facility of
$61,930
. CONSOL Energy management believes that these letters of credit will expire without being funded, and therefore the commitments will not have a material adverse effect on the Company's financial condition. No amounts related to these financial guarantees and letters of credit are recorded as liabilities on the financial statements.
CNX Funding Corporation, a wholly owned, special purpose, bankruptcy-remote subsidiary, buys and sells eligible trade receivables generated by certain subsidiaries of CONSOL Energy. Under the receivables facility, CONSOL Energy and certain subsidiaries, irrevocably and without recourse, sell all of their eligible trade accounts receivable to CNX Funding Corporation, who in turn sells these receivables to financial institutions and their affiliates, while maintaining a subordinated interest in a portion of the pool of trade receivables. This retained interest, which is included in Accounts and Notes Receivable Trade in the Consolidated Balance Sheets, is recorded at fair value. Due to a short average collection cycle for such receivables, our collection experience history and the composition of the designated pool of trade accounts receivable that are part of this program, the fair value of our retained interest approximates the total amount of the designated pool of accounts receivable. CONSOL Energy will continue to service the sold trade receivables for the financial institutions for a fee based upon market rates for similar services.
In accordance with the Transfers and Servicing Topics of the Financial Accounting Standards Board (FASB) Accounting Standards Codification, CONSOL Energy records transactions under the securitization facility as secured borrowings on the Consolidated Balance Sheets. The pledge of collateral is reported as Accounts Receivable - Securitized and the borrowings are classified as debt in Borrowings under Securitization Facility.
The cost of funds under this facility is based upon commercial paper rates or LIBOR, plus a charge for administrative services paid to the financial institutions. Costs associated with the receivables facility totaled $
279
and
$472
for the three months ended
March 31, 2014
and 2013, respectively. These costs have been recorded as financing fees which are included in
in the Miscellaneous Operating Expense in the Other Cost line in the Consolidated Statements of Income. No servicing asset or liability has been recorded. The receivables facility expires in
March 2015
.
At
March 31, 2014
and
December 31, 2013
, eligible accounts receivable totaled
$98,500
and
$115,000
, respectively. There was
$36,570
subordinated retained interest at
March 31, 2014
and
$48,945
subordinated retained interest at
December 31, 2013
. There were
no
borrowings under the Securitization Facility recorded on the Consolidated Balance Sheet as of
March 31, 2014
and
no
borrowings at
December 31, 2013
. The accounts receivable securitization program had
no change
in the
three
months ended
March 31, 2014
and decreased by
$7,727
in the
three
months ended
March 31, 2013
. The decrease is reflected in the Net Cash Used in Financing Activities in the Consolidated Statement of Cash Flows. In accordance with the facility agreement, the Company is able to receive proceeds based upon the eligible accounts receivable at the previous month end.
NOTE 8—PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
|
|
|
March 31,
2014
|
|
December 31,
2013
|
Coal and other plant and equipment
|
$
|
3,695,573
|
|
|
$
|
3,681,051
|
|
Intangible drilling cost
|
2,044,717
|
|
|
1,937,336
|
|
Proven gas properties
|
1,673,555
|
|
|
1,670,404
|
|
Unproven gas properties
|
1,483,016
|
|
|
1,463,406
|
|
Coal properties and surface lands
|
1,404,043
|
|
|
1,409,408
|
|
Gas gathering equipment
|
1,082,873
|
|
|
1,058,008
|
|
Gas wells and related equipment
|
718,653
|
|
|
688,548
|
|
Airshafts
|
414,181
|
|
|
397,466
|
|
Mine development
|
411,432
|
|
|
354,607
|
|
Leased coal lands
|
388,033
|
|
|
388,020
|
|
Coal advance mining royalties
|
385,197
|
|
|
381,348
|
|
Other gas assets
|
127,019
|
|
|
126,239
|
|
Gas advance royalties
|
22,326
|
|
|
22,668
|
|
Total Property Plant and Equipment
|
13,850,618
|
|
|
13,578,509
|
|
Less: Accumulated DD&A
|
4,245,627
|
|
|
4,136,247
|
|
Total Net PP&E
|
$
|
9,604,991
|
|
|
$
|
9,442,262
|
|
Industry Participation Agreements
CONSOL Energy has two significant industry participation agreements (referred to as "joint ventures" or "JVs") that provided drilling and completion carries for our retained interests.
CNX Gas Company LLC (CNX Gas Company), a wholly owned subsidiary of CONSOL Energy, is party to a joint development agreement with Hess Ohio Developments, LLC (Hess) with respect to approximately
109
thousand net Utica Shale acres in Ohio in which each party has a 50% undivided interest. Under the agreement, as amended, Hess is obligated to pay a total of approximately $
335,000
in the form of a 50% drilling carry of certain CONSOL Energy working interest obligations as the acreage is developed. As of March 31, 2014, Hess’ remaining carry obligation is $
208,127
.
CNX Gas Company is party to a joint development agreement with Noble Energy, Inc. (Noble) with respect to approximately
437
thousand net Marcellus Shale oil and gas acres in West Virginia and Pennsylvania, in which each party owns a 50% undivided interest. Under the agreement, as amended, Noble Energy is obligated to pay a total of approximately
$1,884,000
in the form of a one-third drilling carry of certain of CONSOL Energy’s working interest obligations as the property is developed, subject to certain limitations. These limitations include the suspension of the carry if average Henry Hub natural gas prices are below $4.00 per million British thermal units (MMbtu) for three consecutive months. Due to the increase in average natural gas prices, the carry is in effect beginning March 1, 2014, and will remain effective until average natural gas prices are below $4.00/MMbtu for three consecutive months. Restrictions also include a
$400,000
annual maximum on Noble Energy's carried cost obligation. As of March 31, 2014, Noble Energy’s remaining carry obligation is
$1,859,978
.
NOTE 9—SHORT-TERM NOTES PAYABLE:
CONSOL Energy's $
1,000,000
Senior Secured Credit Agreement, as amended, expires April 12, 2016. The amendment reduced the availability from
$1,500,000
to $
1,000,000
resulting in an acceleration of previously deferred financing charges of
$3,195
during the year ended
December 31, 2013
. The facility is secured by substantially all of the assets of CONSOL Energy and certain of its subsidiaries. CONSOL Energy's credit facility allows for up to
$1,000,000
of borrowings and letters of credit. CONSOL Energy can request an additional $
250,000
increase in the aggregate borrowing limit amount. Fees and interest rate spreads are based on a ratio of financial covenant debt to twelve-month trailing earnings before interest, taxes, depreciation, depletion and amortization (Adjusted EBITDA), measured quarterly. The facility includes a minimum interest coverage ratio covenant of no less than
1.50
to 1.00, measured quarterly through March 30, 2015 and
2.00
to 1.00 thereafter. The interest coverage ratio was
2.52
to 1.00 at
March 31, 2014
. The facility also includes a senior secured leverage ratio covenant of not more than
2.00
to 1.00, measured quarterly. The senior secured leverage ratio was
0.00
to 1.00 at
March 31, 2014
. Affirmative and negative covenants in the facility limit our ability to dispose of assets, make investments, purchase or redeem CONSOL Energy common stock, pay dividends, merge with another corporation and amend, modify or restate the senior unsecured notes. At
March 31, 2014
, the
$1,000,000
facility had no borrowings outstanding and $
167,941
of letters of credit outstanding, leaving $
832,059
of unused capacity. At
December 31, 2013
, the
$1,000,000
facility had no borrowings outstanding and $
206,988
of letters of credit outstanding, leaving $
793,012
of unused capacity.
CNX Gas Corporation's (CNX Gas) $
1,000,000
Senior Secured Credit Agreement expires April 12, 2016. The facility is secured by substantially all of the assets of CNX Gas and its subsidiaries. CNX Gas' credit facility allows for up to
$1,000,000
for borrowings and letters of credit. CNX Gas can request an additional $
250,000
increase in the aggregate borrowing limit amount. Fees and interest rate spreads are based on the percentage of facility utilization, measured quarterly. Covenants in the facility limit CNX Gas’ ability to dispose of assets, make investments, pay dividends and merge with another corporation. The credit facility allows unlimited investments in joint ventures for the development and operation of gas gathering systems and provides for $
600,000
of loans, advances and dividends from CNX Gas to CONSOL Energy. Investments in CONE Gathering, LLC (CONE) are unrestricted. The facility includes a maximum leverage ratio covenant of not more than
3.50
to 1.00, measured quarterly. The leverage ratio was
0.42
to 1.00 at
March 31, 2014
. The facility also includes a minimum interest coverage ratio covenant of no less than
3.00
to 1.00, measured quarterly. This ratio was
35.48
to 1.00 at
March 31, 2014
. At
March 31, 2014
, the $
1,000,000
facility had no borrowings outstanding and $
94,703
of letters of credit outstanding, leaving $
905,297
of unused capacity. At
December 31, 2013
, the $
1,000,000
facility had no borrowings outstanding and $
87,643
of letters of credit outstanding, leaving $
912,357
of unused capacity.
NOTE 10—LONG-TERM DEBT:
|
|
|
|
|
|
|
|
|
|
March 31,
2014
|
|
December 31,
2013
|
Debt:
|
|
|
|
Senior notes due April 2017 at 8.00%, issued at par value
|
$
|
1,500,000
|
|
|
$
|
1,500,000
|
|
Senior notes due April 2020 at 8.25%, issued at par value
|
1,250,000
|
|
|
1,250,000
|
|
Senior notes due March 2021 at 6.375%, issued at par value
|
250,000
|
|
|
250,000
|
|
MEDCO revenue bonds in series due September 2025 at 5.75%
|
102,865
|
|
|
102,865
|
|
Advance royalty commitments (7.93% weighted average interest rate for March 31, 2014 and December 31, 2013)
|
11,182
|
|
|
11,182
|
|
Other long-term notes maturing at various dates through 2031 (total value of $5,580 and $5,923 less unamortized discount of $940 and $1,050 at March 31, 2014 and December 31, 2013, respectively).
|
4,640
|
|
|
4,873
|
|
|
3,118,687
|
|
|
3,118,920
|
|
Less amounts due in one year *
|
3,512
|
|
|
2,957
|
|
Long-Term Debt
|
$
|
3,115,175
|
|
|
$
|
3,115,963
|
|
* Excludes current portion of Capital Lease Obligations of
$8,546
and $
8,498
at
March 31, 2014
and
December 31, 2013
, respectively.
Accrued interest related to Long-Term Debt of $
113,593
and $
63,272
was included in Other Accrued Liabilities in the Consolidated Balance Sheets at
March 31, 2014
and
December 31, 2013
, respectively.
NOTE 11—COMMITMENTS AND CONTINGENT LIABILITIES:
CONSOL Energy and its subsidiaries are subject to various lawsuits and claims with respect to such matters as personal injury, wrongful death, damage to property, exposure to hazardous substances, governmental regulations including environmental remediation, employment and contract disputes and other claims and actions arising out of the normal course of business. We accrue the estimated loss for these lawsuits and claims when the loss is probable and can be estimated. Our current estimated accruals related to these pending claims, individually and in the aggregate, are immaterial to the financial position, results of operations or cash flows of CONSOL Energy. It is possible that the aggregate loss in the future with respect to these lawsuits and claims could ultimately be material to the financial position, results of operations or cash flows of CONSOL Energy; however, such amounts cannot be reasonably estimated. The amount claimed against CONSOL Energy is disclosed below when an amount is expressly stated in the lawsuit or claim, which is not often the case. The maximum aggregate amount claimed in those lawsuits and claims, regardless of probability, where a claim is expressly stated or can be estimated, exceeds the aggregate amounts accrued for all lawsuits and claims by approximately
$390,121
.
The following lawsuits and claims include those for which a loss is probable and an accrual has been recognized.
Asbestos-Related Litigation: One of our subsidiaries, Fairmont Supply Company (Fairmont), which distributes industrial supplies, currently is named as a defendant in approximately
6,900
asbestos-related claims in state courts in Pennsylvania, Ohio, West Virginia, Maryland, Texas and Illinois. Because a very small percentage of products manufactured by third parties and supplied by Fairmont in the past may have contained asbestos and many of the pending claims are part of mass complaints filed by hundreds of plaintiffs against a hundred or more defendants, it has been difficult for Fairmont to determine how many of the cases actually involve valid claims or plaintiffs who were actually exposed to asbestos-containing products supplied by Fairmont. In addition, while Fairmont may be entitled to indemnity or contribution in certain jurisdictions from manufacturers of identified products, the availability of such indemnity or contribution is unclear at this time, and in recent years, some of the manufacturers named as defendants in these actions have sought protection from these claims under bankruptcy laws. Fairmont has no insurance coverage with respect to these asbestos cases. Based on over 15 years of experience with this litigation, we have established an accrual to cover our estimated liability for these cases. This accrual is immaterial to the overall financial position of CONSOL Energy and was included in Other Accrued Liabilities on the Consolidated Balance Sheets. Past payments by Fairmont with respect to asbestos cases have not been material.
Hale Litigation: A purported class action lawsuit was filed on September 23, 2010 in the U.S. District Court in Abingdon, Virginia styled Hale v. CNX Gas Company, et. al. The lawsuit alleges that the plaintiff class consists of forced-pooled unleased gas owners whose gas ownership is in conflict, the Virginia Supreme Court and General Assembly have decided that coalbed methane (CBM) belongs to the owner of the gas estate, the Virginia Gas and Oil Act of 1990 unconstitutionally provides only a 1/8 net proceeds royalty to CBM owners for gas produced under the forced-pooled orders, and CNX Gas Company relied upon control of only the coal estate in force pooling the CBM notwithstanding decisions by the Virginia Supreme Court. The lawsuit seeks a judicial declaration of ownership of the CBM and that the entire net proceeds of CBM production (that is, the 1/8 royalty and the 7/8 of net revenues since production began) be distributed to the class members. The lawsuit also alleges CNX Gas Company failed to either pay royalties due to conflicting claimants, or deemed lessors or paid them less than required because of the alleged practice of improper below market sales and/or taking alleged improper post-production deductions. In ruling on our Motion to Dismiss, the District Judge decided that the deemed lease provision of the Gas and Oil Act is constitutional as is the 1/8 royalty. An amended complaint was filed, which added additional allegations that include gas hedging receipts should have been used as the basis for royalty payments, severance tax should not be allowed as a post-production deduction from royalties, and damages incurred because gas was produced prior to the entry of pooling orders. A motion to dismiss the Amended Complaint was filed and denied. The Magistrate Judge issued a Report & Recommendation on June 5, 2013, recommending that the District Judge grant plaintiffs' Motion for Class Certification. On September 30, 2013, the District Judge entered an Order overruling CNX Gas Company’s Objections, adopting the Report & Recommendation and certifying the class with a modified class definition. CONSOL Energy believes this case cannot properly proceed as a class action and filed a Petition asking the U.S. Court of Appeals for the Fourth Circuit to review the class certification Order. On November 13, 2013, the Fourth Circuit entered an Order deferring a ruling on the Petition but assigning the case to a merits panel. Now fully briefed, oral argument is scheduled before the Fourth Circuit on May 13, 2014. Plaintiffs filed Motions for Summary Judgment on the issue of ownership of the gas royalty escrow accounts and seeking an accounting. The Fourth Circuit denied a Motion to Stay the trial court proceedings while it considers the class certification issues, and the District Judge heard argument on the summary judgment motions on January 6, 2014. CONSOL Energy believes that the case has meritorious defenses and intends to defend it vigorously. We have established an accrual to cover our estimated liability for this case. This accrual is immaterial to the overall financial position of CONSOL Energy and is included in Other Accrued Liabilities on the Consolidated Balance Sheets.
Addison Litigation: A purported class action lawsuit was filed on April 28, 2010 in the United States District Court in Abingdon, Virginia styled Addison v. CNX Gas Company, et al. The lawsuit alleges that the plaintiff class consists of gas lessors
whose gas ownership is in conflict. The lawsuit alleges that the Virginia Supreme Court and General Assembly have decided that the plaintiff owns the gas and is entitled to royalties held in escrow by the Commonwealth of Virginia or CNX Gas Company. The lawsuit also alleges CNX Gas Company failed to either pay royalties due these conflicting claimant lessors or paid them less than required because of the alleged practice of improper below market sales and/or taking alleged improper post-production deductions. Plaintiff seeks a declaratory judgment regarding ownership, an accounting and compensatory and punitive damages for breach of contract; conversion; negligence (voluntary undertaking) for improperly asserting that conflicting ownership exists, negligence (breach of duties as an operator); breach of fiduciary duties; and unjust enrichment. The District Judge granted, in part, CNX Gas Company’s Motion to Dismiss. An Amended Complaint was filed which added an additional allegation that gas hedging receipts should have been used as the basis for royalty payments. A motion to dismiss those claims was filed and was denied. The Magistrate Judge issued a Report & Recommendation on June 5, 2013, recommending that the District Judge grant plaintiffs' Motion for Class Certification. On September 30, 2013, the District Judge entered an Order overruling CNX Gas Company’s Objections, adopting the Report & Recommendation and certifying the class with a modified class definition. CNX Gas believes this case cannot properly proceed as a class action and filed a Petition asking the U.S. Court of Appeals for the Fourth Circuit to review the class certification Order. On November 13, 2013, the Fourth Circuit entered an Order deferring a ruling on the Petition but assigning the case to a merits panel. Now fully briefed, the Fourth Circuit has scheduled oral argument for May 13, 2014. Plaintiffs have filed Motions for Summary Judgment on the issue of ownership of the gas royalty escrow accounts and seeking an accounting. The Fourth Circuit denied a Motion to Stay the trial court proceedings while it considers the class certification issues, and the District Judge heard argument on the summary judgment motions on January 6, 2014. CONSOL Energy believes that the case has meritorious defenses and intends to defend it vigorously. We have established an accrual to cover our estimated liability for this case. This accrual is immaterial to the overall financial position of CONSOL Energy and was included in Other Accrued Liabilities on the Consolidated Balance Sheets.
The following royalty and land right lawsuits and claims include those for which a loss is reasonably possible, but not probable, and accordingly, no accrual has been recognized. These claims are influenced by many factors which prevent the estimation of a range of potential loss. These factors include, but are not limited to, generalized allegations of unspecified damages (such as improper deductions), discovery having not commenced or not having been completed, unavailability of expert reports on damages and non-monetary issues are being tried. For example, in instances where a gas lease termination is sought, damages would depend on speculation as to if and when the gas production would otherwise have occurred, how many wells would have been drilled on the lease premises, what their production would be, what the cost of production would be, and what the price of gas would be during the production period. An estimate is calculated, if applicable, when sufficient information becomes available.
Ratliff Litigation: On January 30, 2013, the Company was served with a complaint filed on behalf of four individuals against Consolidation Coal Company (CCC), Island Creek Coal Company (ICCC), CNX Gas Company, as well as CONSOL Energy itself in the United States District Court for the Western District of Virginia. The complaint seeks damages and injunctive relief in connection with the deposit of water from mining activities at the Buchanan Mine (formerly owned by CCC) into nearby void spaces at some of the mines of ICCC, voids ostensibly underlying their property. The suit alleges damage to coal and coalbed methane and seek recovery in tort, contract and assumpsit (quasi-contract). The suit seeks damages of approximately $
50,000
plus punitive damages. The defendants have asserted Virginia's Mine Void Statute as a defense to plaintiffs’ claims and the plaintiffs have challenged the constitutionality of that statute. On March 18, 2014, the District Court concluded, in ruling on Defendants’ Motion to Dismiss, it could not resolve either the constitutionality or the applicability of the Mine Void Statute on the current record. Discovery is ongoing. CONSOL Energy intends to vigorously defend the suit.
Kennedy Litigation: The Company is a party to a case filed on March 26, 2008 captioned Earl Kennedy (and others) v. CNX Gas Company and CONSOL Energy in the Court of Common Pleas of Greene County, Pennsylvania. The lawsuit alleges that CNX Gas Company and CONSOL Energy trespassed and converted gas and other minerals allegedly belonging to the plaintiffs in connection with wells drilled by CNX Gas Company. The complaint, as amended, seeks injunctive relief, including removing CNX Gas Company from the property, and compensatory damages of $
20,000
. The suit also sought to overturn existing law as to the ownership of coalbed methane in Pennsylvania, but that claim was dismissed by the court. The suit further sought a determination that the Pittsburgh 8 coal seam does not include the “roof/rider” coal. The court held a bench trial on the “roof/rider” coal issue in November 2011 and ruled in favor of CNX Gas Company and CONSOL Energy. On March 3, 2014, the Company won summary judgment on Counts 1 through 10 of the Amended Complaint, each relating to the alleged trespass of horizontal CBM wells into strata other than the Pittsburgh 8 Seam. The Court rejected each of those claims, essentially holding that if CNX Gas Company went out of the coal seam, it had no intention to do so and, in any event, the plaintiff could not prove any damages as a result. The last remaining Count, seeking to quiet title to approximately 40 acres of Pittsburgh Seam coal, was nonsuited by Plaintiffs, without prejudice, on March 26, 2014. On March 28, 2014, Plaintiffs filed Notices of Appeal with the Pennsylvania Superior Court on all issues decided in CONSOL Energy’s favor.
Rowland Litigation: Rowland Land Company filed a complaint in May 2011 against CONSOL Energy, CNX Gas Company, Dominion Resources Inc., and EQT Production Company (EQT) in Raleigh County Circuit Court, West Virginia. Rowland is the lessor on a 33,000 acre oil and gas lease in southern West Virginia. EQT was the original lessee, but farmed out the development of the lease to Dominion Resources in exchange for an overriding royalty. Dominion Resources sold the indirect subsidiary that held the lease to a subsidiary of CONSOL Energy on April 30, 2010. Subsequent to that acquisition, the subsidiary that held the lease was merged into CNX Gas Company as part of an internal reorganization. Rowland alleges that (i) Dominion Resources' sale of the subsidiary to CONSOL Energy was a change in control that required its consent under the terms of the farmout agreement and lease, and/or (ii) the subsequent merger of the subsidiary into CNX Gas Company was an assignment that required its consent under the lease. Rowland has recently been permitted to file its Third Amended Complaint to include additional allegations that CONSOL Energy has slandered Rowland's title. A motion to dismiss will be filed. Initial mediation efforts have been unsuccessful, but another mediation session is scheduled for May 27, 2014. CONSOL Energy believes that the case is without merit and intends to defend it vigorously. Consequently, we have not recognized any liability related to these actions.
At
March 31, 2014
, CONSOL Energy has provided the following financial guarantees, unconditional purchase obligations and letters of credit to certain third parties, as described by major category in the following table. These amounts represent the maximum potential total of future payments that we could be required to make under these instruments. These amounts have not been reduced for potential recoveries under recourse or collateralization provisions. Generally, recoveries under reclamation bonds would be limited to the extent of the work performed at the time of the default. No amounts related to these financial guarantees and letters of credit are recorded as liabilities on the financial statements. CONSOL Energy management believes that these guarantees will expire without being funded, and therefore the commitments will not have a material adverse effect on financial condition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Commitment Expiration Per Period
|
|
Total
Amounts
Committed
|
|
Less Than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
Beyond
5 Years
|
Letters of Credit:
|
|
|
|
|
|
|
|
|
|
Employee-Related
|
$
|
151,311
|
|
|
$
|
87,507
|
|
|
$
|
63,804
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Environmental
|
56,293
|
|
|
34,346
|
|
|
21,947
|
|
|
—
|
|
|
—
|
|
Other
|
117,041
|
|
|
80,095
|
|
|
36,946
|
|
|
—
|
|
|
—
|
|
Total Letters of Credit
|
324,645
|
|
|
201,948
|
|
|
122,697
|
|
|
—
|
|
|
—
|
|
Surety Bonds:
|
|
|
|
|
|
|
|
|
|
Employee-Related
|
204,884
|
|
|
198,504
|
|
|
6,380
|
|
|
—
|
|
|
—
|
|
Environmental
|
653,395
|
|
|
643,531
|
|
|
9,864
|
|
|
—
|
|
|
—
|
|
Other
|
22,893
|
|
|
22,887
|
|
|
5
|
|
|
—
|
|
|
1
|
|
Total Surety Bonds
|
881,172
|
|
|
864,922
|
|
|
16,249
|
|
|
—
|
|
|
1
|
|
Guarantees:
|
|
|
|
|
|
|
|
|
|
Coal
|
283,360
|
|
|
175,350
|
|
|
108,010
|
|
|
—
|
|
|
—
|
|
Other
|
69,120
|
|
|
35,611
|
|
|
10,658
|
|
|
12,090
|
|
|
10,761
|
|
Total Guarantees
|
352,480
|
|
|
210,961
|
|
|
118,668
|
|
|
12,090
|
|
|
10,761
|
|
Total Commitments
|
$
|
1,558,297
|
|
|
$
|
1,277,831
|
|
|
$
|
257,614
|
|
|
$
|
12,090
|
|
|
$
|
10,762
|
|
Included in the above table are commitments and guarantees entered into in conjunction with the sale of Consolidation Coal Company (CCC) and certain of its subsidiaries, which contain all five of its longwall coal mines in West Virginia, and its river operations to a subsidiary of Murray Energy Corporation (Murray Energy). As part of the sales agreement, CONSOL Energy has guaranteed certain equipment lease obligations and coal sales agreements that were assumed by Murray Energy. In the event that Murray Energy would default on the obligations defined in the agreements, CONSOL Energy would be required to perform under the guarantees. If CONSOL Energy would be required to perform, the stock purchase agreement provides various recourse actions. At March 31, 2014, the fair value of these guarantees was $
3,000
and are included in Other Accrued Liabilities on the Consolidated Balance Sheets. The fair value of certain of the guarantees was determined using CONSOL Energy’s risk adjusted interest rate. Significant increases or decreases in the risk-adjusted interest rates may result in a significantly higher or lower fair value measurement. Coal sales agreement guarantees were valued based on an evaluation of coal market pricing compared to contracted sales price and includes an adjustment for nonperformance risk. No other amounts related to financial guarantees and letters of credit are recorded as liabilities in the financial statements. Significant judgment is required in determining the fair value of these guarantees. The guarantees of the leases and sales agreements are classified within Level 3 of the fair value hierarchy.
CONSOL Energy regularly evaluates the likelihood of default for all guarantees based on an expected loss analysis and records the fair value, if any, of its guarantees as an obligation in the consolidated financial statements.
CONSOL Energy and CNX Gas enter into long-term unconditional purchase obligations to procure major equipment purchases, natural gas firm transportation, gas drilling services and other operating goods and services. These purchase obligations are not recorded on the Consolidated Balance Sheets. As of
March 31, 2014
, the purchase obligations for each of the next five years and beyond were as follows:
|
|
|
|
|
Obligations Due
|
Amount
|
Less than 1 year
|
$
|
181,821
|
|
1 - 3 years
|
330,612
|
|
3 - 5 years
|
260,249
|
|
More than 5 years
|
787,443
|
|
Total Purchase Obligations
|
$
|
1,560,125
|
|
Costs related to these purchase obligations include:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2014
|
|
2013
|
Major equipment purchases
|
|
|
|
$
|
77,635
|
|
|
$
|
3,092
|
|
Firm transportation expense
|
|
|
|
36,930
|
|
|
28,525
|
|
Gas drilling obligations
|
|
|
|
24,164
|
|
|
28,863
|
|
Total costs related to purchase obligations
|
|
|
|
$
|
138,729
|
|
|
$
|
60,480
|
|
NOTE 12—DERIVATIVE INSTRUMENTS:
CONSOL Energy enters into financial derivative instruments to manage our exposure to commodity price volatility. The fair value of CONSOL Energy's derivatives (natural gas price swaps and options) are based on pricing models which utilize inputs that are either readily available in the public market, such as natural gas forward curves, or can be corroborated from active markets or broker quotes. These values are then compared to the values given by our counterparties for reasonableness. Changes in the fair value of the derivatives are recorded currently in earnings unless special hedge accounting criteria are met. For derivatives designated as fair value hedges, the changes in fair value of both the derivative instrument and the hedged item are recorded in earnings. For derivatives designated as cash flow hedges, the effective portions of changes in the fair value of the derivatives are reported in Other Comprehensive Income or Loss (OCI) on the Consolidated Balance Sheets and reclassified into Natural Gas, NGL's and Oil Sales on the Consolidated Statements of Income in the same period or periods which the forecasted transaction affects earnings. The ineffective portions of hedges are recognized in earnings in the current period. CONSOL Energy currently utilizes only cash flow hedges that are considered highly effective.
CONSOL Energy formally assesses both at inception of the hedge and on an ongoing basis whether each derivative is highly effective in offsetting changes in the fair values or the cash flows of the hedged item. If it is determined that a derivative is not highly effective as a hedge or if a derivative ceases to be a highly effective hedge, CONSOL Energy will discontinue hedge accounting prospectively.
CONSOL Energy is exposed to credit risk in the event of nonperformance by counterparties. The creditworthiness of counterparties is subject to continuing review. The Company has not experienced any issues of non-performance by derivative counterparties.
None of our counterparty master agreements currently require CONSOL Energy to post collateral for any of its hedges. However, as stated in the counterparty master agreements, if CONSOL Energy's obligations with one of its counterparties cease to be secured on the same basis as similar obligations with the other lenders under the credit facility, CONSOL Energy would have to post collateral for hedges in a liabilities position in excess of defined thresholds. All of our derivative instruments are subject to master netting arrangements with our counterparties. CONSOL Energy recognizes all financial derivative instruments as either assets or liabilities at fair value on the Consolidated Balance Sheets on a gross basis.
Each of CONSOL Energy's counterparty master agreements allows, in the event of default, the ability to elect early termination of outstanding contracts. If early termination is elected, CONSOL Energy and the applicable counterparty would net settle all open hedge positions.
CONSOL Energy has entered into swap and option contracts for natural gas to manage the price risk associated with the forecasted natural gas sales. The objective of these hedges is to reduce the variability of the cash flows associated with the forecasted sales from the underlying commodity. As of
March 31, 2014
, the total notional amount of the Company’s outstanding derivative instruments was
276.2
billion cubic feet. These derivative instruments are forecasted to settle through December 31, 2016 and meet the criteria for cash flow hedge accounting. As these contracts settle, the cash received and/or paid will be shown on the Consolidated Statements of Cash Flows as Changes in Prepaid Expenses, Changes in Other Assets, Changes in Other Operating Liabilities and/or Changes in Other Liabilities. Assuming no changes in price during the next twelve months, $
1,633
of unrealized gain is expected to be reclassified from Other Comprehensive Income on the Consolidated Balance Sheets and into Natural Gas, NGL's and Oil Sales on the Consolidated Statements of Income, as a result of the gross settlements of cash flow hedges. No gains or losses have been reclassified into earnings as a result of the discontinuance of cash flow hedges.
The gross fair value at
March 31, 2014
of CONSOL Energy's derivative instruments, which all qualify as cash flow hedges, was an asset of $
58,947
and a liability of $
43,700
. The total asset is comprised of $
37,152
and $
21,795
which were included in Prepaid Expense and Other Assets, respectively, on the Consolidated Balance Sheets. The total liability is comprised of $
38,679
and $
5,021
which were included in Other Accrued Liabilities and Other Liabilities, respectively, on the Consolidated Balance Sheets.
The gross fair value at
December 31, 2013
of CONSOL Energy's derivative instruments, which all qualify as cash flow hedges, was an asset of
$83,661
and a liability of
$18,212
. The total asset is comprised of
$59,605
and
$24,056
which were included in Prepaid Expense and Other Assets, respectively, on the Consolidated Balance Sheets. The total liability is comprised of
$12,327
and
$5,885
which were included in Other Accrued Liabilities and Other Liabilities, respectively, on the Consolidated Balance Sheets.
The effect of derivative instruments in cash flow hedging relationships on the Consolidated Statements of Income and the Consolidated Statements of Stockholders' Equity net of tax were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2014
|
|
2013
|
Natural Gas Price Swaps and Options
|
|
|
|
Beginning Balance – Accumulated OCI
|
$
|
42,493
|
|
|
$
|
76,761
|
|
Gain/(Loss) recognized in Accumulated OCI
|
$
|
(46,965
|
)
|
|
$
|
(18,595
|
)
|
Less: Gain/(Loss) reclassified from Accumulated OCI into Natural Gas, NGL's and Oil Sales
|
$
|
(16,313
|
)
|
|
$
|
22,713
|
|
Ending Balance – Accumulated OCI
|
$
|
11,841
|
|
|
$
|
35,453
|
|
Gain/(Loss) recognized in Natural Gas, NGL's and Oil Sales for ineffectiveness
|
$
|
355
|
|
|
$
|
1,041
|
|
There were no amounts excluded from the assessment of hedge effectiveness in 2014 or 2013.
NOTE 13—FAIR VALUE OF FINANCIAL INSTRUMENTS:
The financial instruments measured at fair value on a recurring basis are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at March 31, 2014
|
|
Fair Value Measurements at December 31, 2013
|
Description
|
Quoted Prices in
Active Markets
for Identical
Liabilities
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Quoted Prices in
Active Markets
for Identical
Liabilities
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
Gas Cash Flow Hedges
|
$
|
—
|
|
|
$
|
15,247
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
65,449
|
|
|
$
|
—
|
|
The following methods and assumptions were used to estimate the fair value for which the fair value option was not elected:
Cash and cash equivalents:
The carrying amount reported in the balance sheets for cash and cash equivalents approximates its fair value due to the short-term maturity of these instruments.
Long-term debt:
The fair value of long-term debt is measured using unadjusted quoted market prices or estimated using discounted cash flow analyses. The discounted cash flow analyses are based on current market rates for instruments with similar cash flows.
The carrying amounts and fair values of financial instruments for which the fair value option was not elected are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2014
|
|
December 31, 2013
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
Cash and Cash Equivalents
|
$
|
314,087
|
|
|
$
|
314,087
|
|
|
$
|
327,420
|
|
|
$
|
327,420
|
|
Long-Term Debt
|
$
|
(3,118,687
|
)
|
|
$
|
(3,314,396
|
)
|
|
$
|
(3,118,920
|
)
|
|
$
|
(3,299,875
|
)
|
NOTE 14—SEGMENT INFORMATION:
CONSOL Energy has two principal business divisions: Exploration and Production (E&P) and Coal. The principal activity of the E&P division is to produce pipeline quality natural gas for sale primarily to gas wholesalers. The E&P division includes four reportable segments. These reportable segments are Marcellus, Coalbed Methane, Shallow Oil and Gas and Other Gas. The Other Gas segment includes our purchased gas activities, general and administrative activities as well as various other activities assigned to the E&P division but not allocated to each individual well type. The principal activities of the Coal division are mining, preparation and marketing of thermal coal, sold primarily to power generators, and metallurgical coal, sold to metal and coke producers. The Coal division includes four reportable segments. These reportable segments are Thermal, Low Volatile Metallurgical, High Volatile Metallurgical and Other Coal. Each of these reportable segments includes a number of operating segments (mines or type of coal sold). For the
three
months ended
March 31, 2014
, the Thermal aggregated segment includes the following mines: Bailey Complex, Enlow Fork, and Miller Creek Complex. For the
three
months ended
March 31, 2014
, the Low Volatile Metallurgical aggregated segment includes the Buchanan Mine. For the
three
months ended
March 31, 2014
, the High Volatile Metallurgical aggregated segment includes: Bailey Complex and Enlow Fork coal sales. The Other Coal segment includes our purchased coal activities, idled mine activities, general and administrative activities as well as various other activities assigned to the Coal division but not allocated to each individual mine. CONSOL Energy’s All Other segment includes industrial supplies, coal terminal operations and various other corporate activities that are not allocated to the E&P or coal segment. Intersegment sales have been recorded at amounts approximating market. Operating profit for each segment is based on sales less identifiable operating and non-operating expenses. Assets are reflected at the division level only (E&P, coal, and other) and are not allocated between each individual segment. This presentation is consistent with the information regularly reviewed by the chief operating decision maker. The assets are not allocated to each individual segment due to the diverse asset base controlled by CONSOL Energy where each individual asset may service more than one segment within the division. An allocation of such asset base would not be meaningful or representative on a segment by segment basis.
Industry segment results for the
three months
ended
March 31, 2014
are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcellus
Shale
|
|
Coalbed
Methane
|
|
Shallow Oil and Gas
|
|
Other
Gas
|
|
Total
E&P
|
|
Thermal
|
|
Low Volatile
Metallurgical
|
|
High Volatile
Metallurgical
|
|
Other
Coal
|
|
Total Coal
|
|
All
Other
|
|
Corporate,
Adjustments
&
Eliminations
|
|
Consolidated
|
|
Sales—outside
|
$
|
124,957
|
|
|
$
|
96,071
|
|
|
$
|
32,345
|
|
|
$
|
12,925
|
|
|
$
|
266,298
|
|
|
$
|
416,969
|
|
|
$
|
84,541
|
|
|
$
|
28,932
|
|
|
$
|
4,239
|
|
|
$
|
534,681
|
|
|
$
|
69,287
|
|
|
$
|
—
|
|
|
$
|
870,266
|
|
(A)
|
Sales—purchased gas
|
—
|
|
|
—
|
|
|
—
|
|
|
3,574
|
|
|
3,574
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,574
|
|
|
Sales—gas royalty interests
|
—
|
|
|
—
|
|
|
—
|
|
|
26,645
|
|
|
26,645
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,645
|
|
|
Freight—outside
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,945
|
|
|
9,945
|
|
|
—
|
|
|
—
|
|
|
9,945
|
|
|
Intersegment transfers
|
—
|
|
|
—
|
|
|
—
|
|
|
897
|
|
|
897
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,312
|
|
|
(20,209
|
)
|
|
—
|
|
|
Total Sales and Freight
|
$
|
124,957
|
|
|
$
|
96,071
|
|
|
$
|
32,345
|
|
|
$
|
44,041
|
|
|
$
|
297,414
|
|
|
$
|
416,969
|
|
|
$
|
84,541
|
|
|
$
|
28,932
|
|
|
$
|
14,184
|
|
|
$
|
544,626
|
|
|
$
|
88,599
|
|
|
$
|
(20,209
|
)
|
|
$
|
910,430
|
|
|
Earnings (Loss) Before Income Taxes
|
$
|
59,105
|
|
|
$
|
33,619
|
|
|
$
|
(1,757
|
)
|
|
$
|
(11,223
|
)
|
|
$
|
79,744
|
|
|
$
|
148,568
|
|
|
$
|
11,430
|
|
|
$
|
9,104
|
|
|
$
|
(61,937
|
)
|
|
$
|
107,165
|
|
|
$
|
1,497
|
|
|
$
|
(58,227
|
)
|
|
$
|
130,179
|
|
(B)
|
Segment assets
|
|
|
|
|
|
|
|
|
$
|
6,521,994
|
|
|
|
|
|
|
|
|
|
|
$
|
4,168,372
|
|
|
$
|
291,767
|
|
|
$
|
602,342
|
|
|
$
|
11,584,475
|
|
(C)
|
Depreciation, depletion and amortization
|
|
|
|
|
|
|
|
|
$
|
71,729
|
|
|
|
|
|
|
|
|
|
|
$
|
56,063
|
|
|
$
|
1,324
|
|
|
$
|
—
|
|
|
$
|
129,116
|
|
|
Capital expenditures
|
|
|
|
|
|
|
|
|
$
|
265,970
|
|
|
|
|
|
|
|
|
|
|
$
|
184,508
|
|
|
$
|
531
|
|
|
$
|
—
|
|
|
$
|
451,009
|
|
|
(A) Included in the Coal segment are sales of
$118,884
to Xcoal Energy & Resources, which comprises over 10% of sales.
(B) Includes equity in earnings of unconsolidated affiliates of
$5,814
,
$2,860
and
$(1,224)
for E&P, Coal and All Other, respectively.
(C) Includes investments in unconsolidated equity affiliates of
$223,875
,
$23,923
and $
61,327
for E&P, Coal and All Other, respectively.
Industry segment results for the
three months
ended
March 31, 2013
are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcellus
Shale
|
|
Coalbed
Methane
|
|
Shallow Oil and Gas
|
|
Other
Gas
|
|
Total E&P
|
|
Thermal
|
|
Low Volatile
Metallurgical
|
|
High Volatile
Metallurgical
|
|
Other
Coal
|
|
Total
Coal
|
|
All
Other
|
|
Corporate,
Adjustments
&
Eliminations
|
|
Consolidated
|
|
Sales—outside
|
$
|
48,411
|
|
|
$
|
83,640
|
|
|
$
|
32,436
|
|
|
$
|
3,355
|
|
|
$
|
167,842
|
|
|
$
|
345,940
|
|
|
$
|
146,828
|
|
|
$
|
49,478
|
|
|
$
|
5,663
|
|
|
$
|
547,909
|
|
|
$
|
68,684
|
|
|
$
|
—
|
|
|
$
|
784,435
|
|
(D)
|
Sales—purchased gas
|
—
|
|
|
—
|
|
|
—
|
|
|
1,358
|
|
|
1,358
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,358
|
|
|
Sales—gas royalty interests
|
—
|
|
|
—
|
|
|
—
|
|
|
14,204
|
|
|
14,204
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,204
|
|
|
Freight—outside
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,253
|
|
|
12,253
|
|
|
—
|
|
|
—
|
|
|
12,253
|
|
|
Intersegment transfers
|
—
|
|
|
—
|
|
|
—
|
|
|
836
|
|
|
836
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,478
|
|
|
(36,314
|
)
|
|
—
|
|
|
Total Sales and Freight
|
$
|
48,411
|
|
|
$
|
83,640
|
|
|
$
|
32,436
|
|
|
$
|
19,753
|
|
|
$
|
184,240
|
|
|
$
|
345,940
|
|
|
$
|
146,828
|
|
|
$
|
49,478
|
|
|
$
|
17,916
|
|
|
$
|
560,162
|
|
|
$
|
104,162
|
|
|
$
|
(36,314
|
)
|
|
$
|
812,250
|
|
|
Earnings (Loss) Before Income Taxes
|
$
|
13,768
|
|
|
$
|
21,180
|
|
|
$
|
(4,037
|
)
|
|
$
|
(31,554
|
)
|
|
$
|
(643
|
)
|
|
$
|
93,459
|
|
|
$
|
54,717
|
|
|
$
|
10,737
|
|
|
$
|
(59,256
|
)
|
|
$
|
99,657
|
|
|
$
|
2,575
|
|
|
$
|
(106,205
|
)
|
|
$
|
(4,616
|
)
|
(E)
|
Segment assets
|
|
|
|
|
|
|
|
|
$
|
5,879,988
|
|
|
|
|
|
|
|
|
|
|
$
|
4,058,992
|
|
|
$
|
358,663
|
|
|
$
|
2,295,551
|
|
|
$
|
12,593,194
|
|
(F)
|
Depreciation, depletion and amortization
|
|
|
|
|
|
|
|
|
$
|
52,988
|
|
|
|
|
|
|
|
|
|
|
$
|
57,190
|
|
|
$
|
1,400
|
|
|
$
|
—
|
|
|
$
|
111,578
|
|
|
Capital expenditures
|
|
|
|
|
|
|
|
|
$
|
207,129
|
|
|
|
|
|
|
|
|
|
|
$
|
141,251
|
|
|
$
|
1,437
|
|
|
$
|
—
|
|
|
$
|
349,817
|
|
|
|
|
(D)
|
Included in the Coal segment are sales of
$157,604
to Xcoal Energy & Resources, which comprises over 10% of sales.
|
|
|
(E)
|
Includes equity in earnings of unconsolidated affiliates of
$3,181
,
$1,532
and
$84
for E&P, Coal and All Other, respectively.
|
(F) Includes investments in unconsolidated equity affiliates of
$167,058
,
$22,635
and $
58,434
for E&P, Coal and All Other, respectively.
Reconciliation of Segment Information to Consolidated Amounts:
Earnings Before Income Taxes:
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2014
|
|
2013
|
Segment Earnings Before Income Taxes for total reportable business segments
|
$
|
186,909
|
|
|
$
|
99,014
|
|
Segment Earnings Before Income Taxes for all other businesses
|
1,497
|
|
|
2,575
|
|
Interest expense, net and other non-operating activity (G)
|
(53,943
|
)
|
|
(52,660
|
)
|
Other Corporate Items (G)
|
(4,284
|
)
|
|
(53,545
|
)
|
Earnings Before Income Taxes
|
$
|
130,179
|
|
|
$
|
(4,616
|
)
|
|
|
|
|
|
|
|
|
|
Total Assets:
|
March 31,
|
2014
|
|
2013
|
Segment assets for total reportable business segments
|
$
|
10,690,366
|
|
|
$
|
9,938,980
|
|
Segment assets for all other businesses
|
291,767
|
|
|
358,663
|
|
Items excluded from segment assets:
|
|
|
|
Cash and other investments (G)
|
300,090
|
|
|
23,652
|
|
Recoverable income taxes
|
4,434
|
|
|
6,602
|
|
Deferred tax assets
|
265,226
|
|
|
99,785
|
|
Bond issuance costs
|
32,592
|
|
|
39,939
|
|
Discontinued Operations
|
—
|
|
|
2,125,573
|
|
Total Consolidated Assets
|
$
|
11,584,475
|
|
|
$
|
12,593,194
|
|
_________________________
(G) Excludes amounts specifically related to the E&P segment.
NOTE 15—GUARANTOR SUBSIDIARIES FINANCIAL INFORMATION:
The payment obligations under the
$1,500,000
,
8.000%
per annum senior notes due
April 1, 2017
, the
$1,250,000
,
8.250%
per annum senior notes due
April 1, 2020
, and the
$250,000
,
6.375%
per annum senior notes due
March 1, 2021
issued by CONSOL Energy are jointly and severally, and also fully and unconditionally guaranteed by substantially all subsidiaries of CONSOL Energy. In accordance with positions established by the Securities and Exchange Commission (SEC), the following financial information sets forth separate financial information with respect to the parent, CNX Gas, a guarantor subsidiary, the remaining guarantor subsidiaries and the non-guarantor subsidiaries. The principal elimination entries include investments in subsidiaries and certain intercompany balances and transactions. CONSOL Energy, the parent, and a guarantor subsidiary manage several assets and liabilities of all other wholly owned subsidiaries. These include, for example, deferred tax assets, cash and other post-employment liabilities. These assets and liabilities are reflected as parent company or guarantor company amounts for purposes of this presentation.
Income Statement for the Three Months Ended
March 31, 2014
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Issuer
|
|
CNX Gas
Guarantor
|
|
Other
Subsidiary
Guarantors
|
|
Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Revenues and Other Income:
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas, NGLs and Oil Sales
|
$
|
—
|
|
|
$
|
267,194
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(896
|
)
|
|
$
|
266,298
|
|
Coal Sales
|
—
|
|
|
—
|
|
|
534,681
|
|
|
—
|
|
|
—
|
|
|
534,681
|
|
Other Outside Sales
|
—
|
|
|
—
|
|
|
10,483
|
|
|
58,804
|
|
|
—
|
|
|
69,287
|
|
Gas Royalty Interests and Purchased Gas Sales
|
—
|
|
|
30,219
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,219
|
|
Freight-Outside Coal
|
—
|
|
|
—
|
|
|
9,945
|
|
|
—
|
|
|
—
|
|
|
9,945
|
|
Miscellaneous Other Income
|
173,103
|
|
|
27,720
|
|
|
54,778
|
|
|
22,271
|
|
|
(222,818
|
)
|
|
55,054
|
|
Gain (Loss) on Sale of Assets
|
—
|
|
|
3,152
|
|
|
514
|
|
|
3
|
|
|
—
|
|
|
3,669
|
|
Total Revenue and Other Income
|
173,103
|
|
|
328,285
|
|
|
610,401
|
|
|
81,078
|
|
|
(223,714
|
)
|
|
969,153
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and Production Costs
|
|
|
|
|
|
|
|
|
|
|
|
Lease Operating Expense
|
—
|
|
|
29,243
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,243
|
|
Transportation, Gathering and Compression
|
—
|
|
|
53,782
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53,782
|
|
Production, Ad Valorem, and Other Fees
|
—
|
|
|
10,187
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,187
|
|
Direct Administrative and Selling
|
—
|
|
|
11,653
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,653
|
|
Depreciation, Depletion and Amortization
|
—
|
|
|
71,729
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
71,729
|
|
Exploration and Production Related Other Costs
|
—
|
|
|
2,662
|
|
|
—
|
|
|
31
|
|
|
406
|
|
|
3,099
|
|
Production Royalty Interests and Purchased Gas Costs
|
—
|
|
|
26,108
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
26,096
|
|
Other Corporate Expenses
|
—
|
|
|
25,719
|
|
|
—
|
|
|
—
|
|
|
445
|
|
|
26,164
|
|
General and Administrative
|
—
|
|
|
17,809
|
|
|
—
|
|
|
—
|
|
|
(445
|
)
|
|
17,364
|
|
Total Exploration and Production Costs
|
—
|
|
|
248,892
|
|
|
—
|
|
|
31
|
|
|
394
|
|
|
249,317
|
|
Coal Costs
|
|
|
|
|
|
|
|
|
|
|
|
Operating and Other Costs
|
14,291
|
|
|
—
|
|
|
313,454
|
|
|
—
|
|
|
(896
|
)
|
|
326,849
|
|
Royalties and Production Taxes
|
—
|
|
|
—
|
|
|
45,197
|
|
|
—
|
|
|
(18,709
|
)
|
|
26,488
|
|
Direct Administrative and Selling
|
150
|
|
|
—
|
|
|
11,144
|
|
|
—
|
|
|
—
|
|
|
11,294
|
|
Depreciation, Depletion and Amortization
|
—
|
|
|
—
|
|
|
56,063
|
|
|
—
|
|
|
—
|
|
|
56,063
|
|
Freight Expense
|
—
|
|
|
—
|
|
|
9,945
|
|
|
—
|
|
|
—
|
|
|
9,945
|
|
General and Administrative Costs
|
2,434
|
|
|
—
|
|
|
10,079
|
|
|
—
|
|
|
—
|
|
|
12,513
|
|
Other Corporate Expenses
|
19,295
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,295
|
|
Total Coal Costs
|
36,170
|
|
|
—
|
|
|
445,882
|
|
|
—
|
|
|
(19,605
|
)
|
|
462,447
|
|
Other Costs
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous Operating Expense
|
7,027
|
|
|
—
|
|
|
7,707
|
|
|
78,203
|
|
|
(18,388
|
)
|
|
74,549
|
|
General and Administrative Costs
|
210
|
|
|
—
|
|
|
196
|
|
|
—
|
|
|
—
|
|
|
406
|
|
Depreciation, Depletion and Amortization
|
6
|
|
|
—
|
|
|
845
|
|
|
473
|
|
|
—
|
|
|
1,324
|
|
Interest Expense
|
48,433
|
|
|
1,809
|
|
|
13,222
|
|
|
73
|
|
|
(12,606
|
)
|
|
50,931
|
|
Total Other Costs
|
55,676
|
|
|
1,809
|
|
|
21,970
|
|
|
78,749
|
|
|
(30,994
|
)
|
|
127,210
|
|
Total Costs And Expenses
|
91,846
|
|
|
250,701
|
|
|
467,852
|
|
|
78,780
|
|
|
(50,205
|
)
|
|
838,974
|
|
Earnings Before Income Tax
|
81,257
|
|
|
77,584
|
|
|
142,549
|
|
|
2,298
|
|
|
(173,509
|
)
|
|
130,179
|
|
Income Taxes
|
(34,746
|
)
|
|
30,714
|
|
|
11,651
|
|
|
870
|
|
|
—
|
|
|
8,489
|
|
Income From Continuing Operations
|
116,003
|
|
|
46,870
|
|
|
130,898
|
|
|
1,428
|
|
|
(173,509
|
)
|
|
121,690
|
|
Income From Discontinued Operations, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,687
|
)
|
|
—
|
|
|
(5,687
|
)
|
Net Income Attributable to CONSOL Energy Shareholders
|
$
|
116,003
|
|
|
$
|
46,870
|
|
|
$
|
130,898
|
|
|
$
|
(4,259
|
)
|
|
$
|
(173,509
|
)
|
|
$
|
116,003
|
|
Balance Sheet at
March 31, 2014
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Issuer
|
|
CNX Gas
Guarantor
|
|
Other
Subsidiary
Guarantors
|
|
Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
$
|
298,452
|
|
|
$
|
14,830
|
|
|
$
|
—
|
|
|
$
|
805
|
|
|
$
|
—
|
|
|
$
|
314,087
|
|
Accounts and Notes Receivable:
|
|
|
|
|
|
|
|
|
|
|
|
Trade
|
—
|
|
|
90,369
|
|
|
—
|
|
|
265,237
|
|
|
—
|
|
|
355,606
|
|
Notes Receivable
|
1,283
|
|
|
—
|
|
|
24,626
|
|
|
—
|
|
|
—
|
|
|
25,909
|
|
Other Receivables
|
11,367
|
|
|
204,786
|
|
|
20,345
|
|
|
3,350
|
|
|
—
|
|
|
239,848
|
|
Inventories
|
—
|
|
|
15,465
|
|
|
104,999
|
|
|
35,721
|
|
|
—
|
|
|
156,185
|
|
Deferred Income Taxes
|
254,138
|
|
|
11,088
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
265,226
|
|
Recoverable Income Taxes
|
(8,706
|
)
|
|
13,140
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,434
|
|
Prepaid Expenses
|
31,386
|
|
|
42,059
|
|
|
22,290
|
|
|
1,806
|
|
|
—
|
|
|
97,541
|
|
Total Current Assets
|
587,920
|
|
|
391,737
|
|
|
172,260
|
|
|
306,919
|
|
|
—
|
|
|
1,458,836
|
|
Property, Plant and Equipment:
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment
|
156,226
|
|
|
7,162,125
|
|
|
6,506,116
|
|
|
26,151
|
|
|
—
|
|
|
13,850,618
|
|
Less-Accumulated Depreciation, Depletion and Amortization
|
140,487
|
|
|
1,259,469
|
|
|
2,826,369
|
|
|
19,302
|
|
|
—
|
|
|
4,245,627
|
|
Total Property, Plant and Equipment-Net
|
15,739
|
|
|
5,902,656
|
|
|
3,679,747
|
|
|
6,849
|
|
|
—
|
|
|
9,604,991
|
|
Other Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Affiliates
|
12,105,348
|
|
|
223,874
|
|
|
107,608
|
|
|
—
|
|
|
(12,127,705
|
)
|
|
309,125
|
|
Notes Receivable
|
95
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
95
|
|
Other
|
136,391
|
|
|
27,947
|
|
|
38,185
|
|
|
8,905
|
|
|
—
|
|
|
211,428
|
|
Total Other Assets
|
12,241,834
|
|
|
251,821
|
|
|
145,793
|
|
|
8,905
|
|
|
(12,127,705
|
)
|
|
520,648
|
|
Total Assets
|
$
|
12,845,493
|
|
|
$
|
6,546,214
|
|
|
$
|
3,997,800
|
|
|
$
|
322,673
|
|
|
$
|
(12,127,705
|
)
|
|
$
|
11,584,475
|
|
Liabilities and Equity:
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable
|
$
|
117,351
|
|
|
$
|
354,262
|
|
|
$
|
20,137
|
|
|
$
|
14,834
|
|
|
$
|
—
|
|
|
$
|
506,584
|
|
Accounts Payable (Recoverable)—Related Parties
|
4,549,533
|
|
|
78,880
|
|
|
(5,112,248
|
)
|
|
131,948
|
|
|
351,887
|
|
|
—
|
|
Current Portion Long-Term Debt
|
1,523
|
|
|
6,434
|
|
|
3,322
|
|
|
779
|
|
|
—
|
|
|
12,058
|
|
Short-Term Notes Payable
|
—
|
|
|
351,887
|
|
|
—
|
|
|
—
|
|
|
(351,887
|
)
|
|
—
|
|
Other Accrued Liabilities
|
167,178
|
|
|
139,320
|
|
|
322,471
|
|
|
8,336
|
|
|
—
|
|
|
637,305
|
|
Current Liabilities of Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
14,400
|
|
|
—
|
|
|
14,400
|
|
Total Current Liabilities
|
4,835,585
|
|
|
930,783
|
|
|
(4,766,318
|
)
|
|
170,297
|
|
|
—
|
|
|
1,170,347
|
|
Long-Term Debt:
|
3,004,520
|
|
|
41,727
|
|
|
113,164
|
|
|
1,930
|
|
|
—
|
|
|
3,161,341
|
|
Deferred Credits and Other Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Income Taxes
|
(187,476
|
)
|
|
491,880
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
304,404
|
|
Postretirement Benefits Other Than Pensions
|
—
|
|
|
—
|
|
|
960,197
|
|
|
—
|
|
|
—
|
|
|
960,197
|
|
Pneumoconiosis Benefits
|
—
|
|
|
—
|
|
|
111,566
|
|
|
—
|
|
|
—
|
|
|
111,566
|
|
Mine Closing
|
—
|
|
|
—
|
|
|
320,270
|
|
|
—
|
|
|
—
|
|
|
320,270
|
|
Gas Well Closing
|
—
|
|
|
121,081
|
|
|
56,495
|
|
|
—
|
|
|
—
|
|
|
177,576
|
|
Workers’ Compensation
|
—
|
|
|
—
|
|
|
71,022
|
|
|
336
|
|
|
—
|
|
|
71,358
|
|
Salary Retirement
|
42,506
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42,506
|
|
Reclamation
|
—
|
|
|
—
|
|
|
39,587
|
|
|
—
|
|
|
—
|
|
|
39,587
|
|
Other
|
58,071
|
|
|
65,718
|
|
|
9,247
|
|
|
—
|
|
|
—
|
|
|
133,036
|
|
Total Deferred Credits and Other Liabilities
|
(86,899
|
)
|
|
678,679
|
|
|
1,568,384
|
|
|
336
|
|
|
—
|
|
|
2,160,500
|
|
Total CONSOL Energy Inc. Stockholders’ Equity
|
5,092,287
|
|
|
4,895,025
|
|
|
7,082,570
|
|
|
150,110
|
|
|
(12,127,705
|
)
|
|
5,092,287
|
|
Total Liabilities and Equity
|
$
|
12,845,493
|
|
|
$
|
6,546,214
|
|
|
$
|
3,997,800
|
|
|
$
|
322,673
|
|
|
$
|
(12,127,705
|
)
|
|
$
|
11,584,475
|
|
Income Statement for the Three Months Ended
March 31, 2013
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Issuer
|
|
CNX Gas
Guarantor
|
|
Other
Subsidiary
Guarantors
|
|
Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Revenues and Other Income:
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas, NGLs and Oil Sales
|
$
|
—
|
|
|
$
|
168,679
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(837
|
)
|
|
$
|
167,842
|
|
Coal Sales
|
—
|
|
|
—
|
|
|
547,909
|
|
|
—
|
|
|
—
|
|
|
547,909
|
|
Other Outside Sales
|
—
|
|
|
—
|
|
|
14,631
|
|
|
54,053
|
|
|
—
|
|
|
68,684
|
|
Gas Royalty Interests and Purchased Gas Sales
|
—
|
|
|
15,562
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,562
|
|
Freight-Outside Coal
|
—
|
|
|
—
|
|
|
12,253
|
|
|
—
|
|
|
—
|
|
|
12,253
|
|
Miscellaneous Other Income
|
77,976
|
|
|
12,768
|
|
|
39,531
|
|
|
5,370
|
|
|
(107,258
|
)
|
|
28,387
|
|
Gain (Loss) on Sale of Assets
|
—
|
|
|
456
|
|
|
1,847
|
|
|
3
|
|
|
—
|
|
|
2,306
|
|
Total Revenue and Other Income
|
77,976
|
|
|
197,465
|
|
|
616,171
|
|
|
59,426
|
|
|
(108,095
|
)
|
|
842,943
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and Production Costs
|
|
|
|
|
|
|
|
|
|
|
|
Lease Operating Expense
|
—
|
|
|
22,014
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,014
|
|
Transportation, Gathering and Compression
|
—
|
|
|
48,433
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,433
|
|
Production, Ad Valorem, and Other Fees
|
—
|
|
|
4,569
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,569
|
|
Direct Administrative and Selling
|
—
|
|
|
11,086
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,086
|
|
Depreciation, Depletion and Amortization
|
—
|
|
|
52,988
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,988
|
|
Exploration and Production Related Other Costs
|
—
|
|
|
10,488
|
|
|
—
|
|
|
1,284
|
|
|
(1,283
|
)
|
|
10,489
|
|
Production Royalty Interests and Purchased Gas Costs
|
—
|
|
|
12,776
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
12,765
|
|
Other Corporate Expenses
|
—
|
|
|
24,458
|
|
|
—
|
|
|
—
|
|
|
935
|
|
|
25,393
|
|
General and Administrative
|
—
|
|
|
9,525
|
|
|
—
|
|
|
—
|
|
|
(935
|
)
|
|
8,590
|
|
Total Exploration and Production Costs
|
—
|
|
|
196,337
|
|
|
—
|
|
|
1,284
|
|
|
(1,294
|
)
|
|
196,327
|
|
Coal Costs
|
|
|
|
|
|
|
|
|
|
|
|
Operating and Other Costs
|
10,066
|
|
|
—
|
|
|
325,333
|
|
|
—
|
|
|
(384
|
)
|
|
335,015
|
|
Royalties and Production Taxes
|
—
|
|
|
—
|
|
|
29,276
|
|
|
—
|
|
|
(837
|
)
|
|
28,439
|
|
Direct Administrative and Selling
|
—
|
|
|
—
|
|
|
10,884
|
|
|
—
|
|
|
—
|
|
|
10,884
|
|
Depreciation, Depletion and Amortization
|
—
|
|
|
—
|
|
|
57,190
|
|
|
—
|
|
|
—
|
|
|
57,190
|
|
Freight Expense
|
—
|
|
|
—
|
|
|
12,253
|
|
|
—
|
|
|
—
|
|
|
12,253
|
|
General and Administrative Costs
|
—
|
|
|
—
|
|
|
10,763
|
|
|
36
|
|
|
(1,498
|
)
|
|
9,301
|
|
Other Corporate Expenses
|
18,417
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,498
|
|
|
19,915
|
|
Total Coal Costs
|
28,483
|
|
|
—
|
|
|
445,699
|
|
|
36
|
|
|
(1,221
|
)
|
|
472,997
|
|
Other Costs
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous Operating Expense
|
38,085
|
|
|
—
|
|
|
32,324
|
|
|
53,995
|
|
|
(1,369
|
)
|
|
123,035
|
|
General and Administrative Costs
|
232
|
|
|
—
|
|
|
159
|
|
|
32
|
|
|
—
|
|
|
423
|
|
Depreciation, Depletion and Amortization
|
6
|
|
|
—
|
|
|
910
|
|
|
484
|
|
|
—
|
|
|
1,400
|
|
Interest Expense
|
50,169
|
|
|
1,661
|
|
|
1,643
|
|
|
11
|
|
|
(107
|
)
|
|
53,377
|
|
Total Other Costs
|
88,492
|
|
|
1,661
|
|
|
35,036
|
|
|
54,522
|
|
|
(1,476
|
)
|
|
178,235
|
|
Total Costs And Expenses
|
116,975
|
|
|
197,998
|
|
|
480,735
|
|
|
55,842
|
|
|
(3,991
|
)
|
|
847,559
|
|
Earnings Before Income Tax
|
(38,999
|
)
|
|
(533
|
)
|
|
135,436
|
|
|
3,584
|
|
|
(104,104
|
)
|
|
(4,616
|
)
|
Income Taxes
|
(37,435
|
)
|
|
(208
|
)
|
|
35,395
|
|
|
1,356
|
|
|
—
|
|
|
(892
|
)
|
Income From Continuing Operations
|
(1,564
|
)
|
|
(325
|
)
|
|
100,041
|
|
|
2,228
|
|
|
(104,104
|
)
|
|
(3,724
|
)
|
Income From Discontinued Operations, net
|
—
|
|
|
—
|
|
|
—
|
|
|
1,903
|
|
|
—
|
|
|
1,903
|
|
Net Income
|
(1,564
|
)
|
|
(325
|
)
|
|
100,041
|
|
|
4,131
|
|
|
(104,104
|
)
|
|
(1,821
|
)
|
Less: Net Income Attributable to Noncontrolling Interests
|
—
|
|
|
257
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
257
|
|
Net Income Attributable to CONSOL Energy Shareholders
|
$
|
(1,564
|
)
|
|
$
|
(68
|
)
|
|
$
|
100,041
|
|
|
$
|
4,131
|
|
|
$
|
(104,104
|
)
|
|
$
|
(1,564
|
)
|
Balance Sheet at December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Issuer
|
|
CNX Gas
Guarantor
|
|
Other
Subsidiary
Guarantors
|
|
Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
$
|
320,473
|
|
|
$
|
6,238
|
|
|
$
|
—
|
|
|
$
|
709
|
|
|
$
|
—
|
|
|
$
|
327,420
|
|
Accounts and Notes Receivable:
|
|
|
|
|
|
|
|
|
|
|
|
Trade
|
—
|
|
|
71,911
|
|
|
—
|
|
|
260,663
|
|
|
—
|
|
|
332,574
|
|
Notes Receivable
|
1,238
|
|
|
—
|
|
|
24,623
|
|
|
—
|
|
|
—
|
|
|
25,861
|
|
Other Receivables
|
17,657
|
|
|
207,128
|
|
|
14,969
|
|
|
4,219
|
|
|
—
|
|
|
243,973
|
|
Inventories
|
—
|
|
|
15,185
|
|
|
99,320
|
|
|
43,409
|
|
|
—
|
|
|
157,914
|
|
Recoverable Income Taxes
|
(16,262
|
)
|
|
26,967
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,705
|
|
Deferred Income Taxes
|
219,566
|
|
|
(8,263
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
211,303
|
|
Prepaid Expenses
|
43,698
|
|
|
65,701
|
|
|
24,915
|
|
|
1,528
|
|
|
—
|
|
|
135,842
|
|
Total Current Assets
|
586,370
|
|
|
384,867
|
|
|
163,827
|
|
|
310,528
|
|
|
—
|
|
|
1,445,592
|
|
Property, Plant and Equipment:
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment
|
220,355
|
|
|
6,919,972
|
|
|
6,412,378
|
|
|
25,804
|
|
|
—
|
|
|
13,578,509
|
|
Less-Accumulated Depreciation, Depletion and Amortization
|
145,754
|
|
|
1,188,464
|
|
|
2,783,043
|
|
|
18,986
|
|
|
—
|
|
|
4,136,247
|
|
Total Property, Plant and Equipment-Net
|
74,601
|
|
|
5,731,508
|
|
|
3,629,335
|
|
|
6,818
|
|
|
—
|
|
|
9,442,262
|
|
Other Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Affiliates
|
11,965,054
|
|
|
206,060
|
|
|
70,222
|
|
|
—
|
|
|
(11,949,661
|
)
|
|
291,675
|
|
Notes Receivable
|
125
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
125
|
|
Other
|
145,401
|
|
|
30,728
|
|
|
28,831
|
|
|
9,053
|
|
|
—
|
|
|
214,013
|
|
Total Other Assets
|
12,110,580
|
|
|
236,788
|
|
|
99,053
|
|
|
9,053
|
|
|
(11,949,661
|
)
|
|
505,813
|
|
Total Assets
|
$
|
12,771,551
|
|
|
$
|
6,353,163
|
|
|
$
|
3,892,215
|
|
|
$
|
326,399
|
|
|
$
|
(11,949,661
|
)
|
|
$
|
11,393,667
|
|
Liabilities and Equity:
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable
|
$
|
180,261
|
|
|
$
|
324,226
|
|
|
$
|
493
|
|
|
$
|
9,600
|
|
|
$
|
—
|
|
|
$
|
514,580
|
|
Accounts Payable (Recoverable)-Related Parties
|
4,563,327
|
|
|
23,287
|
|
|
(5,055,923
|
)
|
|
136,822
|
|
|
332,487
|
|
|
—
|
|
Current Portion of Long-Term Debt
|
1,029
|
|
|
6,258
|
|
|
3,372
|
|
|
796
|
|
|
—
|
|
|
11,455
|
|
Short-Term Notes Payable
|
—
|
|
|
332,487
|
|
|
—
|
|
|
—
|
|
|
(332,487
|
)
|
|
—
|
|
Other Accrued Liabilities
|
144,612
|
|
|
89,080
|
|
|
322,606
|
|
|
9,399
|
|
|
—
|
|
|
565,697
|
|
Current Liabilities of Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
28,239
|
|
|
—
|
|
|
28,239
|
|
Total Current Liabilities
|
4,889,229
|
|
|
775,338
|
|
|
(4,729,452
|
)
|
|
184,856
|
|
|
—
|
|
|
1,119,971
|
|
Long-Term Debt:
|
3,005,458
|
|
|
42,852
|
|
|
113,474
|
|
|
1,775
|
|
|
—
|
|
|
3,163,559
|
|
Deferred Credits and Other Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Income Taxes
|
(232,904
|
)
|
|
475,547
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
242,643
|
|
Postretirement Benefits Other Than Pensions
|
—
|
|
|
—
|
|
|
961,127
|
|
|
—
|
|
|
—
|
|
|
961,127
|
|
Pneumoconiosis Benefits
|
—
|
|
|
—
|
|
|
111,971
|
|
|
—
|
|
|
—
|
|
|
111,971
|
|
Mine Closing
|
—
|
|
|
—
|
|
|
320,723
|
|
|
—
|
|
|
—
|
|
|
320,723
|
|
Gas Well Closing
|
—
|
|
|
119,429
|
|
|
56,174
|
|
|
—
|
|
|
—
|
|
|
175,603
|
|
Workers’ Compensation
|
—
|
|
|
—
|
|
|
71,136
|
|
|
332
|
|
|
—
|
|
|
71,468
|
|
Salary Retirement
|
48,252
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,252
|
|
Reclamation
|
—
|
|
|
—
|
|
|
40,706
|
|
|
—
|
|
|
—
|
|
|
40,706
|
|
Other
|
55,227
|
|
|
61,190
|
|
|
14,938
|
|
|
—
|
|
|
—
|
|
|
131,355
|
|
Total Deferred Credits and Other Liabilities
|
(129,425
|
)
|
|
656,166
|
|
|
1,576,775
|
|
|
332
|
|
|
—
|
|
|
2,103,848
|
|
Total CONSOL Energy Inc. Stockholders’ Equity
|
5,006,289
|
|
|
4,878,807
|
|
|
6,931,418
|
|
|
139,436
|
|
|
(11,949,661
|
)
|
|
5,006,289
|
|
Total Liabilities and Equity
|
$
|
12,771,551
|
|
|
$
|
6,353,163
|
|
|
$
|
3,892,215
|
|
|
$
|
326,399
|
|
|
$
|
(11,949,661
|
)
|
|
$
|
11,393,667
|
|
Cash Flow for the
Three Months Ended
March 31, 2014
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
CNX Gas
Guarantor
|
|
Other Subsidiary Guarantors
|
|
Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Net Cash Provided by (Used in) Continuing Operations
|
$
|
(11,711
|
)
|
|
$
|
219,148
|
|
|
$
|
108,944
|
|
|
$
|
14,160
|
|
|
$
|
19,400
|
|
|
$
|
349,941
|
|
Net Cash Used in Discontinued Operating Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,839
|
)
|
|
—
|
|
|
(13,839
|
)
|
Net Cash Provided by (Used in) Operating Activities
|
$
|
(11,711
|
)
|
|
$
|
219,148
|
|
|
$
|
108,944
|
|
|
$
|
321
|
|
|
$
|
19,400
|
|
|
$
|
336,102
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
$
|
(531
|
)
|
|
$
|
(265,970
|
)
|
|
$
|
(184,508
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(451,009
|
)
|
Proceeds From Sales of Assets
|
—
|
|
|
49,470
|
|
|
76,055
|
|
|
3
|
|
|
—
|
|
|
125,528
|
|
(Investments in), net of Distributions from, Equity Affiliates
|
—
|
|
|
(12,000
|
)
|
|
2,000
|
|
|
—
|
|
|
—
|
|
|
(10,000
|
)
|
Net Cash (Used in) Provided by Continuing Operations
|
(531
|
)
|
|
(228,500
|
)
|
|
(106,453
|
)
|
|
3
|
|
|
—
|
|
|
(335,481
|
)
|
Net Cash Used in Discontinued Investing Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net Cash (Used in) Provided by Investing Activities
|
$
|
(531
|
)
|
|
$
|
(228,500
|
)
|
|
$
|
(106,453
|
)
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
(335,481
|
)
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
Payments on Miscellaneous Borrowings
|
$
|
(495
|
)
|
|
$
|
—
|
|
|
$
|
(3,947
|
)
|
|
$
|
(228
|
)
|
|
$
|
—
|
|
|
$
|
(4,670
|
)
|
Payments on Short-Term Borrowings
|
—
|
|
|
19,400
|
|
|
—
|
|
|
—
|
|
|
(19,400
|
)
|
|
—
|
|
Tax Benefit from Stock-Based Compensation
|
92
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92
|
|
Dividends (Paid)
|
(14,351
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,351
|
)
|
Proceeds from Issuance of Common Stock
|
4,976
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,976
|
|
Treasury Stock Activity
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
Other Financing Activities
|
—
|
|
|
(1,456
|
)
|
|
1,456
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net Cash (Used in) Provided by Continuing Operations
|
(9,779
|
)
|
|
17,944
|
|
|
(2,491
|
)
|
|
(228
|
)
|
|
(19,400
|
)
|
|
(13,954
|
)
|
Net Cash Used in Discontinued Financing Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net Cash (Used in) Provided by Financing Activities
|
$
|
(9,779
|
)
|
|
$
|
17,944
|
|
|
$
|
(2,491
|
)
|
|
$
|
(228
|
)
|
|
$
|
(19,400
|
)
|
|
$
|
(13,954
|
)
|
Cash Flow for the
Three Months Ended
March 31, 2013
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
CNX Gas
Guarantor
|
|
Other Subsidiary Guarantors
|
|
Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Net Cash Provided by (Used in) Continuing Operations
|
$
|
59,082
|
|
|
$
|
190,004
|
|
|
$
|
19,298
|
|
|
$
|
(54,706
|
)
|
|
$
|
—
|
|
|
$
|
213,678
|
|
Net Cash Provided by Discontinued Operating Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
54,603
|
|
|
—
|
|
|
54,603
|
|
Net Cash Provided by (Used in) Operating Activities
|
$
|
59,082
|
|
|
$
|
190,004
|
|
|
$
|
19,298
|
|
|
$
|
(103
|
)
|
|
$
|
—
|
|
|
$
|
268,281
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
$
|
(1,504
|
)
|
|
$
|
(207,129
|
)
|
|
$
|
(141,184
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(349,817
|
)
|
Change in Restricted Cash
|
—
|
|
|
—
|
|
|
48,294
|
|
|
—
|
|
|
—
|
|
|
48,294
|
|
Proceeds From Sales of Assets
|
(75
|
)
|
|
343
|
|
|
74,352
|
|
|
3
|
|
|
—
|
|
|
74,623
|
|
(Investments in), net of Distributions from, Equity Affiliates
|
—
|
|
|
(12,000
|
)
|
|
(500
|
)
|
|
—
|
|
|
—
|
|
|
(12,500
|
)
|
Net Cash (Used in) Provided by Continuing Operations
|
(1,579
|
)
|
|
(218,786
|
)
|
|
(19,038
|
)
|
|
3
|
|
|
—
|
|
|
(239,400
|
)
|
Net Cash Provided by Discontinued Investing Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
7,858
|
|
|
—
|
|
|
7,858
|
|
Net Cash (Used in) Provided by Investing Activities
|
$
|
(1,579
|
)
|
|
$
|
(218,786
|
)
|
|
$
|
(19,038
|
)
|
|
$
|
7,861
|
|
|
$
|
—
|
|
|
$
|
(231,542
|
)
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
Payments on Miscellaneous Borrowings
|
$
|
(25,612
|
)
|
|
$
|
—
|
|
|
$
|
(1,663
|
)
|
|
$
|
(176
|
)
|
|
$
|
—
|
|
|
$
|
(27,451
|
)
|
Payments on Short-Term Borrowings
|
(29,000
|
)
|
|
29,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Payments on Securitization Facility
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,727
|
)
|
|
—
|
|
|
(7,727
|
)
|
Tax Benefit from Stock-Based Compensation
|
730
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
730
|
|
Proceeds from Issuance of Common Stock
|
909
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
909
|
|
Debt Issuance and Financing Fees
|
131
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
131
|
|
Other Financing Activities
|
—
|
|
|
(1,400
|
)
|
|
1,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net Cash (Used in) Provided by Continuing Operations
|
(52,842
|
)
|
|
27,600
|
|
|
(263
|
)
|
|
(7,903
|
)
|
|
—
|
|
|
(33,408
|
)
|
Net Cash Used in Discontinued Financing Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
(150
|
)
|
|
—
|
|
|
(150
|
)
|
Net Cash (Used in) Provided by Financing Activities
|
$
|
(52,842
|
)
|
|
$
|
27,600
|
|
|
$
|
(263
|
)
|
|
$
|
(8,053
|
)
|
|
$
|
—
|
|
|
$
|
(33,558
|
)
|
Statement of Comprehensive Income for the Three Months Ended
March 31, 2014
(Unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
CNX Gas
Guarantor
|
|
Other Subsidiary Guarantors
|
|
Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Net Income (Loss)
|
$
|
116,003
|
|
|
$
|
46,870
|
|
|
$
|
130,898
|
|
|
$
|
(4,259
|
)
|
|
$
|
(173,509
|
)
|
|
$
|
116,003
|
|
Other Comprehensive (Loss) Income:
|
|
|
|
|
|
|
|
|
|
|
|
Actuarially Determined Long-Term Liability Adjustments
|
5,119
|
|
|
—
|
|
|
5,119
|
|
|
—
|
|
|
(5,119
|
)
|
|
5,119
|
|
Net (Decrease) Increase in the Value of Cash Flow Hedge
|
(46,965
|
)
|
|
(46,965
|
)
|
|
—
|
|
|
—
|
|
|
46,965
|
|
|
(46,965
|
)
|
Reclassification of Cash Flow Hedge from OCI to Earnings
|
16,313
|
|
|
16,313
|
|
|
—
|
|
|
—
|
|
|
(16,313
|
)
|
|
16,313
|
|
Other Comprehensive (Loss) Income:
|
(25,533
|
)
|
|
(30,652
|
)
|
|
5,119
|
|
|
—
|
|
|
25,533
|
|
|
(25,533
|
)
|
Comprehensive Income (Loss) Attributable to CONSOL Energy Inc. Shareholders
|
$
|
90,470
|
|
|
$
|
16,218
|
|
|
$
|
136,017
|
|
|
$
|
(4,259
|
)
|
|
$
|
(147,976
|
)
|
|
$
|
90,470
|
|
Statement of Comprehensive Income for the Three Months Ended
March 31, 2013
(Unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
CNX Gas
Guarantor
|
|
Other Subsidiary Guarantors
|
|
Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Net (Loss) Income
|
$
|
(1,564
|
)
|
|
$
|
(325
|
)
|
|
$
|
100,041
|
|
|
$
|
4,131
|
|
|
$
|
(104,104
|
)
|
|
$
|
(1,821
|
)
|
Other Comprehensive Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
Actuarially Determined Long-Term Liability Adjustments
|
45,757
|
|
|
—
|
|
|
45,757
|
|
|
—
|
|
|
(45,757
|
)
|
|
45,757
|
|
Net (Decrease) Increase in the Value of Cash Flow Hedge
|
(18,595
|
)
|
|
(18,595
|
)
|
|
—
|
|
|
—
|
|
|
18,595
|
|
|
(18,595
|
)
|
Reclassification of Cash Flow Hedge from OCI to Earnings
|
(22,713
|
)
|
|
(22,713
|
)
|
|
—
|
|
|
—
|
|
|
22,713
|
|
|
(22,713
|
)
|
Other Comprehensive Income (Loss):
|
4,449
|
|
|
(41,308
|
)
|
|
45,757
|
|
|
—
|
|
|
(4,449
|
)
|
|
4,449
|
|
Comprehensive Income (Loss)
|
2,885
|
|
|
(41,633
|
)
|
|
145,798
|
|
|
4,131
|
|
|
(108,553
|
)
|
|
2,628
|
|
Add: Comprehensive Loss Attributable to Noncontrolling Interest
|
—
|
|
|
257
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
257
|
|
Comprehensive Income (Loss) Attributable to CONSOL Energy Inc. Shareholders
|
$
|
2,885
|
|
|
$
|
(41,376
|
)
|
|
$
|
145,798
|
|
|
$
|
4,131
|
|
|
$
|
(108,553
|
)
|
|
$
|
2,885
|
|
NOTE 16—RELATED PARTY TRANSACTIONS:
CONE Gathering LLC Related Party Transactions
During the
three
months ended
March 31, 2014
, CONE Gathering LLC (CONE), a
50%
owned affiliate, provided CNX Gas Company LLC (CNX Gas Company) gathering services in the ordinary course of business. Gathering services received from CONE were
$11,672
and
$7,327
for the three months ended
March 31, 2014
and 2013, respectively, which were included in
Exploration and Production Costs
-
Transportation, Gathering and Compression
on the Consolidated Statements of Income.
As of
March 31, 2014
and
December 31, 2013
, CONSOL Energy and CNX Gas Company had a net payable of $
5,352
and $
5,448
, respectively, due to CONE which was comprised of the following items:
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2014
|
|
2013
|
|
Location on Balance Sheet
|
Reimbursement for CONE Expenses
|
$
|
(2,383
|
)
|
|
$
|
(2,168
|
)
|
|
Accounts Receivable–Other
|
Reimbursement for Services Provided to CONE
|
(225
|
)
|
|
(265
|
)
|
|
Accounts Receivable–Other
|
CONE Gathering Fee Payable
|
7,960
|
|
|
7,881
|
|
|
Accounts Payable
|
Net Payable due to CONE
|
$
|
5,352
|
|
|
$
|
5,448
|
|
|
|
NOTE 17—SUBSEQUENT EVENTS:
On
April 16, 2014
,
CONSOL Energy closed on the private placement of $1,600,000 of 5.875% senior notes due 2022 (the "Notes"). The Notes are guaranteed by substantially all of CONSOL Energy's wholly-owned domestic restricted subsidiaries. CONSOL Energy intends to use a portion of the net proceeds of the sale of the Notes to purchase all of the 8.00% senior notes due 2017 (the "2017 Notes") that are validly tendered pursuant to its previously announced tender offer and consent solicitation in respect of the 2017 Notes.
CONSOL Energy intends to use the remaining net proceeds from the sale of the Notes to finance the redemption of all of the 2017 Notes that remain outstanding on May 15, 2014, and if any net proceeds remain, to repay other outstanding senior indebtedness.
The Notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes were offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.