PITTSBURGH, July 29, 2014 /PRNewswire/ -- CONSOL Energy
Inc. (NYSE: CNX) reported a net loss of $25
million for the quarter ended June
30, 2014, or ($0.11) per
diluted share. This is compared to a net loss of $13 million, or ($0.05) per diluted share from the year-earlier
quarter. Adjusted EBITDA1 was $246 million for the 2014 second quarter,
compared to $181 million in the
year-earlier quarter. Cash flow from operations in the just-ended
quarter was $221 million, as compared
to $125 million in the year-earlier
quarter.
The second quarter earnings results included the following
pre-tax items related to recent transactions completed by the
company:
- The company incurred $74.3
million in expense related to the early extinguishment of
debt due to the purchase of all the 8.00% senior notes that were
due 2017.
- The company incurred a $3.0
million non-cash charge associated with entering into a new
senior secured credit facility. The charge was related to the
acceleration of previously deferred financing fees.
- The company incurred a non-cash charge of $20.7 million in association with a pension
settlement.
- The company recognized a gain of $30.0
million related to a coal contract customer buyout. CONSOL
received a cash payment of $30
million for Bailey tons that were dedicated to a non-core
market. Now, CONSOL will be able to re-market these tons into core
markets.
After adjusting for these items not found in security analysts'
models and which are listed in the EBITDA reconciliation table,
adjusted net income1 in the 2014 second quarter, a
non-GAAP financial measure, was $16
million.
CONSOL's E&P Division had an outstanding quarter. Production
was a record 51.9 Bcfe, or an increase of 34% from the 38.6
Bcfe produced in the year-earlier
quarter. Average realized prices of $4.44 per Mcfe, when combined with declining unit
costs of $3.44 per Mcfe, resulted in
a margin of $1.00 per Mcfe. This was
45% higher than the $0.69 per Mcfe
margin achieved in the year-earlier quarter. Net Income
attributable to CONSOL shareholders from the E&P Division was
$15.5 million in the 2014 second
quarter, compared to a loss of $2.7
million in the year-earlier quarter.
CONSOL Energy recently raised its 2014 E&P production
guidance range to 225 - 235 Bcfe from earlier guidance of 215
- 235 Bcfe. To achieve the mid-point of the new range, the company
will need to produce approximately 60 Bcfe in the third quarter and
70 Bcfe in the fourth quarter. The company has a record number of
Marcellus Shale wells due to be tied into line in the third
quarter.
CONSOL's Coal Division produced 8.3 million tons, achieving the
mid-point of the guidance range of 8.1 - 8.5 million tons. Weaker
markets for metallurgical coal, though, decreased pricing for the
company's low-vol and high-vol coals. Thermal coal pricing was also
lower in the quarter, when compared to the year-earlier quarter.
Higher thermal coal sales volumes, however, enabled the thermal
coal business to generate more cash before capital expenditures and
depreciation, depletion, and amortization (DD&A) than in the
year-earlier quarter.
The thermal coal segment achieved cash production costs of
$40.47 per ton in the 2014 second
quarter, as detailed in a table later in the release. This cost was
lower than the $43.11 per ton cash
production cost in the year-earlier quarter despite geologic issues
at the Enlow Fork Mine and the change-out of a shearer at the new
Harvey (formerly BMX) Mine.
In total, CONSOL's active coal operations generated $179 million of cash before capital expenditures
and DD&A, as detailed later in the release. This was an
increase of $4 million from the
year-earlier quarter.
"CONSOL Energy did what we said we'd do," commented Nicholas J. DeIuliis, president and CEO. "Our
quarterly gas production came in toward the upper end of our
guidance range, our gas pricing held steady with last year's
quarter while our unit costs dropped meaningfully, especially in
the Marcellus Shale, where cash costs below $2 per Mcfe were achieved. In coal, we managed
through some typical operating issues to again achieve our
production target. In the first half of 2014, the Coal Division
generated nearly $400 million in cash
(before capital expenditures and DD&A). For the second half of
2014, our tactical focus remains on safety, compliance, and
operational execution."
"Our strategic focus, however, remains on NAV per share
accretion. The latest example of that focus is our
recently-announced gas midstream MLP that we intend to have up and
running in the next few months. Also at our recent analyst day, we
discussed potential non-core asset sales of $1 billion over the next five years. All in all,"
continued Mr. DeIuliis, "the pace of change at CONSOL Energy is
accelerating the point in time when we become net free cash flow
positive, which creates additional opportunities for NAV per share
accretion."
E&P Division:
E&P Mid-Year PV-10 Sensitivity Analysis:
CONSOL Energy updated the PV-102 calculation of its
5.731 Tcfe of proved reserves as of December
31, 2013 using latest twelve month pricing as of
June 30, 2014. The PV-10 valuation at
year-end 2013 was $2.78 billion
(without the assumption of drilling carry), with pricing of
$3.67 per MMBtu. The 2014
mid-year PV-10 increased to $4.5
billion using latest twelve month SEC pricing as of
June 30 of $4.10 per MMBtu, which resulted in realizing the
carried interest of our JV partner.
E&P Second Quarter Results:
The table below summarizes the quarterly comparison of key
metrics for the E&P Division. Revenue and production both
increased by 34% in the just-ended quarter, when compared to the
year-earlier quarter. These metrics, when combined with much lower
unit costs, enabled the E&P Division to post net income of
$15.5 million in the quarter,
compared to a net loss of $2.7
million in the year-earlier quarter.
E&P Division capital expenditures in the quarter set a
record at $304.5 million, as the
company increased drilling and completion investments to achieve
its production growth targets. CONSOL's quarterly capital
expenditures were net of $25.6
million of drilling carry from its joint venture partner in
the Marcellus Shale and $14.1 million
of carry from its joint venture partner in the Utica Shale.
1 The terms "Adjusted EBITDA" and "Adjusted Net
Income" are non-GAAP financial measures, which are defined and
reconciled to GAAP net income below, under the caption "Non-GAAP
Financial Measure."
2 Pre-tax discounted present value, or "PV-10," is a
non-GAAP financial measure as defined by the SEC. CONSOL believes
that the presentation of pre-tax discounted present value is
relevant and useful to investors because it presents the discounted
future net cash flows attributable to the company's proved reserves
prior to taking into account corporate future income taxes and the
current tax structure. CONSOL believe investors and creditors use
pre-tax discounted present value as a basis for comparison of the
relative size and value of our reserves as compared with other
companies. The pre-tax discounted present value may be reconciled
to the standardized measure of discounted future net cash flows by
reducing the pre-tax discounted present value by the discounted
future income taxes associated with such reserves. This
reconciliation is included in the slides posted today to the
company's web site, at www.consolenergy.com.
E&P DIVISION
RESULTS — Quarter-to-Quarter Comparison
|
|
|
|
|
|
|
|
Quarter
|
|
Quarter
|
|
|
Ended
|
|
Ended
|
|
|
June 30,
2014
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|
June 30,
2013
|
Sales -
Gas
|
|
$
|
208.5
|
|
|
$
|
160.4
|
|
Hedging Impact -
Gas
|
|
(6.4)
|
|
|
5.8
|
|
Sales -
Oil
|
|
2.9
|
|
|
1.9
|
|
Sales -
NGLs
|
|
17.7
|
|
|
3.6
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|
Sales -
Condensate
|
|
7.6
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|
|
0.5
|
|
Total Sales Revenue
($ MM)
|
|
$
|
230.3
|
|
|
$
|
172.2
|
|
|
|
|
|
|
|
|
Net Income (Loss)
Attributable to CONSOL Energy Shareholders
|
|
$
|
15.5
|
|
|
$
|
(2.7)
|
|
Net Cash Provided By
(Used In) Operating Activities ($ MM)
|
|
$
|
86.0
|
|
|
$
|
73.3
|
|
Total Period
Production (Bcfe)
|
|
51.9
|
|
|
38.6
|
|
Average Daily
Production (MMcfe)
|
|
570.0
|
|
|
424.0
|
|
Capital Expenditures
($ MM)
|
|
$
|
304.5
|
|
|
$
|
188.5
|
|
CONSOL's E&P division production in the quarter came from
the following categories:
|
|
Quarter
|
|
Quarter
|
|
% Increase/
(Decrease)
|
|
|
Ended
|
|
Ended
|
|
|
|
June 30,
2014
|
|
June 30,
2013
|
|
GAS
|
|
|
|
|
|
|
|
Marcellus Sales
Volumes (Bcf)
|
|
22.0
|
|
10.0
|
|
120.0
|
%
|
CBM Sales Volumes
(Bcf)
|
|
19.7
|
|
20.8
|
|
(5.3)
|
%
|
Shallow Oil and Gas
Sales Volumes (Bcf)
|
|
5.7
|
|
6.6
|
|
(13.6)
|
%
|
Other Sales Volumes
(Bcf)
|
|
1.9
|
|
0.6
|
|
216.7
|
%
|
|
|
|
|
|
|
|
|
LIQUIDS*
|
|
|
|
|
|
|
|
NGLs Sales Volumes
(Bcfe)
|
|
1.9
|
|
0.4
|
|
375.0
|
%
|
Oil Sales Volumes
(Bcfe)
|
|
0.2
|
|
0.1
|
|
100.0
|
%
|
Condensate Sales
Volumes (Bcfe)
|
|
0.5
|
|
0.1
|
|
400.0
|
%
|
|
|
|
|
|
|
|
|
TOTAL
|
|
51.9
|
|
38.6
|
|
34.5
|
%
|
|
|
|
|
|
|
|
|
Production results
are net of royalties. *NGLs, Oil, and Condensate are converted to
Mcfe at the rate of one barrel equals six Mcf based upon the
approximate relative energy content of oil and natural gas. The
increase in Marcellus sales volumes represent only the gas
portion of production. When including liquids, the increase
in Marcellus volumes was 129%.
|
Liquids production of 2.6 Bcfe, as a percentage of the total of
51.9 Bcfe, was 5% in the just-ended quarter.
E&P PRICE AND
COST DATA PER MCFE — Quarter-to-Quarter Comparison:
|
|
|
|
|
|
|
|
Quarter
|
|
Quarter
|
|
|
Ended
|
|
Ended
|
(Per Mcfe)
|
|
June 30,
2014
|
|
June 30,
2013
|
Average Sales Price -
Gas
|
|
$
|
4.23
|
|
|
$
|
4.22
|
|
Hedging Impact -
Gas
|
|
$
|
(0.13)
|
|
|
$
|
0.15
|
|
Average Sales Price -
Oil*
|
|
$
|
15.85
|
|
|
$
|
13.76
|
|
Average Sales Price -
NGLs*
|
|
$
|
9.26
|
|
|
$
|
9.88
|
|
Average Sales Price -
Condensate*
|
|
$
|
15.82
|
|
|
$
|
13.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sales Price -
Total Company
|
|
$
|
4.44
|
|
|
$
|
4.46
|
|
Costs -
Production
|
|
|
|
|
|
|
Lifting
|
|
$
|
0.51
|
|
|
$
|
0.65
|
|
Ad Valorem, Severance
and Other Taxes
|
|
0.19
|
|
|
0.20
|
|
DD&A
|
|
1.21
|
|
|
1.14
|
|
Total Production
Costs
|
|
$
|
1.91
|
|
|
$
|
1.99
|
|
Costs -
Gathering
|
|
|
|
|
|
|
Transportation
|
|
$
|
0.60
|
|
|
$
|
0.58
|
|
Operating
Costs
|
|
0.51
|
|
|
0.69
|
|
DD&A
|
|
0.16
|
|
|
0.20
|
|
Total Gathering
Costs
|
|
$
|
1.27
|
|
|
$
|
1.47
|
|
|
|
|
|
|
|
|
Gas Direct
Administrative Selling & Other
|
|
$
|
0.26
|
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
Total
Costs
|
|
$
|
3.44
|
|
|
$
|
3.77
|
|
|
|
|
|
|
|
|
Margin
|
|
$
|
1.00
|
|
|
$
|
0.69
|
|
|
|
|
|
|
|
|
|
|
*Oil, NGLs, and
Condensate are converted to Mcfe at the rate of one barrel equals
six Mcf based upon the approximate relative energy content of oil
and natural gas, which is not indicative of the relationship of
oil, NGLs, condensate, and natural gas prices.
|
|
|
|
|
|
|
|
|
|
Note: Costs − The
line item "gas direct administrative, selling, & other"
excludes general administration, incentive compensation, and other
corporate expenses.
|
The average sales price per Mcfe within the E&P Division was
nearly flat in the just-ended quarter, when compared to the
year-earlier quarter. A greater proportion of liquids production —
which receives higher unit pricing — offset the negative impact of
gas hedges in the just-ended quarter.
Unit costs were improved in the just-ended quarter, as higher
production volumes spread fixed costs, such as direct
administration, over more units. Unit costs were also improved, as
low-cost Marcellus Shale production represented a much higher
proportion of total production.
All-in unit costs in the Marcellus Shale category were
$2.94 per Mcfe in the just-ended
quarter, or a decrease of $0.42 from
the $3.36 per Mcfe in the
year-earlier quarter. The decrease in unit costs was primarily
related to the 120% increase in Marcellus gas sales volumes during
the just-ended quarter.
E&P Marketing and Transportation Update:
Second quarter 2014 average dry gas prices, including the impact
of our hedging program and net of basis, averaged $4.10 per
Mcf. CONSOL's expansion into wet gas production areas provided
a liquids value uplift of $0.34 per Mcfe, bringing the overall
average sales price to $4.44 per Mcfe. Second
quarter 2014 liquids volumes of 2.6 Bcfe were nearly five times
greater than in the 2013 second quarter. CONSOL will continue to
experience liquids uplift on future average sales prices as
additional wells are brought online in the liquid-rich areas of the
Marcellus and Utica.
Faster-than-expected replenishment of gas inventories and
increasing Marcellus production have put downward pressure on gas
prices. These factors have contributed to a decline in the NYMEX
index price for natural gas along with the basis differentials for
most Appalachian market sales points. CONSOL continues to mitigate
the effect of the current downward basis pressure by finding
opportunities to optimize and diversify sales opportunities among
our 80+ customers located in five index markets. In addition,
CONSOL Energy continues to manage the impact of price volatility
through an active hedge program.
CONSOL Energy continues to develop a diversified portfolio
of firm transportation capacity options to support the three-year
production growth plan. Primary production areas
in Southwestern Pennsylvania, Northern West Virginia,
and Eastern Ohio are served by a large concentration of
existing pipeline infrastructure that provides capacity to move
production to major gas markets. The company is negotiating with
pipeline and utility companies to expand our market reach into the
premium markets of the upper-Midwest/Canada and the Southeast.
The company currently has a total of 1.3 Bcf per day of
effective firm transportation capacity. This capacity is adequate
for the remainder of 2014 and supports the majority of projected
volumes for the three-year growth plan. This is comprised of 0.7
Bcf per day of firm capacity on existing pipelines, contracted
volumes of 0.3 Bcf per day on several pipeline projects that will
be completed over the next several years, and an additional 0.3 Bcf
per day of long-term firm sales with major customers that have
their own firm capacity. The average demand cost for the existing
and committed firm capacity is approximately $0.24 per
MMBtu.
In addition to firm transportation capacity, CONSOL has
developed a processing portfolio that supports the increasing
volumes from our wet production areas. The company has agreements
to support the processing of 129 MMcf per day of gross gas volumes
growing to more than 380 MMcf per day in the next twelve months.
These commitments are sufficient to cover projected processing
requirements for the next two years. CONSOL will continue to layer
in processing capacity as needed to support the liquids development
plan.
In addition to establishing a solid processing portfolio, CONSOL
is developing a diversified approach to managing ethane. The
company has entered into supply agreements with INEOS Europe and
are also contracted to supply volumes to Shell's cracker plant in
Monaca, PA. CONSOL is
actively negotiating to supply ethane to other proposed regional
cracker facilities. In addition to term sales, the company executed
several spot deals to move ethane to Mt. Belvieu via the ATEX
pipeline. CONSOL will also realize ethane value through blending
capabilities. The company recently constructed an ethane pipeline
to bring ethane supplies to the McQuay station where it will be
blended with significant volumes of dry gas blend stock. Employing
this multi-faceted approach enables us to diversify the ethane
portfolio and capitalizes on changes in ethane pricing.
Coal Division:
Coal Reserve Mid-Year Update:
In June 2014, CONSOL completed a
multi-year re-evaluation of its remaining Pittsburgh seam longwall mineable reserves
utilizing mine plans and mining horizon assumptions specific to
each mine/reserve. In prior years, reserves estimates were
based on a fixed 70% mining recovery of the Pittsburgh seam main bench only. This
reevaluation is primarily predicated on advances in mining
technology which have increased both mine recovery and the recovery
of additional coal above the Pittsburgh main seam and advances in mine
planning and modeling technology allowing CONSOL to estimate and
capture these changes. As a direct result of this
reevaluation, which was audited by a reputable third party, the
company's Pittsburgh Seam reserve tonnage increased by 442 million
tons to 1.805 billion tons.
CONSOL is also updating its estimate of its Illinois Basin coal reserves. This study
should be complete in the next few months.
Coal Second Quarter Summary:
For the second quarter, CONSOL's Coal Division achieved the
mid-point of its guidance range by producing 8.3 million tons.
Realized prices per ton were lower for each category of coal than
in the year-earlier quarter. Low-vol and high-vol coking coal
prices reflected the oversupply of coal used in steelmaking, while
thermal coal pricing was lower because of the roll-off of some
higher-priced legacy contracts.
Coal costs in the low-vol coal category in the 2014 second
quarter were much improved over the year-earlier quarter on a per
ton basis despite lower volumes, as the mine was optimized to
reflect lower production. Coal costs in the thermal coal category
were improved when compared to the year-earlier quarter, but not as
good as what was achieved in the 2014 first quarter. Geologic
issues at the Enlow Fork Mine and an equipment change-out at the
Harvey Mine led to higher-than expected thermal costs per ton. The
challenging geology at Enlow Fork Mine is expected to continue
until approximately mid-August.
COAL DIVISION
RESULTS BY PRODUCT CATEGORY - Quarter-To-Quarter
Comparison
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low-Vol
|
|
Low-Vol
|
|
High-Vol
|
|
High-Vol
|
|
Thermal
|
|
Thermal
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Inventory
(millions of tons)
|
|
0.2
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
0.6
|
|
Coal Production
(millions of tons)
|
|
1.0
|
|
|
1.2
|
|
|
0.3
|
|
|
0.8
|
|
|
7.0
|
|
|
5.1
|
|
Ending Inventory
(millions of tons)
|
|
0.2
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.6
|
|
Sales - Company
Produced (millions of tons)
|
|
0.9
|
|
|
1.1
|
|
|
0.3
|
|
|
0.8
|
|
|
7.3
|
|
|
5.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Per
Ton
|
|
$
|
71.02
|
|
|
$
|
97.54
|
|
|
$
|
61.00
|
|
|
$
|
63.28
|
|
|
$
|
61.39
|
|
|
$
|
64.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Inventory
Cost Per Ton
|
|
$
|
65.47
|
|
|
$
|
85.60
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
43.57
|
|
|
$
|
50.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Direct Costs
Per Ton
|
|
$
|
36.94
|
|
|
$
|
44.31
|
|
|
$
|
28.87
|
|
|
$
|
28.98
|
|
|
$
|
29.55
|
|
|
$
|
30.19
|
|
Royalty/Production
Taxes Per Ton
|
|
4.43
|
|
|
5.97
|
|
|
3.01
|
|
|
2.62
|
|
|
3.10
|
|
|
3.41
|
|
Direct Services to
Operations Per Ton
|
|
4.24
|
|
|
4.85
|
|
|
4.43
|
|
|
4.95
|
|
|
4.61
|
|
|
6.64
|
|
Retirement and
Disability Per Ton
|
|
5.19
|
|
|
5.56
|
|
|
3.35
|
|
|
2.78
|
|
|
3.21
|
|
|
2.87
|
|
DD&A Per
Ton
|
|
9.44
|
|
|
7.95
|
|
|
6.34
|
|
|
5.51
|
|
|
5.97
|
|
|
5.60
|
|
Total Production
Costs
|
|
$
|
60.24
|
|
|
$
|
68.64
|
|
|
$
|
46.00
|
|
|
$
|
44.84
|
|
|
$
|
46.44
|
|
|
$
|
48.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Inventory Cost
Per Ton
|
|
$
|
(60.96)
|
|
|
$
|
(64.76)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(56.82)
|
|
|
$
|
(57.47)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cost Per Ton
Sold
|
|
$
|
61.15
|
|
|
$
|
70.46
|
|
|
$
|
46.01
|
|
|
$
|
44.84
|
|
|
$
|
45.96
|
|
|
$
|
48.04
|
|
Average Margin Per
Ton Sold
|
|
$
|
9.87
|
|
|
$
|
27.08
|
|
|
$
|
14.99
|
|
|
$
|
18.44
|
|
|
$
|
15.43
|
|
|
$
|
16.90
|
|
Addback: DD&A Per
Ton
|
|
$
|
9.44
|
|
|
$
|
7.95
|
|
|
$
|
6.34
|
|
|
$
|
5.51
|
|
|
$
|
5.97
|
|
|
$
|
5.60
|
|
Average Margin Per
Ton, before DD&A
|
|
$
|
19.31
|
|
|
$
|
35.03
|
|
|
$
|
21.33
|
|
|
$
|
23.95
|
|
|
$
|
21.40
|
|
|
$
|
22.50
|
|
Cash Flow before Cap.
Ex and DD&A ($MM)
|
|
$
|
17
|
|
|
$
|
39
|
|
|
$
|
6
|
|
|
$
|
19
|
|
|
$
|
156
|
|
|
$
|
117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
production tons exclude CONSOL Energy's portion from equity
affiliates and discontinued operations. Direct Costs per Ton
include items such as labor and benefits, supplies, power,
preparation costs, project expenses and gas well plugging costs.
Direct Services to Operations Per Ton include items such as
subsidence costs, direct administrative, selling expenses,
permitting and compliance and asset retirement obligations.
Retirement and Disability Per Ton Sold includes charges for
pension, retiree medical and other employee related long-term
liabilities. Sales tons times Average Margin Per Ton, before
DD&A is meant to approximate the amount of cash generated for
the low-vol, high-vol, and thermal coal categories. This cash
generation will be offset by maintenance of production (MOP)
capital expenditures. Table may not sum due to rounding. Prior year
data excludes discontinued operations.
|
Coal Marketing Update:
Low Vol:
Production cuts continue to take place, both in the U.S. and
elsewhere, and a better supply/demand balance will eventually occur
in the market. CONSOL currently expects to ship approximately 5
million tons of met (both low vol and high vol in 2014). This is 1
million tons lower than the projection the company made three
months ago. Buchanan shipped 0.95 million tons in the second
quarter of 2014. CONSOL has been very active in the domestic
met market for 2015, and expects to increase its 2015 domestic
sales of low vol by at least 50%. CONSOL's sales efforts are
aided by having the lowest cost low vol mine in the U.S. and by
having a strong balance sheet.
High Vol:
Bailey coal continues to have a place in the high vol market,
even though the overall met market remains weak. CONSOL will
continue to send tons where they create the most shareholder value.
In the second quarter, 330,000 tons of Bailey production was sold
into the high vol markets.
Thermal:
For 2014, CONSOL has been able to consistently transport all
Bailey coal produced, even though there have been challenges with
capacity in the US rail system. CONSOL has been able to move these
tons to market due to having dual rail access facilities that can
load 130 car trains in less than 2 hours, and also because of
efficient logistics coordination with both the Norfolk Southern and
CSX railroads and our customers.
For 2015 and 2016, CONSOL continues to successfully market
Bailey tons into target core markets. During the second quarter,
nearly 5.0 million annual tons were committed for 2015, and 4.0
million tons were committed for 2016. An additional 9.0
million tons are currently under negotiation for 2015 and 2016.
E&P Division Guidance:
Third quarter gas production, net to CONSOL, is expected to be
59 – 61 Bcfe, while annual 2014 production guidance was recently
raised to 225 – 235 Bcfe, from 215 – 235 Bcfe. CONSOL Energy
expects its 2015 and 2016 annual gas production to grow by 30%.
Total hedged natural gas production in the 2014 third quarter is
41.7 Bcf, at an average price of $4.58 per Mcf. CONSOL uses a dual-track approach
to its gas hedging. The company uses a formulaic approach to a base
of hedges, but can decide to layer-in additional opportunistic
hedges to capture value from price spikes. CONSOL does not expect
to hedge more than 80% of its estimated natural gas production for
any given year. The annual gas hedge position for three years is
shown in the table below:
E&P DIVISION
GUIDANCE
|
|
|
|
|
|
|
|
|
|
2014
|
|
2015
|
|
2016
|
Total Yearly
Production (Bcfe) / % growth
|
|
225-235
|
|
+30%
|
|
+30%
|
Volumes Hedged
(Bcf),as of 6/17/14
|
|
159.9*
|
|
82.6
|
|
75.3
|
Average Hedge Price
($/Mcf)
|
|
$4.58
|
|
$4.07
|
|
$4.17
|
|
|
|
|
|
|
|
* Includes 1st
Half 2014 Actual Settlements of 76.4 Bcf.
|
The hedged gas volumes shown in the previous table include the
following NYMEX hedges that have basis hedged as well.
NYMEX PLUS BASIS
HEDGES
|
|
|
|
|
|
|
|
|
|
|
|
Q3
2014
|
|
Q4
2014
|
|
2015
|
|
2016
|
Columbia
(TCO)
|
|
|
|
|
|
|
|
|
Volume
(Bcf)
|
|
10.7
|
|
10.7
|
|
35.9
|
|
39.4
|
Average Hedge Price
($/Mcf)
|
|
$4.02
|
|
$4.02
|
|
$3.86
|
|
$3.93
|
Dominion South
(DTI)
|
|
|
|
|
|
|
|
|
Volume
(Bcf)
|
|
1.7
|
|
1.7
|
|
-
|
|
-
|
Average Hedge Price
($/Mcf)
|
|
$5.31
|
|
$5.31
|
|
-
|
|
-
|
Coal Division Guidance:
In coal, the low vol guidance range for 2014 has again been
lowered from that shown three months ago to reflect a deterioration
in pricing. For 2015, the low vol guidance was left unchanged from
the previous guidance on the assumption that pricing will improve
from current levels.
The thermal guidance for 2014 has increased from the previous
guidance due to the strong start in both sales and production. The
company believes that generators will be busy replenishing
inventories that were drawn down due to the cold winter, which
should translate into additional thermal sales opportunities. For
2015, thermal guidance was left unchanged.
COAL DIVISION
GUIDANCE
|
|
|
|
|
|
|
|
|
|
|
|
Q3
2014
|
|
|
2014
|
|
|
2015
|
|
Est. Total Coal
Sales
|
|
7.3 - 7.7
|
|
|
31 - 33
|
|
|
31 - 35
|
|
Tonnage:
Firm
|
|
7.1
|
|
|
30.8
|
|
|
16.9
|
|
Price: Sold
(firm)
|
|
$
|
62.76
|
|
|
$
|
63.73
|
|
|
$
|
65.86
|
|
Est. Low-Vol Met
Sales
|
|
0.75 -
0.85
|
|
|
3.4 - 3.8
|
|
|
3.5 - 5.0
|
|
Tonnage:
Firm
|
|
0.5
|
|
|
2.8
|
|
|
1.0
|
|
Est. High-Vol Met
Sales
|
|
0.2
|
|
|
1.5
|
|
|
2.0
|
|
Tonnage:
Firm
|
|
0.2
|
|
|
1.1
|
|
|
0.3
|
|
Est. Thermal
Sales
|
|
6.35 -
6.65
|
|
|
26.1 -
27.7
|
|
|
25.5 -
28.0
|
|
Tonnage:
Firm
|
|
6.4
|
|
|
26.9
|
|
|
15.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: While
most of the data in the table are single point estimates, the
inherent uncertainty of markets and mining operations means that
investors should consider a reasonable range around these
estimates. CONSOL has chosen not to forecast prices for open
tonnage due to ongoing customer negotiations. Firm tonnage is
tonnage that is both sold and priced, and excludes collared tons.
CONSOL Energy has sold additional coal volumes that are not yet
priced. Those volumes are excluded from this table. There are no
collared tons in 2014. Collared tons in 2015 are 1.4 million
tons, with a ceiling of $67.10 per ton and a floor of $54.90 per
ton. Not included in the category breakdowns are the thermal
tons from equity affiliate Harrison Resources and high vol and
thermal tons from Western Allegheny Energy (WAE). Harrison
Resources has 0.1 million tons for Q3 2014, and 0.4 million tons
for all of 2014 and 2015. WAE has 0.1 million tons for Q3 2014, and
0.5 million tons and 0.6 million tons for all of 2014, and 2015,
respectively.
|
Liquidity:
CONSOL Energy Inc. entered into a new Amended and Restated
Credit Agreement dated as of June 18,
2014 for a $2.0 billion senior
secured revolving credit facility. The new senior secured revolving
credit facility replaced the existing $1.0
billion senior secured revolving credit facility which had
been entered into as of April 12,
2011 and was amended and restated on December 5, 2013. The new senior secured
revolving credit facility also replaced the existing $1.0 billion senior secured revolving credit
facility of CNX Gas Corporation and its subsidiaries that had been
entered into as of April 12,
2011.
As of June 30, 2014, CONSOL Energy
had $1.9 billion in total liquidity,
which is comprised of $147.4 million
of cash, $24.0 million available to
be borrowed under the accounts receivable securitization facility,
and $1.7 billion available to be borrowed under its
$2.0 billion bank facility. CONSOL
Energy's credit facility has no borrowings. Outstanding letters of
credit under the bank facility are $260.4
million.
CONSOL's liquidity in the second quarter was improved by
$112 million from the receipt of a
federal cash tax refund in association with last year's sale of
five mines. The cash from the $30
million coal contract buyout occurred in July, so it
will be reflected in the third quarter financial statements.
About CONSOL
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based producer of natural gas and
coal. The company is one of the largest independent natural gas
exploration, development and production companies, with operations
centered in the major shale formations of the Appalachian basin.
CONSOL Energy deploys an organic growth strategy focused on rapidly
developing its resource base. As of December 31, 2013, CONSOL
Energy had 5.7 trillion cubic feet equivalent of proved natural gas
reserves. The company's premium coals are sold to electricity
generators and steel makers, both domestically and
internationally. CONSOL Energy is a member of the Standard
& Poor's 500 Equity Index and the Fortune 500. Additional
information can be found at www.consolenergy.com.
Non-GAAP Financial Measures
Definition: EBIT is defined as earnings before deducting
net interest expense (interest expense less interest income) and
income taxes. EBITDA is defined as earnings before deducting
net interest expense (interest expense less interest income),
income taxes and depreciation, depletion and amortization.
Adjusted EBITDA is defined as EBITDA after adjusting for the
discrete items listed below. Although EBIT, EBITDA, and Adjusted
EBITDA are not measures of performance calculated in accordance
with generally accepted accounting principles, management believes
that they are useful to an investor in evaluating CONSOL Energy
because they are widely used to evaluate a company's operating
performance. Investors should not view these metrics as a
substitute for measures of performance in that are calculated in
accordance with generally accepted accounting principles. In
addition, because all companies do not calculate EBIT, EBITDA, or
Adjusted EBITDA identically, the presentation here may not be
comparable to similarly titled measures of other companies.
Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial
net income attributable to CONSOL Energy Shareholders is as follows
(dollars in 000):
|
|
Three Months
Ended
|
|
|
|
June
30,
|
|
|
|
2014
|
|
|
2013
|
|
Net Loss Attributable
to CONSOL Energy Inc. Shareholders
|
|
$
|
(24,935)
|
|
|
$
|
(12,526)
|
|
|
|
|
|
|
|
|
Less: Net Loss
Attributable to Discontinued Operations, net of tax
|
|
—
|
|
|
21,375
|
|
Add: Interest
Expense
|
|
64,211
|
|
|
54,517
|
|
Less: Interest
Income
|
|
(676)
|
|
|
(4,477)
|
|
Add: Income
Taxes
|
|
1,214
|
|
|
29,565
|
|
Earnings Before
Interest & Taxes (EBIT)
|
|
39,814
|
|
|
88,454
|
|
|
|
|
|
|
|
|
Add:
Depreciation, Depletion & Amortization
|
|
137,899
|
|
|
109,529
|
|
|
|
|
|
|
|
|
Earnings Before
Interest, Taxes and DD&A (EBITDA) from Continuing
Operations
|
|
177,713
|
|
|
197,983
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
Loss on Debt
Extinguishment
|
|
74,277
|
|
|
—
|
|
Revolver
Modification
|
|
2,989
|
|
|
|
|
Pension
Settlement
|
|
20,707
|
|
|
5,087
|
|
Coal Contract
Buyout
|
|
(30,000)
|
|
|
—
|
|
Marcellus Title
Defects
|
|
—
|
|
|
2,470
|
|
Gain on Potomac
Sale
|
|
—
|
|
|
(24,663)
|
|
Total Pre-tax
Adjustments
|
|
67,973
|
|
|
(17,106)
|
|
|
|
|
|
|
|
|
Adjusted Earnings
Before Interest, Taxes and DD&A (Adjusted EBITDA) from
Continuing Operations
|
|
$
|
245,686
|
|
|
$
|
180,877
|
|
Note: Income tax
effect of Total Pre-tax Adjustments was $26,598 and $5,456 for the
three months ended June 30, 2014 and June 30, 2013, respectively.
Adjusted net income is calculated as GAAP net loss of $24,935 plus
total pre-tax adjustments of $67,973, less the tax effect of
$26,588 equals $16,440.
|
Cautionary Statements
Various statements in this release, including those that express
a belief, expectation or intention, may be considered
forward-looking statements (as defined in Section 21E of the
Exchange Act) that involve risks and uncertainties that could cause
actual results to differ materially from projected results.
Accordingly, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. The
forward-looking statements may include projections and estimates
concerning the timing and success of specific projects and our
future production, revenues, income and capital spending. When we
use the words "believe," "intend," "expect," "may," "should,"
"anticipate," "could," "estimate," "plan," "predict," "project," or
their negatives, or other similar expressions, the statements which
include those words are usually forward-looking statements. When we
describe strategy that involves risks or uncertainties, we are
making forward-looking statements. The forward-looking statements
in this press release, if any, speak only as of the date of this
press release; we disclaim any obligation to update these
statements. We have based these forward-looking statements on our
current expectations and assumptions about future events. While our
management considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks, contingencies
and uncertainties, most of which are difficult to predict and many
of which are beyond our control. These risks, contingencies and
uncertainties relate to, among other matters, the following:
deterioration in economic conditions in any of the industries in
which our customers operate or a worldwide financial downturn; an
extended decline in prices we receive for our gas, natural gas
liquids and coal including the impact on gas prices of our gas
operations being concentrated in Appalachia which has experienced a
dramatic increase in gas production and decline in gas pricing
relative to the benchmark Henry Hub prices; our customers extending
existing contracts or entering into new long-term contracts for
coal; the expiration or failure to extend existing long-term
contracts; our reliance on major customers; our inability to
collect payments from customers if their creditworthiness declines;
the disruption of rail, barge, gathering, processing and
transportation facilities and other systems that deliver our gas
and coal to market; a loss of our competitive position because of
the competitive nature of the gas and coal industries, or a loss of
our competitive position because of overcapacity in these
industries impairing our profitability; coal users switching
to other fuels in order to comply with various environmental
standards related to coal combustion emissions; the impact of
potential, as well as any adopted regulations relating to
greenhouse gas emissions on the demand for natural gas and coal, as
well as the impact of any adopted regulations on our coal mining
operations due to the venting of coalbed methane which occurs
during mining; the risks inherent in gas and coal operations being
subject to unexpected disruptions, including geological conditions,
equipment failure, timing of completion of significant construction
or repair of equipment, fires, explosions, accidents and weather
conditions which could impact financial results; decreases in the
availability of, or increases in, the price of commodities and
services used in our mining and gas operations, as well as our
exposure under "take or pay" contracts we entered into with well
service providers to obtain services of which if not used could
impact our cost of production; obtaining and renewing
governmental permits and approvals for our gas and coal gas
operations; the effects of government regulation on the discharge
into the water or air, and the disposal and clean-up of, hazardous
substances and wastes generated during our coal and gas operations;
the effects of stringent federal and state employee health and
safety regulations, including the ability of regulators to shut
down a well or mine; the potential for liabilities arising from
environmental contamination or alleged environmental contamination
in connection with our past or current gas and coal operations; the
effects of mine closing, reclamation, gas well closing and certain
other liabilities; uncertainties in estimating our economically
recoverable gas and coal reserves; defects may exist in our chain
of title and we may incur additional costs associated with
perfecting title for gas or coal rights on some of our properties
or failing to acquire these additional rights we may have to reduce
our estimated reserves;the outcomes of various legal proceedings,
which are more fully described in our reports filed under the
Securities Exchange Act of 1934; the impacts of various asbestos
litigation claims; increased exposure to employee related long-term
liabilities; lump sum payments made to retiring salaried employees
pursuant to our defined benefit pension plan exceeding total
service and interest cost in a plan year; replacing our natural gas
reserves, which if not replaced, will cause our gas reserves and
gas production to decline; acquisitions that we may make in the
future involve risks including the accuracy of our assessment of
the acquired businesses and their risks, achieving any anticipated
synergies, integrating the acquisitions and divestitures we may
make may not occur or produce anticipated proceeds; existing and
future gas joint ventures may restrict our operational and
corporate flexibility, we may be materially impacted by actions
taken by our joint venture partners and we may not realize
anticipated benefits such as carried costs; our ability to acquire
water supplies needed for gas drilling, or our ability to dispose
of water used or removed from strata in connection with our gas
operations at a reasonable cost and within applicable environmental
rules; provisions of our debt agreements may restrict our
flexibility and the risks associated with the degree to which we
are leveraged; our hedging activities may prevent us from
benefiting from price increases and may expose us to other risks;
changes in federal or state income tax laws, particularly in the
area of percentage depletion and intangible drilling costs, could
cause our financial position and profitability to deteriorate; the
risks in making strategic determinations, including the allocation
of capital and other resources among our strategic opportunities
may adversely affect our financial condition; failure by Murray
Energy Corporation to satisfy the liabilities it assumed from us as
well as to perform its obligations under various agreements; we may
not be able to consummate a sale or MLP transaction of our gas
midstream assets; and other factors discussed in the 2013 Form 10-K
under "Risk Factors," as updated by any subsequent Form 10-Qs,
which are on file at the Securities and Exchange Commission.
A registration statement relating to the securities of the MLP
that would be sold in the offering has not been filed with the
Securities and Exchange Commission or become effective. This
announcement does not constitute an offer to sell, or the
solicitation of an offer to buy, any securities. This announcement
is being issued pursuant to, and in accordance with, Rule 135 under
the Securities Act of 1933.
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF INCOME
|
|
|
|
|
(Dollars in
thousands, except per share data)
|
Three Months
Ended
|
|
Six Months
Ended
|
(Unaudited)
|
June
30,
|
|
June
30,
|
Revenues and Other
Income:
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Natural Gas, NGLs and
Oil Sales
|
$
|
229,743
|
|
|
$
|
171,236
|
|
|
$
|
496,041
|
|
|
$
|
339,078
|
|
Coal Sales
|
536,298
|
|
|
505,060
|
|
|
1,070,979
|
|
|
1,052,969
|
|
Other Outside
Sales
|
70,087
|
|
|
65,218
|
|
|
139,374
|
|
|
133,902
|
|
Gas Royalty Interests
and Purchased Gas Sales
|
19,739
|
|
|
18,434
|
|
|
49,958
|
|
|
33,996
|
|
Freight-Outside
Coal
|
10,109
|
|
|
9,660
|
|
|
20,054
|
|
|
21,913
|
|
Miscellaneous Other
Income
|
69,977
|
|
|
28,520
|
|
|
125,031
|
|
|
56,907
|
|
Gain on Sale of
Assets
|
1,417
|
|
|
30,039
|
|
|
5,086
|
|
|
32,345
|
|
Total Revenue and
Other Income
|
937,370
|
|
|
828,167
|
|
|
1,906,523
|
|
|
1,671,110
|
|
Costs and
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and
Production Costs
|
|
|
|
|
|
|
|
|
|
|
|
Lease Operating
Expense
|
26,374
|
|
|
25,221
|
|
|
55,617
|
|
|
47,235
|
|
Transportation,
Gathering and Compression
|
57,796
|
|
|
48,871
|
|
|
111,578
|
|
|
97,303
|
|
Production, Ad
Valorem, and Other Fees
|
10,145
|
|
|
7,409
|
|
|
20,331
|
|
|
11,978
|
|
Direct Administrative
and Selling
|
13,503
|
|
|
11,803
|
|
|
25,156
|
|
|
22,889
|
|
Depreciation,
Depletion and Amortization
|
71,499
|
|
|
52,846
|
|
|
143,228
|
|
|
105,834
|
|
Exploration and
Production Related Other Costs
|
4,624
|
|
|
10,406
|
|
|
7,723
|
|
|
20,895
|
|
Production Royalty
Interests and Purchased Gas Costs
|
16,672
|
|
|
14,595
|
|
|
42,768
|
|
|
27,360
|
|
Other Corporate
Expenses
|
21,012
|
|
|
22,557
|
|
|
47,176
|
|
|
47,950
|
|
General and
Administrative
|
15,517
|
|
|
10,472
|
|
|
32,881
|
|
|
19,062
|
|
Total Exploration
and Production Costs
|
237,142
|
|
|
204,180
|
|
|
486,458
|
|
|
400,506
|
|
Coal
Costs
|
|
|
|
|
|
|
|
|
|
|
|
Operating and Other
Costs
|
347,541
|
|
|
329,934
|
|
|
674,390
|
|
|
664,949
|
|
Royalties and
Production Taxes
|
27,603
|
|
|
26,438
|
|
|
54,091
|
|
|
54,877
|
|
Direct Administrative
and Selling
|
11,816
|
|
|
12,252
|
|
|
23,110
|
|
|
23,136
|
|
Depreciation,
Depletion and Amortization
|
65,086
|
|
|
55,247
|
|
|
121,149
|
|
|
112,437
|
|
Freight
Expense
|
10,109
|
|
|
9,660
|
|
|
20,054
|
|
|
21,913
|
|
General and
Administrative Costs
|
10,450
|
|
|
10,038
|
|
|
22,963
|
|
|
19,339
|
|
Other Corporate
Expenses
|
12,035
|
|
|
11,996
|
|
|
31,330
|
|
|
31,911
|
|
Total Coal
Costs
|
484,640
|
|
|
455,565
|
|
|
947,087
|
|
|
928,562
|
|
Other
Costs
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous
Operating Expense
|
99,079
|
|
|
73,872
|
|
|
173,628
|
|
|
196,908
|
|
General and
Administrative Costs
|
428
|
|
|
470
|
|
|
834
|
|
|
893
|
|
Depreciation,
Depletion and Amortization
|
1,314
|
|
|
1,436
|
|
|
2,638
|
|
|
2,836
|
|
Loss on Debt
Extinguishment
|
74,277
|
|
|
—
|
|
|
74,277
|
|
|
—
|
|
Interest
Expense
|
64,211
|
|
|
54,517
|
|
|
115,142
|
|
|
107,894
|
|
Total Other
Costs
|
239,309
|
|
|
130,295
|
|
|
366,519
|
|
|
308,531
|
|
Total Costs And
Expenses
|
961,091
|
|
|
790,040
|
|
|
1,800,064
|
|
|
1,637,599
|
|
(Loss) Earnings
Before Income Tax
|
(23,721)
|
|
|
38,127
|
|
|
106,459
|
|
|
33,511
|
|
Income
Taxes
|
1,214
|
|
|
29,565
|
|
|
9,703
|
|
|
28,673
|
|
(Loss) Income From
Continuing Operations
|
(24,935)
|
|
|
8,562
|
|
|
96,756
|
|
|
4,838
|
|
Loss From
Discontinued Operations, net
|
—
|
|
|
(21,375)
|
|
|
(5,687)
|
|
|
(19,472)
|
|
Net (Loss)
Income
|
(24,935)
|
|
|
(12,813)
|
|
|
91,069
|
|
|
(14,634)
|
|
Less: Net Loss
Attributable to Noncontrolling Interests
|
—
|
|
|
(287)
|
|
|
—
|
|
|
(544)
|
|
Net (Loss) Income
Attributable to CONSOL Energy Shareholders
|
$
|
(24,935)
|
|
|
$
|
(12,526)
|
|
|
$
|
91,069
|
|
|
$
|
(14,090)
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(CONTINUED)
|
|
|
|
|
(Dollars in
thousands, except per share data)
|
Three Months
Ended
|
|
Six Months
Ended
|
(Unaudited)
|
June
30,
|
|
June
30,
|
(Loss) Earnings
Per Share
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income from
Continuing Operations
|
$
|
(0.11)
|
|
|
$
|
0.04
|
|
|
$
|
0.42
|
|
|
$
|
0.02
|
|
Loss from
Discontinued Operations
|
—
|
|
|
(0.09)
|
|
|
(0.02)
|
|
|
(0.08)
|
|
Total Basic (Loss)
Earnings Per Share
|
$
|
(0.11)
|
|
|
$
|
(0.05)
|
|
|
$
|
0.40
|
|
|
$
|
(0.06)
|
|
Dilutive
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income from
Continuing Operations
|
$
|
(0.11)
|
|
|
$
|
0.04
|
|
|
$
|
0.42
|
|
|
$
|
0.02
|
|
Loss from
Discontinued Operations
|
—
|
|
|
(0.09)
|
|
|
(0.03)
|
|
|
(0.08)
|
|
Total Dilutive
(Loss) Earnings Per Share
|
$
|
(0.11)
|
|
|
$
|
(0.05)
|
|
|
$
|
0.39
|
|
|
$
|
(0.06)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Paid Per
Share
|
$
|
0.0625
|
|
|
$
|
0.125
|
|
|
$
|
0.125
|
|
|
$
|
0.125
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(Dollars in
thousands)
|
June
30,
|
|
June
30,
|
(Unaudited)
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
Net (Loss)
Income
|
$
|
(24,935)
|
|
|
$
|
(12,813)
|
|
|
$
|
91,069
|
|
|
$
|
(14,634)
|
|
Other Comprehensive
(Loss) Income:
|
|
|
|
|
|
|
|
|
|
|
|
Actuarially
Determined Long-Term Liability Adjustments (Net of tax: $2,214,
($26,489), ($771), ($54,739))
|
(3,798)
|
|
|
42,904
|
|
|
1,321
|
|
|
88,661
|
|
Net (Decrease)
Increase in the Value of Cash Flow Hedges (Net of tax: $8,027,
($29,484), $38,883, ($17,500))
|
(12,218)
|
|
|
45,749
|
|
|
(59,183)
|
|
|
27,154
|
|
Reclassification of Cash Flow Hedges from OCI to Earnings (Net of
tax: ($6,642), $8,560, ($17,593), $22,526)
|
6,951
|
|
|
(9,528)
|
|
|
23,264
|
|
|
(32,241)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive
(Loss) Income
|
(9,065)
|
|
|
79,125
|
|
|
(34,598)
|
|
|
83,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (Loss)
Income
|
(34,000)
|
|
|
66,312
|
|
|
56,471
|
|
|
68,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Comprehensive Loss Attributable to Noncontrolling
Interest
|
—
|
|
|
(287)
|
|
|
—
|
|
|
(544)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (Loss)
Income Attributable to CONSOL Energy Inc. Shareholders
|
$
|
(34,000)
|
|
|
$
|
66,599
|
|
|
$
|
56,471
|
|
|
$
|
69,484
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(Dollars in
thousands)
|
June 30,
2014
|
|
December 31,
2013
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and Cash
Equivalents
|
$
|
147,393
|
|
|
$
|
327,420
|
|
Accounts and Notes
Receivable:
|
|
|
|
|
|
Trade
|
275,431
|
|
|
332,574
|
|
Notes
Receivable
|
1,328
|
|
|
25,861
|
|
Other
Receivables
|
390,484
|
|
|
243,973
|
|
Inventories
|
148,005
|
|
|
157,914
|
|
Deferred Income
Taxes
|
137,716
|
|
|
211,303
|
|
Recoverable Income
Taxes
|
47,060
|
|
|
10,705
|
|
Prepaid
Expenses
|
78,438
|
|
|
135,842
|
|
Total Current
Assets
|
1,225,855
|
|
|
1,445,592
|
|
Property, Plant and
Equipment:
|
|
|
|
|
|
Property, Plant and
Equipment
|
14,160,967
|
|
|
13,578,509
|
|
Less—Accumulated
Depreciation, Depletion and Amortization
|
4,384,209
|
|
|
4,136,247
|
|
Total Property,
Plant and Equipment—Net
|
9,776,758
|
|
|
9,442,262
|
|
Other
Assets:
|
|
|
|
|
|
Investment in
Affiliates
|
352,187
|
|
|
291,675
|
|
Notes
Receivable
|
—
|
|
|
125
|
|
Other
|
211,847
|
|
|
214,013
|
|
Total Other
Assets
|
564,034
|
|
|
505,813
|
|
TOTAL
ASSETS
|
$
|
11,566,647
|
|
|
$
|
11,393,667
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(Dollars in
thousands, except per share data)
|
June 30,
2014
|
|
December 31,
2013
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
Payable
|
$
|
504,009
|
|
|
$
|
514,580
|
|
Current Portion of
Long-Term Debt
|
12,127
|
|
|
11,455
|
|
Other Accrued
Liabilities
|
554,476
|
|
|
565,697
|
|
Current Liabilities
of Discontinued Operations
|
13,054
|
|
|
28,239
|
|
Total Current
Liabilities
|
1,083,666
|
|
|
1,119,971
|
|
Long-Term
Debt:
|
|
|
|
|
|
Long-Term
Debt
|
3,214,913
|
|
|
3,115,963
|
|
Capital Lease
Obligations
|
44,468
|
|
|
47,596
|
|
Total Long-Term
Debt
|
3,259,381
|
|
|
3,163,559
|
|
Deferred Credits and
Other Liabilities:
|
|
|
|
|
|
Deferred Income
Taxes
|
291,928
|
|
|
242,643
|
|
Postretirement
Benefits Other Than Pensions
|
959,034
|
|
|
961,127
|
|
Pneumoconiosis
Benefits
|
111,519
|
|
|
111,971
|
|
Mine
Closing
|
320,902
|
|
|
320,723
|
|
Gas Well
Closing
|
180,097
|
|
|
175,603
|
|
Workers'
Compensation
|
73,406
|
|
|
71,468
|
|
Salary
Retirement
|
58,962
|
|
|
48,252
|
|
Reclamation
|
35,779
|
|
|
40,706
|
|
Other
|
132,315
|
|
|
131,355
|
|
Total Deferred
Credits and Other Liabilities
|
2,163,942
|
|
|
2,103,848
|
|
TOTAL
LIABILITIES
|
6,506,989
|
|
|
6,387,378
|
|
Stockholders'
Equity:
|
|
|
|
|
|
Common Stock, $.01
Par Value; 500,000,000 Shares Authorized, 230,165,816 Issued and
Outstanding at June 30, 2014; 229,145,736 Issued and Outstanding at
December 31, 2013
|
2,305
|
|
|
2,294
|
|
Capital in Excess of
Par Value
|
2,405,728
|
|
|
2,364,592
|
|
Preferred Stock,
15,000,000 shares authorized, None issued and
outstanding
|
—
|
|
|
—
|
|
Retained
Earnings
|
3,011,340
|
|
|
2,964,520
|
|
Accumulated Other
Comprehensive Loss
|
(359,715)
|
|
|
(325,117)
|
|
Total CONSOL
Energy Inc. Stockholders' Equity
|
5,059,658
|
|
|
5,006,289
|
|
TOTAL LIABILITIES
AND EQUITY
|
$
|
11,566,647
|
|
|
$
|
11,393,667
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands, except per share data)
|
Common
Stock
|
|
Capital in
Excess
of Par
Value
|
|
Retained
Earnings
(Deficit)
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total CONSOL
Energy Inc.
Stockholders'
Equity
|
December 31,
2013
|
$
|
2,294
|
|
|
$
|
2,364,592
|
|
|
$
|
2,964,520
|
|
|
$
|
(325,117)
|
|
|
$
|
5,006,289
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
—
|
|
|
—
|
|
|
91,069
|
|
|
—
|
|
|
91,069
|
|
Other Comprehensive
Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(34,598)
|
|
|
(34,598)
|
|
Comprehensive Income
(Loss)
|
—
|
|
|
—
|
|
|
91,069
|
|
|
(34,598)
|
|
|
56,471
|
|
Issuance of Common
Stock
|
11
|
|
|
13,223
|
|
|
—
|
|
|
—
|
|
|
13,234
|
|
Treasury Stock
Activity
|
—
|
|
|
—
|
|
|
(15,516)
|
|
|
—
|
|
|
(15,516)
|
|
Tax Benefit From
Stock-Based Compensation
|
—
|
|
|
2,413
|
|
|
—
|
|
|
—
|
|
|
2,413
|
|
Amortization of
Stock-Based Compensation Awards
|
—
|
|
|
25,500
|
|
|
—
|
|
|
—
|
|
|
25,500
|
|
Dividends ($0.125 per
share)
|
—
|
|
|
—
|
|
|
(28,733)
|
|
|
—
|
|
|
(28,733)
|
|
Balance at June
30, 2014
|
$
|
2,305
|
|
|
$
|
2,405,728
|
|
|
$
|
3,011,340
|
|
|
$
|
(359,715)
|
|
|
$
|
5,059,658
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
(Dollars in
thousands)
|
Three Months
Ended
|
|
Six Months
Ended
|
(Unaudited)
|
June
30,
|
|
June
30,
|
Operating
Activities:
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net (Loss)
Income
|
$
|
(24,935)
|
|
|
$
|
(12,813)
|
|
|
$
|
91,069
|
|
|
$
|
(14,634)
|
|
Adjustments to
Reconcile Net (Loss) Income to Net Cash Provided By Continuing
Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss from
Discontinued Operations
|
—
|
|
|
21,375
|
|
|
5,687
|
|
|
19,472
|
|
Depreciation,
Depletion and Amortization
|
137,899
|
|
|
109,529
|
|
|
267,015
|
|
|
221,107
|
|
Stock-Based
Compensation
|
9,608
|
|
|
8,773
|
|
|
25,500
|
|
|
34,647
|
|
Gain on Sale of
Assets
|
(1,417)
|
|
|
(30,039)
|
|
|
(5,086)
|
|
|
(32,345)
|
|
Loss on Debt
Extinguishment
|
74,277
|
|
|
—
|
|
|
74,277
|
|
|
—
|
|
Deferred Income
Taxes
|
5,636
|
|
|
6,693
|
|
|
13,785
|
|
|
6,998
|
|
Equity in Earnings of
Affiliates
|
(14,062)
|
|
|
(11,870)
|
|
|
(21,512)
|
|
|
(16,667)
|
|
Changes in Operating
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts and Notes
Receivable
|
(30,689)
|
|
|
(1,777)
|
|
|
(52,920)
|
|
|
25,360
|
|
Inventories
|
8,180
|
|
|
(10,960)
|
|
|
9,909
|
|
|
19,772
|
|
Prepaid
Expenses
|
9,036
|
|
|
16,683
|
|
|
24,529
|
|
|
25,359
|
|
Changes in Other
Assets
|
13,073
|
|
|
17,212
|
|
|
13,427
|
|
|
28,070
|
|
Changes in Operating
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
Payable
|
36,776
|
|
|
13,004
|
|
|
53,371
|
|
|
(13,470)
|
|
Accrued
Interest
|
(61,716)
|
|
|
(50,380)
|
|
|
(10,483)
|
|
|
(73)
|
|
Other Operating
Liabilities
|
45,080
|
|
|
23,582
|
|
|
74,714
|
|
|
(4,173)
|
|
Other
|
9,959
|
|
|
(6,419)
|
|
|
14,737
|
|
|
6,523
|
|
Net Cash Provided by
Continuing Operations
|
216,705
|
|
|
92,593
|
|
|
578,019
|
|
|
305,946
|
|
Net Cash Provided by
(Used in) Discontinued Operating Activities
|
4,340
|
|
|
32,517
|
|
|
(20,872)
|
|
|
87,444
|
|
Net Cash Provided by
Operating Activities
|
221,045
|
|
|
125,110
|
|
|
557,147
|
|
|
393,390
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
(368,286)
|
|
|
(357,635)
|
|
|
(819,295)
|
|
|
(707,452)
|
|
Change in Restricted
Cash
|
—
|
|
|
20,379
|
|
|
—
|
|
|
68,673
|
|
Proceeds from Sales
of Assets
|
7,547
|
|
|
33,003
|
|
|
133,075
|
|
|
107,626
|
|
Net Investments In
Equity Affiliates
|
(29,000)
|
|
|
(4,100)
|
|
|
(39,000)
|
|
|
(16,600)
|
|
Net Cash Used in
Investing Activities in Continuing Operations
|
(389,739)
|
|
|
(308,353)
|
|
|
(725,220)
|
|
|
(547,753)
|
|
Net Cash Provided by
Investing Activities in Discontinued Operations
|
—
|
|
|
74,769
|
|
|
—
|
|
|
82,627
|
|
Net Cash Used in
Investing Activities
|
(389,739)
|
|
|
(233,584)
|
|
|
(725,220)
|
|
|
(465,126)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
(Payments on)
Proceeds from Short-Term Borrowings
|
(11,736)
|
|
|
173,000
|
|
|
(11,736)
|
|
|
173,000
|
|
Proceeds from
(Payments on) Miscellaneous Borrowings
|
1,503
|
|
|
(2,513)
|
|
|
(3,167)
|
|
|
(29,964)
|
|
Proceeds from
Securitization Facility
|
—
|
|
|
10,600
|
|
|
—
|
|
|
2,873
|
|
Proceeds from
Long-Term Borrowings
|
1,600,000
|
|
|
—
|
|
|
1,600,000
|
|
|
—
|
|
Payments on Long-Term
Borrowings
|
(1,583,965)
|
|
|
—
|
|
|
(1,583,965)
|
|
|
—
|
|
Tax Benefit from
Stock-Based Compensation
|
2,321
|
|
|
1,455
|
|
|
2,413
|
|
|
2,185
|
|
Dividends
Paid
|
(14,382)
|
|
|
(28,601)
|
|
|
(28,733)
|
|
|
(28,601)
|
|
Issuance of Common
Stock
|
8,259
|
|
|
1,588
|
|
|
13,234
|
|
|
2,497
|
|
Debt Issuance and
Financing Fees
|
—
|
|
|
(131)
|
|
|
—
|
|
|
—
|
|
Net Cash (Used in)
Provided by Financing Activities in Continuing
Operations
|
2,000
|
|
|
155,398
|
|
|
(11,954)
|
|
|
121,990
|
|
Net Cash Used in
Financing Activities in Discontinued Operations
|
—
|
|
|
(48)
|
|
|
—
|
|
|
(198)
|
|
Net Cash (Used in)
Provided by Financing Activities
|
2,000
|
|
|
155,350
|
|
|
(11,954)
|
|
|
121,792
|
|
Net (Decrease)
Increase in Cash and Cash Equivalents
|
(166,694)
|
|
|
46,876
|
|
|
(180,027)
|
|
|
50,056
|
|
Cash and Cash
Equivalents at Beginning of Period
|
314,087
|
|
|
25,042
|
|
|
327,420
|
|
|
21,862
|
|
Cash and Cash
Equivalents at End of Period
|
$
|
147,393
|
|
|
$
|
71,918
|
|
|
$
|
147,393
|
|
|
$
|
71,918
|
|
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SOURCE CONSOL Energy Inc.