PITTSBURGH, Oct. 28, 2014 /PRNewswire/ -- CONSOL Energy
Inc. (NYSE: CNX) had adjusted net income1 in the 2014
third quarter of $20 million, or
$0.09 per share, after adjusting for
unusual items, which are listed in the EBITDA reconciliation table
on page 11. Adjusted EBITDA1 was $236 million for the 2014 third quarter, compared
to $178 million in the year-earlier
quarter. Cash flow from operations in the just-ended quarter was
$293 million, as compared to
$196 million in the year-earlier
quarter. On a GAAP basis, the company reported a net loss of
$2 million for the quarter, or
($0.01) per diluted share. This is
compared to a net loss of $64
million, or ($0.28) per
diluted share from the year-earlier quarter.
CONSOL's E&P Division had another outstanding quarter by
achieving record production of 64.9 Bcfe, or an increase of 41%
from the 46.1 Bcfe produced in the year-earlier quarter. Because
well results are exceeding expectations, CONSOL Energy is raising
its 2014 E&P production guidance range to 235 - 240 Bcfe from
earlier guidance of 225 - 235 Bcfe. To achieve the high end of the
new range, the company will need to produce approximately 75 Bcfe
in the fourth quarter.
"Our record gas production in the third quarter represents
sequential growth of 25%, which is the largest in company
history," commented Nicholas J.
DeIuliis, president and CEO. "Our focus continues to be on
execution: production growth, lowering costs, and maximizing rates
of return. These factors, along with recent transactions such as
the IPO of CONE Midstream Partners LP, will continue to drive
CONSOL Energy's net asset value (NAV) per share growth."
Marcellus Shale production volumes in the 2014 third quarter
were 30.7 Bcfe, or 76% higher than the 17.4 Bcfe produced in the
2013 third quarter. During 2014, rapidly increasing volumes have
contributed to lower unit costs. Despite processing a greater
volume of NGLs, Marcellus Shale costs were $2.69 per Mcfe in the just-ended quarter, which
is a $0.25 per Mcfe improvement from
the second quarter of 2014 costs of $2.94 per Mcfe. When backing out depreciation,
depletion, and amortization (DD&A) in the 2014 third quarter of
$1.11 per Mcfe, the company achieved
all-in cash costs of only $1.58 per
Mcfe in the Marcellus Shale.
CONSOL Energy also achieved a break-out in Utica Shale volumes,
as the completion of third-party infrastructure enabled the company
to produce from completed pads in Noble
County, Ohio. In the 2014 third quarter, Utica Shale
production volumes were 6.8 Bcfe, up from 0.2 Bcfe in the
year-earlier quarter. As impressive as the volumes were, the
financial results were boosted by higher-value condensate and NGL
production. Utica Shale condensate and NGL production in the
quarter was 0.5 Bcfe and 2.0 Bcfe, respectively, up from negligible
amounts in the year-earlier quarter.
CONSOL's Coal Division produced 7.8 million tons, exceeding the
high end of the guidance range of 7.3 - 7.7 million tons. Weaker
coal markets, though, resulted in decreased spot pricing for the
company's low-vol and thermal coals. CONSOL did, however, have an
active contracting season for thermal coal and was able to contract
a significant amount of tons over multiple years. The third quarter
ended with 19.8 million tons of thermal coal contracted for 2015,
up from 15.6 million tons reported at the end of the second
quarter. The company expects to have approximately 90% of its
expected 2015 thermal coal production sold by year-end.
"Our ability to contract in a soft market confirms what we
previously highlighted: electricity generators value the
characteristics of CONSOL's thermal coal, which is among the
highest heat content of any U.S. thermal coal," continued Mr.
DeIuliis. "CONSOL is also positioned to benefit from its proximity
to customers, history of reliability, and its strong financial
metrics. Over time, we have targeted "must run" base load
generation, and this strategy has further enhanced the value of our
premium thermal coal."
In the low-vol coking coal category, CONSOL's premier Buchanan
Mine repeated its stellar cost performance. Total production costs
were $60.04 per ton in the just-ended
quarter, or a reduction of $7.29 per
ton from the year-earlier quarter. The costs were even slightly
improved from the $60.24 per ton
reported in the 2014 second quarter. The company believes that the
Buchanan Mine has the lowest cost structure of any metallurgical
mine in the U.S., which enables it to generate cash and income in a
difficult market.
In the financial arena, CONSOL achieved a number of significant
results. The company chose to re-align its pension and retiree
medical (OPEB) obligations. Certain one-time payments to affected
active employees will occur in the 2014 fourth quarter. These
changes align our retiree benefit program with industry peers,
while providing best-in-class compensation packages for our
employees. These changes, coupled with the reduction in obligations
from the sale of five mines in December
2013, result in total company retiree medical and pension
obligations of approximately $766
million, as compared with approximately $4.0 billion just twelve months ago. The company
anticipates the strengthened balance sheet will improve liquidity
and credit metrics, as well as increase the likelihood of achieving
its E&P 30% annual growth targets.
During the quarter, CONSOL, along with its joint venture
partner, Noble Energy, successfully launched CONE Midstream
Partners LP, a Master Limited Partnership (MLP), which will own,
operate, develop and acquire natural gas gathering and other
midstream energy assets to service rapidly growing production in
the Marcellus Shale in Pennsylvania and West Virginia. CONE Midstream Partners, which
trades on the NYSE under the ticker CNNX, launched its initial
public offering on September 25, 2014
and raised proceeds of $414 million,
of which $204 million was returned to
CONSOL.
CONSOL Energy continues to lower its cost of capital. On
August 12, 2014, CONSOL closed on an
additional $250 million of its 5.875%
senior notes due 2022 at a price equal to $102.75 of the principal amount. CONSOL used the
proceeds of the sale of the additional notes to partially purchase
$235 million of principal of its
8.25% senior notes due 2020. This transaction will reduce annual
interest expense by almost $5
million. Despite resulting in a charge to earnings in the
third quarter, this transaction was NAV-accretive.
During the quarter, CONSOL continued to execute on its non-core
asset sales program and after the close of the third quarter CONSOL
Energy concluded several transactions. These sales generated
$75 million in immediate cash
proceeds and have an estimated total consideration of approximately
$86 million. These transactions
include the sale of a portion of CONSOL Energy's coal reserves
located in Hamilton County,
Illinois to a strategic buyer. These transactions,
together with the proceeds from the CONE Midstream Partners LP
IPO, put the 2014 and 5-year non-core asset sales programs
ahead of schedule based on previously stated goals.
"When you look at what we have accomplished so far in 2014, the
rate of change and results are impressive," concluded Mr. DeIuliis.
"During the quarter we successfully achieved both operational and
transactional goals. These accomplishments are extensive, but we
are far from finished. CONSOL Energy has shown itself to be a
company unsatisfied with the status quo. I'm proud of all of our
employees who are working tirelessly as a team to create meaningful
NAV per share under current macro conditions."
The third quarter earnings results included the following
pre-tax items related to recent transactions completed by the
company:
- The company incurred $21.0
million in expense related to the early extinguishment of
$235 million of the senior notes due
2020.
- The company incurred a non-cash charge of $4.8 million in association with pension
settlement accounting.
- The company recognized a gain of $36.2
million as a result of measurements associated with
amendments to the pension and OPEB plans, which were adopted during
the third quarter.
- In conjunction with the OPEB plan amendments, the company
recognized a $46.3 million expense
for cash payments made to participants of the OPEB plan.
1The 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."
E&P Division:
E&P Third Quarter Summary:
The tables below summarize the quarterly comparison of key
metrics for the E&P Division. Revenue and production both
increased by over 30% 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 $24.4 million in the current
quarter, compared to a net loss of $0.6
million in the year-earlier quarter.
E&P Division capital expenditures in the quarter set a
record at $281.6 million, as the
company increased drilling and completion investments to achieve
its production growth targets. CONSOL's quarterly capital
expenditures were net of $77.1
million of drilling carry from its joint venture partner in
the Marcellus Shale and $41.1 million
of carry from its joint venture partner in the Utica Shale.
During the third quarter, CONSOL signed a letter of intent to
sell a 50% interest in the Utica
formation in the Moundsville area
of Marshall County, West Virginia,
to its joint venture partner, Noble Energy. The approximately
3,000-acre position associated with the transaction, combined with
slightly more than 1,000 already jointly held Utica acres, will form an Area of Mutual
Interest (AMI). The AMI should hold at least 25 Utica laterals
and will use a mix of existing infrastructure and new Utica pads. The transaction is expected
to close in the fourth quarter of 2014, and the first well is
planned for spud late within the same quarter. This AMI provides an
opportunity to quickly ramp this stacked pay potential area by
taking advantage of significant development that is built, or
underway, in the Noble Energy-operated Moundsville field.
E&P DIVISION
RESULTS — Quarter-to-Quarter Comparison
|
|
|
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Quarter
|
|
Quarter
|
|
Quarter
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
September 30,
2014
|
|
September 30,
2013
|
|
June 30,
2014
|
Sales -
Gas
|
|
$
|
189.8
|
|
|
$
|
157.6
|
|
|
$
|
208.5
|
|
Hedging Impact -
Gas
|
|
21.4
|
|
|
27.0
|
|
|
(6.4)
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|
Sales -
Oil
|
|
2.7
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|
|
2.4
|
|
|
2.9
|
|
Sales -
NGLs
|
|
31.9
|
|
|
5.3
|
|
|
17.7
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|
Sales -
Condensate
|
|
12.0
|
|
|
1.1
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|
|
7.6
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|
Total Sales Revenue
($ MM)
|
|
$
|
257.8
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|
|
$
|
193.4
|
|
|
$
|
230.3
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
Attributable to CONSOL Energy Shareholders
|
|
$
|
24.4
|
|
|
$
|
(0.6)
|
|
|
$
|
15.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided By
Operating Activities ($ MM)
|
|
$
|
207.0
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|
|
$
|
120.2
|
|
|
$
|
86.0
|
|
Total Period
Production (Bcfe)
|
|
64.9
|
|
|
46.1
|
|
|
51.9
|
|
Average Daily
Production (MMcfe)
|
|
705.6
|
|
|
500.9
|
|
|
570.0
|
|
Capital Expenditures
($ MM)
|
|
$
|
281.6
|
|
|
$
|
273.5
|
|
|
$
|
304.5
|
|
CONSOL's E&P division production in the quarter came from
the following categories:
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Quarter
|
|
Quarter
|
|
|
|
Quarter
|
|
|
|
|
Ended
|
|
Ended
|
|
%
|
|
Ended
|
|
%
|
|
|
September 30,
2014
|
|
September 30,
2013
|
|
Increase/
(Decrease)
|
|
June 30,
2014
|
|
Increase/
(Decrease)
|
GAS
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcellus Sales
Volumes (Bcf)
|
|
27.0
|
|
16.6
|
|
62.7
|
%
|
|
22.0
|
|
22.7
|
%
|
CBM Sales Volumes
(Bcf)
|
|
20.0
|
|
21.0
|
|
(4.8)
|
%
|
|
19.7
|
|
1.5
|
%
|
Shallow Oil and Gas
Sales Volumes (Bcf)
|
|
6.6
|
|
6.7
|
|
(1.5)
|
%
|
|
5.7
|
|
15.8
|
%
|
Other Sales Volumes
(Bcf)
|
|
5.0
|
|
0.8
|
|
525.0
|
%
|
|
1.9
|
|
163.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIQUIDS*
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|
|
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|
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|
|
|
|
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|
NGLs Sales Volumes
(Bcfe)
|
|
5.3
|
|
0.7
|
|
657.1
|
%
|
|
1.9
|
|
178.9
|
%
|
Oil Sales Volumes
(Bcfe)
|
|
0.2
|
|
0.2
|
|
—
|
%
|
|
0.2
|
|
—
|
%
|
Condensate Sales
Volumes (Bcfe)
|
|
0.8
|
|
0.1
|
|
700.0
|
%
|
|
0.5
|
|
60.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
64.9
|
|
46.1
|
|
40.8
|
%
|
|
51.9
|
|
25.0
|
%
|
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 76%.
|
Liquids production of 6.3 Bcfe, as a percentage of the total of
64.9 Bcfe, was approximately 10% in the just-ended quarter.
E&P PRICE AND
COST DATA PER MCFE — Quarter-to-Quarter Comparison:
|
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
|
Ended
|
|
Ended
|
|
Ended
|
(Per Mcfe)
|
|
September 30,
2014
|
|
September 30,
2013
|
|
June 30,
2014
|
Average Sales Price -
Gas
|
|
$
|
3.24
|
|
|
$
|
3.49
|
|
|
$
|
4.23
|
|
Hedging Impact -
Gas
|
|
$
|
0.36
|
|
|
$
|
0.60
|
|
|
$
|
(0.13)
|
|
Average Sales Price -
Oil*
|
|
$
|
15.02
|
|
|
$
|
16.54
|
|
|
$
|
15.85
|
|
Average Sales Price -
NGLs*
|
|
$
|
6.00
|
|
|
$
|
7.09
|
|
|
$
|
9.26
|
|
Average Sales Price -
Condensate*
|
|
$
|
14.66
|
|
|
$
|
15.88
|
|
|
$
|
15.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sales Price -
Total Company
|
|
$
|
3.97
|
|
|
$
|
4.20
|
|
|
$
|
4.44
|
|
Costs -
Production
|
|
|
|
|
|
|
|
|
|
Lifting
|
|
$
|
0.46
|
|
|
$
|
0.51
|
|
|
$
|
0.51
|
|
Ad Valorem, Severance
and Other Taxes
|
|
0.13
|
|
|
0.18
|
|
|
0.19
|
|
DD&A
|
|
1.13
|
|
|
1.10
|
|
|
1.21
|
|
Total Production
Costs
|
|
$
|
1.72
|
|
|
$
|
1.79
|
|
|
$
|
1.91
|
|
Costs -
Gathering
|
|
|
|
|
|
|
|
|
|
Transportation
|
|
$
|
0.62
|
|
|
$
|
0.45
|
|
|
$
|
0.60
|
|
Operating
Costs
|
|
0.43
|
|
|
0.56
|
|
|
0.51
|
|
DD&A
|
|
0.13
|
|
|
0.18
|
|
|
0.16
|
|
Total Gathering
Costs
|
|
$
|
1.18
|
|
|
$
|
1.19
|
|
|
$
|
1.27
|
|
|
|
|
|
|
|
|
|
|
|
Gas Direct
Administrative Selling & Other
|
|
$
|
0.22
|
|
|
$
|
0.25
|
|
|
$
|
0.26
|
|
|
|
|
|
|
|
|
|
|
|
Total
Costs
|
|
$
|
3.12
|
|
|
$
|
3.23
|
|
|
$
|
3.44
|
|
|
|
|
|
|
|
|
|
|
|
Margin
|
|
$
|
0.85
|
|
|
$
|
0.97
|
|
|
$
|
1.00
|
|
*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
impaired in the just-ended quarter, when compared to the
year-earlier quarter due in part to widening regional basis
differentials. Offsetting decreases to gas prices is a greater
proportion of liquids production, which receives higher unit
pricing.
The average sales price of $3.97
per Mcfe, when combined with declining unit costs of $3.12 per Mcfe, resulted in a margin of
$0.85 per Mcfe. This was $0.12 per Mcfe lower than the $0.97 per Mcfe margin achieved in the
year-earlier quarter, as revenue from surging liquids production
helped to mostly offset weaker regional basis. Net income
attributable to CONSOL shareholders from the E&P Division was
$24.4 million in the 2014 third
quarter, compared to a loss of $0.6
million in the year-earlier quarter.
Unit costs were improved in the just-ended quarter, as fixed
costs, such as direct administration, were spread over higher
production volumes. 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
$2.69 per Mcfe in the just-ended
quarter, or an increase of $0.14 per
Mcfe from the $2.55 per Mcfe in the
year-earlier quarter. Despite Marcellus Shale volumes increasing
76%, when compared to the year-earlier quarter, unit costs were
impaired mainly due to increases in gathering and transportation
costs from increased fees related to liquids gas processing.
E&P Marketing and Transportation Update:
Third quarter 2014 average dry gas prices, including the impact
of our hedging program and net of basis, averaged $3.60 per Mcf. CONSOL's expansion into wet gas
production areas provided a liquids value uplift of $0.37 per Mcfe, bringing the overall average
sales price to $3.97 per Mcfe. Third
quarter 2014 liquids volumes of 6.3 Bcfe were over six times
greater than the 2013 third quarter and make up 10% of the
company's total volumes compared with 2% in the third quarter of
last year. CONSOL expects to continue to realize liquids uplift on
future average sales prices as additional wells are brought online
in the liquid-rich areas of the Marcellus and Utica shales.
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 actively-monitored hedge program.
CONSOL Energy continues to develop a diversified portfolio of
firm transportation capacity to support the three-year production
growth plan. In September, the company entered into a
precedent agreement with DTE Energy and Spectra Energy for its
Nexus project as an anchor shipper to transport gas from the
Appalachian Basin to Midwest markets. The pipeline is expected to
be placed into service in late 2017.
The company currently has a total of 1.4 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 0.5 Bcf per day under precedent agreements with several
pipeline projects (including the Nexus project) that will be
completed over the next few years, and an additional 0.2 Bcf per
day of long-term firm sales with major customers that have their
own firm capacity. The average demand cost for the existing firm
capacity is approximately $0.23 per
MMBtu. The average demand cost for existing, plus future, firm
capacity is approximately $0.32 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 211 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
also expects to supply volumes to Shell's cracker plant in
Monaca, Pennsylvania. 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 Mont Belvieu via the ATEX
pipeline. CONSOL will also realize ethane value through blending
capabilities. Employing this multi-faceted approach enables us to
meet pipeline quality specifications, diversify the ethane
portfolio, and maximize our ethane pricing. CONSOL is in active
discussions with a number of ethane customers and midstream
companies for future outlet opportunities.
Coal Division:
Coal Third Quarter Summary:
Tragically, on August 20, 2014,
the Coal Division experienced a fatality at the Buchanan Mine.
The employee was troubleshooting an electrical circuit on a roof
bolter when he was fatally injured. Our thoughts and prayers remain
with the family during this difficult time. CONSOL remains
unwavering to uphold Absolute Zero and the company's number one
core value - Safety.
For the third quarter, CONSOL's Coal Division produced 7.8
million tons, which exceeded previous quarter's guidance, despite
challenges in geological conditions and lower recovery rates at the
Enlow Fork Mine. The Bailey Mine continues to run at a record pace
and production is forecasted to be above 12 million tons for 2014.
The Enlow Fork Mine continues to mine through very tough geological
conditions that are improving, and the company expects to achieve
planned production for the year. The Harvey Mine saw improved
production of 1.1 million tons, for the third quarter, after an
equipment change out, and the company expects normal production
levels at the mine for the fourth quarter of 2014.
The Buchanan Mine continues to run on a reduced schedule, which
reflects market conditions. This schedule allows the mine to
optimize its cost structure for decreased levels of production,
which is reflected in much lower costs compared to the year-earlier
quarter. The mine can quickly ramp up to the full production rate
of 5 million tons per year when the market is ready. CONSOL has
incorporated needed maintenance for the production shaft into the
reduced schedule that will allow the mine to run at full capacity
for the remainder of its life. The company expects to complete this
maintenance in 2015.
CONSOL's logistical team continues to work closely with
transportation partners to effectively move each customer's tons.
Realized prices for low-vol and thermal coal were lower than in the
year-earlier quarter. Low-vol prices continue to reflect a
challenging market, along with legacy contracts rolling off.
Pricing for thermal coal was down year-on-year due to the roll off
of some thermal legacy business. Third quarter pricing is in-line
with CONSOL's strategic plan. Even though the mines exceeded
guidance targets, thermal pricing also declined sequentially (Q2 to
Q3) due to those incremental tons getting sold into the spot
market, which weakened as hot summer weather failed to
materialize.
Coal costs in the thermal category were impaired mainly due to
geologic conditions and lower recovery rates at Enlow Fork Mine
compared to the year-earlier quarter. However, one of the longwalls
at the Bailey Mine recently completed a section of reserves, which
will allow this area to be sealed to eliminate specific equipment
and travel time. This process will greatly reduce risk for CONSOL
employees, as well as reduce maintenance and compliance cost while
improving efficiencies.
Despite continued adverse geologic conditions early in the
quarter at Enlow Fork Mine, the thermal coal segment achieved cash
production costs of $41.67 per ton in
the 2014 third quarter, as detailed in the table below.
In total, CONSOL's active coal operations generated $150 million of cash before capital expenditures
and DD&A.
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
|
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Inventory
(millions of tons)
|
|
0.2
|
|
0.1
|
|
—
|
|
—
|
|
0.2
|
|
0.6
|
Coal Production
(millions of tons)
|
|
0.9
|
|
1.1
|
|
0.2
|
|
0.4
|
|
6.7
|
|
5.4
|
Ending Inventory
(millions of tons)
|
|
0.1
|
|
0.1
|
|
—
|
|
—
|
|
0.4
|
|
0.5
|
Sales - Company
Produced (millions of tons)
|
|
1.0
|
|
1.1
|
|
0.2
|
|
0.4
|
|
6.6
|
|
5.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Per
Ton
|
|
$
|
70.50
|
|
$
|
85.77
|
|
$
|
72.76
|
|
$
|
60.13
|
|
$
|
60.77
|
|
$
|
65.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Inventory
Cost Per Ton
|
|
$
|
60.96
|
|
$
|
64.76
|
|
$
|
—
|
|
$
|
—
|
|
$
|
56.82
|
|
$
|
57.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Direct Costs
Per Ton
|
|
$
|
33.58
|
|
$
|
41.08
|
|
$
|
29.68
|
|
$
|
30.20
|
|
$
|
30.68
|
|
$
|
29.38
|
Royalty/Production
Taxes Per Ton
|
|
4.36
|
|
5.16
|
|
2.53
|
|
2.82
|
|
2.69
|
|
2.98
|
Direct Services to
Operations Per Ton
|
|
6.57
|
|
5.85
|
|
4.82
|
|
5.33
|
|
4.75
|
|
5.99
|
Retirement and
Disability Per Ton
|
|
4.57
|
|
5.57
|
|
3.63
|
|
2.93
|
|
3.55
|
|
2.77
|
DD&A Per
Ton
|
|
10.96
|
|
9.67
|
|
6.69
|
|
5.93
|
|
6.35
|
|
5.85
|
Total Production
Costs
|
|
$
|
60.04
|
|
$
|
67.33
|
|
$
|
47.35
|
|
$
|
47.21
|
|
$
|
48.02
|
|
$
|
46.97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Inventory Cost
Per Ton
|
|
$
|
(52.53)
|
|
$
|
(65.42)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(48.22)
|
|
$
|
(53.04)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cost Per Ton
Sold
|
|
$
|
61.29
|
|
$
|
67.18
|
|
$
|
47.35
|
|
$
|
47.21
|
|
$
|
48.30
|
|
$
|
47.45
|
Average Margin Per
Ton Sold
|
|
$
|
9.21
|
|
$
|
18.59
|
|
$
|
25.41
|
|
$
|
12.92
|
|
$
|
12.47
|
|
$
|
17.62
|
Addback: DD&A Per
Ton
|
|
$
|
10.96
|
|
$
|
9.67
|
|
$
|
6.69
|
|
$
|
5.93
|
|
$
|
6.35
|
|
$
|
5.85
|
Average Margin Per
Ton, before DD&A
|
|
$
|
20.17
|
|
$
|
28.26
|
|
$
|
32.10
|
|
$
|
18.85
|
|
$
|
18.82
|
|
$
|
23.47
|
Cash Flow before Cap.
Ex and DD&A ($ MM)
|
|
$
|
20
|
|
$
|
31
|
|
$
|
6
|
|
$
|
8
|
|
$
|
124
|
|
$
|
127
|
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:
In the third quarter, CONSOL sold 1 million
tons of Buchanan low-vol coal. Despite the recent decrease in the
BHP Billiton Mitsubishi Alliance (BMA) settlement price, Buchanan's
low cost position allows the mine to compete, and remain
profitable, in the current domestic and worldwide metallurgical
markets. CONSOL continues to ship low-vol coal to European
and South American end users. CONSOL does continue to focus on
expanding domestic metallurgical sales and recently secured
additional new contracts with U.S. customers for 2015.
High-Vol:
In the third quarter, CONSOL exported
200,000 tons of Bailey high-vol coal to existing end users in Korea
and Brazil. Prices for high-vol
remains more stable than other classes of metallurgical
coal. Customers continue to demand Bailey coal due to its
versatility, which allows it to compete as high-vol metallurgical,
pulverized coal injection (PCI) and high-Btu thermal coal.
Thermal:
As winter approaches, CONSOL believes that
domestic utility market demand, buoyed by utility inventories
remaining below normal levels, will support continued spot market
and term contracting activity. As CONSOL contracts Bailey
coal's 2015 production, the company is dedicated to placing the
tons in markets that provide the most value. For Q3 2014, CONSOL
completed sales to 6 different end users for 2.4 million tons and
is currently in negotiations for additional domestic and, in
collaboration with Xcoal, export business.
E&P Division Guidance:
Fourth quarter gas production, net to CONSOL, is expected to be
approximately 70 – 75 Bcfe. If achieved, this would result in 2014
production of approximately 235 – 240 Bcfe. CONSOL Energy continues
to expect its 2015 and 2016 annual gas production to grow by
30%.
CONSOL's hedging strategy and formulaic approach for its natural
gas portfolio requires entering into hedges that meet certain short
and long-term internal pricing parameters. Due to the
quantities and types of hedges in place during the quarter, as well
as the then-expected future gas prices, CONSOL's hedge position met
company requirements, and the company did not add any new hedges
during the quarter. 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
|
|
235-240
|
|
+30%
|
|
+30%
|
Volumes Hedged
(Bcf),as of 10/14/14
|
|
159.9*
|
|
82.6
|
|
75.3
|
Average Hedge Price
($/Mcf)
|
|
$
|
4.58
|
|
$
|
4.07
|
|
$
|
4.17
|
* Includes 2014
Actual Settlements of 118.2 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
|
|
|
|
|
|
|
|
|
|
Q4
2014
|
|
2015
|
|
2016
|
Columbia
(TCO)
|
|
|
|
|
|
|
Volume (Bcf)
|
|
10.7
|
|
35.9
|
|
39.4
|
Average Hedge Price
($/Mcf)
|
|
$
|
4.02
|
|
$
|
3.86
|
|
$
|
3.93
|
Dominion South
(DTI)
|
|
|
|
|
|
|
Volume
(Bcf)
|
|
1.7
|
|
-
|
|
-
|
Average Hedge Price
($/Mcf)
|
|
$
|
5.31
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Coal Division Guidance:
In coal, the lower end of the low-vol guidance range for 2014
has increased slightly to reflect new Atlantic market business,
which the company believes will be ongoing. This shift illustrates
the expansion of the Buchanan product into new markets. 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 range for 2014 has remained relatively
flat.
COAL DIVISION
GUIDANCE
|
|
|
|
Q4
2014
|
|
2014
|
|
2015
|
Est. Total Coal
Sales
|
|
8.0 - 8.4
|
|
32.3 -
32.7
|
|
31.0 -
35.0
|
Tonnage:
Firm
|
|
8.1
|
|
32.4
|
|
21.1
|
Price: Sold
(firm)
|
|
$
|
62.21
|
|
$
|
63.28
|
|
$
|
64.19
|
Est. Low-Vol Met
Sales
|
|
0.7 - 0.9
|
|
3.7 - 3.9
|
|
3.5 - 5.0
|
Tonnage:
Firm
|
|
0.7
|
|
3.7
|
|
1.0
|
Est. High-Vol Met
Sales
|
|
0.3
|
|
1.3
|
|
1.9
|
Tonnage:
Firm
|
|
0.2
|
|
1.2
|
|
0.3
|
Est. Thermal
Sales
|
|
7.0 - 7.2
|
|
27.3 -
27.5
|
|
25.6 -
28.1
|
Tonnage:
Firm
|
|
7.2
|
|
27.5
|
|
19.8
|
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 or
2015. 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
0.3 million tons for 2014. WAE has 0.5 million tons and 0.6 million
tons for all of 2014, and 2015, respectively.
|
Liquidity and Credit Ratings:
As of September 30, 2014, CONSOL
Energy had $2.0 billion in total
liquidity, which is comprised of $225.6
million of cash, $20.6 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 had no borrowings.
Outstanding letters of credit under the bank facility were
$264.5 million.
CONSOL Energy continues to lower its cost of capital: On
August 12, 2014, CONSOL closed on an
additional $250 million of its 5.875%
senior notes due 2022 at a price equal to $102.75 of the principal amount. CONSOL used the
proceeds of the sale of the additional notes to partially purchase
$235 million of principal of its
8.25% senior notes due 2020. This transaction will reduce annual
interest expense by almost $5
million, going forward.
CONSOL's liquidity in the third quarter was improved by
$204 million due to the receipt of
proceeds from the CONE Midstream IPO, as discussed previously.
CONSOL Energy remains on a path towards an investment grade
credit rating. The company has maintained strong total liquidity of
$2.0 billion as of September 30, 2014, which is relatively flat
compared to total liquidity of $2.1
billion at December 31, 2013.
CONSOL's credit metrics are improving as its debt to EBITDA
leverage ratio, less cash on hand, has fallen to 3.5x as of
September 30, 2014 from 4.0x at
December 31, 2013. As stated earlier,
CONSOL continues to manage its long-term liabilities. Retiree
medical and pension obligations have been reduced by over
$2.3 billion as compared to just
twelve months ago, which does not take into account the reduction
of $941 million related to the UMWA
multi-employer pension plan obligation assumed in the sale of the
five mines in December 2013. CONSOL
continues to invest within cash flows and limit short-term
borrowings through realizing gains in capital efficiency, asset
sales, and capturing value within our midstream assets.
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
|
|
|
September
30,
|
|
|
2014
|
|
2013
|
Net Loss Attributable
to CONSOL Energy Inc. Shareholders
|
|
$
|
(1,645)
|
|
$
|
(63,651)
|
|
|
|
|
|
Less: Net Loss
Attributable to Discontinued Operations, net of tax
|
|
—
|
|
(8,120)
|
Add: Interest
Expense
|
|
55,397
|
|
56,300
|
Less: Interest
Income
|
|
(527)
|
|
(4,300)
|
Add: Income
Taxes
|
|
(1,388)
|
|
68,858
|
Earnings Before
Interest & Taxes (EBIT)
|
|
51,837
|
|
49,087
|
|
|
|
|
|
Add:
Depreciation, Depletion & Amortization
|
|
148,665
|
|
117,730
|
|
|
|
|
|
Earnings Before
Interest, Taxes and DD&A (EBITDA) from Continuing
Operations
|
|
200,502
|
|
166,817
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Loss on Debt
Extinguishment
|
|
20,990
|
|
—
|
Long-Term Liability
Plan Changes
|
|
10,100
|
|
—
|
Pension
Settlement
|
|
4,785
|
|
6,296
|
Marcellus Title
Defects
|
|
—
|
|
12,984
|
Transaction
Fees
|
|
—
|
|
10,295
|
Bailey Structural
Incident Business Interruption Proceeds
|
|
—
|
|
(2,658)
|
Gain on Sale
Crowsnest Pass
|
|
—
|
|
(15,260)
|
Total Pre-tax
Adjustments
|
|
35,875
|
|
11,657
|
|
|
|
|
|
Adjusted Earnings
Before Interest, Taxes and DD&A (Adjusted EBITDA) from
Continuing Operations
|
|
$
|
236,377
|
|
$
|
178,474
|
Note: Income tax
effect of Total Pre-tax Adjustments was ($14,038) and ($1,979) for
the three months ended September 30, 2014 and September 30, 2013,
respectively. Adjusted net income is calculated as GAAP net loss of
$1,645 plus total pre-tax adjustments of $35,875, less the tax
effect of $14,038 equals $20,192.
|
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; 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.
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF INCOME
|
|
(Dollars in
thousands, except per share data)
|
Three Months
Ended
|
|
Nine Months
Ended
|
(Unaudited)
|
September
30,
|
|
September
30,
|
Revenues and Other
Income:
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Natural Gas, NGLs and
Oil Sales
|
$
|
257,358
|
|
$
|
192,781
|
|
$
|
753,399
|
|
$
|
531,859
|
Coal Sales
|
483,960
|
|
479,311
|
|
1,554,939
|
|
1,532,280
|
Other Outside
Sales
|
73,673
|
|
63,876
|
|
213,047
|
|
197,778
|
Gas Royalty Interests
and Purchased Gas Sales
|
18,815
|
|
17,113
|
|
68,773
|
|
51,109
|
Freight-Outside
Coal
|
2,497
|
|
9,579
|
|
22,551
|
|
31,492
|
Miscellaneous Other
Income
|
40,784
|
|
20,822
|
|
165,815
|
|
77,729
|
Gain on Sale of
Assets
|
7,529
|
|
19,863
|
|
12,615
|
|
52,208
|
Total Revenue and
Other Income
|
884,616
|
|
803,345
|
|
2,791,139
|
|
2,474,455
|
Costs and
Expenses:
|
|
|
|
|
|
|
|
Exploration and
Production Costs
|
|
|
|
|
|
|
|
Lease Operating
Expense
|
30,005
|
|
23,600
|
|
85,622
|
|
70,835
|
Transportation,
Gathering and Compression
|
68,234
|
|
46,699
|
|
179,813
|
|
144,002
|
Production, Ad
Valorem, and Other Fees
|
8,486
|
|
8,033
|
|
28,817
|
|
20,011
|
Direct Administrative
and Selling
|
14,060
|
|
11,725
|
|
39,216
|
|
34,615
|
Depreciation,
Depletion and Amortization
|
82,538
|
|
58,998
|
|
225,766
|
|
164,832
|
Exploration and
Production Related Other Costs
|
8,042
|
|
22,771
|
|
15,765
|
|
43,666
|
Production Royalty
Interests and Purchased Gas Costs
|
15,751
|
|
13,805
|
|
58,519
|
|
41,165
|
Other Corporate
Expenses
|
13,700
|
|
26,289
|
|
60,876
|
|
74,239
|
General and
Administrative
|
14,874
|
|
10,177
|
|
47,755
|
|
29,239
|
Total Exploration
and Production Costs
|
255,690
|
|
222,097
|
|
742,149
|
|
622,604
|
Coal
Costs
|
|
|
|
|
|
|
|
Operating and Other
Costs
|
339,216
|
|
328,393
|
|
1,013,606
|
|
993,342
|
Royalties and
Production Taxes
|
23,306
|
|
24,380
|
|
77,397
|
|
79,257
|
Direct Administrative
and Selling
|
10,479
|
|
11,608
|
|
33,589
|
|
34,744
|
Depreciation,
Depletion and Amortization
|
64,880
|
|
57,265
|
|
186,029
|
|
169,702
|
Freight
Expense
|
2,497
|
|
9,579
|
|
22,551
|
|
31,492
|
General and
Administrative Costs
|
10,434
|
|
8,607
|
|
33,397
|
|
27,946
|
Other Corporate
Expenses
|
10,114
|
|
11,145
|
|
41,444
|
|
43,056
|
Total Coal
Costs
|
460,926
|
|
450,977
|
|
1,408,013
|
|
1,379,539
|
Other
Costs
|
|
|
|
|
|
|
|
Miscellaneous
Operating Expense
|
92,974
|
|
75,439
|
|
266,601
|
|
272,346
|
General and
Administrative Costs
|
425
|
|
376
|
|
1,259
|
|
1,269
|
Depreciation,
Depletion and Amortization
|
1,247
|
|
1,467
|
|
3,885
|
|
4,303
|
Loss on Debt
Extinguishment
|
20,990
|
|
—
|
|
95,267
|
|
—
|
Interest
Expense
|
55,397
|
|
56,300
|
|
170,539
|
|
164,194
|
Total Other
Costs
|
171,033
|
|
133,582
|
|
537,551
|
|
442,112
|
Total Costs And
Expenses
|
887,649
|
|
806,656
|
|
2,687,713
|
|
2,444,255
|
(Loss) Earnings
Before Income Tax
|
(3,033)
|
|
(3,311)
|
|
103,426
|
|
30,200
|
Income
Taxes
|
(1,388)
|
|
68,858
|
|
8,315
|
|
97,531
|
(Loss) Income From
Continuing Operations
|
(1,645)
|
|
(72,169)
|
|
95,111
|
|
(67,331)
|
Income (Loss) From
Discontinued Operations, net
|
—
|
|
8,120
|
|
(5,687)
|
|
(11,352)
|
Net (Loss)
Income
|
(1,645)
|
|
(64,049)
|
|
89,424
|
|
(78,683)
|
Less: Net Loss
Attributable to Noncontrolling Interests
|
—
|
|
(398)
|
|
—
|
|
(942)
|
Net (Loss) Income
Attributable to CONSOL Energy Shareholders
|
$
|
(1,645)
|
|
$
|
(63,651)
|
|
$
|
89,424
|
|
$
|
(77,741)
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(CONTINUED)
|
|
(Dollars in
thousands, except per share data)
|
Three Months
Ended
|
|
Nine Months
Ended
|
(Unaudited)
|
September
30,
|
|
September
30,
|
(Loss) Earnings
Per Share
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Basic
|
|
|
|
|
|
|
|
(Loss) Income from
Continuing Operations
|
$
|
(0.01)
|
|
$
|
(0.31)
|
|
$
|
0.41
|
|
$
|
(0.29)
|
Income (Loss) from
Discontinued Operations
|
—
|
|
0.03
|
|
(0.02)
|
|
(0.05)
|
Total Basic (Loss)
Earnings Per Share
|
$
|
(0.01)
|
|
$
|
(0.28)
|
|
$
|
0.39
|
|
$
|
(0.34)
|
Dilutive
|
|
|
|
|
|
|
|
(Loss) Income from
Continuing Operations
|
$
|
(0.01)
|
|
$
|
(0.31)
|
|
$
|
0.41
|
|
$
|
(0.29)
|
Income (Loss) from
Discontinued Operations
|
—
|
|
0.03
|
|
(0.02)
|
|
(0.05)
|
Total Dilutive
(Loss) Earnings Per Share
|
$
|
(0.01)
|
|
$
|
(0.28)
|
|
$
|
0.39
|
|
$
|
(0.34)
|
|
|
|
|
|
|
|
|
Dividends Paid Per
Share
|
$
|
0.0625
|
|
$
|
0.125
|
|
$
|
0.1875
|
|
$
|
0.25
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
(Dollars in
thousands)
|
September
30,
|
|
September
30,
|
(Unaudited)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net (Loss)
Income
|
$
|
(1,645)
|
|
$
|
(64,049)
|
|
$
|
89,424
|
|
$
|
(78,683)
|
Other Comprehensive
Income (Loss):
|
|
|
|
|
|
|
|
Actuarially
Determined Long-Term Liability Adjustments (Net of tax: ($107,383),
($15,422), ($108,154), ($70,161))
|
184,154
|
|
24,980
|
|
185,475
|
|
113,641
|
Net Increase
(Decrease) in the Value of Cash Flow Hedges (Net of tax: ($25,722),
($8,536), $13,161, ($26,036))
|
39,151
|
|
13,246
|
|
(20,032)
|
|
40,400
|
Reclassification of Cash Flow Hedges from OCI to Earnings (Net of
tax: $12,084, $14,025, ($5,509), $36,551)
|
(19,510)
|
|
(24,354)
|
|
3,754
|
|
(56,595)
|
|
|
|
|
|
|
|
|
Other Comprehensive
Income
|
203,795
|
|
13,872
|
|
169,197
|
|
97,446
|
|
|
|
|
|
|
|
|
Comprehensive Income
(Loss)
|
202,150
|
|
(50,177)
|
|
258,621
|
|
18,763
|
|
|
|
|
|
|
|
|
Less: Comprehensive Loss Attributable to Noncontrolling
Interest
|
—
|
|
(398)
|
|
—
|
|
(942)
|
|
|
|
|
|
|
|
|
Comprehensive Income
(Loss) Attributable to CONSOL Energy Inc. Shareholders
|
$
|
202,150
|
|
$
|
(49,779)
|
|
$
|
258,621
|
|
$
|
19,705
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
(Unaudited)
|
|
|
|
(Dollars in
thousands)
|
September 30,
2014
|
|
December 31,
2013
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and Cash
Equivalents
|
$
|
225,563
|
|
|
$
|
327,420
|
|
Accounts and Notes
Receivable:
|
|
|
|
|
|
Trade
|
299,939
|
|
|
332,574
|
|
Notes
Receivable
|
—
|
|
|
25,861
|
|
Other
Receivables
|
382,652
|
|
|
243,973
|
|
Inventories
|
145,372
|
|
|
157,914
|
|
Deferred Income
Taxes
|
127,731
|
|
|
211,303
|
|
Recoverable Income
Taxes
|
41,971
|
|
|
10,705
|
|
Prepaid
Expenses
|
101,867
|
|
|
135,842
|
|
Total Current
Assets
|
1,325,095
|
|
|
1,445,592
|
|
Property, Plant and
Equipment:
|
|
|
|
|
|
Property, Plant and
Equipment
|
14,463,328
|
|
|
13,578,509
|
|
Less—Accumulated
Depreciation, Depletion and Amortization
|
4,499,344
|
|
|
4,136,247
|
|
Total Property,
Plant and Equipment—Net
|
9,963,984
|
|
|
9,442,262
|
|
Other
Assets:
|
|
|
|
|
|
Investment in
Affiliates
|
185,509
|
|
|
291,675
|
|
Notes
Receivable
|
—
|
|
|
125
|
|
Other
|
244,347
|
|
|
214,013
|
|
Total Other
Assets
|
429,856
|
|
|
505,813
|
|
TOTAL
ASSETS
|
$
|
11,718,935
|
|
|
$
|
11,393,667
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
(Unaudited)
|
|
|
|
(Dollars in
thousands, except per share data)
|
September 30,
2014
|
|
December 31,
2013
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
Payable
|
$
|
610,725
|
|
|
$
|
514,580
|
|
Current Portion of
Long-Term Debt
|
12,225
|
|
|
11,455
|
|
Other Accrued
Liabilities
|
610,704
|
|
|
565,697
|
|
Current Liabilities
of Discontinued Operations
|
12,992
|
|
|
28,239
|
|
Total Current
Liabilities
|
1,246,646
|
|
|
1,119,971
|
|
Long-Term
Debt:
|
|
|
|
|
|
Long-Term
Debt
|
3,236,172
|
|
|
3,115,963
|
|
Capital Lease
Obligations
|
43,150
|
|
|
47,596
|
|
Total Long-Term
Debt
|
3,279,322
|
|
|
3,163,559
|
|
Deferred Credits and
Other Liabilities:
|
|
|
|
|
|
Deferred Income
Taxes
|
395,025
|
|
|
242,643
|
|
Postretirement
Benefits Other Than Pensions
|
652,050
|
|
|
961,127
|
|
Pneumoconiosis
Benefits
|
111,514
|
|
|
111,971
|
|
Mine
Closing
|
321,776
|
|
|
320,723
|
|
Gas Well
Closing
|
180,520
|
|
|
175,603
|
|
Workers'
Compensation
|
73,398
|
|
|
71,468
|
|
Salary
Retirement
|
48,231
|
|
|
48,252
|
|
Reclamation
|
34,499
|
|
|
40,706
|
|
Other
|
121,355
|
|
|
131,355
|
|
Total Deferred
Credits and Other Liabilities
|
1,938,368
|
|
|
2,103,848
|
|
TOTAL
LIABILITIES
|
6,464,336
|
|
|
6,387,378
|
|
Stockholders'
Equity:
|
|
|
|
|
|
Common Stock, $.01
Par Value; 500,000,000 Shares Authorized, 230,177,923 Issued and
Outstanding at September 30, 2014; 229,145,736 Issued and
Outstanding at December 31, 2013
|
2,305
|
|
|
2,294
|
|
Capital in Excess of
Par Value
|
2,412,976
|
|
|
2,364,592
|
|
Preferred Stock,
15,000,000 shares authorized, None issued and
outstanding
|
—
|
|
|
—
|
|
Retained
Earnings
|
2,995,238
|
|
|
2,964,520
|
|
Accumulated Other
Comprehensive Loss
|
(155,920)
|
|
|
(325,117)
|
|
Total CONSOL
Energy Inc. Stockholders' Equity
|
5,254,599
|
|
|
5,006,289
|
|
TOTAL LIABILITIES
AND EQUITY
|
$
|
11,718,935
|
|
|
$
|
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
(Loss)
Income
|
|
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
|
—
|
|
—
|
|
89,424
|
|
—
|
|
89,424
|
Other Comprehensive
Income
|
—
|
|
—
|
|
—
|
|
169,197
|
|
169,197
|
Comprehensive
Income
|
—
|
|
—
|
|
89,424
|
|
169,197
|
|
258,621
|
Issuance of Common
Stock
|
11
|
|
13,392
|
|
—
|
|
—
|
|
13,403
|
Treasury Stock
Activity
|
—
|
|
—
|
|
(15,587)
|
|
—
|
|
(15,587)
|
Tax Benefit From
Stock-Based Compensation
|
—
|
|
2,478
|
|
—
|
|
—
|
|
2,478
|
Amortization of
Stock-Based Compensation Awards
|
—
|
|
32,514
|
|
—
|
|
—
|
|
32,514
|
Dividends ($0.1875
per share)
|
—
|
|
—
|
|
(43,119)
|
|
—
|
|
(43,119)
|
September 30,
2014
|
$
|
2,305
|
|
$
|
2,412,976
|
|
$
|
2,995,238
|
|
$
|
(155,920)
|
|
$
|
5,254,599
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(Dollars in
thousands)
|
Three Months
Ended
|
|
Nine Months
Ended
|
(Unaudited)
|
September
30,
|
|
September
30,
|
Operating
Activities:
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net (Loss)
Income
|
$
|
(1,645)
|
|
$
|
(64,049)
|
|
$
|
89,424
|
|
$
|
(78,683)
|
Adjustments to
Reconcile Net (Loss) Income to Net Cash Provided By Continuing
Operating Activities:
|
|
|
|
|
|
|
|
Net (Income) Loss
from Discontinued Operations
|
—
|
|
(8,120)
|
|
5,687
|
|
11,352
|
Depreciation,
Depletion and Amortization
|
148,665
|
|
117,730
|
|
415,680
|
|
338,837
|
Stock-Based
Compensation
|
7,009
|
|
9,379
|
|
32,514
|
|
44,026
|
Gain on Sale of
Assets
|
(7,529)
|
|
(19,863)
|
|
(12,615)
|
|
(52,208)
|
Loss on Debt
Extinguishment
|
20,990
|
|
—
|
|
95,267
|
|
—
|
Deferred Income
Taxes
|
(7,246)
|
|
(30,333)
|
|
6,540
|
|
(23,335)
|
Equity in Earnings of
Affiliates
|
(16,965)
|
|
(3,609)
|
|
(38,477)
|
|
(20,276)
|
Return on Equity
Investments
|
47,424
|
|
—
|
|
47,424
|
|
—
|
Changes in Operating
Assets:
|
|
|
|
|
|
|
|
Accounts and Notes
Receivable
|
(11,321)
|
|
(14,215)
|
|
(64,241)
|
|
11,145
|
Inventories
|
2,633
|
|
(8,772)
|
|
12,542
|
|
11,000
|
Prepaid
Expenses
|
(21,351)
|
|
(34,047)
|
|
3,178
|
|
(8,688)
|
Changes in Other
Assets
|
(27,766)
|
|
(3,752)
|
|
(14,339)
|
|
24,318
|
Changes in Operating
Liabilities:
|
|
|
|
|
|
|
|
Accounts
Payable
|
98,458
|
|
(5,017)
|
|
151,829
|
|
(18,487)
|
Accrued
Interest
|
43,181
|
|
50,257
|
|
32,698
|
|
50,184
|
Other Operating
Liabilities
|
41,761
|
|
126,602
|
|
116,474
|
|
122,429
|
Other
|
(23,212)
|
|
32,833
|
|
(8,480)
|
|
39,356
|
Net Cash Provided by
Continuing Operations
|
293,086
|
|
145,024
|
|
871,105
|
|
450,970
|
Net Cash Provided by
(Used in) Discontinued Operating Activities
|
(62)
|
|
50,585
|
|
(20,934)
|
|
138,029
|
Net Cash Provided by
Operating Activities
|
293,024
|
|
195,609
|
|
850,171
|
|
588,999
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
Capital
Expenditures
|
(355,312)
|
|
(313,675)
|
|
(1,174,607)
|
|
(1,021,127)
|
Change in Restricted
Cash
|
—
|
|
(12,263)
|
|
—
|
|
56,410
|
Proceeds from Sales
of Assets
|
8,061
|
|
357,012
|
|
141,136
|
|
464,638
|
Net Investments In
Equity Affiliates
|
147,532
|
|
(1,512)
|
|
108,532
|
|
(18,112)
|
Net Cash (Used in)
Provided by Investing Activities in Continuing
Operations
|
(199,719)
|
|
29,562
|
|
(924,939)
|
|
(518,191)
|
Net Cash Used in
Investing Activities in Discontinued Operations
|
—
|
|
(123,873)
|
|
—
|
|
(41,246)
|
Net Cash Used in
Investing Activities
|
(199,719)
|
|
(94,311)
|
|
(924,939)
|
|
(559,437)
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
(Payments on)
Proceeds from Short-Term Borrowings
|
—
|
|
(126,000)
|
|
(11,736)
|
|
47,000
|
Payments on
Miscellaneous Borrowings
|
(1,002)
|
|
(1,894)
|
|
(4,169)
|
|
(31,858)
|
Proceeds from
Securitization Facility
|
—
|
|
3,645
|
|
—
|
|
6,518
|
Proceeds from
Long-Term Borrowings
|
259,920
|
|
—
|
|
1,859,920
|
|
—
|
Payments on Long-Term
Borrowings
|
(259,901)
|
|
—
|
|
(1,843,866)
|
|
—
|
Tax Benefit from
Stock-Based Compensation
|
65
|
|
131
|
|
2,478
|
|
2,316
|
Dividends
Paid
|
(14,386)
|
|
(28,610)
|
|
(43,119)
|
|
(57,211)
|
Issuance of Common
Stock
|
169
|
|
201
|
|
13,403
|
|
2,698
|
Issuance of Treasury
Stock
|
—
|
|
609
|
|
—
|
|
609
|
Net Cash Used in
Financing Activities in Continuing Operations
|
(15,135)
|
|
(151,918)
|
|
(27,089)
|
|
(29,928)
|
Net Cash Used in
Financing Activities in Discontinued Operations
|
—
|
|
(234)
|
|
—
|
|
(432)
|
Net Cash Used in
Financing Activities
|
(15,135)
|
|
(152,152)
|
|
(27,089)
|
|
(30,360)
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
78,170
|
|
(50,854)
|
|
(101,857)
|
|
(798)
|
Cash and Cash
Equivalents at Beginning of Period
|
147,393
|
|
71,918
|
|
327,420
|
|
21,862
|
Cash and Cash
Equivalents at End of Period
|
$
|
225,563
|
|
$
|
21,064
|
|
$
|
225,563
|
|
$
|
21,064
|
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SOURCE CONSOL Energy Inc.