PITTSBURGH, Jan. 30, 2015 /PRNewswire/ -- CONSOL Energy Inc.
(NYSE: CNX) reported net income of $74
million for the quarter, or $0.32 per diluted share. This is compared to net
income of $738 million, or
$3.20 per diluted share from the
year-earlier quarter, which included income from discontinued
operations of $591 million. On a
non-GAAP basis, the company had adjusted net income1 in
the 2014 fourth quarter of $58
million, or $0.25 per share,
after adjusting for certain one-time items, which are listed in the
EBITDA reconciliation table. Adjusted EBITDA1 from
continuing operations was $262
million for the 2014 fourth quarter, compared to
$179 million in the year-earlier
quarter. Cash flow from operations in the just-ended quarter was
$87 million, as compared to
$70 million in the year-earlier
quarter.
CONSOL's E&P Division had another outstanding quarter by
achieving record production of 70.5 Bcfe, or an increase of 45%
from the 48.5 Bcfe produced in the year-earlier quarter. CONSOL's
annual 2014 production was 235.7 Bcfe, which exceeded its goal of
30% production growth over 2013. CONSOL Energy's annual gas
production guidance remains 30% growth for 2015 and 2016.
During the quarter, a midstream company that handles and
processes some of CONSOL's gas and liquids had a fatality on one of
their sites, during their operations. This tragedy unearthed
operational standards that led CONSOL to question the safety
procedures of the company. As a result, over the course of the
quarter CONSOL elected to shut-in pads serviced by this midstream
provider while safety processes and procedures were evaluated and
validated by CONSOL. As a result of this process, CONSOL estimated
that the shut-in pads accounted for 2.7 Bcfe worth of lost
production in the quarter. Operations are ramping-up in this area
and should be back to normal levels by the end of January.
"Even though we have set high operational and production targets
for the company, make no mistake about it, we are not willing to
compromise our number one core value of 'safety,' just to reach or
exceed operational goals," commented Nicholas J. DeIuliis, president and CEO.
"CONSOL's core values represent the foundation of this company, and
there is nothing more important than upholding them. I'm really
proud of our team and how they handled this situation, ultimately
demanding something better from this particular company."
Marcellus Shale production volumes in the 2014 fourth quarter
were 36.5 Bcfe, or 88% higher than the 19.4 Bcfe produced in the
2013 fourth quarter. Marcellus Shale costs were $2.83 per Mcfe in the just-ended quarter, which
is a $0.18 per Mcfe improvement from
the fourth quarter of 2013 costs of $3.01 per Mcfe. The company achieved all-in cash
costs of only $1.71 per Mcfe in the
Marcellus Shale.
CONSOL Energy's Utica Shale continues to become a bigger part of
the production mix, and in the 2014 fourth quarter, volumes were
7.1 Bcfe, up from 0.5 Bcfe in the year-earlier quarter. Utica Shale
costs were an impressive $2.24 per
Mcfe in the just-ended quarter, which is a substantial improvement
from the fourth quarter 2013. Rapidly increasing volumes and lower
gathering and transportation costs have contributed to lower unit
costs. The Utica Shale continues to benefit from higher-value
condensate and NGL production, which in the quarter was 1.0 Bcfe
and 1.9 Bcfe, respectively, up from negligible amounts in the
year-earlier quarter.
"Despite the current commodity price environment, CONSOL
continues to realize strong rates of return due to our tier one
asset base, which allows us to drive efficiency improvements and
continue to benefit from being a low-cost producer," commented
Nicholas J. DeIuliis, president and
CEO. "CONSOL will not only continue to manage through these types
of commodity cycles, but we will also capitalize on them as well
through share repurchase opportunities. Our strong balance sheet
and substantial liquidity position will help fuel these types of
opportunities."
CONSOL's Coal Division produced 8.0 million tons in the 2014
fourth quarter. In the Pennsylvania Operations, the Bailey Mine had
a record year in 2014 and annual production was 12.3 million tons,
which exceeded the mines previous annual production record of 11.1
million tons in 2005. In the Virginia Operations, CONSOL's premier
Buchanan Mine, again, repeated its stellar cost performance. Total
costs per ton sold at Buchanan Mine were $53.96 per ton in the just-ended quarter, or a
reduction of $12.64 per ton from the
year-earlier quarter.
In the fourth quarter, CONSOL received $270 million in cash proceeds from the sale of
assets and return on equity investments, including $252 million in cash proceeds from the sale of:
an industrial supply subsidiary, coal reserves in the Illinois Basin to two strategic buyers,
surface properties in Illinois,
and a 50% working interest in 3,433 gross Utica Shale acres in the
Moundsville, West Virginia area to
our joint venture partner, Noble Energy. These asset sales have a
total value to CONSOL of $294 million
when including the estimated value of future royalties, liabilities
assumed by the buyers and tax benefits. For 2014, CONSOL received a
total of $459 million in cash
proceeds from asset sales and return on equity investments,
including $252 million in cash
proceeds from the sale of assets referred to above. The balance of
cash proceeds in 2014 were primarily comprised of sale leaseback
transactions for mine shields and a payment from our joint venture
partner for their portion of the acquired acreage in a Marcellus
farm-in transaction. In addition to the total cash proceeds from
asset sales and return on equity investments in 2014, the company
also received $204 million of
proceeds from the initial public offering of CONE Midstream
Partners LP, of which $47 million is
included in return on equity investments disclosed above. The
company's asset sales program is ahead of schedule based on the
previously stated goal of selling $1.0
billion of assets over five years, ending in 2019.
In early December 2014, CONSOL
announced its intent to pursue transactions for a Thermal Coal MLP
and MetCo IPO. Since then, the company has hired advisers for the
Thermal Coal MLP and expects timing to remain around mid-year
2015. The company expects the MetCo IPO to occur around early
fourth quarter 2015.
The fourth quarter earnings results included the following
after-tax items related to recent transactions completed by the
company:
- The company recorded $12.3
million in net income related to the sales of certain
non-core assets as a part of its ongoing non-core asset divestiture
program.
- The company recorded $6.0 million
in net income related to the settlement of an insurance claim for a
mine fire that occurred in 2013.
- The company incurred a $2.2
million impairment to net income in association with pension
settlement accounting.
1The terms "adjusted net income" and "adjusted
EBITDA" are non-GAAP financial measures, which are defined and
reconciled to GAAP net income below, under the caption "Non-GAAP
Financial Measures."
E&P Division:
E&P Fourth Quarter Summary:
The tables below summarize the quarterly comparison of key
metrics for the E&P Division. Production increased by over 45%
in the just-ended quarter, when compared to the year-earlier
quarter, while revenue increased by over 30% for the same period.
These metrics enabled the E&P Division to post net income of
$36.5 million in the current quarter,
compared to net income of $1.9
million in the year-earlier quarter.
During the quarter, the E&P Division's capital expenditures
of $251.6 million helped the company
continue drilling and completion investments to achieve its
production growth targets. CONSOL's quarterly capital expenditures
were net of $82.3 million of drilling
carry from its joint venture partner in the Marcellus Shale and
$29.2 million of carry from its joint
venture partner in the Utica Shale. For the full year 2014, CONSOL
received $185.4 million and
$100.4 million from its joint venture
partners in the Marcellus and Utica shales, respectively.
CONSOL continued to successfully develop its core operating
areas in the Marcellus and Utica
shales throughout the quarter. In the Marcellus Shale, CONSOL
drilled four wells in the Philippi Field in Barbour County, West Virginia, and the company
was also able to confirm previous positive results at the Audra
Field along the corridor of the planned Tygart Valley pipeline.
CONSOL also drilled four Burkett wells in Washington County during the quarter. These
new Upper Devonian wells were drilled on existing Marcellus pads,
which allowed CONSOL to benefit from cost efficiencies associated
with stacked pays. In addition to Upper Devonian, a second stacked
pay opportunity is progressing in the dry Utica in Monroe
County, Ohio. The company is drilling its first pad with
four Utica wells and one wet
Marcellus well, and the company expects production in the third
quarter of 2015. In Marshall County, West
Virginia, CONSOL's joint venture partner is drilling a dry
Utica well on a seven well
Marcellus pad. CONSOL also plans to drill two additional dry
Utica wells: one in both
Greene and Westmoreland Counties, Pennsylvania. CONSOL's geological view, along
with existing industry data, will help delineate CONSOL's sizable
leasehold in West Virginia and
Pennsylvania for additional
stacked pay opportunities. CONSOL expects production for these
three dry Utica wells in the
second and third quarters of 2015.
CONSOL Energy and Columbia Energy Ventures, LLC (CEVCO) recently
completed a transaction involving the oil and gas rights in CEVCO's
Majorsville gas storage field. The storage field spans
approximately 20,000 acres and is located in Washington and Greene Counties, Pennsylvania, and Marshall and Ohio Counties, West Virginia. CONSOL has
the exclusive right to explore, drill, and develop oil, gas and
other hydrocarbons in the Utica Shale formation within the storage
field. CEVCO has a minor, non-operating participation interest in
the development of the Utica
rights in the storage field. According to CONSOL's analysis,
the storage field suggests that the company can drill up to 125
Utica wells from 23 pad sites.
E&P DIVISION
RESULTS — Quarter-to-Quarter Comparison
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Quarter
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Quarter
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Quarter
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Ended
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Ended
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Ended
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December 31,
2014
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December 31,
2013
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September 30,
2014
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Sales -
Gas
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$
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204.9
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$
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170.6
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$
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189.8
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Hedging Impact -
Gas
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24.2
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18.8
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21.4
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Sales -
Oil
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2.3
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3.4
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2.7
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Sales -
NGLs
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30.0
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11.3
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31.9
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Sales -
Condensate
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13.8
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2.5
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12.0
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Total Sales Revenue
($ MM)
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$
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275.2
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$
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206.6
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$
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257.8
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Net Income
Attributable to CONSOL Energy Shareholders
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$
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36.5
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$
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1.9
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$
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24.4
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Net Cash Provided By
Operating Activities ($ MM)
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$
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55.7
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$
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57.3
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$
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207.0
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Total Period
Production (Bcfe)
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70.5
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48.5
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64.9
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Average Daily
Production (MMcfe)
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766.6
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527.0
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705.6
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Capital Expenditures
($ MM)
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$
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251.6
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$
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299.5
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$
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281.6
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CONSOL's E&P division production in the quarter came from
the following categories:
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Quarter
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Quarter
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Quarter
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Ended
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Ended
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Ended
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December 31,
2014
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December 31,
2013
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% Increase/
(Decrease)
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September 30,
2014
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% Increase/
(Decrease)
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GAS
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Marcellus Sales
Volumes (Bcf)
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31.1
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18.2
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70.9
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%
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27.0
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15.2
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%
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CBM Sales Volumes
(Bcf)
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20.0
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20.3
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(1.5)
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%
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20.0
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—
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%
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Utica Sales Volumes
(Bcf)
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4.1
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0.4
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925.0
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%
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4.3
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(4.7)%
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Other Sales Volumes
(Bcf)
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6.8
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8.0
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(15.0)%
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7.3
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(6.8)%
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LIQUIDS*
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NGLs Sales Volumes
(Bcfe)
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6.7
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1.1
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509.1
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%
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5.3
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26.4
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%
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Oil Sales Volumes
(Bcfe)
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0.2
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0.2
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—
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%
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0.2
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—
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%
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Condensate Sales
Volumes (Bcfe)
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1.6
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0.3
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433.3
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%
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0.8
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100.0
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%
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TOTAL
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70.5
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48.5
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45.4
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%
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64.9
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8.6
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%
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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 represents only the gas portion
of production. When including liquids, the increase in Marcellus
volumes was 88%.
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Liquids production of 8.5 Bcfe, as a percentage of the total of
70.5 Bcfe, was approximately 12% in the just-ended quarter.
E&P PRICE AND
COST DATA PER MCFE — Quarter-to-Quarter Comparison:
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Quarter
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Quarter
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Quarter
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Ended
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Ended
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Ended
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(Per Mcfe)
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December 31,
2014
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December 31,
2013
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September 30,
2014
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Average Sales Price -
Gas
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$
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3.31
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$
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3.63
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$
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3.24
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Hedging Impact -
Gas
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$
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0.39
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$
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0.40
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$
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0.36
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Average Sales Price -
Oil*
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$
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13.47
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$
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15.63
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$
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15.02
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Average Sales Price -
NGLs*
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$
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4.50
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$
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10.09
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$
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6.00
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Average Sales Price -
Condensate*
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$
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8.08
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$
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12.81
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$
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14.66
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Average Sales Price -
Total Company
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$
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3.90
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$
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4.26
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$
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3.97
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Costs -
Production
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Lifting
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$
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0.46
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$
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0.53
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$
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0.46
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Ad Valorem, Severance
and Other Taxes
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0.15
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0.18
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0.13
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DD&A
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1.12
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1.20
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1.13
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Total Production
Costs
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$
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1.73
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$
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1.91
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$
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1.72
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Costs -
Gathering
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Transportation
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$
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0.70
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$
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0.60
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$
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0.62
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Operating
Costs
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0.41
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0.58
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0.43
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DD&A
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0.12
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0.16
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0.13
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Total Gathering
Costs
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$
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1.23
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$
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1.34
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$
|
1.18
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Gas Direct
Administrative Selling & Other
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$
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0.23
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$
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0.30
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$
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0.22
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Total
Costs
|
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$
|
3.19
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$
|
3.55
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$
|
3.12
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Margin
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$
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0.71
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$
|
0.71
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$
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0.85
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*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.
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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 the decline in commodity prices
and regional basis differentials. Helping to offset decreases to
gas prices is a greater proportion of liquids production, which
receives higher unit pricing.
The average sales price of $3.90
per Mcfe, when combined with unit costs of $3.19 per Mcfe, resulted in a margin of
$0.71 per Mcfe. This was flat when
compared to the year-earlier quarter, as unit cost improvements
helped to offset the decreases in price realizations from weaker
regional basis.
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 and Utica Shale production represented a much higher
proportion of total production.
All-in unit costs in the Marcellus Shale category were
$2.83 per Mcfe in the just-ended
quarter, or a decrease of $0.18 per
Mcfe from the $3.01 per Mcfe in the
year-earlier quarter. Marcellus Shale unit costs were improved in
part by volumes increasing 88%, when compared to the year-earlier
quarter. Partially offsetting Marcellus unit cost improvements were
slight increases in gathering and transportation costs associated
with fees related to liquids gas processing.
E&P Marketing and Transportation Update:
During the quarter, CONSOL's average gas sales price was
$3.90 per Mcfe. This gas equivalent
price includes a $0.20 per Mcfe
uplift from the sale of natural gas liquids, oil, and condensate.
Excluding the liquids uplift, CONSOL's gas price was $3.70 per Mcf for the fourth quarter, including
hedging. During the quarter, CONSOL produced liquids volumes of 8.5
Bcfe, or 12% of the company's total volumes. These liquids volumes
were over five times greater than the year-earlier quarter, which
then comprised 3% of the company's total volumes. The average
realized price for liquids for the fourth quarter of 2014 was
$32.40 per barrel. CONSOL expects to
continue to realize a liquids uplift benefit as additional wells
are brought online in the liquid-rich areas of the Marcellus and
Utica shales.
The company currently has a total of 1.4 Bcf per day of
effective firm pipeline transportation capacity. This
capacity supports the majority of projected volumes through 2016
and is composed of 0.8 Bcf per day of existing firm capacity,
contracted volumes of 0.4 Bcf per day under precedent agreements
with several pipeline projects that will be completed over the next
few years, and 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 $0.25 per MMBtu. The average demand cost for
existing and expected future firm capacity is approximately
$0.33 per MMBtu.
CONSOL Energy continues to develop a diversified portfolio of
firm transportation capacity to support its production growth. The
company is confident that its current contractual capacity,
combined with future pipeline expansion projects, will ensure that
CONSOL's growing gas production will flow onto the major interstate
pipelines, while diversifying basis exposure. Large electric and
gas utilities have shown a great deal of interest in these pipeline
projects. CONSOL is in active negotiations with various pipeline
companies regarding cost-effective transportation options that
reach attractive markets.
In addition to firm transportation capacity, CONSOL has
developed a processing portfolio that supports its increasing
production of wet gas. The company has agreements in place to
support the processing of 289 MMcf per day of gross gas volumes
growing to more than 399 MMcf per day by year-end 2015. Processing
supported by these agreements is expected to cover essentially all
wet gas production in 2015 and be adequate to process projected wet
gas production well into 2016. CONSOL plans to continue to layer in
processing capacity with existing and new midstream companies as
needed to support the liquids development plan.
CONSOL Energy continues to sell the majority of its natural gas
liquids through the large midstream companies that process our gas.
This approach allows CONSOL to take advantage of the processors'
transportation efficiencies and diversified markets. CONSOL's
processing contracts provide for the ability to take its NGLs "in
kind" and market them directly, if desired. The processed purity
products are ultimately sold to industrial, commercial, and
petrochemical markets.
CONSOL is also developing a diversified approach to managing
ethane. 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 the
company to meet pipeline quality specifications, diversify the
ethane portfolio, and maximize ethane pricing. CONSOL is actively
discussing future outlet opportunities with a number of ethane
customers and midstream companies.
Coal Division:
Coal Fourth Quarter Summary:
During the fourth quarter, CONSOL's Coal Division produced 8.0
million tons, which was in-line with previous quarter's guidance,
despite a roof fall on a longwall at Bailey Mine and continued
geological conditions at Enlow Fork, which ultimately resulted in
10 days of reduced production.
The Bailey Mine produced 2.7 million tons in the fourth quarter,
compared to 2.8 million tons produced in the year-earlier quarter.
The Enlow Fork Mine produced 2.6 million tons in the fourth
quarter, which is flat when compared to the year-earlier quarter.
Despite difficult geological conditions, Enlow Fork managed to
record total unit costs of $38.25 per
ton, which is the lowest unit cost across the Coal Division. Enlow
Fork's 2014 annual production was 10.6 million tons. The Harvey
Mine produced 1.1 million tons in the fourth quarter of 2014. The
Harvey Mine started longwall operations in late March of 2014, and
CONSOL expects normal levels of longwall production moving
forward.
The Buchanan Mine continued to operate on a reduced schedule of
two shifts per day and produced 1.0 million tons during the fourth
quarter, compared to 1.2 million tons produced in the year-earlier
quarter. The reduced schedule allowed the mine to optimize its cost
structure for decreased levels of production, which is reflected in
much lower all-in unit costs during the fourth quarter 2014 of
$53.96 per ton, compared to
$66.60 per ton in the year-earlier
quarter. The Buchanan Mine is able to quickly ramp up to the full
production capacity rate of 5.0 million tons per year when market
conditions warrant. During the quarter, and in conjunction with the
reduced operating schedule, CONSOL has continued maintenance work
on the production shaft, which is on-track for completion by late
2015, or early 2016.
Miller Creek's Twin Branch Mine
produced 0.5 million tons for the fourth quarter, which is a slight
increase when compared to the year-earlier quarter.
During the quarter, CONSOL's active coal operations generated
$187 million of cash before capital
expenditures.
COAL DIVISION
RESULTS BY PRODUCT CATEGORY - Quarter-To-Quarter
Comparison
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PA
Ops
|
|
PA
Ops
|
|
VA
Ops
|
|
VA
Ops
|
|
Other
|
|
Other
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Inventory
(millions of tons)
|
|
0.3
|
|
|
0.3
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
Coal Production
(millions of tons)
|
|
6.4
|
|
|
5.4
|
|
|
1.0
|
|
|
1.2
|
|
|
0.6
|
|
|
0.5
|
|
Ending Inventory
(millions of tons)
|
|
0.2
|
|
|
0.3
|
|
|
0.1
|
|
|
0.2
|
|
|
0.1
|
|
|
0.1
|
|
Sales - Company
Produced (millions of tons)
|
|
6.5
|
|
|
5.5
|
|
|
1.1
|
|
|
1.2
|
|
|
0.5
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Per
Ton
|
|
$
|
60.10
|
|
|
$
|
62.84
|
|
|
$
|
68.58
|
|
|
$
|
81.32
|
|
|
$
|
59.38
|
|
|
$
|
76.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Costs
Per Ton
|
|
$
|
32.35
|
|
|
$
|
35.69
|
|
|
$
|
39.08
|
|
|
$
|
51.13
|
|
|
$
|
46.58
|
|
|
$
|
54.60
|
|
Direct Administration
and Selling
|
|
1.10
|
|
|
1.44
|
|
|
1.19
|
|
|
1.35
|
|
|
0.98
|
|
|
0.70
|
|
Royalty and
Production Taxes
|
|
2.49
|
|
|
2.32
|
|
|
3.92
|
|
|
5.22
|
|
|
5.28
|
|
|
5.89
|
|
DD&A Per
Ton
|
|
6.67
|
|
|
5.44
|
|
|
9.77
|
|
|
8.90
|
|
|
3.26
|
|
|
5.26
|
|
Total Cost Per Ton
Sold
|
|
$
|
42.61
|
|
|
$
|
44.89
|
|
|
$
|
53.96
|
|
|
$
|
66.60
|
|
|
$
|
56.10
|
|
|
$
|
66.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Margin Per
Ton Sold
|
|
$
|
17.49
|
|
|
$
|
17.95
|
|
|
$
|
14.62
|
|
|
$
|
14.72
|
|
|
$
|
3.28
|
|
|
$
|
9.78
|
|
Addback: DD&A Per
Ton
|
|
$
|
6.67
|
|
|
$
|
5.44
|
|
|
$
|
9.77
|
|
|
$
|
8.90
|
|
|
$
|
3.26
|
|
|
$
|
5.26
|
|
Average Margin Per
Ton, before DD&A
|
|
$
|
24.16
|
|
|
$
|
23.39
|
|
|
$
|
24.39
|
|
|
$
|
23.62
|
|
|
$
|
6.54
|
|
|
$
|
15.04
|
|
Cash Flow before Cap.
Ex ($ MM)
|
|
$
|
157
|
|
|
$
|
129
|
|
|
$
|
27
|
|
|
$
|
28
|
|
|
$
|
3
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PA Ops includes
Bailey, Enlow Fork, and Harvey mines. VA Ops includes the Buchanan
Mine. Other includes the Miller Creek Complex. Sales and production
tons exclude CONSOL Energy's portion from equity affiliates and
discontinued operations. Total Operating Costs per Ton include
items such as labor and benefits, supplies, power, preparation
costs, project expenses, gas well plugging costs, subsidence costs,
permitting and compliance, asset retirement obligations and charges
for pension, retiree medical and other employee related long-term
liabilities. Direct Administration and Selling Per Ton include
items such as labor and benefits, marketing, and consulting. Sales
tons times Average Margin Per Ton, before DD&A is meant to
approximate the amount of cash generated for the PA Ops, VA Ops,
and Other 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:
Pennsylvania Operations:
During the quarter, CONSOL
sold 6.5 million tons to 45 different end users. CONSOL's customers
continue to demonstrate a steady demand for coal through term
contracts that vary in length. During the quarter, CONSOL
contracted for 1.4 million additional tons for 2015, bringing the
total firm and priced contracted position to 20.7 million tons, or
80% of estimated sales volumes based on the midpoint of guidance.
For 2015, Pennsylvania Operations coal was committed and priced
attractively under term or spot contracts. During the quarter,
CONSOL contracted for 1.0 million additional tons for 2016,
bringing the total firm and priced contracted position to 11.8
million tons, or 46% of expected sales volumes based on the
midpoint of guidance. CONSOL's contracted strategy allows the
company to hedge against the dynamics and potential downside of the
market.
In the fourth quarter, CONSOL exported 0.2 million tons of
Bailey high-vol coal to existing end users in Korea and
Brazil. In 2014, CONSOL retained a
footprint in the high-vol market shipping a total of 1.3 million
tons. Worldwide customers continue to demand Bailey coal, and the
versatility of the coal allows it to compete as high-vol
metallurgical, PCI and high-BTU thermal product.
Virginia Operations:
In the fourth quarter, CONSOL
sold 1.1 million tons of Buchanan low-vol coal. Buchanan's low unit
costs allow the mine to compete, and remain profitable, in the
current domestic and worldwide metallurgical markets. In 2014,
CONSOL added 11 new end users in 8 countries to its already strong
portfolio. Buchanan will continue to prosper as additional supply
cuts are announced and the market recovers. During the quarter,
CONSOL contracted for 0.6 million additional tons for 2015 and
expects strong demand in the first quarter of 2015, as well as
subsequent quarters.
Other:
In the fourth quarter, CONSOL sold 0.5 million
tons of Miller Creek coal, which is
flat when compared to the year-earlier quarter. During the quarter,
CONSOL contracted for 0.75 million additional tons for 2015 and for
2016 bringing the total firm and priced contracted position to 1.9
million tons for 2015, or 93% of estimated sales volumes based on
the midpoint of guidance, and 0.85 million tons for 2016, or 41% of
estimated sales volumes based on the midpoint of guidance.
E&P Division Guidance:
First quarter 2015 gas production, net to CONSOL, is expected to
be approximately 70 – 74 Bcfe, while annual 2015 production is
expected to be between 300 – 310 Bcfe, or 30% growth compared
to 2014 total production. CONSOL Energy continues to expect 2016
annual gas production to grow by 30%.
Total hedged natural gas production in the 2015 first quarter is
29.9 Bcf, at an average price of $4.05 per Mcf. CONSOL uses a dual-track approach
to its gas hedging. The company uses a program approach to add a
base level of hedges and layers in additional opportunistic hedges
set at a higher price threshold. During the fourth quarter, the
company raised its 2015 gas hedge position from 27% to 45%.
E&P DIVISION
GUIDANCE
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2016
|
|
Total Yearly
Production (Bcfe) / % growth
|
|
300-310
|
|
|
+30%
|
|
Volumes Hedged (Bcf),
as of 1/15/15
|
|
121.2
|
|
|
94.7
|
|
Average Hedge Price
($/Mcf)
|
|
$
|
4.05
|
|
|
$
|
4.11
|
|
|
|
|
|
|
|
|
|
|
The hedged gas volumes shown in the previous table include the
following NYMEX hedges that have basis hedged as well.
NYMEX PLUS BASIS
HEDGES
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2016
|
|
Columbia
(TCO)
|
|
|
|
|
|
|
Volume
(Bcf)
|
|
49.6
|
|
|
59.6
|
|
Average Hedge Price
($/Mcf)
|
|
$
|
3.84
|
|
|
$
|
3.86
|
|
Texas Eastern
(TETCO)
|
|
|
|
|
|
|
Volume
(Bcf)
|
|
3.5
|
|
|
-
|
|
Average Hedge Price
($/Mcf)
|
|
$
|
3.93
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Coal Division Guidance:
During the fourth quarter, Virginia Operations sales exceeded
previous guidance by around 200 thousand tons due to CONSOL
expanding into new markets and growing its base of end users. The
company believes that these new sales opportunities are ongoing and
are now reflecting in sales guidance for Virginia Operations.
COAL DIVISION
GUIDANCE
|
|
|
|
|
|
|
|
|
|
|
|
Q1
2015
|
|
2015
|
|
|
2016
|
|
Est. Total Coal
Sales
|
|
8.0 - 8.5
|
|
|
30.5 -
33.0
|
|
|
30.5 -
33.0
|
|
Tonnage:
Firm
|
|
7.3
|
|
|
24.2
|
|
|
13.4
|
|
Price: Sold
(firm)
|
|
$
|
62.24
|
|
|
$
|
63.06
|
|
|
$
|
63.12
|
|
Est. PA Operations
Sales
|
|
6.6 - 6.8
|
|
|
24.9 -
26.6
|
|
|
24.9 -
26.6
|
|
Tonnage:
Firm
|
|
5.9
|
|
|
20.7
|
|
|
11.8
|
|
Est. VA Operations
Sales
|
|
1.0 - 1.2
|
|
|
3.7 - 4.2
|
|
|
3.7 - 4.2
|
|
Tonnage:
Firm
|
|
0.9
|
|
|
1.6
|
|
|
0.8
|
|
Est. Other
Sales
|
|
0.4 - 0.5
|
|
|
1.9 - 2.2
|
|
|
1.9 - 2.2
|
|
Tonnage:
Firm
|
|
0.5
|
|
|
1.9
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 2015. Collared tons in 2016 are 0.9 million
tons, with a ceiling of $61.46 per ton and a floor of $57.54
per ton. Not included in the category breakdowns are the tons
from Western Allegheny Energy (WAE). WAE has 0.1 million tons for
Q1 2015, and 0.5 million tons and 0.4 million tons for all of 2015,
and 2016, respectively.
|
2015 Capital Budget:
In 2015, CONSOL expects to invest approximately $1.0 billion in its E&P Division, while
maintaining its 30% year-over-year production growth targets for
2015 and 2016. In addition to E&P capital, in 2015 CONSOL also
expects to invest $220 million in the
Coal Division: $160 million in
maintenance of production capital, and $60
million in land, safety, water, terminal operations, and
other miscellaneous categories.
The $1.0 billion E&P budget
consists of drilling and completion capital and midstream
investments to continue building out the Marcellus Shale gathering
systems, which are part of CONE Midstream Partners and will provide
future dropdown opportunities. As the year progresses, CONSOL will
allocate capital expenditures across its operating areas in
projects where the company can realize the highest rates of return
based on results, commodity prices, basis, and other factors. The
E&P capital budget does not include land, permitting, and
business development expenditures. The company expects liquids
volumes (NGL, condensates, and oil) to remain between 10%-15% as a
percentage of total production by the end of 2016.
"Due in part to continued efficiency improvements in drilling
and completions and service cost deflation, as well as high net
revenue interests (NRI's), strong economics in our areas of
operations support our production growth targets," commented
Nicholas J. DeIuliis, president and
CEO. "Despite a challenging commodity price environment, our 2015
capital budget will not only support our growth this year, but more
importantly, it will also support our 2016 production volumes as
well."
CONSOL and its joint venture partner, Noble Energy, are working
together to optimize the capital plan for 2015 in light of the
commodity price environment. The parties have not formally agreed
on a 2015 capital budget, and CONSOL could increase activity levels
in the Marcellus Shale beyond the levels contemplated by the
E&P budget if the commodity price environment improves.
Currently, drilling and completion capital is expected to be
weighted towards the liquids-rich areas.
Liquidity and Credit Ratings:
As of December 31, 2014, CONSOL
Energy had $2.0 billion in total
liquidity, which is comprised of $177.0
million of cash, $17.6 million
available to be borrowed under the accounts receivable
securitization facility, and $1.8 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
$244.4 million.
CONSOL's liquidity in the fourth quarter was improved by
$270 million primarily due to
proceeds from the sale of assets, which maintained the company's
positive cash position through year end.
CONSOL Energy has maintained strong total liquidity of
$2.0 billion as of December 31, 2014, which is relatively flat
compared to total liquidity of $2.1
billion at December 31, 2013.
CONSOL Energy's credit metrics continue to improve as its debt to
EBITDA leverage ratio, less cash on hand, has fallen to 3.2x as of
December 31, 2014 from 4.0x at
December 31, 2013 and from 3.5x just
a quarter earlier. Through two debt capital market transactions in
2014, the company lowered its weighted average interest rate on
long-term debt by 1.2%. CONSOL has limited its short-term
borrowings by investing within cash flows, realizing gains in
capital efficiency, asset sales, and capturing value within the
company's 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 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
|
|
|
December
31,
|
|
|
2014
|
|
|
2013
|
|
Net Income
Attributable to CONSOL Energy Inc. Shareholders
|
|
$
|
73,666
|
|
|
$
|
738,183
|
|
|
|
|
|
|
|
|
Less: Net Income
Attributable to Discontinued Operations, net of tax
|
|
—
|
|
|
(591,144)
|
|
Add: Interest
Expense
|
|
53,025
|
|
|
55,004
|
|
Less: Interest
Income
|
|
(476)
|
|
|
(188)
|
|
Add: Income
Taxes
|
|
6,032
|
|
|
(130,720)
|
|
Earnings Before
Interest & Taxes (EBIT)
|
|
132,247
|
|
|
71,135
|
|
|
|
|
|
|
|
|
Add:
Depreciation, Depletion & Amortization
|
|
155,520
|
|
|
122,285
|
|
|
|
|
|
|
|
|
Earnings Before
Interest, Taxes and DD&A (EBITDA) from Continuing
Operations
|
|
287,767
|
|
|
193,420
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
Gain on Sale of
Non-Core Assets
|
|
(19,830)
|
|
|
(15,273)
|
|
Blacksville Fire
Settlement
|
|
(9,750)
|
|
|
—
|
|
Pension
Settlement
|
|
3,603
|
|
|
1,949
|
|
Marcellus Title
Defects
|
|
—
|
|
|
1,295
|
|
Accelerated Bank
Fees
|
|
—
|
|
|
3,196
|
|
Transaction
Fees
|
|
—
|
|
|
3,496
|
|
PA Turnpike
Settlement
|
|
—
|
|
|
(9,000)
|
|
Total Pre-tax
Adjustments
|
|
(25,977)
|
|
|
(14,337)
|
|
|
|
|
|
|
|
|
Adjusted Earnings
Before Interest, Taxes and DD&A (Adjusted EBITDA)
from Continuing
Operations
|
|
$
|
261,790
|
|
|
$
|
179,083
|
|
|
|
|
|
|
|
|
|
|
Note: Income tax
effect of Total Pre-tax Adjustments was $9,871 and ($8,106) for the
three months ended December 31, 2014 and December 31, 2013,
respectively. Adjusted net income is calculated as GAAP net income
of $73,666 less total pre-tax adjustments of $25,977, plus the tax
effect of $9,871 equals $57,560.
|
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 an initial public offering of a
master limited partnership (MLP) owning certain of our thermal coal
assets or an initial public offering of the subsidiary owning
certain of our metallurgical coal assets (Metco); 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
and Metco 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.
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
(Dollars in
thousands, except per share data)
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Revenues and Other
Income:
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas, NGLs and
Oil Sales
|
$
|
274,718
|
|
|
$
|
205,842
|
|
|
$
|
1,028,117
|
|
|
$
|
737,701
|
|
Coal Sales
|
497,227
|
|
|
485,786
|
|
|
2,052,166
|
|
|
2,018,067
|
|
Other Outside
Sales
|
63,195
|
|
|
62,006
|
|
|
276,242
|
|
|
259,783
|
|
Gas Royalty Interests
and Purchased Gas Sales
|
22,654
|
|
|
18,624
|
|
|
91,427
|
|
|
69,733
|
|
Freight-Outside
Coal
|
5,597
|
|
|
3,946
|
|
|
28,148
|
|
|
35,438
|
|
Miscellaneous Other
Income
|
41,288
|
|
|
33,754
|
|
|
207,103
|
|
|
111,483
|
|
Gain on Sale of
Assets
|
30,986
|
|
|
15,273
|
|
|
43,601
|
|
|
67,480
|
|
Total Revenue and
Other Income
|
935,665
|
|
|
825,231
|
|
|
3,726,804
|
|
|
3,299,685
|
|
Costs and
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and
Production Costs
|
|
|
|
|
|
|
|
|
|
|
|
Lease Operating
Expense
|
32,769
|
|
|
25,766
|
|
|
118,391
|
|
|
96,601
|
|
Transportation,
Gathering and Compression
|
78,298
|
|
|
57,021
|
|
|
258,110
|
|
|
201,024
|
|
Production, Ad
Valorem, and Other Fees
|
10,601
|
|
|
8,665
|
|
|
39,418
|
|
|
28,676
|
|
Direct Administrative
and Selling
|
15,876
|
|
|
14,478
|
|
|
55,092
|
|
|
49,092
|
|
Depreciation,
Depletion and Amortization
|
88,615
|
|
|
66,977
|
|
|
314,381
|
|
|
231,809
|
|
Exploration and
Production Related Other Costs
|
7,589
|
|
|
17,440
|
|
|
23,356
|
|
|
61,104
|
|
Production Royalty
Interests and Purchased Gas Costs
|
18,666
|
|
|
16,700
|
|
|
77,185
|
|
|
57,865
|
|
Other Corporate
Expenses
|
25,623
|
|
|
21,295
|
|
|
86,499
|
|
|
95,535
|
|
General and
Administrative
|
16,292
|
|
|
9,807
|
|
|
64,047
|
|
|
39,047
|
|
Total Exploration
and Production Costs
|
294,329
|
|
|
238,149
|
|
|
1,036,479
|
|
|
860,753
|
|
Coal
Costs
|
|
|
|
|
|
|
|
|
|
|
|
Operating and Other
Costs
|
317,114
|
|
|
328,399
|
|
|
1,349,832
|
|
|
1,345,797
|
|
Royalties and
Production Taxes
|
23,493
|
|
|
22,871
|
|
|
100,890
|
|
|
102,128
|
|
Direct Administrative
and Selling
|
9,752
|
|
|
13,075
|
|
|
44,185
|
|
|
49,018
|
|
Depreciation,
Depletion and Amortization
|
66,509
|
|
|
54,667
|
|
|
254,914
|
|
|
226,639
|
|
Freight
Expense
|
5,597
|
|
|
3,946
|
|
|
28,148
|
|
|
35,438
|
|
General and
Administrative Costs
|
11,155
|
|
|
11,531
|
|
|
45,160
|
|
|
40,047
|
|
Other Corporate
Expenses
|
13,877
|
|
|
12,746
|
|
|
55,321
|
|
|
55,802
|
|
Total Coal
Costs
|
447,497
|
|
|
447,235
|
|
|
1,878,450
|
|
|
1,854,869
|
|
Other
Costs
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous
Operating Expense
|
60,583
|
|
|
68,090
|
|
|
307,236
|
|
|
315,180
|
|
General and
Administrative Costs
|
137
|
|
|
237
|
|
|
788
|
|
|
936
|
|
Depreciation,
Depletion and Amortization
|
396
|
|
|
641
|
|
|
1,896
|
|
|
2,674
|
|
Loss on Debt
Extinguishment
|
—
|
|
|
—
|
|
|
95,267
|
|
|
—
|
|
Interest
Expense
|
53,025
|
|
|
55,004
|
|
|
223,564
|
|
|
219,198
|
|
Total Other
Costs
|
114,141
|
|
|
123,972
|
|
|
628,751
|
|
|
537,988
|
|
Total Costs And
Expenses
|
855,967
|
|
|
809,356
|
|
|
3,543,680
|
|
|
3,253,610
|
|
Earnings Before
Income Tax
|
79,698
|
|
|
15,875
|
|
|
183,124
|
|
|
46,075
|
|
Income
Taxes
|
6,032
|
|
|
(130,720)
|
|
|
14,347
|
|
|
(33,189)
|
|
Income From
Continuing Operations
|
73,666
|
|
|
146,595
|
|
|
168,777
|
|
|
79,264
|
|
Income (Loss) From
Discontinued Operations, net
|
—
|
|
|
591,144
|
|
|
(5,687)
|
|
|
579,792
|
|
Net
Income
|
73,666
|
|
|
737,739
|
|
|
163,090
|
|
|
659,056
|
|
Less: Net Loss
Attributable to Noncontrolling Interests
|
—
|
|
|
(444)
|
|
|
—
|
|
|
(1,386)
|
|
Net Income
Attributable to CONSOL Energy Shareholders
|
$
|
73,666
|
|
|
$
|
738,183
|
|
|
$
|
163,090
|
|
|
$
|
660,442
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME
(CONTINUED)
(Unaudited)
(Dollars in
thousands, except per share data)
|
|
|
|
|
|
Three Months
Ended
|
|
For the Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Earnings (Loss)
Per Share
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
Income from
Continuing Operations
|
$
|
0.32
|
|
|
$
|
0.64
|
|
|
$
|
0.73
|
|
|
$
|
0.35
|
|
Income (Loss) from
Discontinued Operations
|
—
|
|
|
2.58
|
|
|
(0.02)
|
|
|
2.54
|
|
Total Basic
Earnings Per Share
|
$
|
0.32
|
|
|
$
|
3.22
|
|
|
$
|
0.71
|
|
|
$
|
2.89
|
|
Dilutive
|
|
|
|
|
|
|
|
|
|
|
|
Income from
Continuing Operations
|
$
|
0.32
|
|
|
$
|
0.64
|
|
|
$
|
0.73
|
|
|
$
|
0.35
|
|
Income (Loss) from
Discontinued Operations
|
—
|
|
|
2.56
|
|
|
(0.03)
|
|
|
2.52
|
|
Total Dilutive
Earnings Per Share
|
$
|
0.32
|
|
|
$
|
3.20
|
|
|
$
|
0.70
|
|
|
$
|
2.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Paid Per
Share
|
$
|
0.0625
|
|
|
$
|
0.125
|
|
|
$
|
0.25
|
|
|
$
|
0.375
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Dollars in
thousands)
|
|
|
|
|
|
Three Months
Ended
|
|
For the Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Net Income
|
$
|
73,666
|
|
|
$
|
737,739
|
|
|
$
|
163,090
|
|
|
$
|
659,056
|
|
Other Comprehensive
Income:
|
|
|
|
|
|
|
|
|
|
|
|
Actuarially
Determined Long-Term Liability
Adjustments (Net of tax:
$47,326, ($206,767), ($60,828),
($276,928)
|
(95,010)
|
|
|
342,852
|
|
|
90,465
|
|
|
456,493
|
|
Net Increase in the
Value of Cash Flow
Hedge (Net of tax: ($68,928), ($3,371),
($55,767), ($29,407))
|
117,348
|
|
|
5,231
|
|
|
97,316
|
|
|
45,631
|
|
Reclassification of
Cash Flow Hedges
from Other Comprehensive Income to
Earnings (Net of tax: $15,974, $17,439,
$10,465, $53,990)
|
(22,042)
|
|
|
(23,304)
|
|
|
(18,288)
|
|
|
(79,899)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive
Income
|
296
|
|
|
324,779
|
|
|
169,493
|
|
|
422,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
Income
|
73,962
|
|
|
1,062,518
|
|
|
332,583
|
|
|
1,081,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net Loss
Attributable to
Noncontrolling Interests
|
—
|
|
|
(444)
|
|
|
—
|
|
|
(1,386)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
Attributable to
CONSOL Energy Inc. Shareholders
|
$
|
73,962
|
|
|
$
|
1,062,962
|
|
|
$
|
332,583
|
|
|
$
|
1,082,667
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(Unaudited)
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2014
|
|
|
December 31,
2013
|
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and Cash
Equivalents
|
$
|
176,989
|
|
|
$
|
327,420
|
|
Accounts and Notes
Receivable:
|
|
|
|
|
|
Trade
|
259,817
|
|
|
332,574
|
|
Notes
Receivable
|
—
|
|
|
25,861
|
|
Other
Receivables
|
347,146
|
|
|
243,973
|
|
Inventories
|
101,873
|
|
|
157,914
|
|
Deferred Income
Taxes
|
66,569
|
|
|
211,303
|
|
Recoverable Income
Taxes
|
20,401
|
|
|
10,705
|
|
Prepaid
Expenses
|
193,555
|
|
|
135,842
|
|
Total Current
Assets
|
1,166,350
|
|
|
1,445,592
|
|
Property, Plant and
Equipment:
|
|
|
|
|
|
Property, Plant and
Equipment
|
14,674,777
|
|
|
13,578,509
|
|
Less—Accumulated
Depreciation, Depletion and Amortization
|
4,512,305
|
|
|
4,136,247
|
|
Total Property,
Plant and Equipment—Net
|
10,162,472
|
|
|
9,442,262
|
|
Other
Assets:
|
|
|
|
|
|
Investment in
Affiliates
|
152,958
|
|
|
291,675
|
|
Notes
Receivable
|
—
|
|
|
125
|
|
Other
|
277,750
|
|
|
214,013
|
|
Total Other
Assets
|
430,708
|
|
|
505,813
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
$
|
11,759,530
|
|
|
$
|
11,393,667
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(Unaudited)
(Dollars in
thousands, except per share data)
|
|
|
|
|
|
|
|
December 31,
2014
|
|
|
December 31,
2013
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts
Payable
|
$
|
531,973
|
|
|
$
|
514,580
|
|
Current Portion of
Long-Term Debt
|
13,016
|
|
|
11,455
|
|
Other Accrued
Liabilities
|
602,972
|
|
|
565,697
|
|
Current Liabilities
of Discontinued Operations
|
—
|
|
|
28,239
|
|
Total Current
Liabilities
|
1,147,961
|
|
|
1,119,971
|
|
Long-Term
Debt:
|
|
|
|
|
|
Long-Term
Debt
|
3,236,422
|
|
|
3,115,963
|
|
Capital Lease
Obligations
|
39,456
|
|
|
47,596
|
|
Total Long-Term
Debt
|
3,275,878
|
|
|
3,163,559
|
|
Deferred Credits and
Other Liabilities:
|
|
|
|
|
|
Deferred Income
Taxes
|
330,116
|
|
|
242,643
|
|
Postretirement
Benefits Other Than Pensions
|
703,680
|
|
|
961,127
|
|
Pneumoconiosis
Benefits
|
116,941
|
|
|
111,971
|
|
Mine
Closing
|
306,789
|
|
|
320,723
|
|
Gas Well
Closing
|
175,369
|
|
|
175,603
|
|
Workers'
Compensation
|
75,947
|
|
|
71,468
|
|
Salary
Retirement
|
109,956
|
|
|
48,252
|
|
Reclamation
|
33,788
|
|
|
40,706
|
|
Other
|
158,171
|
|
|
131,355
|
|
Total Deferred
Credits and Other Liabilities
|
2,010,757
|
|
|
2,103,848
|
|
TOTAL
LIABILITIES
|
6,434,596
|
|
|
6,387,378
|
|
Stockholders'
Equity:
|
|
|
|
|
|
Common Stock, $.01
Par Value; 500,000,000 Shares Authorized, 230,265,463 Issued
and
Outstanding at December 31, 2014; 229,145,736 Issued and
Outstanding at December 31,
2013
|
2,306
|
|
|
2,294
|
|
Capital in Excess of
Par Value
|
2,424,102
|
|
|
2,364,592
|
|
Preferred Stock,
15,000,000 Shares Authorized, None Issued and
Outstanding
|
—
|
|
|
—
|
|
Retained
Earnings
|
3,054,150
|
|
|
2,964,520
|
|
Accumulated Other
Comprehensive Loss - Continuing Operations
|
(155,624)
|
|
|
(325,117)
|
|
Common Stock in
Treasury, at Cost—No Shares at December 31, 2014 and
2013
|
—
|
|
|
—
|
|
Total CONSOL
Energy Inc. Stockholders' Equity
|
5,324,934
|
|
|
5,006,289
|
|
TOTAL LIABILITIES
AND EQUITY
|
$
|
11,759,530
|
|
|
$
|
11,393,667
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(Dollars in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Capital in
Excess
of Par
Value
|
|
Retained
Earnings
(Deficit)
|
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
|
Common
Stock in
Treasury
|
|
Total
CONSOL
Energy Inc.
Stockholders'
Equity
|
December 31,
2013
|
$
|
2,294
|
|
|
$
|
2,364,592
|
|
|
$
|
2,964,520
|
|
|
$
|
(325,117)
|
|
|
$
|
—
|
|
|
$
|
5,006,289
|
|
Net Income
|
—
|
|
|
—
|
|
|
163,090
|
|
|
—
|
|
|
—
|
|
|
163,090
|
|
Gas Cash Flow Hedge
(Net of ($45,302) Tax)
|
—
|
|
|
—
|
|
|
—
|
|
|
79,028
|
|
|
—
|
|
|
79,028
|
|
Actuarially
Determined Long-Term Liability Adjustments
(Net of ($60,828) Tax)
|
—
|
|
|
—
|
|
|
—
|
|
|
90,465
|
|
|
—
|
|
|
90,465
|
|
Comprehensive
Income
|
—
|
|
|
—
|
|
|
163,090
|
|
|
169,493
|
|
|
—
|
|
|
332,583
|
|
Issuance of Treasury
Stock
|
—
|
|
|
—
|
|
|
(15,954)
|
|
|
—
|
|
|
—
|
|
|
(15,954)
|
|
Issuance of Common
Stock
|
12
|
|
|
15,004
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,016
|
|
Tax Benefit from
Stock-Based Compensation
|
—
|
|
|
2,629
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,629
|
|
Amortization of
Stock-Based Compensation Awards
|
—
|
|
|
41,877
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41,877
|
|
Dividends ($0.25 per
share)
|
—
|
|
|
—
|
|
|
(57,506)
|
|
|
—
|
|
|
—
|
|
|
(57,506)
|
|
December 31,
2014
|
$
|
2,306
|
|
|
$
|
2,424,102
|
|
|
$
|
3,054,150
|
|
|
$
|
(155,624)
|
|
|
$
|
—
|
|
|
$
|
5,324,934
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
(Dollars in
Thousands)
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Operating
Activities:
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Net Income
|
|
$
|
73,666
|
|
|
$
|
737,739
|
|
|
$
|
163,090
|
|
|
$
|
659,056
|
|
Adjustments to
Reconcile Net Income to Net Cash Provided By Continuing
Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Income) Loss from Discontinued Operations
|
|
—
|
|
|
(591,144)
|
|
|
5,687
|
|
|
(579,792)
|
|
Depreciation,
Depletion and Amortization
|
|
155,520
|
|
|
122,285
|
|
|
571,191
|
|
|
461,122
|
|
Stock-Based
Compensation
|
|
9,358
|
|
|
12,969
|
|
|
41,877
|
|
|
56,987
|
|
Gain on Sale of
Assets
|
|
(30,986)
|
|
|
(15,273)
|
|
|
(43,601)
|
|
|
(67,480)
|
|
Loss on Debt
Extinguishment
|
|
—
|
|
|
—
|
|
|
95,267
|
|
|
—
|
|
Deferred Income
Taxes
|
|
(6,823)
|
|
|
(5,679)
|
|
|
(282)
|
|
|
(29,014)
|
|
Return on Equity
Investment
|
|
54,750
|
|
|
—
|
|
|
102,174
|
|
|
—
|
|
Equity in Earnings of
Affiliates
|
|
(11,314)
|
|
|
(12,857)
|
|
|
(49,791)
|
|
|
(33,133)
|
|
Changes in Operating
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts and Notes
Receivable
|
|
(33,007)
|
|
|
124,825
|
|
|
(97,248)
|
|
|
135,970
|
|
Inventories
|
|
7,391
|
|
|
1,894
|
|
|
19,933
|
|
|
12,894
|
|
Prepaid
Expenses
|
|
(2,810)
|
|
|
5,469
|
|
|
368
|
|
|
(3,219)
|
|
Changes in Other
Assets
|
|
14,977
|
|
|
5,489
|
|
|
638
|
|
|
31,146
|
|
Changes in Operating
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
Payable
|
|
(124,364)
|
|
|
(81,457)
|
|
|
27,465
|
|
|
(99,944)
|
|
Accrued
Interest
|
|
(42,566)
|
|
|
(50,271)
|
|
|
(9,868)
|
|
|
(87)
|
|
Other Operating
Liabilities
|
|
68,810
|
|
|
(161,806)
|
|
|
185,283
|
|
|
(39,377)
|
|
Other
|
|
(33,001)
|
|
|
20,502
|
|
|
(41,477)
|
|
|
48,441
|
|
Net Cash Provided by
Continuing Operations
|
|
99,601
|
|
|
112,685
|
|
|
970,706
|
|
|
553,570
|
|
Net Cash (Used In)
Provided by Discontinued Operating Activities
|
|
(12,992)
|
|
|
(42,908)
|
|
|
(33,926)
|
|
|
105,206
|
|
Net Cash Provided by
Operating Activities
|
|
86,609
|
|
|
69,777
|
|
|
936,780
|
|
|
658,776
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
|
(318,818)
|
|
|
(482,722)
|
|
|
(1,493,425)
|
|
|
(1,496,056)
|
|
Changes in Restricted
Cash
|
|
—
|
|
|
12,263
|
|
|
—
|
|
|
68,673
|
|
Proceeds from Sales
of Assets
|
|
215,700
|
|
|
19,367
|
|
|
356,836
|
|
|
483,969
|
|
Investments in Equity
Affiliates
|
|
(13,325)
|
|
|
(17,600)
|
|
|
95,207
|
|
|
(35,712)
|
|
Net Cash Used in
Continuing Operations
|
|
(116,443)
|
|
|
(468,692)
|
|
|
(1,041,382)
|
|
|
(979,126)
|
|
Net Cash Provided by
Discontinued Investing Activities
|
|
—
|
|
|
826,148
|
|
|
—
|
|
|
777,145
|
|
Net Cash (Used in)
Provided By Investing Activities
|
|
(116,443)
|
|
|
357,456
|
|
|
(1,041,382)
|
|
|
(201,981)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments on
Short-Term Borrowings
|
|
—
|
|
|
(47,000)
|
|
|
—
|
|
|
—
|
|
(Payments on)
Proceeds from Miscellaneous Borrowings
|
|
(6,117)
|
|
|
292
|
|
|
(22,022)
|
|
|
(31,544)
|
|
Payments on
Securitization Facility
|
|
—
|
|
|
(44,364)
|
|
|
—
|
|
|
(37,846)
|
|
Payments on Long-Term
Notes, including Redemption Premium
|
|
—
|
|
|
—
|
|
|
(1,843,866)
|
|
|
—
|
|
Proceeds from
Issuance of Long-Term Notes
|
|
—
|
|
|
—
|
|
|
1,859,920
|
|
|
—
|
|
Tax Benefit from
Stock-Based Compensation
|
|
151
|
|
|
613
|
|
|
2,629
|
|
|
2,929
|
|
Dividends
Paid
|
|
(14,387)
|
|
|
(28,621)
|
|
|
(57,506)
|
|
|
(85,832)
|
|
Proceeds from
Issuance of Common Stock
|
|
1,613
|
|
|
1,029
|
|
|
15,016
|
|
|
3,727
|
|
Issuance of Treasury
Stock
|
|
—
|
|
|
(2,760)
|
|
|
—
|
|
|
(2,151)
|
|
Net Cash Used in
Continuing Operations
|
|
(18,740)
|
|
|
(120,811)
|
|
|
(45,829)
|
|
|
(150,717)
|
|
Net Cash Used in
Discontinued Financing Activities
|
|
—
|
|
|
(66)
|
|
|
—
|
|
|
(520)
|
|
Net Cash Used in
Financing Activities
|
|
(18,740)
|
|
|
(120,877)
|
|
|
(45,829)
|
|
|
(151,237)
|
|
Net (Decrease)
Increase in Cash and Cash Equivalents
|
|
(48,574)
|
|
|
306,356
|
|
|
(150,431)
|
|
|
305,558
|
|
Cash and Cash
Equivalents at Beginning of Period
|
|
225,563
|
|
|
21,064
|
|
|
327,420
|
|
|
21,862
|
|
Cash and Cash
Equivalents at End of Period
|
|
$
|
176,989
|
|
|
$
|
327,420
|
|
|
$
|
176,989
|
|
|
$
|
327,420
|
|
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SOURCE CONSOL Energy Inc.