PITTSBURGH, Oct. 27, 2015 /PRNewswire/ -- CONSOL Energy
Inc. (NYSE: CNX) reported net income attributable to CONSOL Energy
shareholders of $119 million for the
quarter, or $0.52 per diluted share.
This compares to a net loss attributable to CONSOL Energy
shareholders of $2 million, or
($0.01) per diluted share from the
year-earlier quarter. EBITDA attributable to CONSOL Energy
shareholders was $374 million for the
2015 third quarter, compared to $201
million in the year-earlier quarter.
After adjusting for certain unusual items, which are listed in
the EBITDA reconciliation table, the company had an adjusted net
loss1 in the 2015 third quarter of $64 million, or ($0.28) per share. Adjusted EBITDA1
attributable to CONSOL Energy shareholders was $136 million for the 2015 third quarter, compared
to $236 million in the year-earlier
quarter. Cash flow from operations in the just-ended quarter was
$110 million, compared to
$293 million in the year-earlier
quarter.
The third quarter earnings results included the following
pre-tax items related to recent transactions:
- Recorded a $100.9 million benefit
related to changes in our retiree medical (OPEB) plan;
- Recorded a $99.1 million
unrealized gain on commodity derivative instruments;
- Recorded a $48.5 million gain on
the sale of our 49% interest in the Western Allegheny Energy (WAE)
joint venture with Rosebud Mining Company;
- Recorded $7.7 million in
severance expense; and
- Recorded $3.1 million in pension
settlement expense.
"Despite depressed commodity prices, CONSOL remains focused on
achieving our free cash flow base plan over the next 15 months,"
commented Nicholas J. DeIuliis,
president and CEO. "During the quarter, we beat production targets,
locked in a significant percentage of our revenues for 2016 with
additional gas hedges and multi-year coal contracts, significantly
reduced operating costs, corporate overhead, and legacy
liabilities, and accelerated our asset sale monetization program.
These steps provide increased confidence in our ability to achieve
our free cash flow base plan that we highlighted during our second
quarter 2015 earnings call, and we are hard at work with multiple
processes underway to monetize additional assets this year and into
2016. Expected proceeds will go towards reducing debt to help
accelerate the separation of our Coal and E&P Divisions."
CONSOL's E&P Division achieved record production of 86.1
Bcfe, or an increase of 33% from the 64.9 Bcfe produced in the
year-earlier quarter. CONSOL is increasing the lower end of its
2015 annual gas production guidance by 5 Bcfe to 325-330 Bcfe, and
the company expects approximately 20% annual gas production growth
for 2016. The E&P Division's total unit costs declined during
the quarter to $2.63 per Mcfe,
compared to $3.12 per Mcfe during the
year-earlier quarter. Due to continued efficiency improvements,
reductions in service costs and consumables, and the optimization
of support personnel through zero-based budgeting, the E&P
Division expects further reductions to capital intensity and total
unit costs through 2016.
Marcellus Shale production volumes in the 2015 third quarter
were 44.9 Bcfe, or 46% higher than the 30.7 Bcfe produced in the
2014 third quarter. Marcellus Shale costs were $2.57 per Mcfe in the just-ended quarter, which
is a $0.12 per Mcfe improvement from
the third quarter of 2014 costs of $2.69 per Mcfe. The company achieved all-in cash
costs of $1.62 per Mcfe in the
Marcellus Shale.
CONSOL Energy's Utica Shale production volumes in the 2015 third
quarter were 15.3 Bcfe, up from 6.7 Bcfe in the year-earlier
quarter. Utica Shale costs were $2.14
per Mcfe in the just-ended quarter, which is a $0.23 per Mcfe improvement from the third quarter
of 2014 costs of $2.37 per Mcfe.
CONSOL Energy's Switz 6 pad in Eastern
Monroe County, Ohio, is currently under flowback directly to
sales. The Switz-6D well recently showcased a 44.7 MMcf per day
24-hour flow test to sales at an average flowing casing pressure of
6,835 psi. The Switz-6D well had a lateral length of approximately
9,800 feet. The Switz-6 pad consists of four dry Utica Shale wells
and one wet Marcellus Shale well with average Utica lateral lengths of 8,800 feet and a
Marcellus lateral length of 6,200 feet. CONSOL owns approximately
13,000 contiguous net acres in Monroe
County, Ohio.
CONSOL Energy maintains its 2016 E&P capital budget of
approximately $400-$500 million,
which includes $50 million for
midstream capital. CONSOL expects fourth quarter 2015 E&P
capital to decline significantly, when compared to the previous
three quarters, due to the company laying down all operated rigs
late within the third quarter. The company expects to maintain a
consistent completion schedule of drilled uncompleted wells through
2016.
CONSOL's Coal Division produced 7.3 million tons in the 2015
third quarter, compared to 7.8 million tons in the year-earlier
quarter. In the Virginia Operations, the company's Buchanan Mine
saw metallurgical coal prices continue to decline. The Virginia
Operations average sales price per ton decreased during the quarter
to $51.82 per ton, compared to
$70.57 per ton from the year-earlier
quarter. The Pennsylvania Operations average sales price per ton
decreased during the quarter to $56.99 per ton, compared to $61.35 per ton from the year-earlier quarter.
However, compared to the second quarter of 2015, the Pennsylvania
Operations average sales price per ton slightly increased due, in
part, to lower exported spot sales in the third quarter.
"A testament to our premium assets and our coal marketing team,
CONSOL continues to see a tremendous amount of contracting success
in, what continues to be, a brutal coal environment," commented
Nicholas J. DeIuliis, president and
CEO. "The company now has a 2016 committed position of
approximately 74% of total estimated Pennsylvania Operations sales
tons. As highlighted by CNXC, the company now has in place
multi-year commitments that secure CONSOL as the anchor supplier to
the largest, most efficient, and most environmentally compliant
coal power plants in the PJM and SERC regions. These power plants
are expected to operate at high capacity factors for the coming
years. In addition, CONSOL has secured multi-year commitments with
key power plants in the upper Midwest and Southeast regions, which
are markets that have historically been thought of as the domain of
the Illinois, Central Appalachian,
and Powder River Basins."
The benefit related to changes in CONSOL Energy's retiree
medical (OPEB) plan resulted from recent plan amendments, which
will benefit the company on a recurring basis through the
accelerated amortization of deferred gains associated with the
plan. Due to CONSOL actively managing the OPEB liability, these
amendments will result in lower operating and other coal costs in
2015, as well as lower future cash payments for OPEB. Beyond
year-end 2015, CONSOL will benefit, indefinitely, through lower
cash payments related to these liabilities by $15-$20 million per year.
The unrealized gain on commodity derivative instruments
represents changes in fair value of all existing gas commodity
hedges on a mark-to-market basis.
During the third quarter, CONSOL Energy sold its 49%
interest in WAE, which resulted in a recorded gain. The sale
included the conveyance of 63 million tons of coal reserves, and
the transaction closed on September 30, 2015.
Severance payments resulted from zero-based budgeting and
department and employee realignments, and the company does not
expect additional severance payments in future quarters.
The pension settlement expense occurs when the lump sum
distributions made for a given plan year exceed the total of the
service and interest costs for that same plan year. CONSOL expects
between $15-$20 million of pension
settlement expense in the fourth quarter of 2015 resulting from
anticipated lump sum distributions.
E&P Division:
E&P Third Quarter Summary:
Production increased by 33% in the just-ended quarter, when
compared to the year-earlier quarter. Despite increased production,
total quarterly outside sales revenue decreased by $56.0 million for the same period due to
depressed commodity prices. During the quarter, due to oversupply
within the region, natural gas liquids (NGLs) saw significant price
degradation, which, in part, contributed to decreased sales
revenue. Despite a reduction in revenue, the E&P Division
realized net income of $30.3 million
in the third quarter of 2015, compared to net income of
$24.4 million in the year earlier
quarter. In addition to total outside sales revenue of $202.3 million, the E&P Division also
benefited from other income in the quarter including: $99 million from unrealized gain on commodity
derivative instruments, $16 million from miscellaneous other
income, and $1 million from a gain on
the sale of assets.
CONSOL's first dry Utica Gaut 4I well in Westmoreland County, Pennsylvania, was
completed in the second quarter, and the company has been
conducting well flow tests to ascertain the deliverability of the
reservoir and well drainage. These tests are providing critical
information on pressure drawdown management and inter-lateral
spacing for future Utica Shale development. CONSOL's initial
24-hour flow test to sales was 61.4 MMcf per day at an average
flowing casing pressure of 7,968 psi. Over the initial 6 days of 20
MMcf per day flow test, the flowing pressure of the Gaut 4I well
dropped by 400 psi and is already beginning to flatten out.
Compared to a prolific Southwest Pennsylvania Marcellus well in
Greene County where flowing
pressure can drop by 1,700 psi over the first month of production,
the company believes that the pressure data provides a positive
indication for production volumes and an estimated ultimate
recovery (EUR).
CONSOL Energy recently cemented the casing on the 6,100 foot dry
Utica Shale GH9 well, which is located on fee acreage in
Central Greene County,
Pennsylvania. The GH9 well is scheduled for hydraulic
fracturing in the fourth quarter of 2015, and the company expects
the well to be turned-in-line in the first quarter of 2016.
The tables below summarize the quarterly comparison of key
metrics for the E&P Division:
E&P DIVISION
RESULTS — Quarter-to-Quarter Comparison
|
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
September
30,
|
|
September
30,
|
|
June
30,
|
|
|
2015
|
|
2014
|
|
2015
|
Sales -
Gas
|
|
$
|
137.7
|
|
|
$
|
189.8
|
|
|
$
|
135.1
|
|
Realized Hedging
Impact - Gas
|
|
44.5
|
|
|
21.4
|
|
|
42.3
|
|
Sales -
Oil
|
|
1.7
|
|
|
2.7
|
|
|
1.2
|
|
Sales -
NGLs
|
|
7.6
|
|
|
31.9
|
|
|
15.0
|
|
Sales -
Condensate
|
|
10.8
|
|
|
12.0
|
|
|
8.7
|
|
Total Sales Revenue
($ MM)
|
|
$
|
202.3
|
|
|
$
|
257.8
|
|
|
$
|
202.3
|
|
|
|
|
|
|
|
|
Net Income (Loss) ($
MM)
|
|
$
|
30.3
|
|
|
$
|
24.4
|
|
|
$
|
(540.1)
|
|
Net Cash Provided By
Operating Activities ($ MM)
|
|
$
|
236.9
|
|
|
$
|
207.0
|
|
|
$
|
297.9
|
|
Total Period
Production (Bcfe)
|
|
86.1
|
|
|
64.9
|
|
|
75.5
|
|
Average Daily
Production (MMcfe)
|
|
935.6
|
|
|
705.6
|
|
|
829.6
|
|
Capital Expenditures
($ MM)
|
|
$
|
209.6
|
|
|
$
|
281.6
|
|
|
$
|
289.2
|
|
CONSOL's E&P Division production in the quarter came from
the following categories:
|
|
Quarter
|
|
Quarter
|
|
|
|
Quarter
|
|
|
|
|
Ended
|
|
Ended
|
|
|
|
Ended
|
|
|
|
|
September
30,
2015
|
|
September
30,
2014
|
|
%
Increase/
(Decrease)
|
|
June
30,
2015
|
|
%
Increase/
(Decrease)
|
GAS
|
|
|
|
|
|
|
|
|
|
|
Marcellus Sales
Volumes (Bcf)
|
|
38.1
|
|
|
27.0
|
|
|
41.1%
|
|
|
33.6
|
|
|
13.4%
|
|
Utica Sales Volumes
(Bcf)
|
|
10.2
|
|
|
4.3
|
|
|
137.2%
|
|
|
7.1
|
|
|
43.7%
|
|
CBM Sales Volumes
(Bcf)
|
|
18.5
|
|
|
20.0
|
|
|
(7.5)%
|
|
|
18.8
|
|
|
(1.6)%
|
|
Other Sales Volumes
(Bcf)
|
|
7.2
|
|
|
7.3
|
|
|
(1.4)%
|
|
|
6.9
|
|
|
4.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
LIQUIDS*
|
|
|
|
|
|
|
|
|
|
|
NGLs Sales Volumes
(Bcfe)
|
|
9.6
|
|
|
5.3
|
|
|
81.1%
|
|
|
7.2
|
|
|
33.3%
|
|
Oil Sales Volumes
(Bcfe)
|
|
0.2
|
|
|
0.2
|
|
|
—%
|
|
|
0.2
|
|
|
—%
|
|
Condensate Sales
Volumes (Bcfe)
|
|
2.3
|
|
|
0.8
|
|
|
187.5%
|
|
|
1.7
|
|
|
35.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
86.1
|
|
|
64.9
|
|
|
32.7%
|
|
|
75.5
|
|
|
14.0%
|
|
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.
|
Liquids production of 12.1 Bcfe, as a percentage of the total of
86.1 Bcfe, was approximately 14% 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,
2015
|
|
September 30,
2014
|
|
June
30, 2015
|
Average Sales Price -
Gas
|
|
$
|
1.86
|
|
|
$
|
3.24
|
|
|
$
|
2.03
|
|
Realized Hedging
Impact - Gas
|
|
$
|
0.60
|
|
|
$
|
0.36
|
|
|
$
|
0.64
|
|
Average Sales Price -
Oil*
|
|
$
|
9.03
|
|
|
$
|
15.02
|
|
|
$
|
7.69
|
|
Average Sales Price -
NGLs*
|
|
$
|
0.80
|
|
|
$
|
6.00
|
|
|
$
|
2.08
|
|
Average Sales Price -
Condensate*
|
|
$
|
4.64
|
|
|
$
|
14.66
|
|
|
$
|
5.21
|
|
|
|
|
|
|
|
|
Average Sales Price -
Total Company
|
|
$
|
2.35
|
|
|
$
|
3.97
|
|
|
$
|
2.68
|
|
Costs -
Production
|
|
|
|
|
|
|
Lifting
|
|
$
|
0.31
|
|
|
$
|
0.46
|
|
|
$
|
0.34
|
|
Ad Valorem,
Severance
and Other Taxes
|
|
|
0.10
|
|
|
|
0.13
|
|
|
|
0.09
|
|
DD&A
|
|
0.93
|
|
|
1.13
|
|
|
1.03
|
|
Total Production
Costs
|
|
$
|
1.34
|
|
|
$
|
1.72
|
|
|
$
|
1.46
|
|
Costs -
Gathering
|
|
|
|
|
|
|
Transportation
|
|
$
|
0.79
|
|
|
$
|
0.62
|
|
|
$
|
0.83
|
|
Operating
Costs
|
|
0.29
|
|
|
0.43
|
|
|
0.32
|
|
DD&A
|
|
0.09
|
|
|
0.13
|
|
|
0.11
|
|
Total Gathering
Costs
|
|
$
|
1.17
|
|
|
$
|
1.18
|
|
|
$
|
1.26
|
|
|
|
|
|
|
|
|
Gas Direct
Administrative Selling & Other
|
|
$
|
0.12
|
|
|
$
|
0.22
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
Total
Costs
|
|
$
|
2.63
|
|
|
$
|
3.12
|
|
|
$
|
2.90
|
|
|
|
|
|
|
|
|
Margin
|
|
$
|
(0.28)
|
|
|
$
|
0.85
|
|
|
$
|
(0.22)
|
|
|
*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 to the continued decline in commodity
prices.
The average sales price of $2.35
per Mcfe, when combined with unit costs of $2.63 per Mcfe, resulted in a margin of
($0.28) per Mcfe. This was a decrease
when compared to the year-earlier quarter even though the
improvements in unit costs partially offset the decline in price
realizations.
All-in unit costs in the Marcellus Shale were $2.57 per Mcfe in the just-ended quarter, or a
decrease of $0.12 from the
$2.69 per Mcfe in the year-earlier
quarter. The decrease in unit costs was primarily related to the
46% increase in total Marcellus sales volumes, including liquids,
during the just-ended quarter, compared to the year-earlier
quarter.
During the quarter, transportation costs were $0.79 per Mcfe, or an increase of $0.17 from the year-earlier quarter. The increase
was primarily related to additional processing and gathering fees
associated with increased liquids volumes.
E&P Marketing, Transportation, and Processing
Update:
For the third quarter of 2015, CONSOL's average sales price for
natural gas, natural gas liquids, oil, and condensate
was $2.35 per Mcfe. CONSOL's average price for natural
gas was $1.86 per Mcf for the quarter and, including hedging,
was $2.46 per Mcf. During the third quarter, CONSOL produced
NGL, oil, and condensate volumes of 12.1 Bcfe, or 14% of the
company's total gas equivalent volumes. These liquids volumes were
nearly double those of the year-earlier quarter, which then
comprised 10% of the company's total gas equivalent volumes. The
average realized price for all liquids for the third quarter of
2015 was $9.99 per barrel.
The company currently has a total of 1.2 Bcf per day of
available firm transportation capacity. This is composed of 0.9 Bcf
per day of firm capacity on existing pipelines and an additional
0.3 Bcf per day of long-term firm sales with major customers having
their own firm capacity. Additionally, CONSOL has contracted
volumes of approximately 0.6 Bcf per day on several pipeline
projects that will be completed over the next several years. Even
with the future expiration of certain transportation contracts, the
company's effective firm transportation capacity will increase to
approximately 1.6 Bcf per day. The average demand cost for the
existing firm capacity is approximately $0.28 per MMBtu.
The average demand cost for the existing and committed firm
capacity is approximately $0.33 per MMBtu.
In addition to firm transportation capacity, CONSOL has
developed a processing portfolio to support the projected volumes
from its wet production areas. The company has agreements in place
to support the processing of approximately 0.4 Bcf per day of gross
natural gas volumes.
Coal Division Results:
Coal Division Third Quarter Summary:
During the third quarter of 2015, Pennsylvania Operations total
unit costs were $40.38 per ton,
compared to $47.06 per ton in the
year-earlier quarter, despite production declining by approximately
9% over the same period. Cost performance was driven by improved
longwall operations, better geological conditions, an optimized
workforce, and a continued focus on zero-based budgeting. As
previously announced, to better align production to contracted
sales to preserve margins, the Pennsylvania Operations moved to a
four-day work week in the second quarter of 2015, compared to a
normal five-day per week schedule. The company expects this
schedule to continue through the remainder of 2015.
During the quarter, Virginia Operations continued to optimize
its cost structure with total unit costs being lower at
$53.83 per ton, compared to
$61.21 per ton in the year-earlier
quarter. Better utilization from previously completed efficiency
projects, optimized shift schedules, and reduced travel time to the
face of the longwall continued to benefit cost performance. As
discussed in the previous quarter, these continued cost
improvements were slightly offset, as expected, due to a planned
longwall move and scheduled outage to perform a maintenance upgrade
in the quarter.
During the quarter, CONSOL's active coal operations generated
$142 million of cash before capital
expenditures.
COAL DIVISION
RESULTS BY SEGMENT - 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
|
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Inventory
(millions of tons)
|
|
0.3
|
|
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
|
0.2
|
|
|
0.1
|
|
Coal Production
(millions of tons)
|
|
5.8
|
|
|
6.4
|
|
|
1.0
|
|
|
0.9
|
|
|
0.5
|
|
|
0.5
|
|
Ending Inventory
(millions of tons)
|
|
0.5
|
|
|
0.3
|
|
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
|
0.1
|
|
Sales - Company
Produced (millions of tons)
|
|
5.7
|
|
|
6.2
|
|
|
0.9
|
|
|
1.0
|
|
|
0.6
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Per
Ton
|
|
$
|
56.99
|
|
|
$
|
61.35
|
|
|
$
|
51.82
|
|
|
$
|
70.57
|
|
|
$
|
57.36
|
|
|
$
|
58.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Production
Costs
|
|
$
|
40.38
|
|
|
$
|
47.06
|
|
|
$
|
53.83
|
|
|
$
|
61.21
|
|
|
$
|
56.49
|
|
|
$
|
61.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Margin Per
Ton Sold
|
|
$
|
16.61
|
|
|
$
|
14.29
|
|
|
$
|
(2.01)
|
|
|
$
|
9.36
|
|
|
$
|
0.87
|
|
|
$
|
(3.01)
|
|
Addback: DD&A Per
Ton
|
|
$
|
6.88
|
|
|
$
|
6.61
|
|
|
$
|
9.10
|
|
|
$
|
10.94
|
|
|
$
|
3.01
|
|
|
$
|
3.15
|
|
Average Margin Per
Ton, before DD&A
|
|
$
|
23.49
|
|
|
$
|
20.90
|
|
|
$
|
7.09
|
|
|
$
|
20.30
|
|
|
$
|
3.88
|
|
|
$
|
0.14
|
|
Cash Flow before Cap.
Ex and DD&A ($MM)
|
|
$
|
134
|
|
|
$
|
130
|
|
|
$
|
6
|
|
|
$
|
20
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
The Pennsylvania
Operations include Bailey, Enlow Fork, and Harvey mines. The
Virginia Operations include the Buchanan Mine. Other includes the
Miller Creek Complex. 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. Sales tons times Average Margin Per Ton, before
DD&A is meant to approximate the amount of cash generated for
the Pennsylvanian Operations, Virginia Operations, and Other coal
categories. This cash generation will be offset by maintenance of
production (MOP) capital expenditures. Table may not sum due to
rounding.
|
Coal Marketing Update:
In the third quarter of 2015, CONSOL's Coal Division sold 7.2
million tons, which was slightly above the previous quarter's
guidance range of 6.6 - 7.1 million tons.
Pennsylvania Operations:
In the third quarter of 2015, the Pennsylvania Operations sold 5.7
million tons, which exceeded previous quarter's guidance of 5.4-5.6
million tons.
The current thermal coal market remains extremely challenged due
to low natural gas prices, tepid economic growth, and regulatory
uncertainty. Despite these challenges, during the third quarter,
CONSOL made substantial strategic and tactical progress through
securing additional thermal coal commitments.
Strategically, CONSOL's Pennsylvania Operations increased its
2016 sold position to 19.3 million tons, or approximately 74% of
the total estimated sales tons based on the midpoint of the
guidance range. Also, CONSOL's Pennsylvania Operations sold
positions for 2017 and 2018 increased to approximately 45% and 41%,
respectively. Cumulatively, these multi-year commitments allow the
Pennsylvania Operations to efficiently operate at an expected
five-day per week work schedule, which also provides economies of
scale to lower unit costs. The structure of these multi-year
commitments price coal in 2016 but also allow for higher prices in
2017, and beyond, when markets are expected to strengthen. Domestic
thermal coal prices are in contango, which ties to a few contracts
that have prices locked in for 2017 and 2018.
Tactically, continuing into the fourth quarter, CONSOL is
positioned to selectively capture additional power plants across
the eastern U.S., as well as spot sales, both domestic and
international. CONSOL expects that these incremental sales will
increase the 2016 sold position to over 90% by year-end. As CONSOL
continues to secure market share, and as overall U.S. coal demand
declines, the company expects the idling of coal mines across a
number of basins. This supply response will allow CONSOL to
selectively layer-in additional incremental sales for 2016, and
beyond.
Virginia Operations:
In the third quarter of 2015, CONSOL sold 0.9 million tons of its
Buchanan low-vol coal, which was in-line with previous quarter's
guidance of 0.8-1.0 million tons. Despite the continued degradation
across the domestic and international metallurgical markets,
Buchanan's low cost position allows it to compete in a challenging
environment. Also during the quarter, CONSOL contracted for 0.9
million additional tons for 2015 and expects to capture ongoing
opportunities throughout the year. CONSOL has been successful
developing new markets both domestically and in the Atlantic
Basin.
Other:
In the third quarter, CONSOL sold 0.6 million tons of Miller Creek coal, which is flat compared to the
year-earlier quarter.
E&P Division Guidance:
CONSOL expects fourth quarter 2015 gas production to be
approximately 92-97 Bcfe, which would result in annual 2015
production guidance between 325-330 Bcfe, or 39% growth compared to
2014 total production. CONSOL Energy expects 2016 annual gas
production to grow by approximately 20%.
Total hedged natural gas production in the 2015 fourth quarter
is 63.3 Bcf. The annual gas hedge position is shown in the table
below:
|
|
|
|
|
E&P DIVISION
GUIDANCE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
2016
|
|
|
|
|
|
Total Yearly
Production (Bcfe)
|
|
325-330
|
|
~20%
|
|
|
|
|
|
Volumes Hedged (Bcf),
as of 10/09/15
|
|
173.5*
|
|
224.0
|
|
|
|
|
|
* Includes 2015
actual settlements of 110.1 Bcf.
|
|
|
|
CONSOL Energy's hedged gas volumes include a combination of
NYMEX financial hedges and index financial hedges (NYMEX plus
basis). In addition, to protect the NYMEX hedge volumes from basis
exposure, CONSOL enters into basis-only financial hedges and
physical sales with fixed basis at certain sales points. CONSOL
Energy's gas hedge position is shown in the table below.
GAS
HEDGES
|
|
|
|
Q4
2015
|
|
2015
|
|
2016
|
Total NYMEX +
Basis* (Bcf)
|
|
43.1
|
|
|
123.6
|
|
|
182.9
|
|
Average Hedge Price
($/Mcf)
|
|
$
|
3.42
|
|
|
$
|
3.62
|
|
|
$
|
3.30
|
|
|
|
|
|
|
|
|
NYMEX Only Hedges
Exposed to Basis (Bcf)
|
|
20.2
|
|
|
49.9
|
|
|
41.1
|
|
Average Hedge Price
($/Mcf)
|
|
$
|
3.50
|
|
|
$
|
3.75
|
|
|
$
|
3.58
|
|
|
|
|
|
|
|
|
Total % Volumes
Hedged
|
|
67
|
%
|
|
53
|
%
|
|
57
|
%
|
Total % Volumes with
NYMEX and Basis Hedged
|
|
46
|
%
|
|
38
|
%
|
|
47
|
%
|
Total % Volumes with
NYMEX Only Hedges Exposed to Basis
|
|
21
|
%
|
|
15
|
%
|
|
10
|
%
|
|
* Includes
physical sales with fixed basis in Q4 2015, 2015, and 2016 of 18.1
Bcf, 50.0 Bcf, and 43.8 Bcf, respectively. Note: % of
volumes hedged is based off of the midpoint of estimated total
production guidance for each respective period.
|
During the third quarter of 2015, CONSOL Energy added 34 Bcf in
gas NYMEX hedges for the second half of 2015 and an additional 114
Bcf of NYMEX hedges for 2016. In addition, to help mitigate basis
exposure on NYMEX hedges, in the third quarter, CONSOL added 15.7
Bcf and 67.6 Bcf of basis hedges for the second half of 2015 and
full-year 2016, respectively.
Coal Division Guidance:
For full year 2016, Pennsylvania Operations sales guidance is
higher, compared to 2015, resulting from an increased committed
position. CONSOL expects Pennsylvania Operations total unit costs
to increase slightly in the fourth quarter of 2015, compared to the
third quarter. However, for full year 2015, CONSOL continues to
expect average total unit costs, including DD&A, to be between
$40-$43 per ton.
In the Virginia Operations, CONSOL continues to expect 2015
total unit costs to be between $50-$55 per ton.
In the Other Operations (Miller
Creek), CONSOL continues to expect 2015 total unit costs to
be between $50-$55 per ton.
Also, CONSOL expects maintenance of production capital
expenditures of $5 per ton moving
forward.
COAL DIVISION
GUIDANCE
|
|
The following table
describes the forecasted contracted position (in millions of tons)
for the years ending December 31, 2015 and 2016 as of October 26,
2015:
|
|
|
|
2015
|
|
2016
|
|
Est. Total Coal
Sales
|
|
28.9 -
29.9
|
|
30.6 -
33.4
|
|
Committed
|
|
28.6
|
|
20.2
|
|
Estimated Price
(committed tons)
|
|
$57.00 -
$59.00
|
|
$50.00 -
$55.00
|
|
Est. PA Operations
Sales
|
|
23.0 -
23.5
|
|
25.0 -
27.0
|
|
Committed
|
|
22.7
|
|
18.9
|
|
Est. VA Operations
Sales
|
|
3.9 - 4.2
|
|
3.7 - 4.2
|
|
Committed
|
|
3.8
|
|
0.6
|
|
Est. Other
Sales
|
|
2.0 - 2.2
|
|
1.9 - 2.2
|
|
Committed
|
|
2.1
|
|
0.7
|
|
Refer to note at
the end of the press release for additional
disclosures.
|
Liquidity:
As of September 30, 2015, CONSOL
Energy had $854.5 million in total
liquidity, which is comprised of $80.0
million of cash and $774.5
million available to be borrowed under its $2.0 billion bank facility. In addition, CONSOL
holds 12.7 million CNX Coal Resources LP ("CNXC") limited
partnership units with a current market value of approximately
$159 million and 19.1 million CONE
Midstream Partners LP ("CNNX") limited partnership units with a
current market value of approximately $181
million, as of October 23,
2015.
"We are comfortable with our current liquidity position
and expect it to improve materially with
additional asset sales," commented David Khani, CFO. "We are already starting to
see our liquidity improve, and when you adjust for the term loan
that was in place as a back-stop for the CNXC IPO, our liquidity
improved meaningfully in the third quarter, compared to the second
quarter of 2015."
As of September 30, 2015, due to
the company generating free cash flow during the quarter, CONSOL
Energy's leverage ratio decreased to 3.8x, when compared to the
previous quarter's leverage of 3.9x.
About
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, 2014, CONSOL Energy reported 6.8 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. Additional information can
be found at www.consolenergy.com.
Non-GAAP Financial Measures
Definition: 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 EBITDA and Adjusted EBITDA
are not measures of performance calculated in accordance with
generally accepted accounting principles, management believes that
it is useful to an investor in evaluating CONSOL Energy because it
is widely used to evaluate a company's operating performance before
debt expense and its cash or as a substitute for measures of
performance in accordance with generally accepted accounting
principles. In addition, because all companies do not calculate
EBITDA or Adjusted EBITDA identically, the presentation here may
not be comparable to similarly titled measures of other
companies.
Reconciliation of EBITDA and Adjusted EBITDA to financial net
income attributable to CONSOL Energy Shareholders is as follows
(dollars in 000):
|
|
Three Months
Ended
|
|
|
September
30
|
|
|
2015
|
|
2014
|
Net Income
(Loss)
|
|
$
|
125,470
|
|
|
$
|
(1,645)
|
|
|
|
|
|
|
Add: Interest
Expense
|
|
48,558
|
|
|
55,397
|
|
Less: Interest
Income
|
|
(361)
|
|
|
(527)
|
|
Add: Income
Taxes
|
|
58,143
|
|
|
(1,388)
|
|
Add:
Depreciation, Depletion & Amortization
|
|
152,989
|
|
|
148,673
|
|
|
|
|
|
|
Earnings Before
Interest, Taxes and DD&A (EBITDA)
|
|
384,799
|
|
|
200,510
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
OPEB Plan
Changes
|
|
(100,947)
|
|
|
—
|
|
Unrealized Gain on
Commodity Derivative Instruments
|
|
(99,138)
|
|
|
—
|
|
Gain on Sale of
Western Allegheny Energy
|
|
(48,468)
|
|
|
—
|
|
Severance
Expense
|
|
7,683
|
|
|
—
|
|
Pension
Settlement
|
|
3,132
|
|
|
4,785
|
|
Loss on Debt
Extinguishment
|
|
—
|
|
|
20,990
|
|
Long-Term Liability
Plan Changes
|
|
—
|
|
|
10,100
|
|
Total Pre-tax
Adjustments
|
|
(237,738)
|
|
|
35,875
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
147,061
|
|
|
$
|
236,385
|
|
|
|
|
|
|
Less: Noncontrolling
Interest*
|
|
(11,092)
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Attributable to CONSOL Energy Shareholders
|
|
$
|
135,969
|
|
|
$
|
236,385
|
|
|
Note: Income tax
effect of Total Pre-tax Adjustments was ($54,680) and ($14,038) for
the three months ended September 30, 2015 and September 30, 2014,
respectively. Adjusted net income attributable to CONSOL Energy
shareholders for the three months ended September 30, 2015 is
calculated as GAAP net income of $118,980 less total pre-tax
adjustments of $237,738, plus the tax benefit of $54,680 equals the
adjusted net loss attributable to CONSOL Energy shareholders of
$64,078. EBITDA attributable to CONSOL Energy shareholders of
$373,707 equals EBITDA of $384,799 less Noncontrolling interest of
$11,092.
|
|
*Equals Net Income
Attributable to Noncontrolling Interest of $6,490 plus $4,602 of
Interest, Taxes, and DD&A related to the Noncontrolling
Interest.
|
Coal Division Guidance
Note: Committed tons are tons that are both committed to be
purchased and priced. Committed tons exclude collared tons and tons
that are sold but not yet priced. There are no collared tons in
2015. Collared tons in 2016 are 0.4 million tons, with a ceiling of
$62.00 per ton and a floor of
$57.00 per ton. Contracts with
certain customers permit the customer to carry a portion of their
contracted tons into the following year and/or to take gas instead
of coal. For purposes of this table, the estimated price of each
committed contract includes the base price stated in the contract
and an estimate of the future adjustments to the contracted base
price as set forth in such contract. The adjustment mechanisms
reflect (i) variances in the quality characteristics of coal
delivered to the customer beyond threshold quality characteristics
specified in the applicable sales contract, (ii) the actual
calorific value of coal delivered to the customer, and/or (iii)
changes in electric power prices in the markets in which our
customers operate, as adjusted for any factors set forth in the
applicable contract. Each customer contract is different and not
all contracts contain adjustments described in the preceding
sentence. The estimated prices set forth in the table above were
based in part on certain assumptions made by management. With
respect to clause (i) quality characteristics, we based our
assumption on our average monthly estimated quality numbers
generated with our production forecast, created using pre-mining
geology and analytical work, to determine the likely penalties and
premiums associated with each contract using the average mine
quality for tons estimated to be shipped during the time period.
With respect to clause (ii) actual calorific value, we based our
assumption on our average monthly estimated quality numbers
generated with our production forecast, created using pre-mining
geology and analytical work, to determine the likely penalties and
premiums associated with each contract using the average mine
quality for tons estimated to be shipped during the time period.
With respect to clause (iii), the electric power price-related
adjustments, if any, result only in positive monthly adjustments to
the contracted base price that we receive for our coal. These
adjustments to contracted base prices were estimated using publicly
available regional power generation information applicable to the
markets in which our customers operate and other internally
estimated information regarding contract specific factors that
impact pricing. The key assumptions used for the estimated electric
power price-related adjustments were derived using PJM Western Hub
Day-Ahead Calendar Month (Peak and Off-Peak) prices adjusted using
management's judgment and historical results. These derived
assumptions were held constant in 2015 and 2016. While management
considers the expectations and assumptions regarding estimated
prices, including with respect to estimated electric power
price-related adjustments, to be reasonable, they are inherently
subject to business, economic, competitive, regulatory, and other
risks and uncertainties, most of which are beyond our
control.
Cautionary Statements
Various statements in this release, including those that express
a belief, expectation or intention, may be considered
forward-looking statements under federal securities laws including
Section 21E of the Securities Exchange Act of 1934 (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; 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; foreign currency fluctuations affecting the
competitiveness of our coal abroad; our customers extending
existing contracts or entering into new long-term contracts for
coal; 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 ; the risks inherent in gas and
coal operations, including our reliance upon third party
contractors, 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 or capital equipment used in our mining
operations; obtaining and renewing governmental permits and
approvals for our natural 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 natural gas and coal operations; our ability
to find adequate water sources for our use in 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; the effects of stringent federal
and state employee health and safety regulations, including the
ability of regulators to shut down a 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, oil and coal reserves;
defects may exist in our chain of title and we may incur additional
costs associated with perfecting title for gas 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 Exchange Act; 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 and oil reserves, which if not replaced,
will cause our gas and oil reserves and production to decline;
acquisitions that we recently completed or may make in the future
including the accuracy of our assessment of the acquired businesses
and their risks, achieving any anticipated synergies, integrating
the acquisitions and unanticipated changes that could affect
assumptions we may have made and asset monetization
transactions, including sales of additional interests in our
thermal coal or other assets to CNX Coal Resources LP and
divestitures to third parties we anticipate may not occur or
produce anticipated proceeds; the terms of our existing joint
ventures restrict flexibility, actions taken by the other party in
our gas joint ventures may impact our financial position and
various circumstances could cause us not to realize the benefits we
anticipate receiving from these joint ventures; risks
associated with our debt; 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; failure to appropriately allocate capital and other
resources among our strategic opportunities may adversely affect
our financial condition; failure by Murray Energy to satisfy
liabilities it acquired from us, or failure to perform its
obligations under various arrangements, which we guaranteed, could
materially or adversely affect our results of operations, financial
position, and cash flows; information theft, data corruption
and/or financial loss resulting from a terrorist attack or cyber
incident; operating in a single geographic area; and
other factors discussed in the 2014 Form 10-K under "Risk Factors,"
as updated by any subsequent Form 10-Qs, which are on file at the
Securities and Exchange Commission.
The SEC permits oil and gas companies, in their filings with the
SEC, to disclose only proved, probable and possible oil and gas
reserves that a company anticipates as of a given date to be
economically and legally producible and deliverable by application
of development projects to known accumulations. We may use certain
terms in this press release, such as EUR (estimated ultimate
recovery), unproved reserves and total resource potential, that the
SEC's rules strictly prohibit us from including in filings with the
SEC. We caution you that the SEC views such estimates as inherently
unreliable and these estimates may be misleading to investors
unless the investor is an expert in the natural gas industry These
measures are by their nature more speculative than estimates of
reserves prepared in accordance with SEC definitions and guidelines
and accordingly are less certain. We also note that the SEC
strictly prohibits us from aggregating proved, probable and
possible reserves in filings with the SEC due to the different
levels of certainty associated with each reserve category.
1The terms "adjusted net loss" and "adjusted EBITDA"
are non-GAAP financial measures, which are defined and reconciled
to the GAAP net income below, under the caption "Non-GAAP Financial
Measures."
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:
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Natural Gas, NGLs and
Oil Sales
|
$
|
202,007
|
|
|
$
|
257,358
|
|
|
$
|
658,498
|
|
|
$
|
753,399
|
|
Unrealized Gain on
Commodity Derivative Instruments
|
99,137
|
|
|
—
|
|
|
134,205
|
|
|
—
|
|
Coal Sales
|
403,602
|
|
|
483,960
|
|
|
1,314,748
|
|
|
1,554,939
|
|
Other Outside
Sales
|
5,129
|
|
|
73,673
|
|
|
24,596
|
|
|
213,047
|
|
Production Royalty
Interests and Purchased Gas Sales
|
14,080
|
|
|
18,815
|
|
|
39,423
|
|
|
68,773
|
|
Freight-Outside
Coal
|
3,219
|
|
|
2,497
|
|
|
13,995
|
|
|
22,551
|
|
Miscellaneous Other
Income
|
38,640
|
|
|
40,784
|
|
|
112,400
|
|
|
165,815
|
|
Gain on Sale of
Assets
|
48,124
|
|
|
7,529
|
|
|
54,604
|
|
|
12,615
|
|
Total Revenue and
Other Income
|
813,938
|
|
|
884,616
|
|
|
2,352,469
|
|
|
2,791,139
|
|
Costs and
Expenses:
|
|
|
|
|
|
|
|
Exploration and
Production Costs
|
|
|
|
|
|
|
|
Lease Operating
Expense
|
26,454
|
|
|
30,005
|
|
|
83,385
|
|
|
85,622
|
|
Transportation,
Gathering and Compression
|
92,606
|
|
|
68,234
|
|
|
258,329
|
|
|
179,813
|
|
Production, Ad
Valorem, and Other Fees
|
8,475
|
|
|
8,486
|
|
|
24,605
|
|
|
28,817
|
|
Direct Administrative
and Selling
|
10,711
|
|
|
14,060
|
|
|
38,630
|
|
|
39,216
|
|
Depreciation,
Depletion and Amortization
|
89,742
|
|
|
82,538
|
|
|
262,356
|
|
|
225,766
|
|
Exploration and
Production Related Other Costs
|
3,332
|
|
|
8,045
|
|
|
7,694
|
|
|
15,765
|
|
Production Royalty
Interests and Purchased Gas Costs
|
10,989
|
|
|
15,751
|
|
|
30,751
|
|
|
58,518
|
|
Other Corporate
Expenses
|
26,986
|
|
|
13,700
|
|
|
66,633
|
|
|
60,876
|
|
Impairment of
Exploration and Production Properties
|
—
|
|
|
—
|
|
|
828,905
|
|
|
—
|
|
General and
Administrative
|
12,513
|
|
|
14,874
|
|
|
42,086
|
|
|
47,755
|
|
Total Exploration
and Production Costs
|
281,808
|
|
|
255,693
|
|
|
1,643,374
|
|
|
742,148
|
|
Coal
Costs
|
|
|
|
|
|
|
|
Operating and Other
Costs
|
173,178
|
|
|
344,992
|
|
|
756,045
|
|
|
1,033,088
|
|
Royalties and
Production Taxes
|
19,101
|
|
|
23,306
|
|
|
63,474
|
|
|
77,397
|
|
Direct Administrative
and Selling
|
8,225
|
|
|
10,682
|
|
|
26,192
|
|
|
34,354
|
|
Depreciation,
Depletion and Amortization
|
63,242
|
|
|
65,640
|
|
|
195,707
|
|
|
188,405
|
|
Freight
Expense
|
3,219
|
|
|
2,497
|
|
|
13,995
|
|
|
22,551
|
|
General and
Administrative Costs
|
7,477
|
|
|
10,639
|
|
|
21,786
|
|
|
34,005
|
|
Other Corporate
Expenses
|
10,680
|
|
|
10,113
|
|
|
32,863
|
|
|
41,444
|
|
Total Coal
Costs
|
285,122
|
|
|
467,869
|
|
|
1,110,062
|
|
|
1,431,244
|
|
Other
Costs
|
|
|
|
|
|
|
|
Miscellaneous
Operating Expense
|
14,832
|
|
|
86,993
|
|
|
39,268
|
|
|
246,355
|
|
General and
Administrative Costs
|
—
|
|
|
220
|
|
|
—
|
|
|
651
|
|
Depreciation,
Depletion and Amortization
|
5
|
|
|
487
|
|
|
17
|
|
|
1,509
|
|
Loss on Debt
Extinguishment
|
—
|
|
|
20,990
|
|
|
67,751
|
|
|
95,267
|
|
Interest
Expense
|
48,558
|
|
|
55,397
|
|
|
150,187
|
|
|
170,539
|
|
Total Other
Costs
|
63,395
|
|
|
164,087
|
|
|
257,223
|
|
|
514,321
|
|
Total Costs And
Expenses
|
630,325
|
|
|
887,649
|
|
|
3,010,659
|
|
|
2,687,713
|
|
Earnings (Loss)
Before Income Tax
|
183,613
|
|
|
(3,033)
|
|
|
(658,190)
|
|
|
103,426
|
|
Income
Taxes
|
58,143
|
|
|
(1,388)
|
|
|
(259,389)
|
|
|
8,315
|
|
Income (Loss) From
Continuing Operations
|
125,470
|
|
|
(1,645)
|
|
|
(398,801)
|
|
|
95,111
|
|
Loss From
Discontinued Operations, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,687)
|
|
Net Income
(Loss)
|
125,470
|
|
|
(1,645)
|
|
|
(398,801)
|
|
|
89,424
|
|
Less: Net Income
Attributable to Noncontrolling Interest
|
6,490
|
|
|
—
|
|
|
6,490
|
|
|
—
|
|
Net Income (Loss)
Attributable to CONSOL Energy Shareholders
|
$
|
118,980
|
|
|
$
|
(1,645)
|
|
|
$
|
(405,291)
|
|
|
$
|
89,424
|
|
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,
|
Earnings Per
Share
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Basic
|
|
|
|
|
|
|
|
Income (Loss) from
Continuing Operations
|
$
|
0.52
|
|
|
$
|
(0.01)
|
|
|
$
|
(1.77)
|
|
|
$
|
0.41
|
|
Loss from
Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.02)
|
|
Total Basic
Earnings (Loss) Per Share
|
$
|
0.52
|
|
|
$
|
(0.01)
|
|
|
$
|
(1.77)
|
|
|
$
|
0.39
|
|
Dilutive
|
|
|
|
|
|
|
|
Income (Loss) from
Continuing Operations
|
$
|
0.52
|
|
|
$
|
(0.01)
|
|
|
$
|
(1.77)
|
|
|
$
|
0.41
|
|
Loss from
Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.02)
|
|
Total Dilutive
Earnings (Loss) Per Share
|
$
|
0.52
|
|
|
$
|
(0.01)
|
|
|
$
|
(1.77)
|
|
|
$
|
0.39
|
|
|
|
|
|
|
|
|
|
Dividends Paid Per
Share
|
$
|
0.01
|
|
|
$
|
0.0625
|
|
|
$
|
0.135
|
|
|
$
|
0.1875
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
(Dollars in
thousands)
|
September
30,
|
|
September
30,
|
(Unaudited)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net Income
(Loss)
|
$
|
125,470
|
|
|
$
|
(1,645)
|
|
|
$
|
(398,801)
|
|
|
$
|
89,424
|
|
Other Comprehensive
(Loss) Income:
|
|
|
|
|
|
|
|
Actuarially
Determined Long-Term Liability Adjustments (Net of tax: $29,720,
($107,383), $24,935, ($108,154))
|
(49,353)
|
|
|
184,154
|
|
|
(40,036)
|
|
|
185,475
|
|
Net Increase
(Decrease) in the Value of Cash Flow Hedges (Net of tax: $-,
($25,722), $-, $13,161)
|
—
|
|
|
39,151
|
|
|
—
|
|
|
(20,032)
|
|
Reclassification of Cash Flow Hedges from OCI to Earnings (Net of
tax: $11,807, $12,084, $35,123, ($5,509))
|
(20,602)
|
|
|
(19,510)
|
|
|
(60,720)
|
|
|
3,754
|
|
|
|
|
|
|
|
|
|
Other Comprehensive
(Loss) Income
|
(69,955)
|
|
|
203,795
|
|
|
(100,756)
|
|
|
169,197
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
(Loss)
|
55,515
|
|
|
202,150
|
|
|
(499,557)
|
|
|
258,621
|
|
|
|
|
|
|
|
|
|
Less: Comprehensive
Income Attributable to Noncontrolling Interest
|
6,490
|
|
|
—
|
|
|
6,490
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
(Loss) Attributable to CONSOL Energy Inc. Shareholders
|
$
|
49,025
|
|
|
$
|
202,150
|
|
|
$
|
(506,047)
|
|
|
$
|
258,621
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
(Unaudited)
|
|
|
(Dollars in
thousands)
|
September 30,
2015
|
|
December 31,
2014
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and Cash
Equivalents
|
$
|
83,019
|
|
|
$
|
176,989
|
|
Accounts and Notes
Receivable:
|
|
|
|
Trade
|
237,896
|
|
|
259,817
|
|
Other
Receivables
|
139,840
|
|
|
347,146
|
|
Inventories
|
112,950
|
|
|
101,873
|
|
Deferred Income
Taxes
|
78,501
|
|
|
66,569
|
|
Recoverable Income
Taxes
|
64,693
|
|
|
20,401
|
|
Prepaid
Expenses
|
253,562
|
|
|
193,555
|
|
Total Current
Assets
|
970,461
|
|
|
1,166,350
|
|
Property, Plant and
Equipment:
|
|
|
|
Property, Plant and
Equipment
|
15,533,716
|
|
|
14,674,777
|
|
Less—Accumulated
Depreciation, Depletion and Amortization
|
5,774,736
|
|
|
4,512,305
|
|
Total Property,
Plant and Equipment—Net
|
9,758,980
|
|
|
10,162,472
|
|
Other
Assets:
|
|
|
|
Investment in
Affiliates
|
210,092
|
|
|
152,958
|
|
Other
|
245,833
|
|
|
277,750
|
|
Total Other
Assets
|
455,925
|
|
|
430,708
|
|
TOTAL
ASSETS
|
$
|
11,185,366
|
|
|
$
|
11,759,530
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
(Unaudited)
|
|
|
(Dollars in
thousands, except per share data)
|
September 30,
2015
|
|
December 31,
2014
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
Payable
|
$
|
331,958
|
|
|
$
|
531,973
|
|
Current Portion of
Long-Term Debt
|
12,413
|
|
|
13,016
|
|
Short-Term Notes
Payable
|
945,000
|
|
|
—
|
|
Other Accrued
Liabilities
|
578,332
|
|
|
602,972
|
|
Total Current
Liabilities
|
1,867,703
|
|
|
1,147,961
|
|
Long-Term
Debt:
|
|
|
|
Long-Term
Debt
|
2,739,291
|
|
|
3,236,422
|
|
Capital Lease
Obligations
|
37,387
|
|
|
39,456
|
|
Total Long-Term
Debt
|
2,776,678
|
|
|
3,275,878
|
|
Deferred Credits and
Other Liabilities:
|
|
|
|
Deferred Income
Taxes
|
69,947
|
|
|
325,592
|
|
Postretirement
Benefits Other Than Pensions
|
632,049
|
|
|
703,680
|
|
Pneumoconiosis
Benefits
|
118,532
|
|
|
116,941
|
|
Mine
Closing
|
300,883
|
|
|
306,789
|
|
Gas Well
Closing
|
183,423
|
|
|
175,369
|
|
Workers'
Compensation
|
75,714
|
|
|
75,947
|
|
Salary
Retirement
|
90,459
|
|
|
109,956
|
|
Reclamation
|
34,088
|
|
|
33,788
|
|
Other
|
148,040
|
|
|
158,171
|
|
Total Deferred
Credits and Other Liabilities
|
1,653,135
|
|
|
2,006,233
|
|
TOTAL
LIABILITIES
|
6,297,516
|
|
|
6,430,072
|
|
Stockholders'
Equity:
|
|
|
|
Common Stock, $.01
Par Value; 500,000,000 Shares Authorized, 229,053,634 Issued and
Outstanding at September 30, 2015; 230,265,463 Issued and
Outstanding at December 31, 2014
|
2,294
|
|
|
2,306
|
|
Capital in Excess of
Par Value
|
2,430,834
|
|
|
2,424,102
|
|
Preferred Stock,
15,000,000 shares authorized, None issued and
outstanding
|
—
|
|
|
—
|
|
Retained
Earnings
|
2,551,721
|
|
|
3,054,150
|
|
Accumulated Other
Comprehensive Loss
|
(251,856)
|
|
|
(151,100)
|
|
Total CONSOL
Energy Inc. Stockholders' Equity
|
4,732,993
|
|
|
5,329,458
|
|
Noncontrolling
Interest
|
154,857
|
|
|
—
|
|
TOTAL
EQUITY
|
4,887,850
|
|
|
5,329,458
|
|
TOTAL LIABILITIES
AND EQUITY
|
$
|
11,185,366
|
|
|
$
|
11,759,530
|
|
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
|
|
Total CONSOL
Energy Inc.
Stockholders'
Equity
|
|
Non-
Controlling
Interest
|
|
Total
Equity
|
December 31,
2014
|
$
|
2,306
|
|
|
$
|
2,424,102
|
|
|
$
|
3,054,150
|
|
|
$
|
(151,100)
|
|
|
$
|
5,329,458
|
|
|
$
|
—
|
|
|
$
|
5,329,458
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss)
Income
|
—
|
|
|
—
|
|
|
(405,291)
|
|
|
—
|
|
|
(405,291)
|
|
|
6,490
|
|
|
(398,801)
|
|
Other Comprehensive
Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(100,756)
|
|
|
(100,756)
|
|
|
—
|
|
|
(100,756)
|
|
Comprehensive (Loss)
Income
|
—
|
|
|
—
|
|
|
(405,291)
|
|
|
(100,756)
|
|
|
(506,047)
|
|
|
6,490
|
|
|
(499,557)
|
|
Issuance of Common
Stock
|
10
|
|
|
8,278
|
|
|
—
|
|
|
—
|
|
|
8,288
|
|
|
—
|
|
|
8,288
|
|
Retirement of Common
Stock (2,213,100 shares)
|
(22)
|
|
|
(17,683)
|
|
|
(53,969)
|
|
|
—
|
|
|
(71,674)
|
|
|
—
|
|
|
(71,674)
|
|
Treasury Stock
Activity
|
—
|
|
|
—
|
|
|
(12,178)
|
|
|
—
|
|
|
(12,178)
|
|
|
—
|
|
|
(12,178)
|
|
Tax Cost From
Stock-Based Compensation
|
—
|
|
|
(3,699)
|
|
|
—
|
|
|
—
|
|
|
(3,699)
|
|
|
—
|
|
|
(3,699)
|
|
Amortization of
Stock-Based Compensation Awards
|
—
|
|
|
19,836
|
|
|
—
|
|
|
—
|
|
|
19,836
|
|
|
—
|
|
|
19,836
|
|
Noncontrolling
Interest,
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
148,367
|
|
|
148,367
|
|
Dividends ($0.1350
per share)
|
—
|
|
|
—
|
|
|
(30,991)
|
|
|
—
|
|
|
(30,991)
|
|
|
—
|
|
|
(30,991)
|
|
Balance at
September 30, 2015
|
$
|
2,294
|
|
|
$
|
2,430,834
|
|
|
$
|
2,551,721
|
|
|
$
|
(251,856)
|
|
|
$
|
4,732,993
|
|
|
$
|
154,857
|
|
|
$
|
4,887,850
|
|
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:
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net Income
(Loss)
|
$
|
125,470
|
|
|
$
|
(1,645)
|
|
|
$
|
(398,801)
|
|
|
$
|
89,424
|
|
Adjustments to
Reconcile Net Income (Loss) to Net Cash Provided By Operating
Activities:
|
|
|
|
|
|
|
|
Net Loss from
Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
5,687
|
|
Depreciation,
Depletion and Amortization
|
152,989
|
|
|
148,665
|
|
|
458,080
|
|
|
415,680
|
|
Impairment of
Exploration and Production Properties
|
—
|
|
|
—
|
|
|
828,905
|
|
|
—
|
|
Non-Cash Other
Post-Employment Benefits
|
(100,946)
|
|
|
(35,633)
|
|
|
(151,871)
|
|
|
(35,633)
|
|
Stock-Based
Compensation
|
5,720
|
|
|
7,009
|
|
|
19,849
|
|
|
32,514
|
|
Gain on Sale of
Assets
|
(48,124)
|
|
|
(7,529)
|
|
|
(54,604)
|
|
|
(12,615)
|
|
Loss on Debt
Extinguishment
|
—
|
|
|
20,990
|
|
|
67,751
|
|
|
95,267
|
|
Unrealized Gain on
Commodity Derivative Instruments
|
(99,137)
|
|
|
—
|
|
|
(134,205)
|
|
|
—
|
|
Deferred Income
Taxes
|
31,409
|
|
|
(7,246)
|
|
|
(281,705)
|
|
|
6,540
|
|
Equity in Earnings of
Affiliates
|
(15,588)
|
|
|
(16,965)
|
|
|
(38,838)
|
|
|
(38,477)
|
|
Return on Equity
Investment
|
22,949
|
|
|
47,424
|
|
|
31,111
|
|
|
47,424
|
|
Changes in Operating
Assets:
|
|
|
|
|
|
|
|
Accounts and Notes
Receivable
|
(13,112)
|
|
|
(11,321)
|
|
|
77,272
|
|
|
(64,241)
|
|
Inventories
|
(1,256)
|
|
|
2,633
|
|
|
(11,077)
|
|
|
12,542
|
|
Prepaid
Expenses
|
19,531
|
|
|
(21,351)
|
|
|
103,091
|
|
|
3,178
|
|
Changes in Other
Assets
|
5,725
|
|
|
(27,766)
|
|
|
22,913
|
|
|
(14,339)
|
|
Changes in Operating
Liabilities:
|
|
|
|
|
|
|
|
Accounts
Payable
|
(25,774)
|
|
|
98,458
|
|
|
(123,376)
|
|
|
151,829
|
|
Accrued
Interest
|
37,730
|
|
|
43,181
|
|
|
63,879
|
|
|
32,698
|
|
Other Operating
Liabilities
|
23,463
|
|
|
41,761
|
|
|
(73,515)
|
|
|
116,474
|
|
Changes in Other
Liabilities
|
(14,475)
|
|
|
780
|
|
|
(9,945)
|
|
|
10,703
|
|
Other
|
3,494
|
|
|
11,641
|
|
|
9,369
|
|
|
16,450
|
|
Net Cash Provided by
Continuing Operations
|
110,068
|
|
|
293,086
|
|
|
404,283
|
|
|
871,105
|
|
Net Cash Used in
Discontinued Operating Activities
|
—
|
|
|
(62)
|
|
|
—
|
|
|
(20,934)
|
|
Net Cash Provided by
Operating Activities
|
110,068
|
|
|
293,024
|
|
|
404,283
|
|
|
850,171
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
Capital
Expenditures
|
(259,371)
|
|
|
(355,312)
|
|
|
(895,156)
|
|
|
(1,174,607)
|
|
Proceeds from Sales
of Assets
|
76,113
|
|
|
8,061
|
|
|
83,044
|
|
|
141,136
|
|
Net Investments In
Equity Affiliates
|
(26,463)
|
|
|
147,532
|
|
|
(70,224)
|
|
|
108,532
|
|
Net Cash Used in
Investing Activities
|
(209,721)
|
|
|
(199,719)
|
|
|
(882,336)
|
|
|
(924,939)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
(Payments on)
Proceeds from Short-Term Borrowings
|
(113,000)
|
|
|
—
|
|
|
945,000
|
|
|
(11,736)
|
|
Proceeds from
(Payments on) Miscellaneous Borrowings
|
2,550
|
|
|
(1,002)
|
|
|
(1,562)
|
|
|
(4,169)
|
|
Payments on Long-Term
Notes, including Redemption Premium
|
—
|
|
|
(257,068)
|
|
|
(1,263,719)
|
|
|
(1,819,005)
|
|
Net Proceeds from
Revolver - MLP
|
180,000
|
|
|
—
|
|
|
180,000
|
|
|
—
|
|
Proceeds from Sale of
MLP Interest
|
148,359
|
|
|
—
|
|
|
148,359
|
|
|
—
|
|
Payments on
Securitization Facility
|
(38,669)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Proceeds from
Issuance of Long-Term Notes
|
—
|
|
|
259,920
|
|
|
492,760
|
|
|
1,859,920
|
|
Tax Benefit from
Stock-Based Compensation
|
10
|
|
|
65
|
|
|
208
|
|
|
2,478
|
|
Dividends
Paid
|
(2,280)
|
|
|
(14,386)
|
|
|
(30,991)
|
|
|
(43,119)
|
|
Issuance of Common
Stock
|
—
|
|
|
169
|
|
|
8,288
|
|
|
13,403
|
|
Purchases of Treasury
Stock
|
—
|
|
|
—
|
|
|
(71,674)
|
|
|
—
|
|
Debt Issuance and
Financing Fees
|
(4,329)
|
|
|
(2,833)
|
|
|
(22,586)
|
|
|
(24,861)
|
|
Net Cash Provided by
(Used in) Financing Activities
|
172,641
|
|
|
(15,135)
|
|
|
384,083
|
|
|
(27,089)
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
72,988
|
|
|
78,170
|
|
|
(93,970)
|
|
|
(101,857)
|
|
Cash and Cash
Equivalents at Beginning of Period
|
10,031
|
|
|
147,393
|
|
|
176,989
|
|
|
327,420
|
|
Cash and Cash
Equivalents at End of Period
|
$
|
83,019
|
|
|
$
|
225,563
|
|
|
$
|
83,019
|
|
|
$
|
225,563
|
|
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SOURCE CONSOL Energy Inc.