NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
NOTE 1—BASIS OF PRESENTATION:
The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the
three months
ended
March 31, 2016
are not necessarily indicative of the results that may be expected for future periods.
The Consolidated Balance Sheets at
December 31, 2015
have been derived from the Audited Consolidated Financial Statements at that date but do not include all the notes required by generally accepted accounting principles for complete financial statements. For further information, refer to the Consolidated Financial Statements and related notes for the year ended
December 31, 2015
included in CONSOL Energy Inc.'s Annual Report on Form 10-K.
In the three months ended March 31, 2016, CONSOL Energy Inc. ("CONSOL Energy" or "the Company") has made certain adjustments to the financial statements to reflect the sale of the Buchanan Mine, which is now reflected under "discontinued operations." Additionally, CONSOL Energy also made reclassifications within our financial statements to better align our financial reporting with our peer group. These reclassifications impacted the “Lease Operating Expense,” “Transportation, Gathering and Compression,” "Direct Administrative and Selling," “Production Royalty Interests and Purchased Gas Sales,” "Production Royalty Interests and Purchased Gas Costs,” “Operating and Other Costs” and “Selling, General and Administrative” line items on our Consolidated Statements of Income. These changes are reflected in our current and historic Consolidated Statements of Income, with no effect on previously reported net income or stockholders’ equity.
Basic earnings per share are computed by dividing net income attributable to CONSOL Energy Shareholders by the weighted average shares outstanding during the reporting period. Dilutive earnings per share are computed similarly to basic earnings per share, except that the weighted average shares outstanding are increased to include additional shares from stock options, performance stock options, restricted stock units and performance share units, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options and performance share options were exercised, that outstanding restricted stock units and performance share units were released, and that the proceeds from such activities were used to acquire shares of common stock at the average market price during the reporting period. CONSOL Energy includes the impact of pro forma deferred tax assets in determining potential windfalls and shortfalls for purposes of calculating assumed proceeds under the treasury stock method.
The table below sets forth the share-based awards that have been excluded from the computation of the diluted earnings per share because their effect would be anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2016
|
|
2015
|
Anti-Dilutive Options
|
5,365,686
|
|
|
1,834,432
|
|
Anti-Dilutive Restricted Stock Units
|
868,842
|
|
|
85,018
|
|
Anti-Dilutive Performance Share Units
|
113,531
|
|
|
—
|
|
Anti-Dilutive Performance Stock Options
|
802,804
|
|
|
802,804
|
|
|
7,150,863
|
|
|
2,722,254
|
|
The table below sets forth the share-based awards that have been exercised or released:
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2016
|
|
2015
|
Options
|
—
|
|
|
76,028
|
|
Restricted Stock Units
|
484,680
|
|
|
449,005
|
|
Performance Share Units
|
—
|
|
|
497,134
|
|
|
484,680
|
|
|
1,022,167
|
|
No options were exercised during the
three months
ended
March 31, 2016
. The weighted average exercise price per share of the options exercised during the
three months
ended
March 31, 2015
was $
22.75
.
The computations for basic and dilutive earnings per share are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2016
|
|
2015
|
Loss from Continuing Operations
|
$
|
(50,286
|
)
|
|
$
|
(165,287
|
)
|
(Loss) Income from Discontinued Operations
|
(46,172
|
)
|
|
244,317
|
|
Net (Loss) Income
|
$
|
(96,458
|
)
|
|
$
|
79,030
|
|
Net Income Attributable to Noncontrolling Interest
|
1,114
|
|
|
—
|
|
Net (Loss) Income Attributable to CONSOL Energy Shareholders
|
$
|
(97,572
|
)
|
|
$
|
79,030
|
|
Weighted Average Shares of Common Stock Outstanding:
|
|
|
|
Basic
|
229,259,228
|
|
|
229,734,412
|
|
Effect of Stock-Based Compensation Awards
|
—
|
|
|
712,287
|
|
Dilutive
|
229,259,228
|
|
|
230,446,699
|
|
(Loss) Earnings per Share:
|
|
|
|
Basic (Continuing Operations)
|
$
|
(0.22
|
)
|
|
$
|
(0.72
|
)
|
Basic (Discontinued Operations)
|
(0.21
|
)
|
|
1.06
|
|
Total Basic
|
$
|
(0.43
|
)
|
|
$
|
0.34
|
|
|
|
|
|
Dilutive (Continuing Operations)
|
$
|
(0.22
|
)
|
|
$
|
(0.72
|
)
|
Dilutive (Discontinued Operations)
|
(0.21
|
)
|
|
1.06
|
|
Total Dilutive
|
$
|
(0.43
|
)
|
|
$
|
0.34
|
|
Changes in Accumulated Other Comprehensive Loss by component, net of tax, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains and Losses on Cash Flow Hedges
|
|
Postretirement Benefits
|
|
Total
|
Balance at December 31, 2015
|
$
|
43,470
|
|
|
$
|
(359,068
|
)
|
|
$
|
(315,598
|
)
|
Other Comprehensive Loss before reclassifications
|
—
|
|
|
(5,014
|
)
|
|
(5,014
|
)
|
Amounts reclassified from Accumulated Other Comprehensive Loss
|
(9,814
|
)
|
|
2,530
|
|
|
(7,284
|
)
|
Current period Other Comprehensive Loss
|
(9,814
|
)
|
|
(2,484
|
)
|
|
(12,298
|
)
|
Balance at March 31, 2016
|
$
|
33,656
|
|
|
$
|
(361,552
|
)
|
|
$
|
(327,896
|
)
|
The following table shows the reclassification of adjustments out of Accumulated Other Comprehensive Loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2016
|
|
2015
|
Derivative Instruments (Note 14)
|
|
|
|
Natural Gas Price Swaps and Options
|
$
|
(15,438
|
)
|
|
$
|
(30,527
|
)
|
Tax Expense
|
5,624
|
|
|
11,213
|
|
Net of Tax
|
$
|
(9,814
|
)
|
|
$
|
(19,314
|
)
|
Actuarially Determined Long-Term Liability Adjustments * (Note 5 and Note 6)
|
|
|
|
Amortization of Prior Service Costs
|
$
|
(148
|
)
|
|
$
|
(14,812
|
)
|
Recognized Net Actuarial Loss
|
5,511
|
|
|
14,573
|
|
Total
|
5,363
|
|
|
(239
|
)
|
Tax (Benefit) Expense
|
(2,018
|
)
|
|
90
|
|
Net of Tax
|
$
|
3,345
|
|
|
$
|
(149
|
)
|
*Excludes amounts related to the remeasurement of the Actuarially Determined Long-Term Liabilities for the three months ended March 31, 2016. Excludes
$815
, net of tax, of reclassifications of adjustments out of Accumulated Other Comprehensive Income related to discontinued operations for the period ended
March 31, 2016
.
NOTE 2—DISCONTINUED OPERATIONS:
On March 31, 2016, CONSOL Energy completed the sale of its membership interests in CONSOL Buchanan Mining Company, LLC (BMC), which owned and operated the Buchanan Mine located in Mavisdale, Virginia; various assets relating to the Amonate Mining Complex located in Amonate, Virginia; Russell County, Virginia coal reserves and Pangburn Shaner Fallowfield coal reserves located in Southwestern, Pennsylvania to Coronado IV LLC. Various CONSOL Energy assets were excluded from the sale including coalbed methane, natural gas and minerals other than coal, current assets of BMC, certain coal seams, certain surface rights, and the Amonate Preparation Plant. Coronado assumed only specified liabilities and various CONSOL Energy liabilities were excluded and not assumed. The excluded liabilities included BMC’s indebtedness, trade payables and liabilities arising prior to closing, as well as, the liabilities of the subsidiaries other than BMC which are parties to the sale. In addition, the buyer agreed to pay CONSOL Energy for Buchanan Mine coal sold outside the U.S. and Canada during the five years following closing a royalty of
20%
of any excess of the gross sales price per ton over the following amounts: (1) year one,
$75.00
per ton; (2) year two,
$78.75
per ton; (3) year three,
$82.69
per ton; (4) year four,
$86.82
per ton; (5) year five,
$91.16
per ton. This provision provides CONSOL Energy the opportunity to capture future upside if metallurgical coal prices recover. At closing, the parties entered into several agreements including, among others, agreements relating to the coordination and conduct of gas operations at the mines, an option to purchase the Amonate Preparation Plant and transition services. Cash proceeds of
$402,799
were received at closing and included in Net Cash Provided by Discontinued Investing Activities on the Consolidated Statements of Cash Flow. The net loss on the sale was
$38,364
and was included in Loss from Discontinued Operations on the Consolidated Statements of Income.
For all periods presented in the accompanying Consolidated Statements of Income, the sale of BMC along with the various other assets are classified as discontinued operations. There were no other active businesses classified as discontinued operations in the three months ended March 31, 2016 or 2015.
The following table details selected financial information for the divested business included within discontinued operations:
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2016
|
|
2015
|
Coal Sales
|
$
|
50,787
|
|
|
$
|
80,515
|
|
Miscellaneous Other Income
|
1,042
|
|
|
30
|
|
Loss on Sale of Assets
|
(38,364
|
)
|
|
$
|
—
|
|
Total Revenue
|
$
|
13,465
|
|
|
$
|
80,545
|
|
Total Costs
|
52,279
|
|
|
57,728
|
|
(Loss) Income From Operations Before Income Taxes
|
$
|
(38,814
|
)
|
|
$
|
22,817
|
|
Income Tax Expense (Benefit)
|
7,358
|
|
|
(221,500
|
)
|
(Loss) Income From Discontinued Operations
|
$
|
(46,172
|
)
|
|
$
|
244,317
|
|
The major classes of assets and liabilities of discontinued operations are as follows:
|
|
|
|
|
|
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
Assets:
|
|
|
|
Accounts Receivable - Trade
|
$
|
43,047
|
|
|
$
|
43,346
|
|
Inventories
|
—
|
|
|
13,765
|
|
Prepaid Expense
|
—
|
|
|
836
|
|
Other Current Assets
|
—
|
|
|
213
|
|
Total Current Assets
|
$
|
43,047
|
|
|
$
|
58,160
|
|
Property, Plant and Equipment, Net
|
—
|
|
|
469,720
|
|
Other Assets
|
12
|
|
|
847
|
|
Total Assets of Discontinued Operations
|
$
|
43,059
|
|
|
$
|
528,727
|
|
Liabilities:
|
|
|
|
Accounts Payable
|
$
|
18,594
|
|
|
$
|
14,106
|
|
Current Liabilities
|
990
|
|
|
11,166
|
|
Long Term Debt
|
—
|
|
|
3,753
|
|
Pneumoconiosis Benefits
|
—
|
|
|
1,129
|
|
Mine Closing
|
—
|
|
|
9,496
|
|
Other liabilities
|
—
|
|
|
792
|
|
Total Liabilities of Discontinued Operations
|
$
|
19,584
|
|
|
$
|
40,442
|
|
NOTE 3—ACQUISITIONS AND DISPOSITIONS:
In December 2014, CNX Gas Company LLC (CNX Gas Company), a wholly-owned subsidiary of CONSOL Energy, finalized an agreement with Columbia Energy Ventures (CEVCO) to sublease from CEVCO approximately
20,000
acres of Utica Shale and Upper Devonian gas rights in Greene and Washington Counties in Pennsylvania and Marshall and Ohio Counties in West Virginia. Up-front bonus consideration of up to $
96,106
will be paid by CONSOL Energy over the next five years as drilling occurs in addition to royalties, of which $
49,533
was recorded in Other Current Liabilities and $
40,286
was recorded on a discounted basis in Other Long-term Liabilities. CONSOL Energy did not make a payment to CEVCO in the
three months
ended
March 31, 2016
while
$15,216
of payments were made for the three months ended March 31, 2015. At
March 31, 2016
, the amounts recorded in Other Current Liabilities and Other Long-term Liabilities remained unchanged from December 31, 2015 at $
8,349
and $
29,333
, respectively.
NOTE 4—MISCELLANEOUS OTHER INCOME:
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
2016
|
|
2015
|
Right of Way Issuance
|
$
|
15,733
|
|
|
$
|
2,528
|
|
Equity in Earnings of Affiliates - CONE
|
14,351
|
|
|
7,656
|
|
Rental Income
|
9,198
|
|
|
9,593
|
|
Gathering Revenue
|
2,748
|
|
|
4,560
|
|
Equity in Earnings of Affiliates - Other
|
2,314
|
|
|
3,667
|
|
Royalty Income - Coal
|
2,230
|
|
|
4,540
|
|
Interest Income
|
214
|
|
|
1,143
|
|
Other
|
1,344
|
|
|
2,836
|
|
Total Other Income
|
$
|
48,132
|
|
|
$
|
36,523
|
|
NOTE 5—COMPONENTS OF PENSION AND OTHER POST-EMPLOYMENT BENEFIT (OPEB) PLANS NET PERIODIC BENEFIT COSTS:
Components of net periodic benefit costs are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Post-Employment Benefits
|
|
For the Three Months Ended March 31,
|
|
For the Three Months Ended March 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Service cost
|
$
|
482
|
|
|
$
|
2,350
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
6,841
|
|
|
8,580
|
|
|
6,060
|
|
|
6,995
|
|
Expected return on plan assets
|
(11,869
|
)
|
|
(12,689
|
)
|
|
—
|
|
|
—
|
|
Amortization of prior service credits
|
(147
|
)
|
|
(176
|
)
|
|
—
|
|
|
(14,636
|
)
|
Recognized net actuarial loss
|
2,116
|
|
|
6,939
|
|
|
4,792
|
|
|
8,926
|
|
Net periodic benefit (credit) cost
|
$
|
(2,577
|
)
|
|
$
|
5,004
|
|
|
$
|
10,852
|
|
|
$
|
1,285
|
|
For the three months ended
March 31, 2016
and 2015, $
641
and
$2,215
was paid to the pension trust from operating cash flows, respectively. Additional contributions to the pension trust are not expected to be material for the remainder of
2016
.
CONSOL Energy does not expect to contribute to the other post-employment benefit plan in
2016
. The Company intends to pay benefit claims as they become due. For the three months ended
March 31, 2016
and 2015,
$13,188
and
$14,333
of other post-employment benefits have been paid, respectively.
NOTE 6—COMPONENTS OF COAL WORKERS’ PNEUMOCONIOSIS (CWP) AND WORKERS’ COMPENSATION NET PERIODIC BENEFIT COSTS:
Components of net periodic benefit costs are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CWP
|
|
Workers' Compensation
|
|
For the Three Months Ended March 31,
|
|
For the Three Months Ended March 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Service cost
|
$
|
1,204
|
|
|
$
|
1,623
|
|
|
$
|
1,904
|
|
|
$
|
2,347
|
|
Interest cost
|
1,123
|
|
|
1,279
|
|
|
638
|
|
|
799
|
|
Amortization of actuarial gain
|
(1,383
|
)
|
|
(1,394
|
)
|
|
(101
|
)
|
|
(8
|
)
|
State administrative fees and insurance bond premiums
|
—
|
|
|
—
|
|
|
731
|
|
|
903
|
|
Curtailment gain
|
(1,307
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Net periodic benefit (credit) cost
|
$
|
(363
|
)
|
|
$
|
1,508
|
|
|
$
|
3,172
|
|
|
$
|
4,041
|
|
(Income) expense attributable to discontinued operations included in the CWP net periodic (credit) cost above was
$(1,290)
and
$75
for the
three
months ended
March 31, 2016
and 2015, respectively.
On March 31, 2016, CONSOL Energy completed the sale of its membership interests in Buchanan Mining Company, LLC (See Note 2 - Discontinued Operations). As a result of the sale, certain obligations of the CWP plan were transferred to Coronado. This in turn triggered a curtailment gain of
$1,307
for the three months ended March 31, 2016. The curtailment resulted in a plan remeasurement increasing plan liabilities by
$5,014
, net of
$2,700
deferred tax at
March 31, 2016
.
CONSOL Energy does not expect to contribute to the CWP plan in
2016
. The Company intends to pay benefit claims as they become due. For the three months ended
March 31, 2016
and 2015,
$2,884
and
$2,653
of CWP benefit claims have been paid, respectively.
CONSOL Energy does not expect to contribute to the workers’ compensation plan in
2016
. The Company intends to pay benefit claims as they become due. For the three months ended
March 31, 2016
and 2015,
$4,361
and
$5,306
of workers’ compensation benefits, state administrative fees and surety bond premiums have been paid, respectively.
NOTE 7—INCOME TAXES:
The effective tax rate for the
three
months ended
March 31, 2016
and 2015 was
34%
and
640%
, respectively. The effective tax rate for the three months ended March 31, 2016 differed from the U.S. federal statutory rate primarily due to the income tax benefit for excess percentage depletion, partially offset by a charge to record a state valuation allowance resulting from the Buchanan sale. The effective rate for the
three
months ended
March 31, 2015
differs from the U.S. federal statutory rate primarily due to the income tax benefit for excess percentage depletion.
The total amount of uncertain tax positions at
March 31, 2016
and
December 31, 2015
was
$12,702
. If these uncertain tax positions were recognized, there would be no effect on CONSOL Energy's effective tax rate. There were no additions to the liability for unrecognized tax benefits during the
three
months ended
March 31, 2016
.
CONSOL Energy recognizes interest accrued related to uncertain tax positions in interest expense. As of
March 31, 2016
and
December 31, 2015
, the Company reported an accrued interest liability relating to uncertain tax positions of
$53
in Other Current Liabilities on the Consolidated Balance Sheet. There was no interest expense reflected in the Company's Consolidated Statements of Income for the three months ended
March 31, 2016
relating to uncertain tax positions.
CONSOL Energy recognizes penalties accrued related to uncertain tax positions in its income tax expense. As of
March 31, 2016
and
December 31, 2015
, the Company had no accrued liabilities for tax penalties related to uncertain tax positions.
CONSOL Energy and its subsidiaries file federal income tax returns with the United States and returns within various states and Canadian jurisdictions. With few exceptions, the Company is no longer subject to United States federal, state, local, or non-U.S. income tax examinations by tax authorities for the years before 2010. The Company expects the Internal Revenue Service to conclude its audit of tax years 2010 through 2013 in the third quarter of 2016.
NOTE 8—INVENTORIES:
Inventory components consist of the following:
|
|
|
|
|
|
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
Coal
|
$
|
14,743
|
|
|
$
|
18,843
|
|
Supplies
|
62,487
|
|
|
64,831
|
|
Total Inventories
|
$
|
77,230
|
|
|
$
|
83,674
|
|
Inventories are stated at the lower of cost or market. The cost of coal inventories is determined by the first-in, first-out (FIFO) method. Coal inventory costs include labor, supplies, equipment costs, operating overhead, depreciation, depletion and amortization, and other related costs.
NOTE 9—ACCOUNTS RECEIVABLE SECURITIZATION:
CONSOL Energy and certain of its U.S. subsidiaries were party to a trade accounts receivable facility with financial institutions for the sale on a continuous basis of eligible trade accounts receivable. This facility was terminated on July 7, 2015.
CNX Funding Corporation, a wholly owned, special purpose, bankruptcy-remote subsidiary, bought and sold eligible trade receivables generated by certain subsidiaries of CONSOL Energy. Under the receivables facility, CONSOL Energy and certain subsidiaries, irrevocably and without recourse, sold all of their eligible trade accounts receivable to CNX Funding Corporation, who in turn sold these receivables to financial institutions and their affiliates, while maintaining a subordinated interest in a portion of the pool of trade receivables. This retained interest, which was included in Accounts and Notes Receivable-Trade in the Consolidated Balance Sheets, was recorded at fair value. Due to a short average collection cycle for such receivables, CONSOL Energy's collection experience history and the composition of the designated pool of trade accounts receivable that were part of this program, the fair value of its retained interest approximated the total amount of the designated pool of accounts receivable. CONSOL Energy serviced the sold trade receivables for the financial institutions for a fee based upon market rates for similar services.
In accordance with the Transfers and Servicing Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification, CONSOL Energy recorded transactions under the securitization facility as secured borrowings on the Consolidated Balance Sheets. The pledge of collateral was reported as Accounts Receivable - Securitized and the borrowings were classified as debt in Borrowings under Securitization Facility.
The cost of funds under this facility was based upon LIBOR and commercial paper rates, plus a charge for administrative services paid to the financial institution. Costs associated with the receivables facility totaled $
196
for the
three months
ended
March 31, 2015
. These costs were recorded as financing fees which are included in Other Costs - Miscellaneous Operating Expense in the Consolidated Statements of Income.
NOTE 10—PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
E&P Property, Plant and Equipment
|
|
|
|
Intangible drilling cost
|
$
|
3,481,390
|
|
|
$
|
3,452,989
|
|
Proven gas properties
|
1,925,328
|
|
|
1,922,602
|
|
Unproven gas properties
|
1,421,157
|
|
|
1,421,083
|
|
Gas gathering equipment
|
1,121,253
|
|
|
1,147,173
|
|
Gas wells and related equipment
|
814,993
|
|
|
785,744
|
|
Other gas assets
|
128,042
|
|
|
125,691
|
|
Gas advance royalties
|
19,386
|
|
|
19,745
|
|
Total E&P Property, Plant and Equipment
|
$
|
8,911,549
|
|
|
$
|
8,875,027
|
|
Less: Accumulated Depreciation, Depletion and Amortization
|
2,799,666
|
|
|
2,695,674
|
|
Total E&P Property, Plant and Equipment - Net
|
$
|
6,111,883
|
|
|
$
|
6,179,353
|
|
|
|
|
|
Coal and Other Property, Plant and Equipment - Continuing Operations:
|
|
|
|
Coal and other plant and equipment
|
$
|
3,217,988
|
|
|
$
|
3,217,530
|
|
Coal properties and surface lands
|
1,188,342
|
|
|
1,190,712
|
|
Mine development
|
373,394
|
|
|
371,585
|
|
Airshafts
|
366,125
|
|
|
361,872
|
|
Coal advance mining royalties
|
354,951
|
|
|
351,642
|
|
Leased coal lands
|
227,641
|
|
|
227,584
|
|
Total Coal and Other Property, Plant and Equipment
|
$
|
5,728,441
|
|
|
$
|
5,720,925
|
|
Less: Accumulated Depreciation, Depletion and Amortization
|
2,749,933
|
|
|
2,700,621
|
|
Total Coal and Other Property, Plant and Equipment - Net
|
$
|
2,978,508
|
|
|
$
|
3,020,304
|
|
|
|
|
|
Total Company Property, Plant and Equipment
|
$
|
14,639,990
|
|
|
$
|
14,595,952
|
|
Less - Total Company Accumulated Depreciation, Depletion and Amortization
|
5,549,599
|
|
|
5,396,295
|
|
Total Property, Plant and Equipment of Continuing Operations - Net
|
$
|
9,090,391
|
|
|
$
|
9,199,657
|
|
Industry Participation Agreements
CONSOL Energy has two significant industry participation agreements (referred to as "joint ventures" or "JVs") that provided drilling and completion carries for the Company's retained interests.
CNX Gas Company is party to a joint development agreement with Hess Ohio Developments, LLC (Hess) with respect to approximately
155
thousand net Utica Shale acres in Ohio in which each party has a 50% undivided interest. Under the agreement, as amended, Hess is obligated to pay a total of approximately $
335,000
in the form of a 50% drilling carry of certain CONSOL Energy working interest obligations as the acreage is developed. As of
March 31, 2016
, Hess’ remaining carry obligation is $
7,532
.
CNX Gas Company is party to a joint development agreement with Noble Energy, Inc. (Noble) with respect to approximately
700
thousand net Marcellus Shale natural gas and oil acres in West Virginia and Pennsylvania, in which each party owns a 50% undivided interest. Under the agreement, as amended, Noble Energy is obligated to pay a total of approximately
$1,846,000
in the form of a one-third drilling carry of certain of CONSOL Energy’s working interest obligations as the property is developed, subject to certain limitations. These limitations include the suspension of the carry if average Henry Hub natural gas prices are below $4.00 per million British thermal units (MMbtu) for three consecutive months. The carry was in effect from March 1, 2014, until November 1, 2014 at which time natural gas prices had fallen below $4.00/MMbtu for three consecutive months. The carry remains suspended. Limitations also include a
$400,000
annual maximum on Noble Energy's carried cost obligation. As of
March 31, 2016
, Noble Energy’s remaining carry obligation is
$1,624,448
.
NOTE 11—SHORT-TERM NOTES PAYABLE:
CONSOL Energy's current senior secured credit agreement expires on June 18, 2019. The credit facility allows for up to $
2,000,000
of borrowings, which includes a $
750,000
letters of credit sub-limit. CONSOL Energy can request an additional $
500,000
increase in the aggregate borrowing limit amount.
The current facility is secured by substantially all of the assets of CONSOL Energy and certain of its subsidiaries. Fees and interest rate spreads are based on the percentage of facility utilization, measured quarterly. Availability under the facility is limited to a borrowing base, which is determined by the lenders syndication agent and approved by the required number of lenders in good faith by calculating a value of CONSOL Energy's proved natural gas reserves.
The current facility contains a number of affirmative and negative covenants that limit the Company's ability to dispose of assets, make investments, purchase or redeem CONSOL Energy common stock, pay dividends, merge with another corporation and amend, modify or restate the senior unsecured notes. In May 2015, the facility was amended to allow, among other things, spinoffs, or other public equity offering transactions, in regard to subsidiaries that own metallurgical coal assets and thermal coal assets, and all arrangements, actions and transactions in connection therewith, including releases of associated entities or assets from the Credit Agreement and any liens granted under the loan documents. The Amendment also permits the incurrence of a term loan facility up to the aggregate principal amount of
$600,000
at subsidiaries of the Company that own the thermal coal assets and the incurrence of a revolving credit facility up to an aggregate principal amount of
$300,000
at subsidiaries of the Company that own the metallurgical coal assets.
The facility also requires that CONSOL Energy maintains a minimum interest coverage ratio of
2.50
to 1.00, which is calculated as the ratio of Adjusted EBITDA to cash interest expense of CONSOL Energy and certain of its subsidiaries, measured quarterly. CONSOL Energy must also maintain a minimum current ratio of
1.00
to 1.00, which is calculated as the ratio of current assets, plus revolver availability, to current liabilities, excluding borrowings under the revolver, measured quarterly. At
March 31, 2016
, the interest coverage ratio was
4.78
to 1.00 and the current ratio was
2.85
to 1.00. Further, the credit facility allows unlimited investments in joint ventures for the development and operation of natural gas gathering systems and permits CONSOL Energy to separate its E&P and coal businesses if the leverage ratio (which is, essentially, the ratio of debt to EBITDA) of the E&P business immediately after the separation would not be greater than
2.75
to 1.00. The calculation of all of the ratios above exclude CNX Coal Resources LP ("CNXC").
At
March 31, 2016
, the
$2,000,000
facility had $
851,500
of borrowings outstanding and $
286,358
of letters of credit outstanding, leaving $
862,142
of unused capacity. At
December 31, 2015
, the
$2,000,000
facility had
$952,000
of borrowings outstanding and $
258,177
of letters of credit outstanding, leaving $
789,823
of unused capacity.
NOTE 12—LONG-TERM DEBT:
|
|
|
|
|
|
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
Debt:
|
|
|
|
Senior Notes due April 2022 at 5.875% (Principal of $1,850,000 plus Unamortized Premium of $5,397 and $5,617, respectively)
|
$
|
1,855,397
|
|
|
$
|
1,855,617
|
|
Senior Notes due April 2023 at 8.00% (Principal of $500,000 less Unamortized Discount of $6,335 and $6,561, respectively)
|
493,665
|
|
|
493,439
|
|
Revolving Credit Facility - CNX Coal Resources LP
|
200,000
|
|
|
185,000
|
|
MEDCO Revenue Bonds in Series due September 2025 at 5.75%
|
102,865
|
|
|
102,865
|
|
Senior Notes due April 2020 at 8.25%, Issued at Par Value
|
74,470
|
|
|
74,470
|
|
Senior Notes due March 2021 at 6.375%, Issued at Par Value
|
20,611
|
|
|
20,611
|
|
Advance Royalty Commitments (16.35% Weighted Average Interest Rate)
|
5,862
|
|
|
5,863
|
|
Other Long-Term Note Maturing in 2018 (Principal of $2,752 and $3,096 less Unamortized Discount of $264 and $327, respectively)
|
2,488
|
|
|
2,769
|
|
Less: Unamortized Debt Issuance Costs
|
31,688
|
|
|
33,017
|
|
|
2,723,670
|
|
|
2,707,617
|
|
Net Amounts Due in One Year and Current Unamortized Debt Issuance Costs*
|
(1,801
|
)
|
|
(1,827
|
)
|
Long-Term Debt
|
$
|
2,725,471
|
|
|
$
|
2,709,444
|
|
* Represents
$2,621
and
$2,595
due in one year, less
$4,422
of unamortized debt issuance costs at
March 31, 2016
and
December 31, 2015
, respectively. Excludes current portion of Capital Lease Obligations of
$7,117
and $
7,682
at
March 31, 2016
and
December 31, 2015
, respectively.
In March 2015, CONSOL Energy closed on the private placement of
$500,000
of
8.00%
senior notes due in 2023 (the "Notes") less
$7,240
of unamortized bond discount. The Notes are guaranteed by substantially all of CONSOL Energy's wholly-owned domestic restricted subsidiaries. CONSOL Energy used the net proceeds of the sale of the Notes, together with borrowings under its revolving credit facility, to purchase
$937,822
of its outstanding
8.25%
senior notes due in 2020 and
$229,176
of its outstanding
6.375%
senior notes due in 2021. As part of this transaction, $
67,734
was included in Loss on Debt Extinguishment on the Consolidated Statements of Income.
In April 2015, FASB issued Update 2015-03 - Interest-Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. To simplify the presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance is effective for fiscal years beginning after December 15, 2015 and is required to be applied retrospectively to all prior periods presented. As permitted by the Update, CONSOL Energy elected to early adopt this guidance beginning in the fourth quarter of fiscal year 2015. The resulting reclassification of unamortized debt issuance costs from Other Assets to Long-Term Debt, net of the current portion, in the Consolidated Balance Sheets was
$27,266
and
$28,595
as of
March 31, 2016
and
December 31, 2015
, respectively.
In July 2015, CNX Coal Resources LP (CNXC), a consolidated subsidiary of CONSOL Energy, entered into a Credit Agreement for a
$400,000
revolving credit facility. As of
March 31, 2016
and December 31, 2015, CNXC had
$200,000
and
$185,000
of outstanding borrowings on the facility, respectively. CONSOL Energy is not a guarantor of CNXC's revolving credit facility. See Note 18 - Related Party Transactions for more information.
NOTE 13—COMMITMENTS AND CONTINGENT LIABILITIES:
CONSOL Energy and its subsidiaries are subject to various lawsuits and claims with respect to such matters as personal injury, wrongful death, damage to property, exposure to hazardous substances, governmental regulations including environmental remediation, employment and contract disputes and other claims and actions arising out of the normal course of business. CONSOL Energy accrues the estimated loss for these lawsuits and claims when the loss is probable and can be estimated. The Company's current estimated accruals related to these pending claims, individually and in the aggregate, are immaterial to the financial position, results of operations or cash flows of CONSOL Energy. It is possible that the aggregate loss in the future with respect to these lawsuits and claims could ultimately be material to the financial position, results of operations or cash flows of CONSOL Energy; however, such amounts cannot be reasonably estimated. The amount claimed against CONSOL Energy is disclosed below when an amount is expressly stated in the lawsuit or claim, which is not often the case. The maximum aggregate amount claimed in those lawsuits and claims, regardless of probability, where a claim is expressly stated or can be estimated, exceeds the aggregate amounts accrued for all lawsuits and claims by approximately
$664,874
.
The following lawsuits and claims include those for which a loss is probable and an accrual has been recognized:
Hale Litigation: This class action lawsuit was filed on September 23, 2010 in the U.S. District Court in Abingdon, Virginia. The putative class consists of forced-pooled unleased gas owners whose ownership of the coalbed methane (CBM) gas was declared to be in conflict with rights of others. The lawsuit seeks a judicial declaration of ownership of the CBM and damages based on allegations CNX Gas Company failed to either pay royalties due to conflicting claimants or deemed lessors or paid them less than required because of the alleged practice of improper below market sales and/or taking alleged improper post-production deductions. On September 30, 2013, the District Judge entered an Order certifying the class, and CNX Gas Company appealed the Order to the U.S. Fourth Circuit Court of Appeals. On August 19, 2014, the Fourth Circuit agreed with CNX Gas Company, reversed the Order certifying the class and remanded the case to the trial court for further proceedings consistent with the decision. On April 23, 2015, Plaintiffs filed a Renewed Motion for Class Certification, and on June 23, 2015 CNX Gas Company filed its Opposition to same. The Court held a hearing on the Motion on September 18, 2015 and has not yet ruled. CONSOL Energy continues to believe this action cannot properly proceed as a class action in any form, believes the case has meritorious defenses, and intends to defend it vigorously. The Company has established an accrual to cover its estimated liability for this case. This accrual is immaterial to the overall financial position of CONSOL Energy and is included in Other Accrued Liabilities on the Consolidated Balance Sheets.
Addison Litigation: This class action lawsuit was filed on April 28, 2010 in the United States District Court in Abingdon, Virginia. The putative class consists of gas lessors whose gas ownership is in conflict. The lawsuit seeks a judicial declaration of ownership of the CBM and damages based on the allegations that CNX Gas Company failed to either pay royalties due to these conflicting claimant lessors or paid them less than required because of the alleged practice of improper below market sales and/or
taking alleged improper post-production deductions. On September 30, 2013, the District Judge entered an Order certifying the class, and CNX Gas Company appealed the Order to the U.S. Court of Appeals for the Fourth Circuit. On August 19, 2014, the Fourth Circuit agreed with CNX Gas Company, reversed the Order certifying the class and remanded the case to the trial court for further proceedings consistent with the decision. On April 23, 2015, Plaintiffs filed a Renewed Motion for Class Certification, and on June 23, 2015 CNX Gas Company filed its Opposition to same. The Court held a hearing on the Motion on September 18, 2015 and has not yet ruled. CONSOL Energy continues to believe this action cannot properly proceed as a class action in any form, believes the case has meritorious defenses, and intends to defend it vigorously. The Company has established an accrual to cover its estimated liability for this case. This accrual is immaterial to the overall financial position of CONSOL Energy and is included in Other Accrued Liabilities on the Consolidated Balance Sheets.
Clean Water Act - Bailey Mine: The Company received from the U.S. EPA on April 8, 2011, a request for information relating to National Pollutant Discharge Elimination System (NPDES) Permit compliance at the Company’s Bailey and Enlow Fork Mines. In response, CONSOL Pennsylvania Coal Company submitted water discharge monitoring and other data to the EPA. In early 2013, the case was referred to the U.S. Department of Justice (DOJ), and Pennsylvania Department of Environmental Protection (PA DEP) also became involved. On December 18, 2014, the DOJ provided the Company a proposed Consent Decree to resolve certain Clean Water Act and Clean Streams Law claims against CONSOL Energy, Inc. and CONSOL Pennsylvania Coal Company with respect to the Bailey Mine Complex. The parties continue to negotiate the terms of the proposed Consent Decree. The Company anticipates resolving this matter in 2016. The Company has established an accrual to cover its estimated liability in this matter. This accrual is immaterial to the overall financial position of CONSOL Energy and is included in Other Accrued Liabilities on the Consolidated Balance Sheets.
The following royalty and land rights lawsuits and claims include those for which a loss is reasonably possible, but not probable, and accordingly, an accrual may not have been recognized. These claims are influenced by many factors which prevent the estimation of a range of potential loss. These factors include, but are not limited to, generalized allegations of unspecified damages (such as improper deductions), discovery having not commenced or not having been completed, unavailability of expert reports on damages and non-monetary issues being tried. For example, in instances where a gas lease termination is sought, damages would depend on speculation as to if and when the gas production would otherwise have occurred, how many wells would have been drilled on the lease premises, what their production would be, what the cost of production would be, and what the price of gas would be during the production period. An estimate is calculated, if applicable, when sufficient information becomes available.
Virginia Mine Void Litigation: The Company is currently defending three lawsuits naming Consolidation Coal Company (CCC), Island Creek Coal Company (ICCC), CNX Gas Company, and/or CONSOL Energy. The lawsuits were filed in the U.S. District Court for the Western District of Virginia. On October 26, 2015, the trial court granted summary judgment in favor of the defendants in two of the actions upon its finding that plaintiffs' claims are barred by the applicable statutes of limitation. Plaintiffs have appealed both cases to the U.S. Court of Appeals for the Fourth Circuit. The third case remains pending in the trial court. On January 26, 2016, six mine void lawsuits that have twice before been filed and voluntarily dismissed, were refiled for a third time in state court but have not been served. The Complaints seek damages and injunctive relief in connection with the transfer of water from mining activities at Buchanan Mine into void spaces in inactive ICCC mines adjacent to the Buchanan operations, voids ostensibly underlying plaintiffs’ properties. While some of the plaintiffs have an ownership interest in the coal, others have some interest in one or more of the fee, surface, oil/gas or other mineral estates. The suits allege the water storage precludes access to and has damaged coal, impeded coalbed methane gas production and was made without compensation to the property owners. Plaintiffs seek recovery in tort, contract and trespass assumpsit (quasi-contract). The suits each seek damages between $50,000 and in excess of $100,000 plus punitive damages. The Company intends to vigorously defend these suits.
At
March 31, 2016
, CONSOL Energy has provided the following financial guarantees, unconditional purchase obligations and letters of credit to certain third parties, as described by major category in the following table. These amounts represent the maximum potential total of future payments that the we could be required to make under these instruments. These amounts have not been reduced for potential recoveries under recourse or collateralization provisions. Generally, recoveries under reclamation bonds would be limited to the extent of the work performed at the time of the default. No amounts related to these financial guarantees and letters of credit are recorded as liabilities in the financial statements. CONSOL Energy management believes that these guarantees will expire without being funded, and therefore the commitments will not have a material adverse effect on financial condition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Commitment Expiration Per Period
|
|
Total
Amounts
Committed
|
|
Less Than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
Beyond
5 Years
|
Letters of Credit:
|
|
|
|
|
|
|
|
|
|
Employee-Related
|
$
|
61,434
|
|
|
$
|
42,131
|
|
|
$
|
19,303
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Environmental
|
998
|
|
|
398
|
|
|
600
|
|
|
—
|
|
|
—
|
|
Other
|
223,926
|
|
|
222,954
|
|
|
972
|
|
|
—
|
|
|
—
|
|
Total Letters of Credit
|
286,358
|
|
|
265,483
|
|
|
20,875
|
|
|
—
|
|
|
—
|
|
Surety Bonds:
|
|
|
|
|
|
|
|
|
|
Employee-Related
|
115,353
|
|
|
88,853
|
|
|
26,500
|
|
|
—
|
|
|
—
|
|
Environmental
|
532,900
|
|
|
475,234
|
|
|
57,666
|
|
|
—
|
|
|
—
|
|
Other
|
28,468
|
|
|
27,422
|
|
|
1,046
|
|
|
—
|
|
|
—
|
|
Total Surety Bonds
|
676,721
|
|
|
591,509
|
|
|
85,212
|
|
|
—
|
|
|
—
|
|
Guarantees:
|
|
|
|
|
|
|
|
|
|
Coal
|
25,050
|
|
|
25,050
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Other
|
72,305
|
|
|
39,325
|
|
|
14,024
|
|
|
12,327
|
|
|
6,629
|
|
Total Guarantees
|
97,355
|
|
|
64,375
|
|
|
14,024
|
|
|
12,327
|
|
|
6,629
|
|
Total Commitments
|
$
|
1,060,434
|
|
|
$
|
921,367
|
|
|
$
|
120,111
|
|
|
$
|
12,327
|
|
|
$
|
6,629
|
|
Included in the above table are commitments and guarantees entered into in conjunction with the sale of Consolidation Coal Company and certain of its subsidiaries, which contain all five of its longwall coal mines in West Virginia, and its river operations to a subsidiary of Murray Energy Corporation (Murray Energy). As part of the sales agreement, CONSOL Energy has guaranteed certain equipment lease obligations and coal sales agreements that were assumed by Murray Energy. In the event that Murray Energy would default on the obligations defined in the agreements, CONSOL Energy would be required to perform under the guarantees. If CONSOL Energy would be required to perform, the stock purchase agreement provides various recourse actions. At
March 31, 2016
, and December 31, 2015, the fair value of these guarantees was
$1,228
and are included in Other Accrued Liabilities on the Consolidated Balance Sheets. The fair value of certain of the guarantees was determined using CONSOL Energy’s risk-adjusted interest rate. Significant increases or decreases in the risk-adjusted interest rates may result in a significantly higher or lower fair value measurement. Coal sales agreement guarantees were valued based on an evaluation of coal market pricing compared to contracted sales price and includes an adjustment for nonperformance risk. No other amounts related to financial guarantees and letters of credit are recorded as liabilities in the financial statements. Significant judgment is required in determining the fair value of these guarantees. The guarantees of the leases and sales agreements are classified within Level 3 of the fair value hierarchy.
CONSOL Energy regularly evaluates the likelihood of default for all guarantees based on an expected loss analysis and records the fair value, if any, of its guarantees as an obligation in the consolidated financial statements.
CONSOL Energy and CNX Gas Company enter into long-term unconditional purchase obligations to procure major equipment purchases, natural gas firm transportation, gas drilling services and other operating goods and services. These purchase obligations are not recorded on the Consolidated Balance Sheets. As of
March 31, 2016
, the purchase obligations for each of the next five years and beyond were as follows:
|
|
|
|
|
Obligations Due
|
Amount
|
Less than 1 year
|
$
|
194,668
|
|
1 - 3 years
|
302,316
|
|
3 - 5 years
|
244,396
|
|
More than 5 years
|
641,615
|
|
Total Purchase Obligations
|
$
|
1,382,995
|
|
NOTE 14—DERIVATIVE INSTRUMENTS:
CONSOL Energy enters into financial derivative instruments to manage its exposure to commodity price volatility. CONSOL Energy de-designated all of its cash flow hedges on December 31, 2014 and accounts for all existing and future gas and NGL commodity hedges on a mark-to-market basis with changes in fair value recorded in current period earnings. In connection with this change, CONSOL Energy froze the balances recorded in Accumulated Other Comprehensive Income at December 31, 2014 and will reclassify balances to earnings as the underlying physical transactions occur, unless it is no longer probable that the physical transaction will occur at which time the related gains deferred in Other Comprehensive Income (OCI) will be immediately recorded in earnings.
CONSOL Energy is exposed to credit risk in the event of non-performance by counterparties. The creditworthiness of counterparties is subject to continuing review. The Company has not experienced any issues of non-performance by derivative counterparties.
None of the Company's counterparty master agreements currently require CONSOL Energy to post collateral for any of its positions. However, as stated in the counterparty master agreements, if CONSOL Energy's obligations with one of its counterparties cease to be secured on the same basis as similar obligations with the other lenders under the credit facility, CONSOL Energy would have to post collateral for instruments in a liability position in excess of defined thresholds. All of the Company's derivative instruments are subject to master netting arrangements with our counterparties. CONSOL Energy recognizes all financial derivative instruments as either assets or liabilities at fair value on the Consolidated Balance Sheets on a gross basis.
Each of CONSOL Energy's counterparty master agreements allows, in the event of default, the ability to elect early termination of outstanding contracts. If early termination is elected, CONSOL Energy and the applicable counterparty would net settle all open hedge positions.
CONSOL Energy’s commodity derivative instruments accounted for a total notional amount of production of
569.1
Bcf at
March 31, 2016
and are forecasted to settle through
2020
. At
December 31, 2015
, the commodity derivative instruments accounted for a total notional amount of production of
456.1
Bcf. At
March 31, 2016
, the basis only swaps were for notional amounts of
177.2
Bcf and are forecasted to settle through
2018
. At
December 31, 2015
, the basis only swaps were for notional amounts of
124.4
Bcf.
The gross fair value of CONSOL Energy's derivative instruments at
March 31, 2016
and
December 31, 2015
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivative Instruments
|
|
Liability Derivative Instruments
|
|
March 31,
|
|
December 31,
|
|
|
March 31,
|
|
December 31,
|
|
2016
|
|
2015
|
|
|
2016
|
|
2015
|
Commodity Derivative Instruments:
|
|
|
|
|
|
|
|
Prepaid Expense
|
$
|
228,708
|
|
|
$
|
234,409
|
|
|
Other Accrued Liabilities
|
$
|
7,206
|
|
|
$
|
—
|
|
Other Assets
|
42,333
|
|
|
44,539
|
|
|
Other Liabilities
|
28,315
|
|
|
5,137
|
|
Total Asset
|
$
|
271,041
|
|
|
$
|
278,948
|
|
|
Total Liability
|
$
|
35,521
|
|
|
$
|
5,137
|
|
|
|
|
|
|
|
|
|
|
Basis Only Swaps:
|
|
|
|
|
|
|
|
|
Prepaid Expense
|
$
|
6,782
|
|
|
$
|
5,429
|
|
|
Other Accrued Liabilities
|
$
|
19,358
|
|
|
$
|
12,206
|
|
Other Assets
|
4,460
|
|
|
1,093
|
|
|
Other Liabilities
|
5,557
|
|
|
1,569
|
|
Total Asset
|
$
|
11,242
|
|
|
$
|
6,522
|
|
|
Total Liability
|
$
|
24,915
|
|
|
$
|
13,775
|
|
The effect of derivative instruments on CONSOL Energy's Consolidated Statements of Income was as follows:
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
March 31,
|
|
2016
|
|
2015
|
Cash Received (Paid) in Settlement of Commodity Derivative Instruments:
|
|
|
|
Natural Gas Swaps
|
$
|
82,146
|
|
|
$
|
30,260
|
|
Natural Gas Basis Swaps
|
2,185
|
|
|
(119
|
)
|
Total Cash Received in Settlement of Commodity Derivative Instruments
|
84,331
|
|
|
30,141
|
|
|
|
|
|
Non-Cash Portion of (Loss) Gain on Commodity Derivative Instruments:
|
|
|
|
Natural Gas Swaps
|
(38,023
|
)
|
|
31,103
|
|
NGL Swaps
|
(265
|
)
|
|
—
|
|
Natural Gas Basis Swaps
|
(6,421
|
)
|
|
(1,626
|
)
|
Reclassified from Accumulated OCI
|
15,438
|
|
|
30,527
|
|
Total Non-Cash Portion of (Loss) Gain on Commodity Derivative Instruments
|
(29,271
|
)
|
|
60,004
|
|
|
|
|
|
Gain (Loss) on Commodity Derivative Instruments:
|
|
|
|
Natural Gas Swaps
|
44,123
|
|
|
61,363
|
|
NGL Swaps
|
(265
|
)
|
|
—
|
|
Natural Gas Basis Swaps
|
(4,236
|
)
|
|
(1,745
|
)
|
Reclassified from Accumulated OCI
|
15,438
|
|
|
30,527
|
|
Total Gain on Commodity Derivative Instruments
|
$
|
55,060
|
|
|
$
|
90,145
|
|
Changes in Accumulated OCI, net of tax, attributable to cash flow hedges that were de-designated December 31, 2014 were as follows:
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
March 31,
|
|
2016
|
|
2015
|
Beginning Balance – Accumulated OCI
|
$
|
43,470
|
|
|
$
|
121,521
|
|
Gain Reclassified from Accumulated OCI (Net of tax: $5,624, $11,213)
|
(9,814
|
)
|
|
(19,314
|
)
|
Ending Balance – Accumulated OCI
|
$
|
33,656
|
|
|
$
|
102,207
|
|
CONSOL Energy expects to reclassify an additional
$33,656
, net of tax of
$19,387
, out of Accumulated Other Comprehensive Income over the remaining period ended December 31, 2016.
NOTE 15—FAIR VALUE OF FINANCIAL INSTRUMENTS:
CONSOL Energy determines the fair value of assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. The fair value hierarchy is based on whether the inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources (including NYMEX forward curves, LIBOR-based discount rates and basis forward curves), while unobservable inputs reflect the Company's own assumptions of what market participants would use.
The fair value hierarchy includes three levels of inputs that may be used to measure fair value as described below:
Level One - Quoted prices for identical instruments in active markets.
Level Two - The fair value of the assets and liabilities included in Level 2 are based on standard industry income approach models that use significant observable inputs, including NYMEX forward curves, LIBOR-based discount rates and basis forward curves.
Level Three - Unobservable inputs significant to the fair value measurement supported by little or no market activity. The significant unobservable inputs used in the fair value measurement of the Company's third party guarantees are the credit risk of the third party and the third party surety bond markets. A significant increase or decrease in these values, in isolation, would have a directionally similar effect resulting in higher or lower fair value measurement of the Company's Level 3 guarantees.
In those cases when the inputs used to measure fair value meet the definition of more than one level of the fair value hierarchy, the lowest level input that is significant to the fair value measurement in its totality determines the applicable level in the fair value hierarchy.
The financial instruments measured at fair value on a recurring basis are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at March 31, 2016
|
|
Fair Value Measurements at December 31, 2015
|
Description
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
Gas Derivatives
|
$
|
—
|
|
|
$
|
221,847
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
266,558
|
|
|
$
|
—
|
|
Murray Energy Guarantees
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,228
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,228
|
|
The following methods and assumptions were used to estimate the fair value for which the fair value option was not elected:
Cash and cash equivalents:
The carrying amount reported in the Consolidated Balance Sheets for cash and cash equivalents approximates its fair value due to the short-term maturity of these instruments.
Short-term notes payable
: The carrying amount reported in the Consolidated Balance Sheets for short-term notes payable approximates its fair value due to the short-term maturity of these instruments.
Long-term debt:
The fair value of long-term debt is measured using unadjusted quoted market prices or estimated using discounted cash flow analyses. The discounted cash flow analyses are based on current market rates for instruments with similar cash flows.
The carrying amounts and fair values of financial instruments for which the fair value option was not elected are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
Cash and Cash Equivalents
|
$
|
426,650
|
|
|
$
|
426,650
|
|
|
$
|
72,578
|
|
|
$
|
72,578
|
|
Short-Term Notes Payable
|
$
|
(851,500
|
)
|
|
$
|
(851,500
|
)
|
|
$
|
(952,000
|
)
|
|
$
|
(952,000
|
)
|
Long-Term Debt
|
$
|
(2,755,358
|
)
|
|
$
|
(2,082,975
|
)
|
|
$
|
(2,740,634
|
)
|
|
$
|
(1,810,925
|
)
|
Cash and cash equivalents represent highly liquid instruments and constitute Level 1 fair value measurements. Certain of the Company’s debt is actively traded on a public market and, as a result, constitutes Level 1 fair value measurement. The portion of the Company’s debt obligations that are not actively traded are valued through reference to the applicable underlying benchmark rate and, as a result, constitutes Level 2 fair value measurement.
NOTE 16—SEGMENT INFORMATION:
CONSOL Energy consists of two principal business divisions: Exploration and Production (E&P) and Coal. The principal activity of the E&P division, which includes four reportable segments, is to produce pipeline quality natural gas for sale primarily to gas wholesalers. The E&P division's reportable segments are Marcellus, Utica, Coalbed Methane, and Other Gas. The Other Gas segment is primarily related to shallow oil and gas production, and includes the Company's purchased gas activities and selling, general and administrative activities, as well as various other activities assigned to the E&P division but not allocated to each individual well type.
The principal activities of the Coal division are mining, preparation and marketing of thermal coal, sold primarily to power generators. The Coal division's reportable segments are Pennsylvania (PA) Operations and Other Coal. Each of these reportable segments includes a number of operating segments (individual mines). For the
three
months ended
March 31, 2016
, the PA Operations aggregated segment includes the following mines: Bailey Mine, Enlow Fork Mine, and Harvey Mine and the corresponding preparation plant facilities. For the
three
months ended
March 31, 2016
, the Other Coal segment includes the Miller Creek Complex, coal terminal operations, the Company's purchased coal activities, idled mine activities and selling, general and administrative activities, as well as various other activities assigned to the Coal division but not allocated to each individual mine.
CONSOL Energy’s All Other division includes expenses from various other corporate activities that are not allocated to the E&P or Coal divisions.
Prior to the sale of the Buchanan Mine on March 31, 2016, CONSOL Energy had a third reportable segment in the Coal division, Virginia (VA) Operations. See Note 2 - Discontinued Operations for more information relating to the sale.
In the preparation of the following information, intersegment sales have been recorded at amounts approximating market. Operating profit for each segment is based on sales less identifiable operating and non-operating expenses. Assets are reflected at the division level for E&P and are not allocated between each individual E&P segment. These assets are not allocated to each individual segment due to the diverse asset base controlled by CONSOL Energy, whereby each individual asset may service more than one segment within the division. An allocation of such asset base would not be meaningful or representative on a segment by segment basis.
Industry segment results for the
three months
ended
March 31, 2016
are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcellus
Shale
|
|
Utica Shale
|
|
Coalbed Methane
|
|
Other
Gas
|
|
Total
E&P
|
|
PA Operations
|
|
Other
Coal
|
|
Total Coal
|
|
Other
|
|
Eliminations
|
|
Consolidated
|
|
Sales—Outside
|
$
|
96,138
|
|
|
$
|
34,261
|
|
|
$
|
41,920
|
|
|
$
|
8,936
|
|
|
$
|
181,255
|
|
|
$
|
226,164
|
|
|
$
|
25,731
|
|
|
$
|
251,895
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
433,150
|
|
(A)
|
Gain on Commodity Derivative Instruments
|
48,564
|
|
|
10,009
|
|
|
19,121
|
|
|
(22,634
|
)
|
|
55,060
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55,060
|
|
|
Other Outside Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,709
|
|
|
7,709
|
|
|
—
|
|
|
—
|
|
|
7,709
|
|
|
Sales—Purchased Gas
|
—
|
|
|
—
|
|
|
—
|
|
|
8,618
|
|
|
8,618
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,618
|
|
|
Freight—Outside
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,076
|
|
|
34
|
|
|
13,110
|
|
|
—
|
|
|
—
|
|
|
13,110
|
|
|
Intersegment Transfers
|
—
|
|
|
—
|
|
|
424
|
|
|
—
|
|
|
424
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(424
|
)
|
|
—
|
|
|
Total Sales and Freight
|
$
|
144,702
|
|
|
$
|
44,270
|
|
|
$
|
61,465
|
|
|
$
|
(5,080
|
)
|
|
$
|
245,357
|
|
|
$
|
239,240
|
|
|
$
|
33,474
|
|
|
$
|
272,714
|
|
|
$
|
—
|
|
|
$
|
(424
|
)
|
|
$
|
517,647
|
|
|
Earnings (Loss) Before Income Taxes
|
$
|
19,482
|
|
|
$
|
3,256
|
|
|
$
|
12,606
|
|
|
$
|
(58,885
|
)
|
|
$
|
(23,541
|
)
|
|
$
|
23,410
|
|
|
$
|
(26,253
|
)
|
|
$
|
(2,843
|
)
|
|
$
|
(50,325
|
)
|
|
$
|
(424
|
)
|
|
$
|
(77,133
|
)
|
(B)
|
Segment Assets
|
|
|
|
|
|
|
|
|
$
|
6,814,818
|
|
|
$
|
2,078,559
|
|
|
$
|
1,194,327
|
|
|
$
|
3,272,886
|
|
|
$
|
628,166
|
|
|
$
|
—
|
|
|
$
|
10,715,870
|
|
(C)
|
Depreciation, Depletion and Amortization
|
|
|
|
|
|
|
|
|
$
|
105,715
|
|
|
$
|
41,266
|
|
|
$
|
13,086
|
|
|
$
|
54,352
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
160,067
|
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
|
$
|
62,862
|
|
|
$
|
12,904
|
|
|
$
|
1,921
|
|
|
$
|
14,825
|
|
|
$
|
1,281
|
|
|
$
|
—
|
|
|
$
|
78,968
|
|
|
(A) Included in the Coal segment are sales of $
60,357
to Duke Energy, which comprises over 10% of sales.
(B) Includes equity in earnings of unconsolidated affiliates of
$15,598
and
$1,067
for E&P and Coal, respectively.
(C) Includes investments in unconsolidated equity affiliates of
$248,034
and
$3,594
for E&P and Coal, respectively.
Industry segment results for the
three months
ended
March 31, 2015
are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcellus
Shale
|
|
Utica
Shale
|
|
Coalbed Methane
|
|
Other
Gas
|
|
Total
E&P
|
|
PA Operations
|
|
Other
Coal
|
|
Total
Coal
|
|
Other
|
|
Eliminations
|
|
Consolidated
|
|
Sales—Outside
|
$
|
126,302
|
|
|
$
|
18,603
|
|
|
$
|
61,327
|
|
|
$
|
18,206
|
|
|
$
|
224,438
|
|
|
$
|
384,437
|
|
|
$
|
31,714
|
|
|
$
|
416,151
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
640,589
|
|
(D)
|
Gain on Commodity Derivative Instruments
|
12,792
|
|
|
—
|
|
|
13,657
|
|
|
63,696
|
|
|
90,145
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90,145
|
|
|
Other Outside Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,130
|
|
|
13,130
|
|
|
—
|
|
|
—
|
|
|
13,130
|
|
|
Sales—Purchased Gas
|
—
|
|
|
—
|
|
|
—
|
|
|
3,597
|
|
|
3,597
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,597
|
|
|
Freight—Outside
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,369
|
|
|
4,156
|
|
|
6,525
|
|
|
—
|
|
|
—
|
|
|
6,525
|
|
|
Intersegment Transfers
|
—
|
|
|
—
|
|
|
547
|
|
|
—
|
|
|
547
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(547
|
)
|
|
—
|
|
|
Total Sales and Freight
|
$
|
139,094
|
|
|
$
|
18,603
|
|
|
$
|
75,531
|
|
|
$
|
85,499
|
|
|
$
|
318,727
|
|
|
$
|
386,806
|
|
|
$
|
49,000
|
|
|
$
|
435,806
|
|
|
$
|
—
|
|
|
$
|
(547
|
)
|
|
$
|
753,986
|
|
|
Earnings (Loss) Before Income Taxes
|
$
|
47,177
|
|
|
$
|
(4,121
|
)
|
|
$
|
18,569
|
|
|
$
|
14,364
|
|
|
$
|
75,989
|
|
|
$
|
98,402
|
|
|
$
|
(13,701
|
)
|
|
$
|
84,701
|
|
|
$
|
(129,532
|
)
|
|
$
|
(547
|
)
|
|
$
|
30,611
|
|
(E)
|
Segment Assets
|
|
|
|
|
|
|
|
|
$
|
7,534,830
|
|
|
$
|
2,100,349
|
|
|
$
|
1,936,127
|
|
|
$
|
4,036,476
|
|
|
$
|
91,794
|
|
|
$
|
—
|
|
|
$
|
11,663,100
|
|
(F)
|
Depreciation, Depletion and Amortization
|
|
|
|
|
|
|
|
|
$
|
87,444
|
|
|
$
|
45,743
|
|
|
$
|
16,515
|
|
|
$
|
62,258
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
149,709
|
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
|
$
|
250,303
|
|
|
$
|
32,550
|
|
|
$
|
2,085
|
|
|
$
|
34,635
|
|
|
$
|
2,866
|
|
|
$
|
—
|
|
|
$
|
287,804
|
|
|
|
|
(D)
|
Included in the Coal segment are sales of
$84,616
to Duke Energy and sales of
$68,094
to Xcoal Energy & Resources, each comprising over 10% of sales.
|
|
|
(E)
|
Includes equity in earnings of unconsolidated affiliates of
$8,378
and
$2,945
for E&P and Coal, respectively.
|
(F) Includes investments in unconsolidated equity affiliates of
$158,091
and
$34,182
for E&P and Coal, respectively.
Reconciliation of Segment Information to Consolidated Amounts:
|
|
|
|
|
|
|
|
|
(Loss) Earnings Before Income Taxes:
|
For the Three Months Ended March 31,
|
|
2016
|
|
2015
|
Segment (Loss) Earnings Before Income Taxes for total reportable business segments
|
$
|
(26,384
|
)
|
|
$
|
160,690
|
|
Segment (Loss) Earnings Before Income Taxes for all other business segments
|
(459
|
)
|
|
(6,676
|
)
|
Interest expense, net (G)
|
(49,866
|
)
|
|
(55,122
|
)
|
Eliminations
|
(424
|
)
|
|
(547
|
)
|
Loss on debt extinguishment
|
—
|
|
|
(67,734
|
)
|
(Loss) Earnings Before Income Taxes
|
$
|
(77,133
|
)
|
|
$
|
30,611
|
|
|
|
|
|
|
|
|
|
|
Total Assets:
|
March 31,
|
2016
|
|
2015
|
Segment assets for total reportable business segments
|
$
|
10,087,704
|
|
|
$
|
11,571,306
|
|
Segment assets for all other business segments
|
199,725
|
|
|
65,977
|
|
Items excluded from segment assets:
|
|
|
|
Cash and other investments (G)
|
426,571
|
|
|
5,251
|
|
Recoverable income taxes
|
1,870
|
|
|
20,566
|
|
Total Consolidated Assets
|
$
|
10,715,870
|
|
|
$
|
11,663,100
|
|
(G) Excludes amounts specifically related to the E&P & Coal divisions.
NOTE 17—GUARANTOR SUBSIDIARIES FINANCIAL INFORMATION:
The payment obligations under the
$74,470
,
8.250%
per annum senior notes due
April 1, 2020
, the
$20,611
,
6.375%
per annum senior notes due
March 1, 2021
, the
$1,855,397
,
5.875%
per annum senior notes due
April 15, 2022
, and the
$493,665
,
8.000%
per annum senior notes due
April 1, 2023
issued by CONSOL Energy are jointly and severally, and also fully and unconditionally, guaranteed by certain subsidiaries of CONSOL Energy. In accordance with positions established by the Securities and Exchange Commission (SEC), the following financial information sets forth separate financial information with respect to the parent, CNX Gas, a guarantor subsidiary, CNX Coal Resources LP (CNXC), a non-guarantor subsidiary, and the remaining guarantor and non-guarantor subsidiaries. The principal elimination entries include investments in subsidiaries and certain intercompany balances and transactions. CONSOL Energy, the parent, and a guarantor subsidiary manage several assets and liabilities of all other wholly owned subsidiaries. These include, for example, deferred tax assets, cash and other post-employment liabilities. These assets and liabilities are reflected as parent company or guarantor company amounts for purposes of this presentation.
Income Statement for the
Three Months Ended
March 31, 2016
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Issuer
|
|
CNX Gas
Guarantor
|
|
Other
Subsidiary
Guarantors
|
|
CNXC Non-Guarantor
|
|
Other
Subsidiary
Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Revenues and Other Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas, NGLs and Oil Sales
|
$
|
—
|
|
|
$
|
181,680
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(425
|
)
|
|
$
|
181,255
|
|
Gain on Commodity Derivative Instruments
|
—
|
|
|
55,060
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55,060
|
|
Coal Sales
|
—
|
|
|
—
|
|
|
206,662
|
|
|
45,233
|
|
|
—
|
|
|
—
|
|
|
251,895
|
|
Other Outside Sales
|
—
|
|
|
—
|
|
|
7,709
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,709
|
|
Purchased Gas Sales
|
—
|
|
|
8,618
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,618
|
|
Freight-Outside Coal
|
—
|
|
|
—
|
|
|
10,495
|
|
|
2,615
|
|
|
—
|
|
|
—
|
|
|
13,110
|
|
Miscellaneous Other Income
|
(66,620
|
)
|
|
30,161
|
|
|
17,970
|
|
|
1
|
|
|
—
|
|
|
66,620
|
|
|
48,132
|
|
Loss on Sale of Assets
|
—
|
|
|
(7,143
|
)
|
|
(112
|
)
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(7,265
|
)
|
Total Revenue and Other Income
|
(66,620
|
)
|
|
268,376
|
|
|
242,724
|
|
|
47,839
|
|
|
—
|
|
|
66,195
|
|
|
558,514
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and Production Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease Operating Expense
|
—
|
|
|
27,739
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,739
|
|
Transportation, Gathering and Compression
|
—
|
|
|
93,974
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
93,974
|
|
Production, Ad Valorem, and Other Fees
|
—
|
|
|
8,303
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,303
|
|
Depreciation, Depletion and Amortization
|
—
|
|
|
105,715
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
105,715
|
|
Exploration and Production Related Other Costs
|
—
|
|
|
2,408
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,408
|
|
Purchased Gas Costs
|
—
|
|
|
7,868
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,868
|
|
Other Corporate Expenses
|
—
|
|
|
27,694
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,694
|
|
Selling, General, and Administrative
|
—
|
|
|
17,563
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,563
|
|
Total Exploration and Production Costs
|
—
|
|
|
291,264
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
291,264
|
|
Coal Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and Other Costs
|
1,003
|
|
|
—
|
|
|
183,277
|
|
|
30,794
|
|
|
—
|
|
|
—
|
|
|
215,074
|
|
Depreciation, Depletion and Amortization
|
153
|
|
|
—
|
|
|
45,946
|
|
|
8,253
|
|
|
—
|
|
|
—
|
|
|
54,352
|
|
Freight Expense
|
—
|
|
|
—
|
|
|
10,495
|
|
|
2,615
|
|
|
—
|
|
|
—
|
|
|
13,110
|
|
Selling, General, and Administrative
|
—
|
|
|
—
|
|
|
3,966
|
|
|
1,684
|
|
|
—
|
|
|
—
|
|
|
5,650
|
|
Other Corporate Expenses
|
—
|
|
|
—
|
|
|
3,143
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,143
|
|
Total Coal Costs
|
1,156
|
|
|
—
|
|
|
246,827
|
|
|
43,346
|
|
|
—
|
|
|
—
|
|
|
291,329
|
|
Other Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous Operating Expense
|
3,002
|
|
|
—
|
|
|
164
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
3,188
|
|
Interest Expense
|
45,628
|
|
|
653
|
|
|
1,591
|
|
|
1,994
|
|
|
—
|
|
|
—
|
|
|
49,866
|
|
Total Other Costs
|
48,630
|
|
|
653
|
|
|
1,755
|
|
|
1,994
|
|
|
22
|
|
|
—
|
|
|
53,054
|
|
Total Costs And Expenses
|
49,786
|
|
|
291,917
|
|
|
248,582
|
|
|
45,340
|
|
|
22
|
|
|
—
|
|
|
635,647
|
|
(Loss) Earnings Before Income Tax
|
(116,406
|
)
|
|
(23,541
|
)
|
|
(5,858
|
)
|
|
2,499
|
|
|
(22
|
)
|
|
66,195
|
|
|
(77,133
|
)
|
Income Taxes
|
(18,834
|
)
|
|
(9,355
|
)
|
|
1,350
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(26,847
|
)
|
(Loss) Income From Continuing Operations
|
(97,572
|
)
|
|
(14,186
|
)
|
|
(7,208
|
)
|
|
2,499
|
|
|
(14
|
)
|
|
66,195
|
|
|
(50,286
|
)
|
Loss From Discontinued Operations, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(46,172
|
)
|
|
—
|
|
|
(46,172
|
)
|
Net (Loss) Income
|
(97,572
|
)
|
|
(14,186
|
)
|
|
(7,208
|
)
|
|
2,499
|
|
|
(46,186
|
)
|
|
66,195
|
|
|
(96,458
|
)
|
Less: Net Income Attributable to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,114
|
|
|
1,114
|
|
Net (Loss) Income Attributable to CONSOL Energy Shareholders
|
$
|
(97,572
|
)
|
|
$
|
(14,186
|
)
|
|
$
|
(7,208
|
)
|
|
$
|
2,499
|
|
|
$
|
(46,186
|
)
|
|
$
|
65,081
|
|
|
$
|
(97,572
|
)
|
Balance Sheet at
March 31, 2016
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Issuer
|
|
CNX Gas
Guarantor
|
|
Other
Subsidiary
Guarantors
|
|
CNXC
Non-Guarantor
|
|
Other Subsidiary
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
$
|
415,915
|
|
|
$
|
78
|
|
|
$
|
—
|
|
|
$
|
9,095
|
|
|
$
|
1,562
|
|
|
$
|
—
|
|
|
$
|
426,650
|
|
Accounts and Notes Receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
|
—
|
|
|
58,580
|
|
|
88,216
|
|
|
19,145
|
|
|
—
|
|
|
—
|
|
|
165,941
|
|
Other Receivables
|
46,837
|
|
|
95,831
|
|
|
6,450
|
|
|
372
|
|
|
—
|
|
|
—
|
|
|
149,490
|
|
Inventories
|
—
|
|
|
12,646
|
|
|
53,683
|
|
|
10,901
|
|
|
—
|
|
|
—
|
|
|
77,230
|
|
Recoverable Income Taxes
|
60,897
|
|
|
(59,026
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,871
|
|
Prepaid Expenses
|
21,552
|
|
|
238,549
|
|
|
18,470
|
|
|
3,643
|
|
|
—
|
|
|
—
|
|
|
282,214
|
|
Current Assets of Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43,047
|
|
|
—
|
|
|
43,047
|
|
Total Current Assets
|
545,201
|
|
|
346,658
|
|
|
166,819
|
|
|
43,156
|
|
|
44,609
|
|
|
—
|
|
|
1,146,443
|
|
Property, Plant and Equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment
|
144,621
|
|
|
8,911,548
|
|
|
4,889,452
|
|
|
694,369
|
|
|
—
|
|
|
—
|
|
|
14,639,990
|
|
Less-Accumulated Depreciation, Depletion and Amortization
|
104,960
|
|
|
2,799,666
|
|
|
2,316,190
|
|
|
328,783
|
|
|
—
|
|
|
—
|
|
|
5,549,599
|
|
Total Property, Plant and Equipment-Net
|
39,661
|
|
|
6,111,882
|
|
|
2,573,262
|
|
|
365,586
|
|
|
—
|
|
|
—
|
|
|
9,090,391
|
|
Other Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Affiliates
|
9,760,389
|
|
|
248,034
|
|
|
13,025
|
|
|
—
|
|
|
—
|
|
|
(9,769,820
|
)
|
|
251,628
|
|
Other
|
52,786
|
|
|
49,218
|
|
|
109,371
|
|
|
16,021
|
|
|
—
|
|
|
—
|
|
|
227,396
|
|
Other Assets of Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
Total Other Assets
|
9,813,175
|
|
|
297,252
|
|
|
122,396
|
|
|
16,021
|
|
|
12
|
|
|
(9,769,820
|
)
|
|
479,036
|
|
Total Assets
|
$
|
10,398,037
|
|
|
$
|
6,755,792
|
|
|
$
|
2,862,477
|
|
|
$
|
424,763
|
|
|
$
|
44,621
|
|
|
$
|
(9,769,820
|
)
|
|
$
|
10,715,870
|
|
Liabilities and Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable
|
$
|
41,785
|
|
|
$
|
122,153
|
|
|
$
|
33,888
|
|
|
$
|
12,645
|
|
|
$
|
—
|
|
|
$
|
11,154
|
|
|
$
|
221,625
|
|
Accounts Payable (Recoverable)-Related Parties
|
2,386,429
|
|
|
1,474,748
|
|
|
(3,642,464
|
)
|
|
1,280
|
|
|
(208,839
|
)
|
|
(11,154
|
)
|
|
—
|
|
Current Portion of Long-Term Debt
|
(2,759
|
)
|
|
6,266
|
|
|
1,762
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
5,316
|
|
Short-Term Notes Payable
|
851,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
851,500
|
|
Other Accrued Liabilities
|
93,867
|
|
|
113,531
|
|
|
249,586
|
|
|
29,922
|
|
|
—
|
|
|
—
|
|
|
486,906
|
|
Current Liabilities of Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,584
|
|
|
—
|
|
|
19,584
|
|
Total Current Liabilities
|
3,370,822
|
|
|
1,716,698
|
|
|
(3,357,228
|
)
|
|
43,894
|
|
|
(189,255
|
)
|
|
—
|
|
|
1,584,931
|
|
Long-Term Debt:
|
2,423,952
|
|
|
31,746
|
|
|
106,998
|
|
|
196,265
|
|
|
—
|
|
|
—
|
|
|
2,758,961
|
|
Deferred Credits and Other Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Income Taxes
|
(129,353
|
)
|
|
182,197
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,844
|
|
Postretirement Benefits Other Than Pensions
|
—
|
|
|
—
|
|
|
623,525
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
623,525
|
|
Pneumoconiosis Benefits
|
—
|
|
|
—
|
|
|
116,477
|
|
|
1,701
|
|
|
—
|
|
|
—
|
|
|
118,178
|
|
Mine Closing
|
—
|
|
|
—
|
|
|
283,243
|
|
|
6,865
|
|
|
—
|
|
|
—
|
|
|
290,108
|
|
Gas Well Closing
|
—
|
|
|
135,212
|
|
|
28,834
|
|
|
78
|
|
|
—
|
|
|
—
|
|
|
164,124
|
|
Workers’ Compensation
|
—
|
|
|
—
|
|
|
66,451
|
|
|
2,395
|
|
|
—
|
|
|
—
|
|
|
68,846
|
|
Salary Retirement
|
86,369
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
86,369
|
|
Reclamation
|
—
|
|
|
—
|
|
|
34,490
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,490
|
|
Other
|
56,917
|
|
|
132,686
|
|
|
4,251
|
|
|
552
|
|
|
—
|
|
|
—
|
|
|
194,406
|
|
Total Deferred Credits and Other Liabilities
|
13,933
|
|
|
450,095
|
|
|
1,157,271
|
|
|
11,591
|
|
|
—
|
|
|
—
|
|
|
1,632,890
|
|
Total CONSOL Energy Inc. Stockholders’ Equity
|
4,589,330
|
|
|
4,557,253
|
|
|
4,955,436
|
|
|
173,013
|
|
|
233,876
|
|
|
(9,919,578
|
)
|
|
4,589,330
|
|
Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
149,758
|
|
|
149,758
|
|
Total Liabilities and Equity
|
$
|
10,398,037
|
|
|
$
|
6,755,792
|
|
|
$
|
2,862,477
|
|
|
$
|
424,763
|
|
|
$
|
44,621
|
|
|
$
|
(9,769,820
|
)
|
|
$
|
10,715,870
|
|
Income Statement for the
Three Months Ended
March 31, 2015
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Issuer
|
|
CNX Gas
Guarantor
|
|
Other
Subsidiary
Guarantors
|
|
CNXC
Non-Guarantor
|
|
Other
Subsidiary
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
Revenues and Other Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas, NGLs and Oil Sales
|
$
|
—
|
|
|
$
|
224,985
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(547
|
)
|
|
$
|
224,438
|
|
Gain on Commodity Derivative Instruments
|
—
|
|
|
90,145
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90,145
|
|
Coal Sales
|
—
|
|
|
—
|
|
|
339,264
|
|
|
76,887
|
|
|
—
|
|
|
—
|
|
|
416,151
|
|
Other Outside Sales
|
—
|
|
|
—
|
|
|
13,130
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,130
|
|
Purchased Gas Sales
|
—
|
|
|
3,597
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,597
|
|
Freight-Outside Coal
|
—
|
|
|
—
|
|
|
6,051
|
|
|
474
|
|
|
—
|
|
|
—
|
|
|
6,525
|
|
Miscellaneous Other Income
|
162,197
|
|
|
14,606
|
|
|
21,631
|
|
|
216
|
|
|
2,300
|
|
|
(164,427
|
)
|
|
36,523
|
|
Gain on Sale of Assets
|
—
|
|
|
641
|
|
|
1,489
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
2,145
|
|
Total Revenue and Other Income
|
162,197
|
|
|
333,974
|
|
|
381,565
|
|
|
77,592
|
|
|
2,300
|
|
|
(164,974
|
)
|
|
792,654
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and Production Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease Operating Expense
|
—
|
|
|
37,256
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,256
|
|
Transportation, Gathering and Compression
|
—
|
|
|
75,521
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
75,521
|
|
Production, Ad Valorem, and Other Fees
|
—
|
|
|
9,192
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,192
|
|
Depreciation, Depletion and Amortization
|
—
|
|
|
87,444
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
87,444
|
|
Exploration and Production Related Other Costs
|
—
|
|
|
2,040
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
(5
|
)
|
|
2,040
|
|
Purchased Gas Costs
|
—
|
|
|
2,957
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,957
|
|
Other Corporate Expenses
|
—
|
|
|
19,096
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,096
|
|
Selling, General, and Administrative
|
—
|
|
|
21,824
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,824
|
|
Total Exploration and Production Costs
|
—
|
|
|
255,330
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
(5
|
)
|
|
255,330
|
|
Coal Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and Other Costs
|
1,648
|
|
|
—
|
|
|
243,645
|
|
|
46,114
|
|
|
—
|
|
|
—
|
|
|
291,407
|
|
Depreciation, Depletion and Amortization
|
146
|
|
|
—
|
|
|
52,963
|
|
|
9,149
|
|
|
—
|
|
|
—
|
|
|
62,258
|
|
Freight Expense
|
—
|
|
|
—
|
|
|
6,051
|
|
|
474
|
|
|
—
|
|
|
—
|
|
|
6,525
|
|
Selling, General, and Administrative
|
34
|
|
|
—
|
|
|
5,043
|
|
|
2,125
|
|
|
—
|
|
|
—
|
|
|
7,202
|
|
Other Corporate Expenses
|
—
|
|
|
—
|
|
|
6,074
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,074
|
|
Total Coal Costs
|
1,828
|
|
|
—
|
|
|
313,776
|
|
|
57,862
|
|
|
—
|
|
|
—
|
|
|
373,466
|
|
Other Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous Operating Expense
|
10,062
|
|
|
—
|
|
|
95
|
|
|
—
|
|
|
227
|
|
|
—
|
|
|
10,384
|
|
Depreciation, Depletion and Amortization
|
2
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
Loss on Debt Extinguishment
|
67,734
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67,734
|
|
Interest Expense
|
52,846
|
|
|
2,655
|
|
|
1,561
|
|
|
2,381
|
|
|
46
|
|
|
(4,367
|
)
|
|
55,122
|
|
Total Other Costs
|
130,644
|
|
|
2,655
|
|
|
1,661
|
|
|
2,381
|
|
|
273
|
|
|
(4,367
|
)
|
|
133,247
|
|
Total Costs And Expenses
|
132,472
|
|
|
257,985
|
|
|
315,437
|
|
|
60,243
|
|
|
278
|
|
|
(4,372
|
)
|
|
762,043
|
|
Earnings (Loss) Before Income Tax
|
29,725
|
|
|
75,989
|
|
|
66,128
|
|
|
17,349
|
|
|
2,022
|
|
|
(160,602
|
)
|
|
30,611
|
|
Income Taxes
|
(49,305
|
)
|
|
45,094
|
|
|
199,344
|
|
|
—
|
|
|
765
|
|
|
—
|
|
|
195,898
|
|
Income (Loss) From Continuing Operations
|
79,030
|
|
|
30,895
|
|
|
(133,216
|
)
|
|
17,349
|
|
|
1,257
|
|
|
(160,602
|
)
|
|
(165,287
|
)
|
Income From Discontinued Operations, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
244,317
|
|
|
—
|
|
|
244,317
|
|
Net Income (Loss)
|
$
|
79,030
|
|
|
$
|
30,895
|
|
|
$
|
(133,216
|
)
|
|
$
|
17,349
|
|
|
$
|
245,574
|
|
|
$
|
(160,602
|
)
|
|
$
|
79,030
|
|
Balance Sheet at
December 31, 2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Issuer
|
|
CNX Gas
Guarantor
|
|
Other
Subsidiary
Guarantors
|
|
CNXC Non-Guarantor
|
|
Other
Subsidiary
Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
$
|
64,999
|
|
|
$
|
75
|
|
|
$
|
—
|
|
|
$
|
6,531
|
|
|
$
|
973
|
|
|
$
|
—
|
|
|
$
|
72,578
|
|
Accounts and Notes Receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
|
—
|
|
|
72,664
|
|
|
68,980
|
|
|
15,518
|
|
|
—
|
|
|
—
|
|
|
157,162
|
|
Other Receivables
|
18,933
|
|
|
99,001
|
|
|
3,570
|
|
|
377
|
|
|
—
|
|
|
—
|
|
|
121,881
|
|
Inventories
|
—
|
|
|
13,815
|
|
|
60,068
|
|
|
9,791
|
|
|
—
|
|
|
—
|
|
|
83,674
|
|
Recoverable Income Taxes
|
72,913
|
|
|
(59,026
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,887
|
|
Prepaid Expenses
|
27,245
|
|
|
244,680
|
|
|
21,416
|
|
|
4,080
|
|
|
—
|
|
|
—
|
|
|
297,421
|
|
Current Assets of Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58,160
|
|
|
—
|
|
|
58,160
|
|
Total Current Assets
|
184,090
|
|
|
371,209
|
|
|
154,034
|
|
|
36,297
|
|
|
59,133
|
|
|
—
|
|
|
804,763
|
|
Property, Plant and Equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment
|
156,475
|
|
|
8,875,027
|
|
|
4,871,968
|
|
|
692,482
|
|
|
—
|
|
|
—
|
|
|
14,595,952
|
|
Less-Accumulated Depreciation, Depletion and Amortization
|
111,442
|
|
|
2,695,674
|
|
|
2,268,450
|
|
|
320,729
|
|
|
—
|
|
|
—
|
|
|
5,396,295
|
|
Property, Plant and Equipment of Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
469,720
|
|
|
—
|
|
|
469,720
|
|
Total Property, Plant and Equipment-Net
|
45,033
|
|
|
6,179,353
|
|
|
2,603,518
|
|
|
371,753
|
|
|
469,720
|
|
|
—
|
|
|
9,669,377
|
|
Other Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Affiliates
|
11,276,858
|
|
|
234,803
|
|
|
6,293
|
|
|
—
|
|
|
—
|
|
|
(11,280,624
|
)
|
|
237,330
|
|
Other
|
53,529
|
|
|
47,892
|
|
|
102,085
|
|
|
14,079
|
|
|
—
|
|
|
—
|
|
|
217,585
|
|
Other Assets of Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
847
|
|
|
—
|
|
|
847
|
|
Total Other Assets
|
11,330,387
|
|
|
282,695
|
|
|
108,378
|
|
|
14,079
|
|
|
847
|
|
|
(11,280,624
|
)
|
|
455,762
|
|
Total Assets
|
$
|
11,559,510
|
|
|
$
|
6,833,257
|
|
|
$
|
2,865,930
|
|
|
$
|
422,129
|
|
|
$
|
529,700
|
|
|
$
|
(11,280,624
|
)
|
|
$
|
10,929,902
|
|
Liabilities and Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable
|
$
|
33,431
|
|
|
$
|
149,930
|
|
|
$
|
46,087
|
|
|
$
|
14,023
|
|
|
$
|
—
|
|
|
$
|
13,817
|
|
|
$
|
257,288
|
|
Accounts Payable (Recoverable)-Related Parties
|
3,362,423
|
|
|
1,521,444
|
|
|
(4,664,053
|
)
|
|
3,452
|
|
|
(209,449
|
)
|
|
(13,817
|
)
|
|
—
|
|
Current Portion of Long-Term Debt
|
(2,754
|
)
|
|
6,798
|
|
|
1,762
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
5,855
|
|
Short-Term Notes Payable
|
952,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
952,000
|
|
Other Accrued Liabilities
|
63,668
|
|
|
102,753
|
|
|
244,173
|
|
|
29,929
|
|
|
—
|
|
|
—
|
|
|
440,523
|
|
Current Liabilities of Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,272
|
|
|
—
|
|
|
25,272
|
|
Total Current Liabilities
|
4,408,768
|
|
|
1,780,925
|
|
|
(4,372,031
|
)
|
|
47,453
|
|
|
(184,177
|
)
|
|
—
|
|
|
1,680,938
|
|
Long-Term Debt:
|
2,423,276
|
|
|
33,141
|
|
|
106,989
|
|
|
181,046
|
|
|
3,753
|
|
|
—
|
|
|
2,748,205
|
|
Deferred Credits and Other Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Income Taxes
|
(122,547
|
)
|
|
197,176
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
74,629
|
|
Postretirement Benefits Other Than Pensions
|
—
|
|
|
—
|
|
|
630,892
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
630,892
|
|
Pneumoconiosis Benefits
|
—
|
|
|
—
|
|
|
110,356
|
|
|
1,547
|
|
|
—
|
|
|
—
|
|
|
111,903
|
|
Mine Closing
|
—
|
|
|
—
|
|
|
283,063
|
|
|
6,722
|
|
|
—
|
|
|
—
|
|
|
289,785
|
|
Gas Well Closing
|
—
|
|
|
135,174
|
|
|
28,591
|
|
|
77
|
|
|
—
|
|
|
—
|
|
|
163,842
|
|
Workers’ Compensation
|
—
|
|
|
—
|
|
|
67,469
|
|
|
2,343
|
|
|
—
|
|
|
—
|
|
|
69,812
|
|
Salary Retirement
|
91,596
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
91,596
|
|
Reclamation
|
—
|
|
|
—
|
|
|
34,150
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,150
|
|
Other
|
56,390
|
|
|
105,588
|
|
|
4,408
|
|
|
571
|
|
|
—
|
|
|
—
|
|
|
166,957
|
|
Deferred Credits and Other Liabilities of Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,417
|
|
|
—
|
|
|
11,417
|
|
Total Deferred Credits and Other Liabilities
|
25,439
|
|
|
437,938
|
|
|
1,158,929
|
|
|
11,260
|
|
|
11,417
|
|
|
—
|
|
|
1,644,983
|
|
Total CONSOL Energy Inc. Stockholders’ Equity
|
4,702,027
|
|
|
4,581,253
|
|
|
5,972,043
|
|
|
182,370
|
|
|
698,707
|
|
|
(11,434,373
|
)
|
|
4,702,027
|
|
Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
153,749
|
|
|
153,749
|
|
Total Liabilities and Equity
|
$
|
11,559,510
|
|
|
$
|
6,833,257
|
|
|
$
|
2,865,930
|
|
|
$
|
422,129
|
|
|
$
|
529,700
|
|
|
$
|
(11,280,624
|
)
|
|
$
|
10,929,902
|
|
Cash Flow for the
Three Months Ended
March 31, 2016
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
CNX Gas
Guarantor
|
|
Other Subsidiary Guarantors
|
|
CNXC Non-Guarantor
|
|
Other
Subsidiary Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
Net Cash Provided by Continuing Operations
|
$
|
455,341
|
|
|
$
|
58,594
|
|
|
$
|
15,419
|
|
|
$
|
2,285
|
|
|
$
|
(405,100
|
)
|
|
$
|
(6,731
|
)
|
|
$
|
119,808
|
|
Net Cash Provided by Discontinued Operating Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,634
|
|
|
—
|
|
|
8,634
|
|
Net Cash (Used in) Provided by Operating Activities
|
$
|
455,341
|
|
|
$
|
58,594
|
|
|
$
|
15,419
|
|
|
$
|
2,285
|
|
|
$
|
(396,466
|
)
|
|
$
|
(6,731
|
)
|
|
$
|
128,442
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
$
|
(1,281
|
)
|
|
$
|
(62,862
|
)
|
|
$
|
(12,244
|
)
|
|
$
|
(2,581
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(78,968
|
)
|
Proceeds From Sales of Assets
|
—
|
|
|
7,953
|
|
|
486
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
8,453
|
|
(Investments in), net of Distributions from, Equity Affiliates
|
—
|
|
|
(2,145
|
)
|
|
(3,433
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,578
|
)
|
Net Cash Used in Continuing Operations
|
$
|
(1,281
|
)
|
|
$
|
(57,054
|
)
|
|
$
|
(15,191
|
)
|
|
$
|
(2,567
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(76,093
|
)
|
Net Cash Used in Discontinued Investing Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
397,069
|
|
|
—
|
|
|
397,069
|
|
Net Cash (Used in) Provided by Investing Activities
|
$
|
(1,281
|
)
|
|
$
|
(57,054
|
)
|
|
$
|
(15,191
|
)
|
|
$
|
(2,567
|
)
|
|
$
|
397,069
|
|
|
$
|
—
|
|
|
$
|
320,976
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from (Payments on) Short-Term Borrowings
|
$
|
(100,500
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(100,500
|
)
|
(Payments on) Proceeds from Miscellaneous Borrowings
|
(353
|
)
|
|
(1,537
|
)
|
|
(228
|
)
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(2,128
|
)
|
Proceeds from Revolver - MLP
|
—
|
|
|
—
|
|
|
—
|
|
|
15,000
|
|
|
—
|
|
|
—
|
|
|
15,000
|
|
Distributions to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,144
|
)
|
|
—
|
|
|
6,731
|
|
|
(5,413
|
)
|
Dividends Paid
|
(2,294
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,294
|
)
|
Proceeds from Issuance of Common Stock
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
Net Cash (Used in) Continuing Operations
|
$
|
(103,144
|
)
|
|
$
|
(1,537
|
)
|
|
$
|
(228
|
)
|
|
$
|
2,846
|
|
|
$
|
—
|
|
|
$
|
6,731
|
|
|
$
|
(95,332
|
)
|
Net Cash (Used in) Discontinued Financing Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
(14
|
)
|
Net Cash Provided by (Used in) Financing Activities
|
$
|
(103,144
|
)
|
|
$
|
(1,537
|
)
|
|
$
|
(228
|
)
|
|
$
|
2,846
|
|
|
$
|
(14
|
)
|
|
$
|
6,731
|
|
|
$
|
(95,346
|
)
|
Cash Flow for the
Three Months Ended
March 31, 2015
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
CNX Gas
Guarantor
|
|
Other Subsidiary Guarantors
|
|
CNXC Non-Guarantor
|
|
Other Subsidiary Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Net Cash Provided by (Used in) Continuing Operations
|
$
|
(79,239
|
)
|
|
$
|
177,752
|
|
|
$
|
44,835
|
|
|
$
|
27,444
|
|
|
$
|
(24,360
|
)
|
|
$
|
51,457
|
|
|
$
|
197,889
|
|
Net Cash Provided by Discontinued Operating Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,481
|
|
|
—
|
|
|
30,481
|
|
Net Cash Provided by (Used in) Operating Activities
|
$
|
(79,239
|
)
|
|
$
|
177,752
|
|
|
$
|
44,835
|
|
|
$
|
27,444
|
|
|
$
|
6,121
|
|
|
$
|
51,457
|
|
|
$
|
228,370
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
$
|
(2,866
|
)
|
|
$
|
(250,303
|
)
|
|
$
|
(28,125
|
)
|
|
$
|
(6,510
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(287,804
|
)
|
Proceeds From Sales of Assets
|
47
|
|
|
894
|
|
|
1,148
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
2,108
|
|
(Investments in), net of Distributions from, Equity Affiliates
|
—
|
|
|
(27,992
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,992
|
)
|
Net Cash (Used in) Provided by Continuing Operations
|
$
|
(2,819
|
)
|
|
$
|
(277,401
|
)
|
|
$
|
(26,977
|
)
|
|
$
|
(6,491
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(313,688
|
)
|
Net Cash Used in Discontinued Investing Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,215
|
)
|
|
—
|
|
|
(6,215
|
)
|
Net Cash (Used in) Provided by Investing Activities
|
$
|
(2,819
|
)
|
|
$
|
(277,401
|
)
|
|
$
|
(26,977
|
)
|
|
$
|
(6,491
|
)
|
|
$
|
(6,215
|
)
|
|
$
|
—
|
|
|
$
|
(319,903
|
)
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from (Payments on) Short-Term Borrowings
|
$
|
760,500
|
|
|
$
|
70,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(70,000
|
)
|
|
$
|
760,500
|
|
(Payments on) Proceeds from Miscellaneous Borrowings
|
(406
|
)
|
|
(48
|
)
|
|
(2,002
|
)
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(2,464
|
)
|
Payments on Long-Term Borrowings
|
(1,261,009
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,261,009
|
)
|
Proceeds from Long-Term Borrowings
|
492,760
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
492,760
|
|
Payments on Securitization Facility
|
32,669
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32,669
|
|
Net Change in Parent Advancements
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,543
|
)
|
|
—
|
|
|
18,543
|
|
|
—
|
|
Tax Benefit from Stock-Based Compensation
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
Dividends Paid
|
(14,400
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,400
|
)
|
Proceeds from Issuance of Common Stock
|
1,736
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,736
|
|
Treasury Stock Activity
|
(71,674
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(71,674
|
)
|
Debt Issuance and Financing Fees
|
—
|
|
|
—
|
|
|
(15,856
|
)
|
|
(2,401
|
)
|
|
—
|
|
|
—
|
|
|
(18,257
|
)
|
Net Cash (Used in) Provided by Continuing Operations
|
$
|
(59,809
|
)
|
|
$
|
69,952
|
|
|
$
|
(17,858
|
)
|
|
$
|
(20,952
|
)
|
|
$
|
—
|
|
|
$
|
(51,457
|
)
|
|
$
|
(80,124
|
)
|
Net Cash Used in Discontinued Financing Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
(14
|
)
|
Net Cash (Used in) Provided by Financing Activities
|
$
|
(59,809
|
)
|
|
$
|
69,952
|
|
|
$
|
(17,858
|
)
|
|
$
|
(20,952
|
)
|
|
$
|
(14
|
)
|
|
$
|
(51,457
|
)
|
|
$
|
(80,138
|
)
|
Statement of Comprehensive Income for the
Three Months Ended
March 31, 2016
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
CNX Gas
Guarantor
|
|
Other Subsidiary Guarantors
|
|
CNXC Non-
Guarantor
|
|
Other Subsidiary Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Net (Loss) Income
|
$
|
(97,572
|
)
|
|
$
|
(14,186
|
)
|
|
$
|
(7,208
|
)
|
|
$
|
2,499
|
|
|
$
|
(46,186
|
)
|
|
$
|
66,195
|
|
|
$
|
(96,458
|
)
|
Other Comprehensive (Loss) Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarially Determined Long-Term Liability Adjustments
|
(2,484
|
)
|
|
—
|
|
|
(2,464
|
)
|
|
(20
|
)
|
|
—
|
|
|
2,484
|
|
|
(2,484
|
)
|
Reclassification of Cash Flow Hedge from OCI to Earnings
|
(9,814
|
)
|
|
(9,814
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,814
|
|
|
(9,814
|
)
|
Other Comprehensive (Loss) Income:
|
(12,298
|
)
|
|
(9,814
|
)
|
|
(2,464
|
)
|
|
(20
|
)
|
|
—
|
|
|
12,298
|
|
|
(12,298
|
)
|
Comprehensive (Loss) Income
|
(109,870
|
)
|
|
(24,000
|
)
|
|
(9,672
|
)
|
|
2,479
|
|
|
(46,186
|
)
|
|
78,493
|
|
|
(108,756
|
)
|
Less: Net Income Attributable to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,114
|
|
|
1,114
|
|
Comprehensive (Loss) Income Attributable to CONSOL Energy Inc. Shareholders
|
$
|
(109,870
|
)
|
|
$
|
(24,000
|
)
|
|
$
|
(9,672
|
)
|
|
$
|
2,479
|
|
|
$
|
(46,186
|
)
|
|
$
|
77,379
|
|
|
$
|
(109,870
|
)
|
Statement of Comprehensive Income for the
Three Months Ended
March 31, 2015
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
CNX Gas
Guarantor
|
|
Other Subsidiary Guarantors
|
|
CNXC Non-
Guarantor
|
|
Other Subsidiary Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Net Income (Loss)
|
$
|
79,030
|
|
|
$
|
30,895
|
|
|
$
|
(133,216
|
)
|
|
$
|
17,349
|
|
|
$
|
245,574
|
|
|
$
|
(160,602
|
)
|
|
$
|
79,030
|
|
Other Comprehensive (Loss) Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarially Determined Long-Term Liability Adjustments
|
(149
|
)
|
|
—
|
|
|
853
|
|
|
(1,002
|
)
|
|
—
|
|
|
149
|
|
|
(149
|
)
|
Reclassification of Cash Flow Hedge from OCI to Earnings
|
(19,314
|
)
|
|
(19,314
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,314
|
|
|
(19,314
|
)
|
Other Comprehensive (Loss) Income:
|
(19,463
|
)
|
|
(19,314
|
)
|
|
853
|
|
|
(1,002
|
)
|
|
—
|
|
|
19,463
|
|
|
(19,463
|
)
|
Comprehensive Income (Loss)
|
$
|
59,567
|
|
|
$
|
11,581
|
|
|
$
|
(132,363
|
)
|
|
$
|
16,347
|
|
|
$
|
245,574
|
|
|
$
|
(141,139
|
)
|
|
$
|
59,567
|
|
NOTE 18—RELATED PARTY TRANSACTIONS:
CONE Midstream Partners LP
On September 30, 2011, CNX Gas Company and Noble Energy, Inc., an unrelated third party and joint venture partner, formed CONE Gathering LLC (CONE) to develop and operate each company's gas gathering system needs in the Marcellus Shale play. CONSOL Energy accounts for CNX Gas Company's 50% ownership interest in CONE under the equity method of accounting.
On
September 30, 2014
, CONE Midstream Partners, LP (the Partnership) closed its initial public offering of
20,125,000
common units representing limited partnership interests at a price to the public of
$22.00
per unit, which included a
2,625,000
common unit over-allotment option that was exercised in full by the underwriters. The Partnership's general partner is CONE Midstream GP LLC, a wholly owned subsidiary of CONE.
As a result of the IPO filing, the Partnership received net proceeds of
$412,741
from the offering, after deducting underwriting discounts and commissions and structuring fees of
$28,779
, along with additional estimated offering expenses of approximately
$1,230
. Of the proceeds received,
$203,986
was distributed to both CNX Gas Company LLC ("CNX Gas Company") and Noble Energy on
September 30, 2014
.
During the
three months
ended
March 31, 2016
, additional capital contributions of $
94
were made to CONE and additional capital contributions of $
2,051
were made to the Partnership. The capital contributions were offset by $
4,512
of distributions from the Partnership. During the
three months
ended
March 31, 2015
, additional capital contributions of $
3,608
were made to CONE, and additional capital contributions of
$30,487
were made to the Partnership, offset in part, by
$4,103
of distributions from the Partnership.
Following the Partnership IPO in September 2014, CONE has a 2% general partner interest in the Partnership, while each sponsor has a 32.1% limited partner interest. CNX Gas Company accounts for its portion of the earnings in the Partnership under the equity method of accounting. At
March 31, 2016
, CNX Gas Company and Noble Energy each continue to own a 50% interest in the assets of CONE that were not contributed to the Partnership. Equity in earnings of affiliates during the three months ended
March 31,
2016 and 2015 related to CONE was
$6,393
and
$3,138
, respectively. Equity in earnings of affiliates during the three months ended
March 31,
2016 and 2015 related to the Partnership. was
$7,958
and
$4,518
, respectively.
During the
three months
ended
March 31, 2016
and 2015, CONE and the Partnership provided gathering services to CNX Gas Company in the ordinary course of business. Gathering services provided were
$32,016
and
$22,360
for the three months ended
March 31,
2016 and 2015, respectively. These costs were included in Transportation, Gathering and Compression Costs on CONSOL Energy’s accompanying Consolidated Statements of Income. At
March 31, 2016
and December 31, 2015, CONSOL Energy had a net payable of
$9,685
and
$12,216
respectively, due to both the Partnership and CONE primarily for accrued but unpaid gathering services. The net payable for both periods is included in Accounts Payable on CONSOL Energy’s accompanying Consolidated Balance Sheets.
CNX Coal Resources LP
On July 7, 2015, CNXC closed its initial public offering of
5,000,000
common units representing limited partnership interests at a price to the public of
$15.00
per unit. Additionally, Greenlight Capital entered into a common unit purchase agreement with CNXC pursuant to which Greenlight Capital agreed to purchase, and CNXC agreed to sell,
5,000,000
common units at a price per unit equal to
$15.00
, which equates to
$75,000
in net proceeds. CNXC's general partner is CNX Coal Resources GP, a wholly owned subsidiary of CONSOL Energy. The underwriters of the IPO filing exercised an over-allotment option of
561,067
common units to the public at
$15.00
per unit.
In connection with the IPO offering, CNXC entered into a
$400,000
senior secured revolving credit facility with certain lenders and PNC Bank, National Association (PNC), as administrative agent. Obligations under the revolving credit facility are guaranteed by CNXC's subsidiaries (the "guarantor subsidiaries") and are secured by substantially all of CNXC's and CNXC's subsidiaries' assets pursuant to a security agreement and various mortgages. Under the new revolving credit facility, CNXC made an initial draw of
$200,000
, and after origination fees of
$3,000
, the net proceeds were
$197,000
.
The total net proceeds related to these transactions that were distributed to CONSOL Energy were
$342,711
.
Charges for services from CONSOL Energy include the following:
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
March 31,
|
|
2016
|
|
2015
|
Operating and Other Costs
|
$
|
947
|
|
|
$
|
797
|
|
Selling, General and Administrative Expenses
|
765
|
|
|
1,628
|
|
Total Services from CONSOL Energy
|
$
|
1,712
|
|
|
$
|
2,425
|
|
At
March 31, 2016
, and December 31, 2015, CNXC had a net payable to CONSOL Energy in the amount of
$1,280
and
$3,452
, respectively. This payable includes reimbursements for business expenses, executive fees, debt issuance and financing fees, stock-based compensation and other items.
NOTE 19—STOCK REPURCHASE:
In December 2014, CONSOL Energy's Board of Directors approved a stock repurchase program under which CONSOL Energy may purchase from time to time up to
$250,000
of its common stock over the next two years. Under the terms of the program, CONSOL Energy may make repurchases in the open market, in privately negotiated transactions, accelerated repurchase programs or in structured share repurchase programs. Any repurchases of common stock will be funded from available cash on hand or short-term borrowings. The program does not obligate CONSOL Energy to acquire any particular amount of common stock, and it may be modified or suspended at any time at the Company's discretion. The program will be conducted in compliance with applicable legal requirements and within the limits imposed by any credit agreement, receivables purchase agreement or indenture and shall be subject to market conditions and other factors. During the
three months
ended
March 31, 2016
, no shares were repurchased. During the
three months
ended
March 31, 2015
,
2,213,100
shares were repurchased and retired at an average price of $
32.37
per share.
NOTE 20—RECENT ACCOUNTING PRONOUNCEMENTS:
In March 2016, the FASB issued Update 2016-09 - Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Specifically, this Update states that: all excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit in the income statement; excess tax benefits should be classified along with other income tax cash flows as an operating activity; an entity can make an accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur; the threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions; and cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity. For public entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact this guidance may have on CONSOL Energy's financial statements.
In March 2016, the FASB issued Update 2016-08 - Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross Versus Net), which reduces the potential for diversity in practice arising from inconsistent application of the principal versus agent guidance and the cost and complexity of applying Topic 606. The amendments in this Update do not change the core principle of the guidance, but clarify the following implementation guidance considerations: (1) An entity determines whether it is a principal or an agent for each specified good or service promised to the customer. If a contract with a customer includes more than one specified good or service, an entity could be a principal for some specified goods or services and an agent for others; (2) An entity determines the nature of each specified good or service (for example, whether it is a good, a service, or a right to a good or service); (3) When another party is involved in providing goods or services to a customer, an entity that is a principal obtains control of (a) a good or another asset from the other party that it then transfers to the customer; (b) a right to a service that will be performed by another party, which gives the entity the ability to direct that party to provide the service to the customer on the entity's behalf; or (c) a good or service from the other party that it combines with other goods or services to provide the specified good or service to the customer; and (4) The purpose of the indicators in paragraph 606-10-55-39 is to support or assist in the assessment of control. The indicators may be more or less relevant to the control assessment and one or more indicators may be more or less persuasive to the control assessment, depending on the facts and circumstances. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements of Update 2014-09, which was deferred to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period, by Update 2015-14. The Company is currently evaluating the impact this guidance may have on CONSOL Energy's financial statements.
In February 2016, the FASB issued Update 2016-02 - Leases (Topic 842), which increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Update 2016-02 does retain a distinction between finance leases and operating leases, which is substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. Retaining this distinction allows the recognition, measurement and presentation of expenses and cash flows arising from a lease to not significantly change from previous GAAP. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities, but to recognize lease expense on a straight-line basis over the lease term. For both financing and operating leases, the right-to-use asset and lease liability will be initially measured at the present value of the lease payments in the statement of financial position.The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact this guidance may have on CONSOL Energy's financial statements.
In August 2015, the FASB issued Update 2015-14 - Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date. In response to stakeholders’ requests to defer the effective date of the guidance in Update 2014-09 - Revenue from Contracts with Customers (Topic 606), and in consideration of feedback received through extensive outreach with preparers, practitioners, and users of financial statements, the Board issued proposed Accounting Standards Update, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. Respondents to the proposed Update overwhelmingly support a deferral and noted that providing sufficient time for implementation of the guidance in Update 2014-09 is critical to its success. As such, the Board is issuing this Update in consideration of respondents’ feedback, including the timing of when Update 2014-09 was issued, the current status of key standard-setting activities associated with the guidance in Update 2014-09, and the availability of information technology solutions to facilitate the implementation of the guidance in Update 2014-09. The amendments in this Update defer the effective date of Update 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact this guidance may have on CONSOL Energy's financial statements.