Consol officially separates coal and natural gas entities
October 31, 2017
For the past year, Consol Energy has discussed its intention to separate its oil and gas and coal businesses into two separate entities.
The company’s board made the move official Tuesday, approving the separation of the energy company into publicly traded natural gas and coal entities. It will divide the stock for shareholders in late November.
The news came as Consol Energy reported a third-quarter net loss of $26 million, or 11 cents per share, compared to net income of $25 million or 11 cents per share in the third quarter of 2016.
Earnings before deducting net interest expense, income taxes and depreciation, depletion and amortization from continuing operations were $190 million for the third quarter, compared to $314 million in the year-earlier quarter.
After adjusting for certain items, the company had an adjusted net loss of $36 million, or 15 cents per share, with adjusted earnings of $168 million for the third quarter, compared to $158 million in the third quarter of 2016.
Consol said it will formally change its natural gas division’s name to CNX Resources Corp. and retain its CNX ticker name on the New York Stock Exchange. The coal entity will be known as Consol Energy Inc. and will be traded as CEIX. Meanwhile, CNX Coal Resources LP will change its name to Consol Coal Resources LP and change its trading name from CNXC to CCR.
In commenting on the company’s announcement in the third-quarter news release, Consol Energy Chief Executive Officer Nick DeIuliis said once the separation is completed, CNX Resources Corp. will spend all of its time focused on its core operations as a natural gas production company.
“The company has been hard at work during the quarter finalizing the process to separate the gas and coal businesses,” DeIuliis said in a statement.
“Our strategic goal of creating two successful, separately traded, pure-play entities is expected to be complete in the coming weeks. ... Both of the teams are executing at peak performance, (and) respective company financial and balance sheets are strong,” he said, adding “the future looks bright” for both companies.
Consol announced in February it plans to sell its coal business.
DeIuliis said by year’s end the natural gas exploration and production business will be growing substantially.
While the gas business finished the third quarter slightly above its production guidance, DeIuliis said the company expects its fourth-quarter volumes to be a little over 120 billion cubic feet.
The company said that during the third quarter Consol Energy received $82 million in proceeds from asset sales, which included the sale of noncore Marcellus Shale acres in Allegheny, Westmoreland, Washington and Greene counties for $55 million and surface acres for about $27 million.
During the quarter, Consol operated two horizontal rigs and drilled six Greene County Marcellus Shale wells and four dry Utica Shale wells in Monroe County, Ohio. The company also completed 21 wells in the quarter: five Marcellus Shale wells in Tyler County, W.Va.; seven Marcellus wells in Ritchie County, W.Va.; and nine dry Utica Shale wells in Monroe County, Ohio.
Consol Energy’s Pennsylvania Mining operations sold 6.3 million tons of coal in the third quarter, compared to 6 million tons in the year-earlier quarter.
In the third quarter, CNX Coal Resources experienced volume constraints due to Enlow Fork Mine geological conditions in July, and one idled Bailey longwall in September. The company said its operations team added incremental shifts at other longwalls to make up for some of the lost production and said it expects to do this in the fourth quarter, as well.
“I am very pleased to announce that all of our longwalls resumed production in the first week of October, and we expect to meet our contractual obligations and previously provided sales guidance for the full year,” DeIuliis said.