Coal news and updates

Consol’s Unexpectedly Strong Showing In Coal

Consol EnergyCNX got investors and analysts buzzing by raising the possibility of splitting its gas and coal operations, and maybe even getting out of coal.
 
So it was a surprise Tuesday when the company reported Tuesday that its production of both fuels was up robustly in the third quarter. Perhaps most surprising, third quarter coal output was 25% higher than a year ago, while natural gas output was up a lesser 17%.
 
Does that mean coal is looking better? Not exactly. The gains were compared to pretty lousy figures a year earlier. And Consol expects fourth quarter coal production is expected to fall by as much as 5% from a year earlier and by as much as 10.5% from 2011 fourth quarter levels.
 
The problem is that shale gas is so plentiful and affordable, it is beating coal in a duel for the power plant market. “In the Eastern United States, coal continues to fight an uphill battle against natural gas production,” says Lucas Pipes, an analyst with Brean Capital LLC.
 
Investors and analysts believe Consol wants to sell low-margin mines tied to domestic utility markets. Likely buyers include Chris Cline’s Foresight Energy LLC, Alliance Resource Partners LP, Murray Energy Corp and a group led by veteran coal investor Ben Statler. None of the four have returned calls seeking comment.
 
In a statement issued Friday, Consol said “the evaluation process regarding our corporate structure continues and all options are being considered. There can be no assurance that any particular option will be pursued.” Consol reports third quarter earnings Oct. 31.
 
Consol, which is one of the world’s oldest coal companies and among the most productive and efficient in the U.S., continues to play both fuels. The 150-year-old mining company said it is beefing up output at its largest underground coal complex, in southwestern Pennsylvania. That expansion, which it said will come on line in April 2014, will add an extra five million tons a year of capacity, a bit under 10% of the company’s 2012 total coal output. It could also add another juicy takeover target to its portfolio.

Source: The Wall Street Journal