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Press release from PR Newswire

CONSOL Energy Reports Third Quarter Pre-Tax Income of $11 million; Marcellus Production Volumes Increase 72% From Year-Earlier Quarter; All-In Marcellus Unit Costs Decrease $0.40 to $2.55 Per Mcfe; Quarterly Coal Costs Fall to $50.46 Per Ton

Tuesday, October 29, 2013

CONSOL Energy Reports Third Quarter Pre-Tax Income of $11 million; Marcellus Production Volumes Increase 72% From Year-Earlier Quarter; All-In Marcellus Unit Costs Decrease $0.40 to $2.55 Per Mcfe; Quarterly Coal Costs Fall to $50.46 Per Ton

07:00 EDT Tuesday, October 29, 2013

PITTSBURGH, Oct. 29, 2013 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) reported a net loss for the quarter ended September 30, 2013 of $64 million, or a loss of $0.28 per diluted share, compared to a loss of $11 million, or $0.05 per diluted share from the year-earlier quarter.

(Logo:  http://photos.prnewswire.com/prnh/20120416/NE87957LOGO )

Pre-tax income for the third quarter was $11 million. After adjusting for five discrete items, which are listed in the EBITDA reconciliation table, adjusted pre-tax income1 in the third quarter, a non-GAAP financial measure, was $22 million. The effective tax rate in the third quarter reflects an expectation of profitability in the 2013 fourth quarter. The effective tax rate of the company over the past three years has varied between 20 - 23%.

Adjusted EBITDA1, which is a non-GAAP financial measure, was $244 million for the quarter ended September 30, 2013, compared to $210 million in the year-earlier quarter.

CONSOL's Gas Division showed unit margin expansion, quarter-over-quarter, as the average sales price was nearly unchanged, while unit costs were lower, mostly due to higher volumes. Overall natural gas production was up 17%, quarter-over-quarter, aided by the 72% growth in the Marcellus Shale component. The Gas Division is on track to meet its 2014 production guidance of 210 - 225 Bcfe. For 2015 and 2016, CONSOL has announced annual production guidance increases of between 25% - 30%. 

"CONSOL's Gas Division continues to see the Marcellus Shale become a greater portion of the production mix," commented J. Brett Harvey, chairman and CEO. "This is important for two main reasons: the first is the lower-cost nature of the Marcellus resulting from drilling efficiencies such as pad drilling, and the second is sales price uplift associated with a higher concentration of liquids. CONSOL is not only on track to meet its 2014 overall gas production guidance but is also on track to more than double its Marcellus Shale production in 2014, compared to 2013."

Coal and gas production results, which were announced on October 15, 2013, exceeded previous guidance provided in the second quarter. In the Coal Division, margins decreased primarily as a result of lower sale prices per ton, reflecting a decrease in the global metallurgical and thermal coal markets. Partially offsetting lower sales prices was approximately a 10 percent improvement in costs per ton.

CONSOL Energy's Coal Division costs per ton sold, across all tons, were $50.46 during the quarter, compared to $55.84 per ton from the year-earlier quarter. Per unit costs improved due to higher sales volumes and completed efficiency programs at the mines.

CONSOL Energy's liquidity remains strong at $2.3 billion, while the company continues to invest in value creating projects. Third quarter capital investments were $438 million, which is flat with the year-earlier quarter. BMX Mine remains on track to begin operations in April of 2014 with an expected total capital cost of $710 million. 

Cash flow from operations in the quarter was $196 million, as compared to $162 million in the year-earlier quarter.

Yesterday, CONSOL Energy announced a transformative step to advance its E&P growth strategy. The company entered into an agreement to sell its Consolidation Coal Company (CCC) subsidiary, which contains all five of its longwall coal mines in West Virginia, to Murray Energy Corporation (Murray) for $4.4 billion in value.

"While this transaction furthers CONSOL's E&P growth strategy," commented J. Brett Harvey, CONSOL's chairman and CEO, "the sale of these five mines - assets that have long contributed to America's economic strength and our company's legacy - was a very difficult decision for our team. The employees at these mines are among the safest and most productive miners anywhere in the world.  In the end, we concluded that the time had come to sell these mature assets to ownership whose strategic direction is more aligned with those mines."

Investors and analysts are encouraged to view details in the transaction release and slides, which are posted at the company website, at www.consolenergy.com.

1The terms "Adjusted Pre-Tax Income" and "Adjusted EBITDA" are non-GAAP financial measures, which are defined and reconciled to the GAAP Pre-Tax Income and GAAP net income below, under the caption "Non-GAAP Financial Measures."

Gas Division Results:

CONSOL's gas production in the quarter came from the following categories:

Coalbed Methane (CBM): Total production was 21.0 Bcfe, or a decrease of 3% from the 21.7 Bcfe produced in the year-earlier quarter. The company has reduced CBM drilling to focus on higher return projects.

Marcellus Shale: Total production was 17.4 Bcfe, or an increase of 72% from the 10.1 Bcfe produced in the year-earlier quarter. The increase is primarily due to additional wells coming on-line from the company's on-going drilling program.

Shallow: Total production was 6.8 Bcfe, or a decrease of 3% from the 7.0 Bcfe produced in the year-earlier quarter.   The company continues to shift rigs and capital toward higher potential return Marcellus and Utica drilling prospects.

Other: The other category had production of 0.9 Bcfe, or an increase of 50% from the 0.6 Bcfe produced in the year-earlier quarter.

The table below summarizes the quarterly comparison of key metrics for the Gas Division:

 

GAS DIVISION RESULTS ? Quarter-to-Quarter Comparison

Quarter

Quarter

Ended

Ended

September 30,

2013

September 30,

2012

Total Revenue and Other Income ($ MM)

$

223.1

$

191.1

Net Income (Loss) Attributable to CONSOL Energy Shareholders

$

(0.6)

$

7.2

Net Cash from Operating Activities ($ MM)

$

120.2

$

14.7

Total Period Production (Bcfe)

46.1

39.5

Average Daily Production (MMcfe)

500.9

429.0

Capital Expenditures ($ MM)

$

273.5

$

166.6

Production results are net of royalties.

 

PRICE AND COST DATA PER MCFE ? Quarter-to-Quarter Comparison

The company experienced decreased profitability within the Gas Division when compared with the quarter ended September 30, 2012, despite unit gas margins and production volumes slightly improving. Unused firm transportation and processing costs of $12 million, which were not included in the table below, as well as $13 million in title defects, reduced overall Gas Division profitability. CONSOL and its Marcellus joint venture partner, Noble Energy, made a concerted effort during the quarter to address the remaining title defects, which resulted in a higher write-off of defected acres than in prior quarters; however, as a result of this effort, the parties have resolved substantially all outstanding asserted defects and any final write-off in the fourth quarter is not expected to be material.    

All-in unit costs in the Marcellus Shale were $2.55 per Mcfe in the just-ended quarter, or a decrease of $0.40 from the $2.95 per Mcfe in the year-earlier quarter. The improvement in all-in unit costs was mainly due to a 72% increase in Marcellus production volumes in the quarter, as compared to year-earlier quarter. Total Marcellus Shale gathering and transportation costs were negatively impacted by $0.29 per Mcfe due to increased costs associated with liquids production and firm transportation.    

 

Quarter

Quarter

Ended

Ended

September 30,

2013

September 30,

2012

Average Sales Price

$4.20

$4.19

Costs - Production

    Lifting

$0.51

$0.57

Ad Valorem, Severance and Other Taxes

$0.18

$0.17

    DD&A

$1.11

$1.12

Total Production Costs

$1.80

$1.86

Costs - Gathering

    Operating Costs

$0.56

$0.65

    Transportation

$0.45

$0.39

    DD&A

$0.17

$0.20

Total Gathering Costs

$1.18

$1.24

Gas Direct Administrative Selling & Other

$0.25

$0.28

Total Costs

$3.23

$3.38

Margin

$0.97

$0.81

Note: Costs ? The line item "gas direct administrative, selling, & other" excludes general administration, incentive compensation, and other corporate expenses.

 

Coal Division Results:

COAL DIVISION RESULTS BY PRODUCT CATEGORY - Quarter-To-Quarter Comparison

Low-Vol

Low-Vol

High-Vol

High-Vol

Thermal

Thermal

Quarter

Quarter

Quarter

Quarter

Quarter

Quarter

Ended

Ended

Ended

Ended

Ended

Ended

September 30,

September 30,

September 30,

September 30,

September 30,

September 30,

2013

2012

2013

2012

2013

2012

Beginning Inventory (millions of tons)

0.1

0.4

?

?

0.9

2.0

Coal Production (millions of tons)

1.1

0.8

0.5

0.7

12.9

10.1

Ending Inventory (millions of tons)

0.1

0.4

?

?

1.0

1.3

Sales - Company Produced (millions of tons)

1.1

0.8

0.5

0.7

12.8

10.8

Sales Per Ton

$

85.77

$

135.66

$

60.42

$

67.76

$

59.08

$

62.11

Beginning Inventory Cost Per Ton

$

64.76

$

69.84

$

?

$

?

$

55.36

$

56.03

Total Direct Costs Per Ton

$

41.07

$

55.61

$

29.85

$

30.10

$

30.38

$

32.24

Royalty/Production Taxes Per Ton

5.16

8.75

3.06

3.09

3.91

4.46

Direct Services to Operations Per Ton

5.98

6.83

5.21

7.26

5.06

5.87

Retirement and Disability Per Ton

5.57

8.63

3.09

3.89

3.43

4.04

DD&A Per Ton

9.55

11.29

6.05

7.38

6.14

6.70

Total Production Costs

$

67.33

$

91.11

$

47.26

$

51.72

$

48.92

$

53.31

Ending Inventory Cost Per Ton

$

(65.42)

$

(87.32)

$

?

$

?

$

(52.26)

$

(51.55)

Total Cost Per Ton Sold

$

67.18

$

83.09

$

47.25

$

55.29

$

49.07

$

53.81

Average Margin Per Ton Sold

$

18.59

$

52.57

$

13.17

$

12.47

$

10.01

$

8.30

Addback: DD&A Per Ton

$

9.55

$

11.29

$

6.05

$

7.38

$

6.14

$

6.70

Average Margin Per Ton, before DD&A

$

28.14

$

63.86

$

19.22

$

19.85

$

16.15

$

15.00

Cash Flow before Cap. Ex and DD&A ($MM)

$

31

$

51

$

10

$

14

$

207

$

162

Sales and production tons exclude CONSOL Energy's portion from equity affiliates.  Direct Costs per Ton include items such as labor and benefits, supplies, power, preparation costs, project expenses and gas well plugging costs.  Direct Services to Operations Per Ton include items such as  subsidence costs,  direct administrative, selling expenses, permitting and compliance and asset retirement obligations.    Retirement and Disability Per Ton Sold includes charges for pension, retiree medical and other employee related long-term liabilities.  Sales tons times Average Margin Per Ton, before DD&A is meant to approximate the amount of cash generated for the low-vol, high-vol, and thermal coal categories. This cash generation will be offset by maintenance of production (MOP) capital expenditures. Table may not sum due to rounding. 

Coal production in the quarter consisted of 1.1 million tons of low-vol, 0.5 million tons of high-vol, and 12.9 million tons of thermal, for a total of 14.5 million tons.

Of the thermal coal production, 12.4 million tons were from Northern Appalachia and 0.5 million tons were from Central Appalachia.

During the third quarter of 2013, CONSOL's total coal inventory increased by 158,000 tons to 1,075,000 tons. Thermal coal inventory increased by 198,000 tons to 971,000 tons, while low-vol coal inventory decreased by 40,000 tons, to 104,000 tons.

Coal Marketing Update:

Met Coal: In the third quarter, CONSOL's Buchanan Mine produced and shipped over 1.1 million tons of coal to domestic and international customers. Buchanan's continued low-cost position presented a new sales opportunity in China. This new opportunity, combined with existing business from traditional customers, enabled CONSOL to exceed the production forecast at the Buchanan Mine, in the third quarter.

CONSOL shipped 371,000 tons of its Bailey high vol met coal to customers. In the fourth quarter, CONSOL expects high vol shipments to China to resume. The demand for Bailey coal currently remains strong as the versatility allows it to compete as high vol, PCI and high-BTU thermal coal. 

CONSOL continues to sell met coal from its Western Allegheny Energy joint venture to explore global opportunities for new met coal customers.

Thermal: At the end of the third quarter, CONSOL's NAPP mine inventories remained below normal levels. Also, CONSOL believes coal pricing has upside potential as Pennsylvania, Jersey, and Maryland (PJM) utility inventories remained below their 5-year average, and Southeast utility inventories have declined nearer to their 5-year average. During the quarter, CONSOL was successful in securing large multi-year deals with key utility customers in the PJM and in the Southeast. In the fourth quarter of 2013, CONSOL expects demand for contracted tonnage to remain steady as plants build their inventories in preparation for winter burn.

CONSOL is currently in negotiations to contract 2 - 3 million tons of thermal and high vol coal for 2014. CONSOL expects negotiations to conclude within the next few weeks.  

CONSOL Energy 2013 - 2015 Guidance

Fourth quarter gas production, net to CONSOL, is expected to be approximately 46 ? 48 Bcfe. If achieved, this would result in 2013 annual production of approximately 170 ? 172 Bcfe.

CONSOL Energy expects its 2014 annual gas production to be between 210 ? 225 Bcfe with annual production growth, thereafter, between 25% - 30% through 2016.

Total hedged gas production in the 2013 fourth quarter is 24.0 Bcf, at an average price of $4.64 per Mcf. The annual gas hedge position for three years is shown in the table below:

 

GAS DIVISION GUIDANCE

2013

2014

2015

Total Yearly Production (Bcfe)

170-172

210-225

+25%-30%

Volumes Hedged (Bcf),as of 10/8/13

84.1

74.5

64.3

Average Hedge Price ($/Mcf)

$

4.70

$

4.81

$

4.18

 

 

COAL DIVISION GUIDANCE

Q4 2013

2013

2014

2015

Estimated Coal Sales (millions of tons)

13.6 - 14.0

57.0- 57.4

30.1

33.8

    Est. Low-Vol Met Sales

0.7 -0.9

4.3-4.5

4.2

4.9

      Tonnage: Firm

0.7

4.2

0.9

0.8

      Avg. Price: Sold (Firm)

$

92.27

$

95.34

$

100.62

$

102.50

    Est. High-Vol Met Sales

0.5+

2.8+

1.8

1.4

      Tonnage: Firm

0.5

2.8

0.2

0.2

      Avg. Price: Sold (Firm)

$

61.31

$

63.27

$

79.80

$

75.33

    Est. Thermal Sales

12.4+

49.9+

24.1

27.5

      Tonnage: Firm

12.4

49.9

18.9

10.1

      Avg. Price: Sold (Firm)

$

58.19

$

58.94

$

64.05

$

67.00

Note:  While the data in the table are single point estimates, the inherent uncertainty of markets and mining operations means that investors should consider a reasonable range around these estimates. CONSOL has chosen not to forecast prices for open tonnage due to ongoing customer negotiations. In the thermal sales category, the open tonnage includes two items: sold, but unpriced tons and collared tons. There are no collared tons in 2014.  Collared tons in 2015 are 1.4 million tons, with a ceiling of $72.59 per ton and a floor of $48.59 per ton.  Calendar year 2013 includes 0.1 million tons of mid-vol coal from Amonate. The Amonate tons are not included in the category breakdowns. Also, not included in the category breakdowns are the tons from equity affiliates Harrison Resources and Western Allegheny Energy (WAE). Harrison Resources has 0.4 million tons for 2013, 2014, and 2015. WAE has 0.3, 0.5, and 0.9 million tons for 2013, 2014, and 2015, respectively.

Coal Division guidance for 2014 - 2015 excludes the five mines that will be sold in CONSOL Energy's recent transaction. However, fourth quarter 2013 guidance includes these mines.  

Liquidity

Total company liquidity as of September 30, 2013 was $2.3 billion, including cash of $21.1 million.

As of September 30, 2013, CONSOL Energy had $1.413 billion in total liquidity, which is comprised of $17.2 million of cash and $1,395.9 million available to be borrowed under its $1.5 billion bank facility. CONSOL Energy's credit facility has no borrowings. Outstanding letters of credit are $104.1 million.

As of September  30, 2013, CNX Gas Corporation had $886.8 million in total liquidity, which is comprised of $3.9 million of cash and $882.9 million available to be borrowed under its $1.0 billion bank facility.  CNX Gas' credit facility has $47.0 million drawn. Outstanding letters of credit are $70.1 million.

About

CONSOL Energy Inc. is a Pittsburgh-based producer of coal and natural gas. It has 11 bituminous coal mining complexes in four states and reports proven and probable coal reserves of 4.2 billion tons. The company's premium Appalachian coals are sold worldwide to electricity generators and steelmakers. In natural gas, CONSOL Energy has transformed itself from a pure-play coalbed methane producer to a full-fledged exploration and production company. The company is a leading producer in the Marcellus Shale and is transitioning its active exploration program into development mode in the Utica Shale. CONSOL Energy has proved natural gas reserves of 4.0 trillion cubic feet. Operational safety is the company's top core value and CONSOL Energy boasts a record of almost two times better than the industry average for underground bituminous coal mines. CONSOL Energy is a member of the Standard & Poor's 500 Equity Index and the Fortune 500. This description does not take into account the recent agreement for the sale of five thermal coal mines. Additional information about CONSOL Energy can be found at its Web site: www.consolenergy.com.

Non-GAAP Financial Measures

Definition: EBIT is defined as  earnings before deducting net interest expense (interest expense less interest income) and income taxes.  EBITDA is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization.  Adjusted EBITDA is defined as EBITDA  after adjusting for the discrete items listed below. Although EBIT, EBITDA, and Adjusted EBITDA  are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that it is useful to an investor in evaluating CONSOL Energy because it is widely used to evaluate a company's operating performance before debt expense and its cash or as a substitute for measures of performance in accordance with generally accepted accounting principles.  In addition, because all companies do not calculate EBIT, EBITDA, or Adjusted EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies.

Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial net income attributable to CONSOL Energy Shareholders is as follows (dollars in 000):

 

 

Three Months Ended

September, 30

2013

2012

Net (Loss) Attributable to CONSOL Energy Inc. Shareholders

$

(63,651)

$

(11,368)

Add:  Interest Expense

56,301

54,075

Less: Interest Income

(4,300)

(8,299)

Add:  Income Taxes

74,623

(19,898)

Earnings Before Interest & Taxes (EBIT)

62,973

14,510

Add:  Depreciation, Depletion & Amortization

169,152

153,877

Earnings Before Interest, Taxes and DD&A (EBITDA)

232,125

168,387

Adjustments:

Marcellus Title Defects

12,984

--

Transaction Fees

10,295

--

Pension Settlement

6,296

--

Bailey Structural Incident Business Interruption Proceeds

(2,658)

--

Gain on Sale - Crowsnest Pass

(15,260)

--

Bailey Structural Incident

?

41,873

Total Pre-tax Adjustments

11,657

41,873

Adjusted Earnings Before Interest, Taxes and DD&A ( Adjusted EBITDA)

$

243,782

$

210,260

Note: Income tax effect of Total Pre-tax Adjustments was ($1,979) and ($2,165) for the three months ended September 30, 2013 and September 30, 2012, respectively.

Forward-Looking Statements

Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Exchange Act) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: deterioration in global economic conditions in any of the industries in which our customers operate, or sustained uncertainty in financial markets cause conditions we cannot predict; an extended decline in demand for or in the prices we receive for our coal and gas affecting our operating results and cash flows; our customers extending existing contracts or entering into new long-term contracts for coal; the expiration or failure to extend existing long-term contracts; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our coal and gas to market; a loss of our competitive position because of the competitive nature of the coal and gas industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; our failure to maintain satisfactory labor relations; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted regulations relating to greenhouse gas emissions on the demand for coal and natural gas, as well as the impact of any adopted regulations on our coal mining operations due to the venting of coalbed methane which occurs during mining; foreign currency fluctuations could adversely affect the competitiveness of our coal abroad; the risks inherent in coal and gas operations being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; our focus on new gas development projects and exploration for gas in areas where we have little or no proven gas reserves; decreases in the availability of, or increases in, the price of commodities and services used in our mining and gas operations, as well as our exposure under "take or pay" contracts we entered into with well service providers to obtain services of which if not used could impact our cost of production; obtaining, maintaining and renewing governmental permits and approvals for our coal and gas operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our coal and gas operations; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down a mine or well; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current coal and gas operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable coal and gas reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for coal or gas rights on some of our properties or failing to acquire these additional rights we may have to reduce our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; the impacts of various asbestos litigation claims; increased exposure to employee related long-term liabilities; increased exposure to multi-employer pension plan liabilities; minimum funding requirements by the Pension Protection Act of 2006 (the Pension Act) coupled with the significant investment and plan asset losses suffered during the recent economic decline has exposed us to making additional required cash contributions to fund the pension benefit plans which we sponsor and the multi-employer pension benefit plans in which we participate; lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan exceeding total service and interest cost in a plan year; acquisitions and joint ventures that we recently have completed or entered into or may make in the future including the accuracy of our assessment of the acquired businesses and their risks, achieving any anticipated synergies, integrating the acquisitions and unanticipated changes that could affect assumptions we may have made and divestitures we anticipate may not occur or produce anticipated proceeds including joint venture partners paying anticipated carry obligations; the anti-takeover effects of our rights plan could prevent a change of control; increased exposure on our financial performance due to the degree we are leveraged; replacing our natural gas reserves, which if not replaced, will cause our gas reserves and gas production to decline; our ability to acquire water supplies needed for gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; our hedging activities may prevent us from benefiting from price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; the following risks and uncertainties with respect to the coal mine sale transaction - the ability to obtain regulatory approvals for the transaction on the proposed terms and schedule, disruption to our business, including customer, employee and supplier relationships resulting from this transaction, risks that the conditions to closing may not be satisfied, and the impact of the transaction on our future operating results, our capital investment program, and our dividend; and other factors discussed in the 2012 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.

 

CONSOL ENERGY INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2013

2012

2013

2012

Sales?Outside

$

1,160,114

$

1,084,041

$

3,512,055

$

3,584,805

Sales?Gas Royalty Interests

15,506

12,968

46,738

34,707

Sales?Purchased Gas

1,608

953

4,372

2,443

Freight?Outside

11,563

27,430

35,749

126,195

Other Income

42,627

34,697

138,824

293,196

Total Revenue and Other Income

1,231,418

1,160,089

3,737,738

4,041,346

Cost of Goods Sold and Other Operating Charges (exclusive of

depreciation, depletion and amortization shown below)

851,088

827,530

2,639,929

2,588,460

Gas Royalty Interests Costs

12,864

10,543

38,204

27,916

Purchased Gas Costs

941

737

2,961

2,123

Freight Expense

11,563

27,430

35,749

126,195

Selling, General and Administrative Expenses

33,472

36,681

104,265

109,412

Depreciation, Depletion and Amortization

169,152

153,877

489,774

463,048

Interest Expense

56,301

54,075

164,197

168,788

Taxes Other Than Income

85,463

80,587

251,575

256,543

Total Costs

1,220,844

1,191,460

3,726,654

3,742,485

Earnings (Loss) Before Income Taxes

10,574

(31,371)

11,084

298,861

Income Taxes

74,623

(19,898)

89,767

60,428

Net (Loss) Income

(64,049)

(11,473)

(78,683)

238,433

Add:  Net Loss Attributable to Noncontrolling Interest

398

105

942

134

Net (Loss) Income Attributable to CONSOL Energy Inc. Shareholders

$

(63,651)

$

(11,368)

$

(77,741)

$

238,567

Earnings Per Share:

Basic

$

(0.28)

$

(0.05)

$

(0.34)

$

1.05

Dilutive

$

(0.28)

$

(0.05)

$

(0.34)

$

1.04

Weighted Average Number of Common Shares Outstanding:

Basic

228,876,336

227,654,395

228,640,671

227,491,284

Dilutive

228,876,336

227,654,395

228,640,671

229,191,870

Dividends Paid Per Share

$

0.125

$

0.125

$

0.250

$

0.375

 

 

CONSOL ENERGY INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2013

2012

2013

2012

Net (Loss) Income

$

(64,049)

$

(11,473)

$

(78,683)

$

238,433

Other Comprehensive Income (Loss):

  Actuarially Determined Long-Term Liability

Adjustments (Net of tax: ($15,422), ($4,775),

($70,161), ($45,242))

24,980

7,921

113,641

75,080

  Net Increase (Decrease) in the Value of Cash Flow

Hedges (Net of tax: ($8,536), $4,161, ($26,036),

($51,716))

13,246

(6,459)

40,400

80,280

  Reclassification of Cash Flow Hedges from OCI to

Earnings (Net of tax: $14,025, $29,683, $36,551,

$97,760)

(24,354)

(47,809)

(56,595)

(153,597)

Other Comprehensive Income (Loss)

13,872

(46,347)

97,446

1,763

Comprehensive (Loss) Income

(50,177)

(57,820)

18,763

240,196

Comprehensive Loss Attributable to Noncontrolling

Interest

398

105

942

134

Comprehensive (Loss) Income Attributable to

CONSOL Energy Inc. Shareholders

$

(49,779)

$

(57,715)

$

19,705

$

240,330

 

CONSOL ENERGY INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

September 30, 2013

December 31, 2012

ASSETS

Current Assets:

Cash and Cash Equivalents

$

21,086

$

21,878

Accounts and Notes Receivable:

Trade

436,388

428,328

Notes Receivable

25,813

318,387

Other Receivables

160,931

131,131

           Accounts Receivable - Securitized

44,364

37,846

Inventories

238,348

247,766

Deferred Income Taxes

81,825

148,104

Restricted Cash

12,263

48,294

Prepaid Expenses

162,418

157,360

Total Current Assets

1,183,436

1,539,094

Property, Plant and Equipment:

Property, Plant and Equipment

16,571,104

15,545,204

Less?Accumulated Depreciation, Depletion and Amortization

5,940,247

5,354,237

Total Property, Plant and Equipment?Net

10,630,857

10,190,967

Other Assets:

Deferred Income Taxes

457,105

444,585

Restricted Cash

?

20,379

Investment in Affiliates

261,218

222,830

Notes Receivable

155

25,977

Other

204,301

227,077

Total Other Assets

922,779

940,848

TOTAL ASSETS

$

12,737,072

$

12,670,909

 

 

CONSOL ENERGY INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

(Unaudited)

September 30, 2013

December 31, 2012

LIABILITIES AND EQUITY

Current Liabilities:

Accounts Payable

$

512,182

$

507,982

Current Portion of Long-Term Debt

13,182

13,485

Short-Term Notes Payable

47,000

25,073

Accrued Income Taxes

87,965

34,219

Borrowings Under Securitization Facility

44,364

37,846

Other Accrued Liabilities

868,904

768,494

Total Current Liabilities

1,573,597

1,387,099

Long-Term Debt:

Long-Term Debt

3,123,755

3,124,473

Capital Lease Obligations

48,176

50,113

Total Long-Term Debt

3,171,931

3,174,586

Deferred Credits and Other Liabilities:

Postretirement Benefits Other Than Pensions

2,814,234

2,832,401

Pneumoconiosis Benefits

178,508

174,781

Mine Closing

460,515

446,727

Gas Well Closing

197,093

148,928

Workers' Compensation

156,568

155,648

Salary Retirement

74,108

218,004

Reclamation

49,487

47,965

Other

103,855

131,025

Total Deferred Credits and Other Liabilities

4,034,368

4,155,479

TOTAL LIABILITIES

8,779,896

8,717,164

Stockholders' Equity:

Common Stock, $.01 Par Value; 500,000,000 Shares Authorized,

228,936,248 Issued and Outstanding at September 30, 2013;

228,129,467 Issued and 228,094,712 Outstanding at

December 31, 2012

2,292

2,284

Capital in Excess of Par Value

2,347,973

2,296,908

Preferred Stock, 15,000,000 authorized, None issued

and outstanding

?

?

Retained Earnings

2,257,796

2,402,551

Accumulated Other Comprehensive Loss

(649,896)

(747,342)

Common Stock in Treasury, at Cost? No Shares at

September 30, 2013 and 34,755 Shares at December 31, 2012

?

(609)

Total CONSOL Energy Inc. Stockholders' Equity

3,958,165

3,953,792

Noncontrolling Interest

(989)

(47)

TOTAL EQUITY

3,957,176

3,953,745

TOTAL LIABILITIES AND EQUITY

$

12,737,072

$

12,670,909

 

 

CONSOL ENERGY INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Dollars in thousands, except per share data)

Common

Stock

Capital in

Excess

of Par

Value

Retained

Earnings

(Deficit)

Accumulated

Other

Comprehensive

Income

(Loss)

Common

Stock in

Treasury

Total

CONSOL

Energy Inc.Stockholders'Equity

Non-

Controlling

Interest

Total

Equity

Balance at December 31, 2012

$

2,284

$

2,296,908

$

2,402,551

$

(747,342)

$

(609)

$

3,953,792

$

(47)

$

3,953,745

(Unaudited)

Net Loss

?

?

(77,741)

?

?

(77,741)

(942)

(78,683)

Other Comprehensive

Income

?

?

?

97,446

?

97,446

?

97,446

Comprehensive (Loss)

Income

?

?

(77,741)

97,446

?

19,705

(942)

18,763

Issuance of Common

Stock

8

2,690

?

?

?

2,698

?

2,698

Treasury Stock Activity

?

?

(9,803)

?

609

(9,194)

?

(9,194)

Tax Cost From Stock-

Based Compensation

?

(2,539)

?

?

?

(2,539)

?

(2,539)

Amortization of Stock-

Based Compensation

Awards

?

50,914

?

?

?

50,914

?

50,914

Dividends ($0.250 per share)

?

?

(57,211)

?

?

(57,211)

?

(57,211)

Balance at September

30, 2013

$

2,292

$

2,347,973

$

2,257,796

$

(649,896)

$

?

$

3,958,165

$

(989)

$

3,957,176

 

 

CONSOL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2013

2012

2013

2012

Operating Activities:

Net (Loss) Income

$

(64,049)

$

(11,473)

$

(78,683)

$

238,433

Adjustments to Reconcile Net (Loss) Income to Net Cash Provided By

Operating Activities:

Depreciation, Depletion and Amortization

169,152

153,877

489,774

463,048

Stock-Based Compensation

11,673

11,488

50,914

38,423

Gain on Sale of Assets

(19,836)

(276)

(52,794)

(190,257)

Amortization of Mineral Leases

1,253

187

2,014

3,818

Deferred Income Taxes

(38,097)

(35,850)

(31,099)

(5,225)

Equity in Earnings of Affiliates

(3,609)

(7,573)

(20,276)

(22,676)

Changes in Operating Assets:

Accounts and Notes Receivable

(14,215)

(26,675)

11,145

13,359

Inventories

(10,354)

38,522

9,418

(8,204)

Prepaid Expenses

(33,692)

(21,071)

(9,259)

(1,362)

Changes in Other Assets

(194)

(19,565)

24,318

(8,961)

Changes in Operating Liabilities:

Accounts Payable

(7,083)

46,484

(20,553)

5,218

Other Operating Liabilities

180,759

54,563

174,740

(11,130)

Changes in Other Liabilities

5,341

(21,987)

8,148

1,469

Other

18,562

1,563

31,198

14,210

Net Cash Provided by Operating Activities

195,611

162,214

589,005

530,163

Investing Activities:

Capital Expenditures

(437,909)

(437,622)

(1,195,909)

(1,152,021)

Change in Restricted Cash

(12,263)

?

56,410

?

Proceeds from Sales of Assets

357,373

331,713

598,174

583,942

Net Investments In Equity Affiliates

(1,512)

3,138

(18,112)

(18,701)

Net Cash Used in Investing Activities

(94,311)

(102,771)

(559,437)

(586,780)

Financing Activities:

(Payments on) Proceeds from Short-Term Borrowings

(126,000)

?

47,000

?

Payments on Miscellaneous Borrowings

(2,128)

(1,903)

(32,290)

(6,565)

Proceeds from Securitization Facility

3,645

?

6,518

?

Tax Benefit from Stock-Based Compensation

131

970

2,316

2,578

Dividends Paid

(28,610)

(28,457)

(57,211)

(85,290)

Issuance of Common Stock

201

777

2,698

1,234

Issuance of Treasury Stock

609

?

609

109

Debt Issuance and Financing Fees

?

(79)

?

(227)

Net Cash Used in Financing Activities

(152,152)

(28,692)

(30,360)

(88,161)

Net (Decrease) Increase in Cash and Cash Equivalents

(50,852)

30,751

(792)

(144,778)

Cash and Cash Equivalents at Beginning of Period

71,938

200,207

21,878

375,736

Cash and Cash Equivalents at End of Period

$

21,086

$

230,958

$

21,086

$

230,958

 

 

SOURCE CONSOL Energy Inc.

For further information: Investor: Dan Zajdel, at (724) 485-4169, or Tyler Lewis, at (724) 485-3157; Media: Lynn Seay, at (724) 485-4065

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