Share This Page

Consol Energy posts $25 million loss despite gas gains

| Tuesday, July 29, 2014, 7:30 a.m.
Jasmine Goldband | Tribune-Review
Walter Baranowski, 27, of Follansbee, W. Va. bolts the ceiling as part of his training on a piece of equipment at Consol Energy Inc. Bailey Mine Complex in Greene County Friday, June 6, 2014.

Leaders at Consol Energy Inc. expressed optimism Tuesday in the company's natural gas production and coal sales despite a widened loss in the latest quarter.

“Our momentum continues to build,” CEO Nick DeIuliis said while discussing second-quarter results that the Cecil-based company says were offset by several one-time expenses.

Consol boosted gas production 34 percent over last year to a company record 51.9 billion cubic feet during the three months that ended June 30, increasing revenue to $937.4 million, a 13 percent jump from the same quarter last year. On the mining side, leaders said they have a plan to overcome a depressed international market for metallurgical coal.

Several big charges during the quarter — including $74 million for early retirement of debt and a $20 million pension settlement — drove down the bottom line. The company's loss worsened in the second quarter to $24.9 million, or 11 cents a share. It had a loss of $12.5 million, or 5 cents a share, in the same period last year.

Company officials played up the positives during a conference call with analysts. They predicted continued production gains in gas and coal, more efficiency in drilling wells in the Marcellus and Utica shales and more pipeline capacity to move the gas to markets.

“In takeaway, you guys seem to be in quite good shape compared to others,” said Neal Dingmann, an analyst at SunTrust Robinson Humphrey in Atlanta.

Consol had warned of the loss in a production update two weeks ago that sent its stock price down. Investors seemed less concerned about Tuesday's report; the stock price closed up 38 cents at $40.32.

Analyst Michael Dudas with Sterne Agee in Birmingham, Ala., noted that Consol had good news on its coal markets, a rarity in that industry. Despite its recent focus on gas exploration and production, more than half of Consol's revenue comes from coal.

The company increased its estimate of how much coal it could mine from the Pittsburgh seam by about 32 percent, based on better longwall mining technology.

Consol lowered its expectation for how much metallurgical coal it would sell for steelmaking this year by about 17 percent, but leaders discussed a strategy to improve sales next year. DeIuliis said staff from Consol's research and development facilities are working with potential buyers to develop custom mixes of coal types to fit their needs.

“We've been getting a very good response from the customers as far as incorporating us into their blends for next year,” he said.

Sales of thermal coal from the Bailey complex in Pennsylvania used to fuel power plants remain rich, even as some utilities on the coast are importing coal from overseas. DeIuliis said that for every ton of coal produced at Bailey “we have a customer waiting to take it.”

The company is focused on signing contracts for that coal with power plants designated to run continuously for the next few years.

David Conti is a staff writer for Trib Total Media. He can be reached at 412-388-5802 or dconti@tribweb.com.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.