CONSOL pares back new mine investment after BMX completed

CONSOL Energy (NYSE: CNX) said Jan. 14 that it expects to invest $835m-$865m in its coal, gas, and water businesses in 2013, after adjusting for certain expected proceeds, with the coal investment coming in at $410m-$520m.

“Our net investment in 2013 reflects both our ability to invest in our organic growth opportunities in coal, gas, and liquids,” said J. Brett Harvey, chairman and CEO, “while selling assets that have more value to others. We have some flexibility in our 2013 investment plan, in both coal and gas. In our coal division, once we complete the BMX Mine, we do not expect to be investing in new major coal growth projects. So, in 2014 and beyond, we expect annual coal investments to approach maintenance-of-production levels of $5 to $6 per ton.”

CONSOL Energy expects to be able to fund this 2013 net investment through cash flow from operations.

Within coal operations for 2013, CONSOL expects to invest $318m for maintenance-of-production projects. Other major items include $166m for the BMX Mine, as well as $80m for the Enlow Fork overland belt project. The BMX Mine, which is essentially a third longwall for the big Bailey mine in southwest Pennsylvania, is scheduled for completion during the first quarter of 2014, when 5 million annual tons of high-quality Pittsburgh seam coal will be available to be sold in either the high-vol or thermal markets. Enlow Fork is a twin-longwall, Pittsburgh-seam mine right next to Bailey, with both mines feeding coal into a common prep plant.

In 2012, CONSOL contracted and paid significant deposits to secure replacement longwall shields at three of its mining complexes and new longwall shields at the BMX complex. The company is nearing the end of a process to fund this capital commitment in a $205m operating lease in 2013.  This amount has been netted from the expected coal operations capital expenditures.

CONSOL Energy will report additional operational and financial results for the quarter ended Dec. 31, 2012 on Jan. 31.

CONSOL has 12 bituminous coal mining complexes in four states and reports proven and probable coal reserves of 4.4 billion tons. It is also a leading Eastern U.S. gas producer, with proved reserves as of December 31, 2011 of 3.5 trillion cubic feet.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.