CONSOL Energy (NYSE: CNX), which last year cut back its coal presence by selling several West Virginia longwall mines to Murray Energy, is looking at selling about 1 billion tons of Illinois Basin coal reserves.
CONSOL President and CEO Nicholas Deluliis said during a July 29 earnings call that CONSOL, which produces both natural gas and coal these days, has a number of projects underway for “monetization of non-core assets,” which includes the potential sale of 1 billion tons of Illinois Basin coal.
Asked by an analyst about the value of those reserves, considering that Illinois Basin reserves have lately gone for about $2/ton, Deluliis added: “Obviously, this is greenfield reserves and so it’s hard to give you dollars per ton. We’re going to let the process work its way through. But I will tell you, we will find a way to maximize the value, either through selling it in one piece or breaking it up into multiple pieces that will make sense for multiple buyers. So you’ll just have to stay tuned. It’s a process that we’re going through right now and hopefully, we’ll have some good results third quarter or fourth quarter.”
CONSOL has in the last couple of years sold off coal reserves and coal mines as it cuts back its coal presence to mostly longwall mines in Northern and Central Appalachia. CONSOL hasn’t operated a mine in the Illinois Basin for years. It, for example, shut its Rend Lake longwall mine in Illinois in 2002. A big new mine that Alliance Coal developed in western Kentucky in recent years is on former CONSOL reserves. The Pittsburgh-based company has in the meantime stepped up its investment in natural gas production.
Notable is that the U.S. Mine Safety and Health Administration classifies the ‘nonproducing” Rend Lake facility in Jefferson County, Ill., shut since 2002, as being controlled by Robert Murray, the founder of Murray Energy, through Consolidation Coal. Consolidation Coal is the former CONSOL subsidiary that Murray acquired last year in his buy of the operating longwall mines in northern West Virginia. MSHA classifies other, “abandoned” Consolidation Coal mines in Illinois, including the Hillsboro deep mine and the Burning Star #2 and #3 strip mines, as being controlled by Murray. That also goes for mines like the “abandoned” Oaktown and Francisco deep mines in Indiana, and the Towhead Island deep mine in western Kentucky.