CNX Coal, which will control three Pennsylvania coal mines, launches IPO

CNX Coal Resources LP, which was formed by CONSOL Energy (NYSE: CNX), announced June 15 that it has launched its initial public offering of 10,000,000 common units representing limited partner interests.

The common units are expected to trade on the New York Stock Exchange under the ticker symbol “CNXC.”  The underwriters of the offering will have a 30-day option to purchase up to an additional 1,500,000 common units to cover over-allotments, if any.

The common units being offered represent a 42.2% limited partner interest in CNX Coal Resources (or a 48.5% limited partner interest if the underwriters exercise in full their option to purchase additional common units). CONSOL will own a 55.8% limited partner interest in CNX Coal Resources (or a 49.5% limited partner interest if the underwriters exercise in full their option to purchase additional common units). In addition, CONSOL will own, through its ownership of CNX Coal Resources GP LLC, the general partner of CNX Coal Resources, a 2% general partner interest and the incentive distribution rights in CNX Coal Resources.

BofA Merrill Lynch, Wells Fargo Securities, Citigroup, Jefferies, Scotia Howard Weil, Credit Suisse, J.P. Morgan, Evercore ISI, BB&T Capital Markets, Goldman, Sachs & Co., The Huntington Investment Company, Stifel and Nomura are acting as book-running managers of the offering.  Clarksons Platou Securities, Cowen and Company and Tuohy Brothers are acting as co-managers of the offering.

CNX Coal Resources is a growth-oriented master limited partnership recently formed by CONSOL to manage and further develop all of CONSOL’s active thermal coal operations in Pennsylvania. Its initial assets include a 20% undivided interest in, and operational control over, CONSOL’s Pennsylvania mining complex, which consists of three underground mines (Bailey, Enlow Fork and Harvey) and related infrastructure. CNX Coal Resources also has a right of first offer on various other CONSOL assets, including the other 80% of the Pennsylvania complex and a coal loading terminal in Baltimore, Md.

As of Dec. 31, 2014, the Pennsylvania mining complex included 785.6 million tons (157.1 million tons net to the 20% interest on a pro forma basis) of proven and probable coal reserves with an average gross heat content of approximately 13,000 Btus per pound and an average sulfur content of 2.37%. Based on current production capacity, these reserves are sufficient to support over 27 years of production.

CNX currently operate five longwalls and 18 continuous mining sections at the Pennsylvania mining complex. The current production capacity of the complex’s five longwalls is 28.5 million tons of coal per year, and it produced approximately 26.1 million tons (5.2 million tons net to the 20% interest on a pro forma basis) of coal for the year ended Dec. 31, 2014.

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.