CONSOL Energy (NYSE: CNX), as part of a recent program to sharply reduce its presence in coal production, announced Oct. 6 the closing of two separate asset sale transactions.
CONSOL sold its 49% interest in the Western Allegheny Energy (WAE) joint venture to Rosebud Mining. The WAE transaction included the conveyance of 63 million tons of coal reserves. This transaction closed on Sept. 30. Rosebud Mining, controlled by J. Clifford Forrest, is a major coal producer in central Pennsylvania where the WAE operation is located.
Separately, CONSOL Energy sold 6.7 million tons of lignite reserves located in South Texas to an unnamed private entity. This transaction closed on Oct. 6. CONSOL had not been producing coal in this region, but as a coal producer dating back many years, it had coal holdings in what seemed to be pretty unlikely places.
Aggregate transaction-related proceeds of $101 million under both deals include: $95 million in cash, $2 million in the assumption of liabilities, and $4 million of advance minimum royalties paid under the terms of leases.
CONSOL saidit expected a $6 million EBITDA contribution in 2016 related to the assets sold in the transactions. CONSOL Energy intends to use the proceeds from these transactions to reduce debt.
CONSOL, which under the name Consolidation Coal has operated coal mines for decades, is cutting its coal holdings. In late 2013 it sold several big longwall-equipped deep mines in northern West Virginia to Murray Energy. Earlier this year it floated a minority interest in its big Bailey-Enlow Fork-Harvey mine complex in Pennsylvania in an IPO for CNX Coal Resources. It has made other coal asset sales, as well.
CONSOL Energy is a Pittsburgh-based producer of natural gas and coal. The company is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company’s premium coals are sold to electricity generators and steel makers, both domestically and internationally.