CONSOL Energy selling Buchanan mine in Virginia

CONSOL Energy (NYSE:  CNX) has entered into an agreement for the sale of its Buchanan Mine in southwestern Virginia and certain other metallurgical coal reserves to Coronado IV LLC for total consideration to CONSOL of $420m, including $398m cash payable at the closing. 

The transaction is not subject to a financing condition and is being funded by Energy and Minerals Group (EMG), which is the management company for a series of specialized private equity funds. EMG has approximately $16.5bn of regulatory assets under management. 

It’s the latest move by CONSOL in its effort to cope with a tough coal market. Only last month, CONSOL and its recently-created partial subsidiary, CNX Coal Resources LP (NYSE: CNXC) offered updates, including reductions in expected 2016 coal sales.

The latest transaction included CONSOL Energy’s idled Amonate Mine in southern West Virginia and southwestern Virginia, its greenfield Russell County coal reserves in southwestern Virginia and its greenfield Pangburn-Shaner-Fallowfield coal reserves in southwestern Pennsylvania, CONSOL said in a news release.

The transaction includes approximately 400 million tons of proved coal reserves which includes approximately 88 million tons associated with the Buchanan Mine. 

The transaction does not include any gas rights, and CONSOL will retain the right to extract and sell gas at the mines and other properties. 

The agreement contains customary representations, warranties and covenants, among other provisions, including a customary escrow provision.  The completion of the sale is subject to customary conditions, including regulatory approvals.  The final purchase price is subject to a limited working capital adjustment.    

CONSOL expects to utilize transaction proceeds in order to pay down debt. The transaction is expected to close in the first quarter of 2016.  

Also in conjunction with the sale, CONSOL Energy is realigning its dividend policy to further reflect the company’s increased emphasis on growth.  Beginning with the first declared quarterly dividend after the transaction closes, CONSOL Energy intends to suspend its regular quarterly dividend. 

“This is another significant event in the execution of CONSOL Energy’s strategy, as well as a meaningful step in continuing to strengthen our balance sheet,” said CONSOL President and CEO Nicholas J. DeIuliis. “The Buchanan Mine fits into Coronado’s portfolio as a pure play metallurgical coal producer, and, in the end, this transaction bolsters the strategic position of both companies.”

Coronado is a evidently a foreign limited liability company that was formed in December 2015.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at