TORONTO (miningweekly.com) – US coal and gas producer Consol Energy has widened its third-quarter net loss to $63.65-million, or $0.28 a share, from a net loss of $11.36-million, or $0.05 a share, despite driving down production costs and increasing output in both its natural gas and coal divisions.
During the three months ended September 30, the company’s revenue fell 6% to $1.23-billion, despite the gas division’s total output rising 17% to 46.1-billion cubic feet equivalent , and total gas production costs declining 3% to $1.80 per million cubic feet equivalent.
Consol’s gas division continued to see the gas from the Marcellus Shale, in Pennsylvania, becoming a greater portion of the production mix.
“This is important for two main reasons: The first is the lower-cost nature of the Marcellus resulting from drilling efficiencies such as pad drilling, and the second is sales price uplift associated with a higher concentration of liquids.
“Consol is not only on track to meet its 2014 overall gas production guidance, but is also on track to more than double its Marcellus Shale production in 2014, compared to 2013,” chairperson and CEO Brett Harvey said.
Consol's coal division produced 14.5-million tons in the third quarter. As of September 30, Consol's total coal inventory increased by 158 000 t to 1.08-million tons. The thermal coal inventory increased by 198 000 t to 971 000 t, and low-volatility coal inventory decreased by 40 000 t, to 104 000 t.
The costs per ton sold, across all tons, were $50.46, compared with $55.84/t from the year-earlier quarter. Unit costs improved owing to higher sales volumes and completed efficiency programmes at the mines.
Consol said its liquidity remained strong at $2.3-billion, and the company continued to invest in value-creating projects.
Third quarter capital investments were $438-million, which was flat with the year-earlier quarter. The new BMX mine, also in Pennsylvania, remained on track to start operations in April 2014, with an expected total capital cost of $710-million.
Consol on Monday announced a transformative step to advance its natural gas exploration and production portfolio growth strategy. The company entered into an agreement to sell its subsidiary Consolidation Coal Company, which contained all five of its longwall coal mines in West Virginia, to Murray Energy Corporation for $4.4-billion in value.
The company would sell the mines for $850-million in cash and $184-million in future royalty payments for coal reserves. Murray would also assume about $2.4-billion of Consol's liabilities, mostly for worker pensions and other benefits.