TORONTO (miningweekly.com) – US coal and gas producer Consol Energy increased adjusted net income 69% year-on-year, to $174-million, thanks to higher revenue and sales in its coal division.
Consol Energy mines coal in Utah, Kentucky, Ohio, West Virginia, Virginia and Pennsylvania, and also produces and explores for natural gas.
Net income rose to $77-million, compared with $67-million in the second quarter of 2010.
However, profit was lower than analysts had expected, after earnings from the gas unit declined because lower gas prices more than offset increased volumes.
The company, which raised its full-year coal output target earlier this month, said on Thursday it has also raised estimates for 2012 and 2013 by one-million tons each.
Revenue in the second quarter rose to $1.59-billion, compared with $1.29-billion a year earlier, driven by higher-than-expected coal sales of 16.4-million tons, coupled with higher coal prices, Consol said.
Coal margins in the quarter expanded by $7.09/t, to $21.56/t, mainly driven by higher sales prices.
Most of the increase in average realized prices came from the company's low-vol coal sales, which Consol is working to increase.
"We exceeded our expectations on coal production and our sales team sold a record 1.5 million tons of Bailey coal into the high-vol coking coal market," CEO Brett Harvey said in a statement.
Consol plans to export 10-million tons this year, which it expects will generate more than $1-billion in revenue.
The group is expanding its Baltimore terminal to facilitate future growth, and is also developing the BMX mine in the Pittsburgh seam and restarting its Amonate complex.
“All three of these coal projects are driven by increased worldwide coal demand," Harvey said.
Consol expects to produce between 62-million and 63-million tons of coal this year, including five million tons of low-vol metallurgical coal in 2011.
Production is now expected to be 60.5-million to 62.5-million a year in 2012 and 2013.
In the gas division, profitability declined despite much higher gas volumes, Consol said.
“Unit gas margins fell, primarily due to much lower realized gas prices,” the firm said.
The firm has maintained its gas production forecast at between 150 bcf and 160 bcf.
Edited by: Creamer Media Reporter
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