Not mine: Consol Energy puts a wrap on CAPP coal business
Thursday August 11, 2016
One of the pioneering and largest Central Appalachian coal producers has closed shop, essentially completing its years-long transformation from coal miner into an E&P company focused on the plethora of natural gas in the Marcellus and Utica shales.
Consol Energy last week shed its final CAPP coal mines in West Virginia, and paid to do it. The company handed over the Miller Creek and shuttered Fola complexes in West Virginia along with $44 million to Booth Energy, who took over the mines and, most importantly, the $103 million in liabilities tied to the properties.
Consol CEO Nicholas DeIuliis said during a second-quarter earnings call July 26 the deal was “not only consistent with our core strategy and not only another step in improving our balance sheet, but, most importantly, and above all else, this deal marks a definitive exit from Central Appalachian coal and surface mining, which significantly de-risks our business moving forward.”
Coal grounded
Consol executives were keen to point out the Miller Creek-Fola deal, in essence, took the company out of the coal business altogether.
The only remaining coal assets owned by Consol, the Northern Appalachian Baily longwall complex in Pennsylvania, last year was spun off into the master-limited partnership CNX Coal Resources.
Consol took its first, and biggest, step away from CAPP coal production in December 2013 when it closed on a $3.5 billion sale to Murray Energy for its five largest longwall mines in West Virginia. The mines collectively produced 29.2 million tons of thermal coal in 2013.
In the 2½ years since the deal, those mines — Marshall County, Ohio County, Harrison County, Marion County and Monongalia County — have churned out 81.9 million st, including 13.8 million through the first half of 2016.
This year, total CNXC coal sales are predicted in the 4.5 million to 5.1 million st range.
The deal with Murray also included Consol’s River and Dock Operations of 21 towboats and 600 barges that in 2012 transported 19.3 million tons of coal and other commodities in the Upper Ohio River system.
Consol at the time said the Murray transaction was a “transformative step” to advance its E&P growth strategy.
Among the company’s final steps away from coal was the $420 millio...