Jul 25, 2013 3 min read

CANONSBURG – Consol Energy, Inc. reported Thursday a second-quarter net loss of $13 million, or a loss of 5 cents per diluted share, compared to net income of $153 million, or 67 cents per diluted share from the year-earlier quarter.

The Southpointe-based diversified energy producer noted in a news release that the prior year’s second quarter included gains because of several asset sales.

The company lost an adjusted 3 cents per share in the quarter ended June 30 after adjusting for items not generally included in security analysts’ estimates.

The two major discrete items in this quarter were largely offsetting: a pre-tax loss of $23.3 million for additional expenses associated with the Blacksville Mine fire and a $24.7 million pre-tax gain on the sale of assets.

Adjusted earnings before interest, taxes, depreciation and amortization were $218 million for the quarter ended June 30, compared to $295 million in the year-earlier quarter.

Coal and gas production results, which were announced earlier, were generally in line with previous guidance.

Consol said lower prices and sales volumes for thermal coal was the primary driver for lower adjusted earnings in the quarter, as compared to the year-earlier quarter.

Lower prices for its premium low-vol coal, due to weaker worldwide demand, also contributed to weaker adjusted earnings.

The company said its coal division continued to hold the line on costs. Across all tons, costs per ton sold were $51.87 in the 2013 second quarter, a modest decrease of 17 cents per ton from the prior-year’s second quarter.

Consol Chief Executive Officer Brett Harvey acknowledged the challenging quarter, “as we incurred the expense associated with the Blacksville mine fire and were not able to realize revenue from the mine’s planned sales.

“In addition, during the second quarter we exerted discipline in a weak Asian market environment, which resulted in overall lower sales volumes and shipments for the rest of the coal segment.”

Harvey said the company sees improving salies for its domestic thermal coal, which he said are expected to occurs ” as a cumulative result of the Blacksville outage, outages and idlings at competitor mines, the hot summer weather, higher year-over-year gas prices, and announced retirements of less-efficient coal plants outside of our market portfolio that will result in the base-load coal plants that we supply running harder.”

In the gas division, results were aided by slightly higher production and higher prices, when compared to the year-earlier quarter. The company said growth in 2013 gas production is on track, as its well completions accelerate through the remainder of the year.

For 2013, Consol said it has stepped up its asset sale process to include coal and gas transportation infrastructure, in order to capitalize on the current market environment and to re-invest proceeds in higher return projects.

Consol said it is also evaluating its overall corporate structure to consider different alternatives to unlock additional value for shareholders.

Ten days ago, the company announced 2014 expected gas production of 210 to 225 billion cubic feet. Assuming the company achieves the mid-point of its 2013 gas production of 172.5 Bcfe, the 2014 range represents an increase of between 22 and 30 percent.

Consol also reported that itsliquidity remains strong at $2.2 billion, while it continues to invest in value-creating projects.

Second-quarter capital investments were $352 million. Capital investment costs for the BMX Mine are now expected to total $710 million. The company said the increase from the prior estimate was due, in part, to a lower sales price for development tons, which increases the dollars being capitalized during the development phase.

Cash flow from operations in the quarter was $125 million, as compared to $138 million in the year-earlier quarter.