Jan 30, 2015 3 min read

Consol Energy Inc. pared $100 million from its natural gas exploration and production budget for this year, but the Southpointe-based energy company said it expects to see a 30 percent output increase in 2015.

The company’s spending plan of $1 billion for its natural gas business was revealed during Consol’s fourth-quarter financial results released Friday.

“Due in part to continued efficiency improvements in drilling and completions and service cost deflation, as well as high net revenue interests, strong economics in our areas of operations support our production growth targets,” said Consol Chief Executive Officer Nick DeIuliis in a news release. “Despite a challenging commodity price environment, our 2015 cpaital budget will not only support our growth this year, but more importantly, it will also support our 2016 production volumes as well.”

The release also noted Consol and its joint venture partner for natural gas, Noble Energy, are working together to optimize the capital plan for 2015 in light of the commodity price environment.

“The parties have not formally agreed on a 2015 capital budget, and Consol could increase activity levels in the Marcellus Shale beyond the levels contemplated by the E&P budget if the commodity price environment improves,” the release stated.

Like many other drillers in the Marcellus and Utica plays, Consol said its drilling and completion are currently expected to be weighted toward the liquids-rich areas.

On Friday, Consol reported fourth-quarter net income of $73.7 million, The coal and natural gas producer said on a per-share basis, it had profit of 32 cents. Earnings, adjusted for nonrecurring gains, came to 25 cents per share.

The results topped Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 20 cents per share.

The company posted revenue of $935.7 million in the period, which missed Street forecasts. Analysts expected $948 million, according to Zacks.

For the year, the company reported profit of $163.1 million, or 70 cents per share. Revenue was reported as $3.73 billion.

Consol said its E&P division had another outstanding quarter, achieving record production of 70.5 billion cubic feet, or an increase of 45 percent from the 48.5 Bcfe produced in the year-earlier quarter. Consol said its annual 2014 production was 235.7 Bcfe, which exceeded its goal of 30 percent production growth over 2013. The company’s annual gas production guidance remains 30 percent growth for 2015 and 2016.

Consol’s coal division produced 8.0 million tons in the 2014 fourth quarter. In the Pennsylvania operations, the Bailey Mine had a record year in 2014, with annual production of 12.3 million tons, which exceeded the mine’s previous annual production record of 11.1 million tons in 2005.

In the Virginia operations, Consol said its Buchanan Mine again repeated its stellar cost performance. Total costs per ton sold at Buchanan Mine were $53.96 per ton in the just-ended quarter, or a reduction of $12.64 per ton from the year-earlier quarter.

In early December, Consol announced its intent to pursue transactions for a Thermal Coal MLP and MetCo IPO. Since then, the company said it hired advisers for the Thermal Coal MLP and expects timing to remain around mid-year 2015. The company expects the MetCo IPO to occur around early fourth quarter 2015.

Consol shares have declined 13 percent since the beginning of the year, while the Standard & Poor’s 500 index dropped roughly 2 percent. The stock dropped 22 percent in the last 12 months.