Diversified fuel producer
CONSOL Energy Inc.
) reported pro forma loss of 5 cents per share for the third
quarter of 2012, substantially lower than the Zacks Consensus
Estimate of earnings of 2 cents per share. Earnings were way
below the year-ago quarter's earnings of 73 cents.
The bleak bottom-line results were due to a string of shutdown
in operations at certain plants together with unplanned outages
at the Enlow Fork and Bailey mines. Also, low sales from the
Buchanan mine led to this heavy loss.
CONSOL Energy's quarterly revenue decreased 23.7% to $1,160.1
million from $1,521.7 million in the year-ago quarter. The
top-line fell short of the Zacks Consensus Estimate of $1,340.0
During the quarter, total costs dropped 9.8% to $1,191.4
million from $1,321.3 million in the year-ago quarter. A steep
decline in gas royalty interests costs of 31.5%, freight expense
of 54.1%, cost of goods sold, purchased gas and selling as well
as general and administrative expenses were responsible for the
Earnings before Interest, Tax and Depreciation and
Amortization (EBITDA) fell 52.3% year over year to $210.0 million
in the third quarter 2012.
In the quarter under review, the company produced 11.6 million
tons of coal, of which 0.8 million tons comprised of low-volatile
metallurgical coal, 0.7 million tons were of high-volatility and
10.1 million tons were thermal coal. Out of the total thermal
coal production, 9.3 million tons were sourced from Northern
Appalachia while 0.8 million tons came from Central Appalachia.
Consol's thermal coal inventory shrunk by 0.8 million tons from
the previous quarter.
The average realized price for low-volatile metallurgical coal
was $135.66 per ton, down 34.5% year over year, while the same
for high-volatile metallurgical coal plunged 18% to $67.76 per
ton. Realized prices for the company's thermal coal production
improved marginally to $62.11 per ton from $60.18 per ton in the
During the reported quarter, the company recorded a slight
decline in gas production volumes to 39.4 billion cubic feet
("Bcf"). Weak production levels in Coalbed Methane and Shallow
prospects resulted in lower gas volumes. This was partially
offset by rise in output at the Marcellus Shale.
However, the average realized gas price decreased 14.8% to
$4.19 per Mcf from $4.92 per Mcf in the year-ago quarter.
As of September 30, 2012, cash and cash equivalents were
$231.0 million, down 38.5% from $376.0 million as of December 31,
Long-term debts, as of September 30, 2012 were $3.17 billion,
flat with the 2011 year-end level.
Cash flow from operations totaled $162 million in the quarter,
down approximately 64.5% from $457 million in the year-ago
Capital expenditure totaled $437.6 million in the quarter, up
6.2% year over year.
CONSOL expects 2012 coal sales to be around 55.9 million tons.
The company expects coal production in 2013 and 2014 to be 56.7
million tons and 61.8 million tons, respectively. In the fourth
quarter 2012, Consol estimates coal sales to be 14.0 million
CONSOL expects 2012 gas production to be in the band of
157-159 Bcf. The company estimates fourth quarter gas production
to be roughly in the range of 42.5-44.5 Bcf.
Peabody Energy Corporation
) reported third quarter 2012 earnings of 51 cents per share,
surpassing the Zacks Consensus Estimate of 34 cents. However, the
company's adjusted income was lower than last year's earnings of
90 cents per share.
The year-over-year drop was due to increased interest
expenses, and depreciation, depletion and amortization expenses,
partially offset by a reduction in selling and administrative
Peabody's recorded revenue of $2,058.8 million compared
favorably with $1,980.6 million in the prior-year quarter,
representing year-over-year growth of 4%.
The company's revenue for the quarter surpassed the Zacks
Consensus Estimate of $1,975 million.
CONSOL Energy's third quarter 2012 results were in-line with
the negative surprise trend registered by the company in the
previous two quarters. Despite this we remain optimistic about
the company's future performance with normal production at the
Bailey and Enlow expected to resume in the upcoming quarters.
Besides, gradual recovery of gas prices owing to rise in demand
in the following winter will drive up short-term top-line.
The company's high-profile capital investment goal of $1.5
billion in 2012 combined with its multiple growth accentuating
projects like the new BMX mine will warrant enhanced
However, continued weakness in steel utilization rates in the
overseas markets, hardened regulatory laws and price volatilities
are persisting threats. It presently retains a Zacks #3
Rank, which translates into a short-term Hold rating.
Based in Canonsburg, Pennsylvania, CONSOL Energy produces coal
and natural gas for energy and raw material markets.
PEABODY ENERGY (BTU): Free Stock Analysis
CONSOL ENERGY (CNX): Free Stock Analysis
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