CONSOL Energy's Quest for Gas Takes it to Pittsburgh Airport - Analyst Blog

By
A A A

CONSOL Energy 's ( CNX ) focus on natural gas production has brought it near the fringes of Pittsburgh Airport, where the company started to drill wells as per its plans. CONSOL will drill 45 wells from six pads to explore the gas-rich Marcellus Shale tapped nearly 7,000 feet underground. The project was approved by the Federal Aviation Administration and other local authorities.

CONSOL will use hydraulic fracking technology to extract gas. The airport authority is expected to receive royalty revenues of $20 million per year.  Incidentally, the airport authority owns nearly 9,000 acres of land. The entire tenure of this project could generate royalty revenues of nearly $500 million for the airport authority.

New drilling technology and the increasingly stringent regulations on coal usage for power generation had led CONSOL Energy to diversify its business into natural gas exploration & production. CONSOL Energy produced 51.9 billion cubic feet equivalent (Bcfe) of natural gas in the second quarter. The company expects to produce 225-235 Bcfe of natural gas in 2014.

CONSOL Energy is targeting 30% annual production growth at the E&P segment over the next three years. We expect drilling near the Pittsburgh airport and the gradual increase in the well count going forward will help the company to meet its production target.

To further strengthen its existing position in the reserve-rich Marcellus Shale, CONSOL Energy joined forces with Noble Energy Inc. ( NBL ) to form a master limited partnership called Cone Gathering LLC. The MLP would provide midstream services for their production in the Marcellus Basin.

CONSOL Energy currently has a Zacks Rank #3 (Hold). Apart from natural gas, CONSOL Energy has exposure in coal. Some better-ranked stocks in the coal sector include Glencore Plc ( GLNCY ) and Alliance Resource Partners LP ( ARLP ). While Glencore sports a Zacks Rank #1 (Strong Buy), Alliance Resource Partners holds a Zacks Rank #2 (Buy).


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CONSOL ENERGY (CNX): Free Stock Analysis Report

GLENCORE PLC (GLNCY): Get Free Report

NOBLE ENERGY (NBL): Free Stock Analysis Report

ALLIANCE RES (ARLP): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CNX , GLNCY , NBL , ARLP

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Budgeting for Baby
Budgeting for Baby                  
A Home to Retire In
A Home to Retire In                 

Stocks

Referenced

Most Active by Volume

45,696,680
  • $16.945 ▼ 0.62%
37,455,901
  • $13.4092 ▼ 5.50%
32,599,861
  • $14.5769 ▼ 1.44%
31,494,359
  • $76.57 ▼ 3.13%
30,265,215
  • $97.46 ▼ 1.35%
26,238,162
  • $3.45 ▼ 1.15%
25,365,785
  • $25.10 ▼ 0.28%
23,876,772
  • $99.58 ▼ 1.16%
As of 10/1/2014, 12:51 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com