CONSOL Energy Inc.
) has announced its third quarter, fourth quarter and full-year
PEABODY ENERGY (BTU): Free Stock Analysis
CONSOL ENERGY (CNX): Free Stock Analysis Report
To read this article on Zacks.com click here.
Third-Quarter 2012 Outlook
In third-quarter 2012, CONSOL expects to report a net loss
primarily owing to planned and unplanned mines idling, which
include idling of Buchanan Mine, Blacksville Mine, Robinson Run
Mine and Fola Mine. In addition, the quarterly production at the
Enlow Fork and Bailey mines hampered due to the failure of two of
the company's new conveyor belts at the Bailey Preparation Plant.
These negative impacts might be to some extent mitigated by
CONSOL's strong balance sheet and liquidity profile.
In the third quarter of 2012, CONSOL's Coal Division produced 11.6
million tons, including 0.8 million tons of low-volatile
metallurgical and mid-volatile coal from Buchanan and Amonate
Mines. As of September 30, 2012, the company's total coal inventory
declined by 0.7 million tons to 1.7 million tons. During the
quarter, thermal coal inventory decreased by 0.8 million tons,
while low-volatile and mid-volatile coal inventory increased by 0.1
million tons to 0.4 million tons.
Gas Division produced 39.5 billion cubic feet ("Bcf") during the
quarter, which was marginally down from 40.4 Bcf reported in the
prior-year quarter. Decline in quarterly production was primarily
due to idling of Buchanan Mine.
Fourth-Quarter and Full-year 2012 Production
In fourth-quarter 2012, Coal Division of CONSOL expects to produce
13.4 - 13.8 million tons, which includes 0.6 million tons produced
from Buchanan Mine.
CONSOL's Gas division is expected to produce 42.5 - 44.5 Bcf during
The company reiterates its full-year 2012 gas production guidance
at 157 - 159 Bcf level.
Second-Quarter 2012 Recap
CONSOL reported operating earnings per share of 31 cents in
second-quarter 2012, a penny lower than the Zacks Consensus
Estimate and approximately 6% below the year-ago quarter's earnings
of 34 cents.
The company's quarterly revenue decreased 8% to $1.45 billion from
$1.59 billion in the year-ago quarter. The top line surpassed the
Zacks Consensus Estimate of $1.33 billion.
In second-quarter 2012, the company produced 14.6 million tons of
coal, including 1.1 million tons of low-volatile metallurgical
coal, 1.2 million tons of high-volatile and 12.2 million tons of
In this quarter, CONSOL registered year-over-year growth in gas
production volumes in Marcellus Shale, but produced lower volumes
from Coalbed Methane and Shallow, leading to a substantial decline
in production volumes.
As the depressed market condition prevails for a long time due to
weak demand from Asia, Europe and South America primarily resulting
from lower steel production, we believe CONSOL's several planned
mines idling is a good move for its future financial as well as
Though these planned production curtailment severely impact the
company's top-line results in the near term, these efforts will
enable CONSOL to minimize its cost of operations and reduce
pressure on its inventory in the long term.
In addition, we believe that over-reliance on a small group of
consumers for bulk sales, stringent regulations and rigid penalties
on underground mining are matters of concern for the underground
miners like CONSOL.
CONSOL Energy Inc. currently has short-term Zacks #5 Rank (Strong
CONSOL Energy Inc. is involved in the production of coal and
natural gas for energy and raw material markets. The company
engages in the mining, preparation, and marketing of steam coal
primarily to the electric power generation industry; and
metallurgical coal to steel and coke producers. With a market
capitalization of $7.82 billion, CONSOL has 9,157 full time
employees. The company's closest peer is
Peabody Energy Corporation