CONSOL Energy Inc.
) has announced its full-year 2013 capital expenditure guidance
in the range of $1,290 - $1,505 million.
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In 2013, the company intends to invest $410 - $520 million under
its coal projects. Out of the total investment, $835 - $935
million and $45 - $50 million will be allocated for gas and water
operations, respectively. Total capital expenditure of these
three segments will be adjusted from the net proceeds of future
sales in the band of $455 - $640 million. As a result net
investment by the company for full-year 2013 would come to just
$835 - $865 million.
The company's full-year 2012 capital expenditure guidance was
$1.7 billion. Almost 50% year-over-year drop in capital spending
is driven by investment-slash in coal and water operations. The
company currently focuses on rebalancing its existing assets
without addition of new assets, thereby leading to spending cut
CONSOL Energy expects to manage full-year 2013 capital
expenditure funding from its operating cash flow and will
primarily utilize net proceeds from the forthcoming assets sales.
In the first nine months of 2012, the company's income from
operating activities was $530.2 million and cash balance was $231
million as on September 30, 2012. CONSOL Energy's available
liquidity stands at $2.6 billion, which will boost the company's
future development goals. In addition, the company will collect
final installment of $328 million from
Noble Energy, Inc.
) for its asset sales and will manage the remaining balance from
other two property sales with price range of $127 - $312 million.
Moreover, strong financial position as well as proceeds from
previous sales enables CONSOL Energy to pursue a steady organic
Under coal operations program, CONSOL Energy primarily focuses on
the completion of its BMX Mine and plans to deploy $166 million
in 2013. The company is in no mood to make any new investments in
its coal segments this year, but instead will focus on production
maintenance activities with investment of $318 million.
For gas operations, the company allocated $660 million for
drilling activities and $128 million for gathering and
compression operations. The company plans to utilize $160 million
for its production-maintenance operations. In the CONSOL Energy -
) joint venture in the Utica Shale, the company plans to invest
$122 million, primarily for the drilling of 27 (gross) wells.
On the other hand, CONSOL Energy plans to pay out $600 million
for the development of its liquids-rich Marcellus Shale assets,
including drilling capital of $415 million.
Under full-year 2013 coalbed methane ("CBM") program, the company
curtailed its drilling activities and intends to invest $65
million, which is flat with the previous year figure.
CONSOL Energy expects its full-year 2013 gas production to be in
the range of 170-180 billion cubic feet equivalent ("Bcfe"),
including approximately 250 thousand barrels ("MBbls") of oil and
1,200 MBbls of condensate and natural gas liquids ("NGLs").
In the first nine months of 2012, CONSOL Energy's capital
expenditure was $1.2 billion. The company is focusing on the
development prospects at the Marcellus and Utica play. The
company generated higher production levels from this region
during third-quarter 2012. We anticipate that these potential
resource-rich areas will continue to spur growth in the near
term. In addition, CONSOL Energy's new BMX mine is set to come
online in 2014, which will further add to its top line.
However, we are concerned about prevailing sluggish demand from
global steel market and over-reliance on limited group of
customers for bulk coal purchase. CONSOL Energy currently has a
short-term Zacks Rank #3 (Hold).
Canonsburg, Pennsylvania-based CONSOL Energy is a multi-fuel
energy producer as well as energy services provider, primarily
catering to the U.S. power generators.