CONSOL Energy Inc. CEIX and CONSOL Coal Resources LP CCR provided preliminary update on second-quarter 2020 operational performance, cash-management efforts and measures undertaken to control the spread of the novel coronavirus in mines. CONSOL Energy ended the second quarter with nearly $33 million of cash and cash equivalents on hand compared with $78 million at the end of first-quarter 2020.
Sales Decline Due to COVID-19
In second-quarter 2020, the company’s sales volume is expected to be 2.3 million tons, including CONSOL Coal’s share of 0.6 million tons. This indicates a decline from 7.4 million tons of sales volume registered in second-quarter 2019. The decline in sales volume was due to significant reduction in economic activity in the United States and globally. Due to the novel coronavirus outbreak, several of its customers deferred tonnage or partially bought out of their contracted positions.
In response to the substantial reduction in the demand for coal, the company decided to keep the Enlow Fork mine idle for most part of the second quarter. The Bailey mine ran at a significantly reduced capacity.
Steps Taken by Struggling Coal Industry
The coal industry’s importance as a fuel source continues to diminish in the United States and globally as more coal-fueled utilities are gradually shifting their fuel preference. Rising usage of clean natural gas and improving technology are bringing down the cost of installing utility scale renewable power plants and lowering coal’s share in the energy source mix. The novel coronavirus outbreak further hampered the struggling coal industry.
To ensure the safety of employees, CONSOL Energy implemented several operating protocols at its mine sites to reduce the risk of spread of COVID-19, including increased sanitation efforts and idling mine locations if needed.
Coal companies like Peabody Energy BTU and Alliance Resource Partners LP ARLP, among others, have taken strong precautions and implemented stringent safety measures in their mines to control the virus spread.
As the process of unlocking of the economy has already started, it could result in an increase in commercial and industrial activities that can revive demand and aid the struggling coal companies.
Zacks Rank & Price Performance
CONSOL Energy currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of the company have gained 10.9% in the past three months, outperforming the industry’s 0.8% growth.
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