Consol Energy pivots from coal to natural gas

OREANDA-NEWS. April 27, 2016. Consol Energy is shifting its focus toward natural gas exploration and away from coal following the sale of its Buchanan coal mine in Virginia, executives said today.

Consol has one remaining coal complex in Pennsylvania which subsidiary CNX Coal Resources operates. But the Buchanan mine sale represents a large step towards the company executing its strategy of becoming purely an exploration and production company, chief executive Nicholas Deluliis said.

In the Marcellus shale the company produced 39pc more natural gas during the first quarter compared with the year-earlier period at 51.2 Bcf (1.5mn m?) of natural gas equivalent (Bcfe). Total production came in at about 1.07 Bcfe/d.

Most of the production growth is driven by strong performances from wells in the southwest Pennsylvania part of the Marcellus and from midstream debottlenecking, although Consol still has over 100 constrained wells currently, chief operating officer Timothy Dugan said.

The company's results in the dry portion of the Utica shale so far are encouraging but still in development, he said. The company has brought seven wells on line there, which produced 7pc of its overall production in the first quarter.

A number of natural gas pipeline projects in the northeast have announced delays related to regulatory and environmental issues. Consol Energy estimates that 22 Bcf/d of takeaway capacity from Appalachia is scheduled to come online through 2018. Even if some of these projects are delayed or cancelled, capacity should be ample for Consol's needs, the company said.

The company announced a \\$50mn loss for the quarter and is considering selling more assets, but declined to give details.