Consol prices limited partnership offering

OREANDA-NEWS. June 19, 2015. Consol Energy has launched the initial public offering of its master limited partnership, at a planned price of \\$19-21/share.

CNX Coal Resources will offer 10mn common shares, representing a 42.2pc interest in the company. Underwriters will have a 30-day option to buy another 1.5mn shares, which would bring the public's stake to 48.5pc. Consol will own the remaining interest.

Consol will also own a 2pc general partner interest in CNX Coal.

The company did not say when shares will start trading on the New York Stock Exchange. They will be listed under the symbol CNXC.

Consol formed the master limited partnership in April to house operating control and a 20pc interest and operating control of its Bailey, Enlow Fork and Harvey thermal and high-volatile coking coal mines in Pennsylvania. CNX Coal also has the right of first offer to buy the remaining interest in the mines. The company last week amended its filings with the US Securities and Exchange Commission to show it has the right of first offer to buy Consol's terminal in Baltimore and the Buchanan low-volatile coking coal mine in Virginia.

CNX Coal will also be able to be the first one to bid on Consol's Cardinal States Gathering System, a natural gas gathering system with about 110 miles of pipeline and associated assets that connect to the Columbia natural gas pipeline system.

CNX's right to the Buchanan mine is subject to Consol's right to spin off the asset into a new coking coal-centric entity that would also offer shares to the public, according to the filings.

Consol initially planned to form two master limited partnerships for its thermal and coking coal businesses in December as it restructured to highlight the value of the segments at a time of flux for the coal industry. As of 11 May, the Bailey, Enlow Fork and Harvey mines had 23mn short tons (20.9mn metric tonnes) of coal priced and under contract for this year, 13.1mn st for 2016 and 7.7mn st for 2017. That represents 93.3pc, 53.1pc and 31.2pc, respectively, of the properties' expected production for the 12 months ending 30 June, 2016. according to yesterday's filing.

As of 31 December, 2014, the Pennsylvania properties, which operate five longwalls, had 785.6mn st of proven and probable coal reserves with an average gross heat content of 13,000 Btu/lb and an average sulfur content of 2.3pc.

BofA Merrill Lynch, Wells Fargo Securities, Citigroup, Jeffries Group, Scotia Howard Weil, Credit Suisse, JP Morgan, Evercore ISI, BB&T Capital Markets and Goldman Sachs are among the managers for the CNX offering.