PITTSBURGH, June 18 /PRNewswire-FirstCall/ -- CONSOL Energy Inc. (NYSE: CNX), a high-Btu bituminous coal and coalbed methane company, has agreed to acquire AMVEST Corporation and certain of its subsidiaries and affiliates, including AMVEST West Virginia Coal (AMVEST Coal) and Vaughan Railroad Company, for approximately $335 million, subject to adjustments. The acquisition will be financed using cash and debt. Closing of the acquisition is expected early in the third quarter. "This acquisition allows us to create a solid Central Appalachian platform for future growth and profitability," said J. Brett Harvey, CONSOL Energy president and CEO. "By combining the reserves and the other assets of the two companies in the central West Virginia area, we expect to create operations that not only will be at the lower end of the Central Appalachian cost curve but will have access to numerous markets because of the excellent transportation infrastructure available to these operations." Harvey said the acquisition creates one of the last large, contiguous blocks of coal remaining in Central Appalachia. "When combined with our adjacent reserves to the north, we will have created a reserve block of nearly 300 million tons of surface and underground mineable coal consisting of thick seams more typical of an earlier generation of mining in Central Appalachia," he said. In addition to approximately 200 million tons of low-sulfur coal reserves being acquired, CONSOL Energy will acquire four coal preparation plants, several fleets of modern mining equipment, and a common carrier rail line. "Infrastructure is a key part of this acquisition because it substantially reduces the cost to develop our existing reserves in the area," Harvey explained. "The existing preparation plants will be able to process coal from our Birch and Canfield reserves as they are developed." Harvey noted that the Fola plant was expanded in 2005. "AMVEST has an excellent track record of regular investment in their facilities. We are acquiring top-of-the-line assets." AMVEST West Virginia Coal is comprised of Fola Coal Company, Little Eagle Coal Company, Powellton Coal Company, and Terry Eagle Coal Company and utilizes surface, underground, and highwall mining methods. AMVEST's coal reserves consist of approximately 200 million tons of high quality, low sulfur steam and high-vol metallurgical coal. During 2006, AMVEST shipped approximately 4.9 million tons of coal to customers, 84 percent of which were domestic and international utilities, with the remaining sales going to metallurgical and industrial customers. Harvey said he also expected substantial value to be created with the addition of the AMVEST workforce. "In addition to high-quality reserves, we are acquiring a highly-skilled workforce proficient in Central Appalachian surface mining," Harvey said. "This complements our underground mining expertise and will allow us to build and transfer knowledge among operations to focus the best skill sets against the development requirements of the various parts of this reserve block." In addition, CONSOL has acquired the Vaughan Railroad Company as part of this transaction. The Vaughan Railroad Company is a common carrier short line railroad that connects the Fola and Little Eagle coal operations and other potential shippers to the CSX and Norfolk Southern rail interchanges. The 18 miles of track that comprises the Vaughan Railroad is capable of accommodating 130 car trains. "This infrastructure will give us the ability to transport coal from the future Birch and Canfield operations to mainline rail service of either the NS or CSX without an extensive investment into new rail haulage." Harvey said AMVEST is a well-run, private company that has produced strong cash flows and steady growth in net income since 1970. The company has minimal legacy liabilities and no debt. "The acquisition of AMVEST increases our production capacity in Central Appalachia to 18 million to 20 million tons annually," Harvey explained. "We have acquired quality reserves and equipment that fit well with our extensive reserve base in the area. But most importantly, like our Buchanan Mine in Virginia, we now have a strong production platform in the Central Appalachian Basin with a cost structure that will allow us to be profitable and very competitive in nearly any pricing environment." Harvey said that CONSOL Energy will retain a disciplined approach to developing new production. "But given the likely cost structure and transportation advantage that we expect this reserve area to have," he concluded, "I am optimistic that we have substantially strengthened our hand in Central Appalachian production." CONSOL Energy Inc., a member of the Standard & Poor's 500 equity index, has annual revenues of $3.7 billion. The company was named one of America's most admired companies in 2005 by Fortune magazine. It received the U.S. Department of the Interior's Office of Surface Mining National Award for Excellence in Surface Mining for the company's innovative reclamation practices in 2002 and 2003. Also in 2003, the company was listed in Information Week magazine's "Information Week 500" list for its information technology operations. In 2002, the company received a U.S. Environmental Protection Agency Climate Protection Award. Additional information about the company can be found at its web site: www.consolenergy.com. Forward-Looking Statements We are including the following cautionary statement in this document to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf, of us. With the exception of historical matters various statements in this document, including those that express a belief, expectation, or intention, as well as those that are not statements of historical fact, are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "would," "will," "estimate," "plan," "predict," "project," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this document speak only as of the date of this document; we disclaim any obligation to update these statements unless required by securities law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, uncertainties and contingencies include, but are not limited to, the following: -- an extended decline in prices we receive for our coal and gas affecting our operating results and cash flows; -- reliance on customers extending existing contracts or entering into new long-term contracts for coal; -- reliance on major customers; -- our inability to collect payments from customers if their creditworthiness declines; -- the disruption of rail, barge and other systems that deliver our coal; -- a loss of our competitive position because of the competitive nature of the coal industry and the gas industry, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; -- our inability to hire qualified people to meet replacement or expansion needs; -- coal users switching to other fuels in order to comply with various environmental standards related to coal combustion; -- the inability to produce a sufficient amount of coal to fulfill our customers' requirements which could result in our customers initiating claims against us; -- the risks inherent in coal mining being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, accidents and weather conditions which could cause our results to deteriorate; -- increases in the price of commodities used in our mining operations could impact our cost of production; -- obtaining governmental permits and approvals for our operations; -- the effects of government regulation; -- the effects of stringent federal and state safety regulations; -- the effects of mine closing, reclamation and certain other liabilities; -- uncertainties in estimating our economically recoverable coal and gas reserves; -- we do not insure against all potential operating risks; -- the outcomes of various legal proceedings, which proceedings are more fully described in our reports filed under the Securities Exchange Act of 1934; -- increased exposure to employee related long-term liabilities; -- our participation in multi-employer pension plans may expose us to obligations beyond the obligation to our employees; -- lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan; -- our ability to comply with laws or regulations requiring that we obtain surety bonds for workers' compensation and other statutory requirements; -- acquisitions that we recently have made or may make in the future including the accuracy of our assessment of the acquired businesses and their risks, achieving any anticipated synergies, integrating the acquisitions and unanticipated changes that could affect assumptions we may have made; -- the anti-takeover effects of our rights plan could prevent a change of control; -- risks in exploring for and producing gas; -- new gas development projects and exploration for gas in areas where we have little or no proven gas reserves; -- the disruption of pipeline systems which deliver our gas; -- the availability of field services, equipment and personnel for drilling and producing gas; -- replacing our natural gas reserves which if not replaced will cause our gas reserves and gas production to decline; -- costs associated with perfecting title for gas rights in some of our properties; -- we need to use unproven technologies to extract coalbed methane on some of our properties; -- location of a vast majority of our gas producing properties in three counties in southwestern Virginia, making us vulnerable to risks associated with having our gas production concentrated in one area; -- other persons could have ownership rights in our advanced gas extraction techniques which could force us to cease using those techniques or pay royalties; -- the coalbeds from which we produce methane gas frequently contain water that may hamper production; and -- other factors discussed in our 2006 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission. CONSOL Energy undertakes no obligation to update these statements unless otherwise required by applicable law.
SOURCE CONSOL Energy Inc.