CONSOL Energy Closes on the Sale of its Five West Virginia Longwall Coal Mines to Murray Energy

PITTSBURGH, Dec. 5, 2013 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) announced today that it has closed on its previously announced agreement to sell its Consolidation Coal Company (CCC) subsidiary, which includes all five of its longwall coal mines in West Virginia, to a subsidiary of Murray Energy Corporation (Murray Energy) for $3.5 billion in value.  The transaction was originally announced on October 28, 2013.   

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"The completion of this complex transaction this year," commented J. Brett Harvey, chairman and CEO, "enables us to enter 2014 with our focus of achieving our gas growth production targets of 210–225 Bcfe for 2014 and 30% annual gas production growth in 2015 and 2016."

The total consideration paid in the transaction includes $850 million in cash paid at the closing and future payments expected to total nearly $184 million in value resulting from the retention of a royalty on select reserves and tolling fees at CONSOL's Baltimore Terminal. CONSOL Energy is also significantly de-levering its balance sheet in the transaction, with Murray Energy acquiring $2.4 billion of CONSOL balance sheet liabilities. Additionally, Murray Energy is acquiring CONSOL's UMWA 1974 Pension Trust obligations, which have a present value of approximately $941 million. The cash purchase price is subject to a working capital adjustment, which is expected to be immaterial.

CONSOL Energy expects to record approximately $1.3 billion of pre-tax gain during the fourth quarter as a result of the transaction. The transaction is expected to generate a cash tax benefit to CONSOL Energy. In connection with the transaction, the company expects to reduce its administrative expenses by approximately $65 million per year. 

In connection with the closing of the transaction, for a transitional period CONSOL Energy will either guaranty certain of the commercial liabilities being assumed by Murray Energy in the transaction or will become the direct payee of Murray Energy for future payments. The value of the guaranties which CONSOL Energy will recognize in its financial statements is not expected to be material to the results of operations or the financial condition of CONSOL Energy.

Also as previously announced, in order to better align its dividend policy to reflect CONSOL's growth strategy, the company intends to pay a regular quarterly rate of $0.0625 per common share, beginning with the first quarter of 2014, for an expected annual rate of $0.25 per share.  

Stifel, Nicolaus & Company, Incorporated acted as primary financial advisor to CONSOL Energy.  BofA Merrill Lynch was also a financial advisor. Greenberg Traurig LLP; Wachtell, Lipton, Rosen & Katz; Steptoe & Johnson PLLC; and Buchanan Ingersoll & Rooney PC acted as legal counsel.

Forward-Looking Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Exchange Act) 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. 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, contingencies and uncertainties relate to, among other matters, the following with respect to the transaction:  the impact of the transaction on our future operating results, including Murray Energy's ability to satisfy its contractual obligations to CONSOL Energy and its obligations underlying CONSOL Energy's guarantees of certain of Murray Energy's obligations; and other factors discussed in the 2012 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.

SOURCE CONSOL Energy Inc.



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