CONSOL Energy Reports Net Income of $153 million; Coal Costs per Ton Drop $2.17, when compared to Q1 2012; Cash on Hand at $200 million, while Total Liquidity at $2.6 Billion

Jul 26, 2012, 07:00 ET from CONSOL Energy Inc.

PITTSBURGH, July 26, 2012 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX), the leading diversified fuel producer in the Eastern United States, reported net income for the quarter ended June 30, 2012 of $153 million, or $0.67 per diluted share, compared to $77 million, or $0.34 per diluted share from the year-earlier quarter. EBITDA1, a non-GAAP financial measure, was $414 million for the quarter ended June 30, 2012. This compared to $321 million in the year-earlier quarter.

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There were several discrete items during the quarter that affected GAAP net income, including gains from the sales of some non-core properties, a charge for reclamation and selenium at the Fola Complex, and a charge for the expiration of certain shallow gas leases. The total after-tax effect of these items was an improvement of $82 million. They are detailed in the EBITDA reconciliation table later in the release.  

"We continue to manage our way through this challenging environment," commented J. Brett Harvey, chairman and CEO. "In fact, we are fortunate to have generated more net income in this year's second quarter than in last year's second quarter, despite the much weaker industry and macro environment. At CONSOL, we've been working  aggressively to manage costs and to raise cash by selling assets that are better suited to others."

In the Coal Division across all of its tons, CONSOL Energy had 2012 second quarter fully-load costs of $52.23 per ton. While this was higher than the 2011 second quarter, it represents a drop of $2.17 per ton from the 2012 first quarter of $54.40 per ton. The sequential improvement in costs per ton is even more impressive when one considers that the company produced 15.7 million tons in the 2012 first quarter and 14.6 million in the 2012 second quarter. Typically, it is more difficult to achieve unit cost savings on a lower production base.

The company attributes the unit cost improvement in coal to a combination of deflationary benefits from suppliers for items such as power, roof bolts, and diesel, as well as from re-doubled management efforts to preserve unit margins    in a softer price environment in each of CONSOL's coal markets.

CONSOL Energy's efforts to sell non-core assets this year has also been very successful. The previously announced sales of non-revenue producing assets has generated $224 million in cash, year-to-date.

Cash flow from operations in the quarter was $138 million, as compared to $360 million in the year-earlier quarter.  CONSOL continues to invest in its future, in both coal and gas, by investing $408 million in the 2012 second quarter on capital projects.

The cash flow from operations, when combined with the cash from asset sales and the $328 million due from our Marcellus Shale joint venture partner, Noble Energy, Inc., on September 30, means that for calendar 2012, the company has a reasonable expectation of being cash flow neutral, despite investing an expected $1.5 billion in maintenance and growth projects for both coal and gas.

"While there's no doubt that CONSOL and the coal and domestic natural gas industries face strong headwinds, we think it prudent to continue to invest in our core businesses to position CONSOL to capture value for our shareholders when the upcycle occurs," continued Mr. Harvey.  "CONSOL's portfolio of coal and gas assets is unique. No other company has tier-one low-vol coal, thermal coal, high-vol coal, gas, and land assets under one roof."

During the quarter, CONSOL Energy also expanded an existing mining joint venture with a privately-held company in Central Pennsylvania. The joint venture will self-fund, through retained earnings, a $54 million (gross) expansion in 2012 and 2013. The expansion will enable CONSOL 's share of high-vol A and mid-vol coal production to ramp from 150,000 tons in 2012 to 900,000 tons in 2015.

1The term "EBITDA" is a non-GAAP financial measure, which is defined and reconciled to the GAAP net income below, under the caption "Non-GAAP Financial Measures."

Coal Division Results:

The average realized price per ton, across all of the company's production in the 2012 second quarter, was $66.00, or down $8.63, or 12%, from the $74.63 realized in the 2011 second quarter. The drop was due to lower realized prices per ton for the low-vol and high-vol coal categories. The realized price for thermal coal, on the other hand, increased slightly from the year earlier quarter.

Average realized price per ton in the low-vol category in the 2012 second quarter was lower than expected because 80,000 tons that had been committed at higher prices, were deferred until later periods. These tons were replaced with lower priced spot sales. Two capesize vessels of a high ash product were sold into Asia for $85 per short ton, FOB mine. All other spot sales in the quarter averaged $109 per short ton, FOB mine. Changes in low-vol inventory valuation were negligible in this quarter, so that the realized price was close to the sales price. The company does not expect to sell any additional high ash tons into Asia in the foreseeable future.

Average realized price per ton in the high-vol category was affected by weaker market conditions in Asia.

COAL DIVISION RESULTS BY PRODUCT CATEGORY - Quarter-To-Quarter Comparison

Low-Vol

Low-Vol

High-Vol

High-Vol

Thermal

Thermal

Quarter

Quarter

Quarter

Quarter

Quarter

Quarter

Ended

Ended

Ended

Ended

Ended

Ended

June 30,

June 30,

June 30,

June 30,

June 30,

June 30,

2012

2011

2012

2011

2012

2011

Sales - Company Produced (millions of tons)

1.0

1.4

1.2

1.5

12.3

13.5

Coal Production (millions of tons)

1.1

1.4

1.2

1.5

12.2

12.5

Average Realized Price Per Ton - Company Produced

$121.58

$207.05

$61.22

$81.75

$61.29

$59.24

Less:

    Operating Costs Per Ton

$58.91

$50.01

$34.83

$35.69

$38.83

$37.68

    Non-Operating Charges Per Ton

$9.38

$10.07

$4.42

$6.36

$5.39

$6.73

    DD&A Per Ton

$9.49

$6.65

$6.24

$6.22

$6.31

$6.07

Total Cost Per Ton - Company Produced

$77.78

$66.73

$45.49

$48.27

$50.53

$50.48

Average Margin Per Ton

$43.80

$140.32

$15.73

$33.48

$10.76

$8.76

Addback DD&A Per Ton

$9.49

$6.65

$6.24

$6.22

$6.31

$6.07

Average Margin Per Ton, before DD&A

$53.29

$146.97

$21.97

$39.70

$17.07

$14.83

Cash Flow before Cap. Ex and DD&A ($MM)

$53

$206

$26

$60

$210

$200

Ending Inventory (MM tons)

0.4

0.2

N/A

N/A

2.0

1.6

Sales and production include CONSOL Energy's portion from equity affiliates. Operating costs include items such as labor, supplies, power, preparation costs, project expenses, subsidence costs, gas well plugging costs, charges for employee benefits (including Combined Fund premiums), royalties, and production and property taxes. Non-operating charges include items such as charges for long-term liabilities, and direct administration. The treatment of general and administrative has changed; it has been removed from the costs shown in this table for both the current quarter and the year-earlier quarter. Management has decided to allocate G&A to the coal division and the gas division, but will no longer allocate G&A beyond that. Sales times Average Margin Per Ton, before DD&A is meant to approximate the amount of cash generated for the low-vol, high-vol, and thermal coal categories. This cash generation will be offset by maintenance of production (MOP) capital expenditures. N/A means not applicable; there is no inventory in the High-Vol segment.

Total costs per ton, across all of CONSOL Energy's coal production in the quarter ended June 30, 2012 were $52.23, an increase of $0.53, or 1%, from the quarter ended June 30, 2011.  However, the April 2012 idling of the Blacksville and Buchanan longwalls accounted for $1.65 per ton during the quarter. This means that, excluding idling, total costs per ton in the quarter ended June 30, 2012 were lower by $1.12, at $50.58.

Coal production in the quarter consisted of 1.1 million tons of low-vol, 1.2 million tons of high-vol, and 12.2 million tons of thermal, for a total of 14.6 million tons. (Numbers don't add due to rounding. Also, Amonate production of 56,000 tons is included in the low-vol category.)

Of the thermal coal production,11.0 million tons were from Northern Appalachia and 1.2 million tons were from Central Appalachia.

During the second quarter, thermal coal inventory was increased by 0.1 million tons, when compared to the quarter ended March 31, 2012.

Coal Marketing Update:

Low-Vol: Low-vol coal continues to be oversupplied in a world economy that has weakened in the last three months. Steel utilization rates are weak in Europe and Brazil, which are CONSOL's natural export markets. CONSOL estimates that unpriced low-vol tons shipped in the third quarter will receive a price similar to what was received in the second quarter. CONSOL idled the Buchanan longwall for a week in late July to better balance supply and demand. The idling will lower third quarter Buchanan production by 100,000 tons, to 1.0 million tons. CONSOL will use the idling to perform maintenance on a skip hoist.

High-Vol: Softness in the Asian metallurgical markets during the quarter continued to affect the realized high-vol coal price. CONSOL's high-vol was successfully tried by a European steel mill, but because of a general oversupply of coking coal, the customer is not expected to take shipments until steel demand increases. As a result, CONSOL has trimmed high-vol sales guidance for the second half of 2012.

U.S. Thermal: CONSOL has benefited during a weak thermal market by having nearly all of its coal sold in 2012. Customer requests for deferrals have largely subsided during hot summer weather. Utility stockpiles, while receding, remain at higher-than-normal levels.  Because of the lack of clarity for 2013, discussions for new thermal sales are in a very early stage.

Global Thermal: CONSOL expects to continue to sell thermal coal into European markets under contract and in Asian markets on a spot basis through the remainder of 2012.

Gas Division Results:

The table below summarizes the key metrics for the Gas Division:

GAS DIVISION RESULTS Quarter-to-Quarter Comparison

Quarter

Quarter

Ended

Ended

June 30, 2012

June 30, 2011

Total Revenue and Other Income ($ MM)

$

176.7

$

210.0

Net Income

$

0.8

$

17.1

Net Cash from Operating Activities ($ MM)

$

70.0

$

85.3

Total Period Production (Bcf)

37.3

37.5

Average Daily Production (MMcf)

409.8

411.6

Capital Expenditures ($ MM)

$

143.2

$

168.6

Production results are net of royalties.

Coalbed Methane (CBM): Total production was 22.3 Bcf, a decrease of 3% from the 22.9 Bcf produced in the year-earlier quarter.

Marcellus Shale: Total production was 7.2 Bcf, an increase of 16% from the 6.2 Bcf produced in the year-earlier quarter. After reducing the year-earlier quarter's production by the 3.5 Bcf attributable to the subsequent sales to Antero and Noble Energy, the adjusted increase was an impressive 167%.

Shallow: Total production was 7.2 Bcf, a decrease of 10% from the 8.0 Bcf produced in the year-earlier quarter.   The company has been shifting rigs and capital toward higher potential return Marcellus and Utica drilling prospects.

Other: A miscellaneous category had production of 0.5 Bcf, unchanged from 0.5 Bcf in the year-earlier quarter.

PRICE AND COST DATA PER MCF Quarter-to-Quarter Comparison

Despite 10% higher adjusted gas volumes, the company experienced reduced profitability within the Gas Division when compared with the quarter ended June 30, 2011.  Unit gas margins fell despite the improvement in unit costs, as realized unit gas prices fell by $1.09 per Mcf. Total unit gas costs declined, due in part to the increased emphasis on low cost Marcellus Shale drilling, where the company has been drilling longer laterals on multi-well pads. All-in unit costs in the Marcellus Shale were $2.61 per Mcf in the just-end quarter, a decrease of $0.65 from the $3.26 per Mcf in the year-earlier quarter. Unit DD&A was lower due to higher proved reserves.

Quarter

Quarter

Ended

Ended

June 30, 2012

June 30, 2011

Average Sales Price

$3.98

$5.07

Costs - Production

    Lifting

$0.61

$0.64

Ad Valorem, Severance and Other Taxes

$0.16

$0.19

    DD&A

$1.07

$1.13

Total Production Costs

$1.84

$1.96

Costs - Gathering

    Operating Costs

$0.65

$0.63

    Transportation

$0.34

$0.29

    DD&A

$0.20

$0.25

Total Gathering Costs

$1.19

$1.17

Gas Direct Administrative Selling & Other

$0.31

$0.44

Total Costs

$3.34

$3.57

Margin

$0.64

$1.50

Note: Costs The line item "gas direct administrative, selling, & other" excludes general administration, incentive compensation, and other corporate expenses.

Gas Division profitability was also impacted by $11 million due to the expiration of certain shallow gas leases, which the company chose not to renew.

CONSOL Energy 2012 Production Guidance

CONSOL Energy expects its net gas production to be between 157 - 159 Bcf for the year. Third quarter gas production, net to CONSOL, is expected to be approximately 40 - 42 Bcf.

Total hedged gas production in the 2012 third quarter is 19.3 Bcf, at an average price of $5.25 per Mcf. The annual gas hedge position for three years is shown in the table below:

GAS DIVISION GUIDANCE

2012

2013

2014

Total Yearly Production (Bcf)

157-159

N/A

N/A

Volumes Hedged (Bcf),as of 7/13/12

76.9

61.7

51.4

Average Hedge Price ($/Mcf)

$5.25

$4.79

$5.01

 

COAL DIVISION GUIDANCE

Q3 2012

2012

2013

2014

Estimated Coal Sales (millions of tons)

14.9

59.4

57.6

62.0

    Est. Low-Vol Met Sales

1.2

4.4

4.6

4.4

        Tonnage: Firm

0.8

3.4

0.3

        Avg. Price: Sold (Firm)

$139.87

$149.47

$126.65

$—

        Price: Estimated (For open            tonnage)

N/A

N/A

N/A

N/A

    Est. High-Vol Met Sales

0.9

4.2

5.2

5.8

        Tonnage: Firm

0.7

3.4

0.4

0.3

        Avg. Price: Sold (Firm)

$72.40

$68.35

$72.11

$75.53

        Price: Estimated (For open           tonnage)

N/A

N/A

N/A

N/A

    Est. Thermal Sales

12.7

50.5

47.2

51.2

        Tonnage: Firm

12.5

49.7

25.1

17.7

        Avg. Price: Sold (Firm)

$63.51

$62.37

$62.57

$63.91

        Price: Estimated (For open           tonnage)

N/A

N/A

N/A

N/A

Note: While most of the data in the table are single point estimates, the inherent uncertainty of markets and mining operations means that investors should consider a reasonable range around these estimates. N/A means not available or not forecast. CONSOL has chosen not to forecast prices for open tonnage due to ongoing customer negotiations. In the thermal sales category, the open tonnage includes 4.7 million collared tons in 2013, with a ceiling of $59.78 per ton and a floor of $51.63 per ton. For 2014, the open tonnage in the thermal sales category includes 7.0 million tons, with a ceiling of $59.31 per ton and a floor of $45.93 per ton. Total Amonate estimated coal sales for Q3 2012 are 0.1 million tons. Calendar years 2012, 2013, and 2014 include 0.3, 0.6, and 0.6 million tons, respectively, from Amonate. The Amonate tons are not included in the category breakdowns. None of the Amonate tons has yet been sold.

Liquidity

Total company liquidity as of June 30, 2012 was $2.6 billion.

As of June 30, 2012, CONSOL Energy had $1.625 billion in total liquidity, which is comprised of $185.9 million of cash, $39.2 million available to be borrowed under the accounts receivable securitization facility, and $1,399.9 million available to be borrowed under its $1.5 billion bank facility. CONSOL Energy also has outstanding letters of credit of $260.9 million.

As of June 30, 2012, CNX Gas Corporation had $944.0 million in total liquidity, which is comprised of $14.2 million of cash and $929.8 million available to be borrowed under its $1.0 billion bank facility.  CNX Gas' credit facility has no borrowings thereunder, and outstanding letters of credit of $70.2 million.

CONSOL Energy Inc., the leading diversified fuel producer in the Eastern U.S., is a member of the Standard & Poor's 500 Equity Index and the Fortune 500. It has 12 bituminous coal mining complexes in four states and reports proven and probable coal reserves of 4.5 billion tons. It is also a leading Eastern U.S. gas producer, with proved reserves of 3.5 trillion cubic feet.  Additional information about CONSOL Energy can be found at its web site: www.consolenergy.com.

Non-GAAP Financial Measures

Definition: EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) and income taxes.  EBITDA is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization.  Although EBIT and EBITDA are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that it is useful to an investor in evaluating CONSOL Energy because it is widely used to evaluate a company's operating performance before debt expense and its cash or as a substitute for measures of performance in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT or EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies.

Reconciliation of EBIT, EBITDA and earnings to financial Net Income is as follows (dollars in 000s):

Three Months Ended

June 30,

2012

2011

Net Income

$152,739

$77,384

Add: Interest Expense

56,593

64,597

Less: Interest Income

(8,147)

(240)

Add: Income Taxes

58,945

21,400

Earnings Before Interest & Taxes (EBIT)

260,130

163,141

Add: Depreciation, Depletion & Amortization

153,824

157,800

Earnings Before Interest, Taxes and DD&A (EBITDA)

413,954

320,941

Adjustments:

Asset Abandonment - Mine 84

115,479

Loss on Debt Extinguishment

16,090

OPEB/Pension Revision

13,926

Expiration of Gas Leases

11,078

Gain on Sale of Elk Creek

(11,235)

Gain on Sale of Northern Powder River Basin Assets

(150,677)

Pre-tax Fola Reclamation (non-cash)

32,079

Total Pre-tax Adjustments

(118,755)

145,495

Adjusted Earnings Before Interest, Taxes and DD&A ( Adjusted EBITDA)

$295,199

$466,436

Note: Income tax effect of Total Pre-tax Adjustments was ($36,616) and $52,081 for the three months ended June 30, 2012 and June 30, 2011,  respectively.

 

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, the matters discussed in this document 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," "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, 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, contingencies and uncertainties relate to, among other matters, the following:  deterioration in global economic conditions in any of the industries in which our customers operate, or sustained uncertainty in financial markets cause conditions we cannot predict; a significant or  extended decline in prices we receive for our coal and natural gas affecting our operating results and cash flows; our customers extending existing contracts or entering into new long-term contracts for coal; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our coal and natural gas to market; a loss of our competitive position because of the competitive nature of the coal and natural gas industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; our inability to maintain satisfactory labor relations; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted regulations relating to greenhouse gas emissions on the demand for coal and natural gas; foreign currency fluctuations could adversely affect the competitiveness of our coal abroad; the risks inherent in coal and natural gas operations being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and natural gas operations; decreases in the availability of, an increase in the prices charged by third party contractors or, failure of third party contractors to provide quality services to us in a timely manner could impact our profitability; obtaining and renewing governmental permits and approvals for our coal and natural gas operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our coal and natural gas operations; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down a mine or well; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current coal and gas operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable coal and gas reserves; costs associated with perfecting title for coal or gas rights on some of our properties; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; the impacts of various asbestos litigation claims; increased exposure to employee related long-term liabilities; our accruals for obligations for long-term employee benefits are based upon assumptions which, if inaccurate, could result in our being required to expend greater amounts than anticipated; due to our participation in an underfunded multi-employer pension plan, we have exposure under that plan that extends beyond what our obligation would be with respect to our employees and in the future we may have to make additional cash contributions to fund the pension plan or incur withdrawal liability; lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan exceeding total service and interest cost in a plan year; acquisitions and joint ventures that we recently have completed or entered into 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 and divestitures we anticipate may not occur or produce anticipated proceeds including joint venture partners paying anticipated carry obligations; the terms of our two significant existing gas joint ventures restrict our flexibility and actions taken by the other party in our gas joint ventures may impact our financial position; the anti-takeover effects of our rights plan could prevent a change of control; risks associated with our debt; replacing our natural gas reserves, which if not replaced, will cause our gas reserves and gas production to decline; our ability to find adequate water sources for use in gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; our hedging activities may prevent us from benefiting from price increases and may expose us to other risks; and other factors discussed in the 2011 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 INC. AND SUBSIDIARIES

 

SPECIAL INCOME STATEMENT (Unaudited) (Dollars in millions)

Three Months Ended June 30, 2012

Produced

Other

Total

Total

Coal

Coal

Coal

Gas

Other

Company

Sales

$940

$5

$945

$149

$96

$1,190

Gas Royalty Interest

10

10

Freight Revenue

49

49

49

Other Income

1

180

181

18

7

206

    Total Revenue and       Other Income

941

234

1,175

177

103

1,455

Cost of Goods Sold

586

76

662

103

93

858

Gas Royalty Interests' Costs

7

7

Freight Expense

49

49

49

Selling, General & Admin.

39

39

9

(14)

34

DD&A

96

4

100

47

7

154

Interest Expense

1

56

57

Taxes Other Than Income

64

9

73

9

2

84

    Total Costs

746

177

923

176

144

1,243

Earnings Before Income Taxes

$195

$57

$252

$1

$(41)

$212

Income Tax

$59

Net Income

$153

 

CONSOL ENERGY INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

June 30,

2012

2011

2012

2011

Sales—Outside

$1,189,293

$1,486,000

$2,500,764

$2,871,478

Sales—Gas Royalty Interests

9,533

16,273

21,739

35,108

Sales—Purchased Gas

651

1,162

1,490

2,142

Freight—Outside

49,472

59,572

98,765

96,440

Other Income

205,538

24,921

258,499

48,137

Total Revenue and Other          Income

1,454,487

1,587,928

2,881,257

3,053,305

Cost of Goods Sold and Other   Operating Charges (exclusive   of depreciation, depletion and   amortization shown below)

856,889

927,399

1,760,930

1,741,108

Loss on Debt Extinguishment

16,090

16,090

Gas Royalty Interests Costs

7,124

14,366

17,373

31,173

Purchased Gas Costs

869

1,776

1,386

2,452

Freight Expense

49,472

59,572

98,765

96,251

Selling, General and   Administrative Expenses

33,732

43,423

72,731

83,619

Depreciation, Depletion and   Amortization

153,824

157,800

309,171

306,862

Abandonment of Long-Lived   Assets

115,479

115,479

Interest Expense

56,593

64,597

114,713

131,079

Taxes Other Than Income

84,329

88,642

175,956

179,331

Total Costs

1,242,832

1,489,144

2,551,025

2,703,444

Earnings Before Income Taxes

211,655

98,784

330,232

349,861

Income Taxes

58,945

21,400

80,326

80,328

Net Income

152,710

77,384

249,906

269,533

Add: Net Loss Attributable to          Noncontrolling Interest

29

29

Net Income Attributable to    CONSOL Energy  Inc.    Shareholders

$152,739

$77,384

$249,935

$269,533

Earnings Per Share:

Basic

$0.67

$0.34

$1.10

$1.19

Dilutive

$0.67

$0.34

$1.09

$1.18

Weighted Average Number of    Common Shares Outstanding:

Basic

227,548,394

226,647,752

227,408,832

226,499,994

Dilutive

229,252,185

229,138,024

229,122,594

228,917,335

Dividends Paid Per Share

$0.125

$0.100

$0.250

$0.200

 

CONSOL ENERGY INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Dollars in thousands)

Three Months Ended

Six Months Ended

June 30,

June 30,

2012

2011

2012

2011

Net Income

$152,710

$77,384

$249,906

$269,533

Other Comprehensive Income (Loss):

Treasury Rate Lock (Net of tax:  $-, $47, $-, $59)

(76)

(96)

Actuarially Determined Long-Term Liability Adjustments

Change in Prior Service Cost (Net of tax: $-,$-, ($30,295),$-)

50,276

Amortization of Prior Service Cost (Net of tax: $5,232, $4,583,$9,784, $9,166)

(8,683)

(7,364)

(16,237)

(14,729)

Amortization of Net Loss (Net of tax: ($9,802), ($13,108), ($19,956), ($22,874))

16,269

21,064

33,120

36,756

Net Increase in the Value of Cash Flow Hedge (Net of tax: ($6,689), ($18,308), ($55,877), ($21,122))

10,663

28,430

86,739

32,801

Reclassification of Cash Flow Hedges from OCI to Earnings (Net of tax: $36,696, $10,839, $68,077, $23,454)

(57,847)

(16,905)

(105,788)

(35,745)

Other Comprehensive Income (Loss):

(39,598)

25,149

48,110

18,987

Add: Comprehensive Loss Attributable to Noncontrolling Interest

29

29

Comprehensive Income Attributable to CONSOL Energy Inc. Shareholders

$113,141

$102,533

$298,045

$288,520

 

 

CONSOL ENERGY INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS (Dollars in thousands)

(Unaudited)

June 30, 2012

December 31, 2011

ASSETS

Current Assets:

Cash and Cash Equivalents

$

200,207

$

375,736

Accounts and Notes Receivable:

Trade

416,838

462,812

Notes Receivable

314,646

314,950

Other Receivables

99,597

105,708

Inventories

305,061

258,335

Deferred Income Taxes

148,977

141,083

Prepaid Expenses

195,297

239,353

Total Current Assets

1,680,623

1,897,977

Property, Plant and Equipment:

Property, Plant and Equipment

14,736,339

14,087,319

Less—Accumulated Depreciation, Depletion and Amortization

5,065,462

4,760,903

Total Property, Plant and Equipment—Net

9,670,877

9,326,416

Other Assets:

Deferred Income Taxes

439,745

507,724

Restricted Cash

20,365

22,148

Investment in Affiliates

209,273

182,036

Notes Receivable

300,307

300,492

Other

276,706

288,907

Total Other Assets

1,246,396

1,301,307

TOTAL ASSETS

$

12,597,896

$

12,525,700

CONSOL ENERGY INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data)

(Unaudited)

June 30, 2012

December 31, 2011

LIABILITIES AND EQUITY

Current Liabilities:

Accounts Payable

$

472,804

$

522,003

Current Portion of Long-Term Debt

20,862

20,691

Accrued Income Taxes

35,065

75,633

Other Accrued Liabilities

744,186

770,070

Total Current Liabilities

1,272,917

1,388,397

Long-Term Debt:

Long-Term Debt

3,122,234

3,122,234

Capital Lease Obligations

53,032

55,189

Total Long-Term Debt

3,175,266

3,177,423

Deferred Credits and Other Liabilities:

Postretirement Benefits Other Than Pensions

2,971,297

3,059,671

Pneumoconiosis Benefits

175,611

173,553

Mine Closing

441,670

406,712

Gas Well Closing

144,577

124,051

Workers' Compensation

150,007

151,034

Salary Retirement

208,506

269,069

Reclamation

56,184

39,969

Other

131,549

124,936

Total Deferred Credits and Other Liabilities

4,279,401

4,348,995

TOTAL LIABILITIES

8,727,584

8,914,815

Stockholders' Equity:

Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 227,628,661 Issued and 227,593,906 Outstanding at June 30, 2012; 227,289,426 Issued and 226,056,212 Outstanding at December 31, 2011

2,276

2,273

Capital in Excess of Par Value

2,262,159

2,234,775

Preferred Stock, 15,000,000 authorized, None issued and outstanding

Retained Earnings

2,359,609

2,184,737

Accumulated Other Comprehensive Loss

(753,444)

(801,554)

Common Stock in Treasury, at Cost—34,755 Shares at June 30, 2012 and 233,214 Shares at December 31, 2011

(609)

(9,346)

Total CONSOL Energy Inc. Stockholders' Equity

3,869,991

3,610,885

Noncontrolling Interest

321

TOTAL EQUITY

3,870,312

3,610,885

TOTAL LIABILITIES AND EQUITY

$

12,597,896

$

12,525,700

 

CONSOL ENERGY INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Dollars in thousands, except per share data)

Common Stock

Capital in

Excess of Par

Value

Retained

Earnings

(Deficit)

Accumulated

Other

Comprehensive

Income

(Loss)

Common

Stock in

Treasury

Total CONSOL Energy Inc.

Stockholders'

Equity

Non-

Controlling

Interest

Total

Equity

Balance at December 31, 2011

$2,273

$2,234,775

$2,184,737

$(801,554)

$(9,346)

$3,610,885

$—

$3,610,885

(Unaudited)

Net Income (Loss)

249,935

249,935

(29)

249,906

Other Comprehensive Income

48,110

48,110

48,110

Comprehensive Income (Loss)

249,935

48,110

298,045

(29)

298,016

Issuance of Treasury Stock

(18,230)

8,737

(9,493)

(9,493)

Issuance of Common Stock

3

454

457

457

Tax Cost From Stock-Based Compensation

(5)

(5)

(5)

Amortization of Stock-Based Compensation Awards

26,935

26,935

26,935

Net Change in Greenshale Energy Noncontrolling Interest

350

350

Dividends ($0.25 per share)

(56,833)

(56,833)

(56,833)

Balance at June 30, 2012

$2,276

$2,262,159

$2,359,609

$(753,444)

$(609)

$3,869,991

$321

$3,870,312

CONSOL ENERGY INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands)

Three Months Ended

Six Months Ended

June 30,

June 30,

2012

2011

2012

2011

Operating Activities:

  Net Income Attributable to CONSOL Energy Inc. Shareholders

$152,739

$77,384

$249,935

$269,533

  Adjustments to Reconcile Net Income to Net Cash Provided     By Operating Activities:

      Depreciation, Depletion and Amortization

153,824

157,800

309,171

306,862

      Abandonment of Long-Lived Assets

115,479

115,479

      Stock-Based Compensation

10,683

12,129

26,935

25,575

      Gain on Sale of Assets

(170,268)

(4,816)

(189,981)

(5,139)

      Loss on Extinguishment of Debt

16,090

16,090

      Amortization of Mineral Leases

1,745

1,110

3,631

3,578

      Deferred Income Taxes

32,890

(15,507)

30,625

7,592

      Equity in Earnings of Affiliates

(7,168)

(5,831)

(15,103)

(11,312)

      Changes in Operating Assets:

          Accounts and Notes Receivable

58,024

(24,196)

40,034

(51,097)

          Inventories

(20,064)

27,727

(46,726)

(1,708)

          Prepaid Expenses

13,478

16,094

19,709

23,679

      Changes in Other Assets

(233)

5,858

10,604

15,307

      Changes in Operating Liabilities:

          Accounts Payable

(1,954)

13,905

(41,266)

21,184

          Other Operating Liabilities

(127,926)

(52,472)

(65,693)

23,391

      Changes in Other Liabilities

32,384

16,086

23,456

29,607

      Other

10,309

3,399

12,618

6,862

      Net Cash Provided by Operating Activities

138,463

360,239

367,949

795,483

Investing Activities:

  Capital Expenditures

(407,953)

(330,663)

(714,399)

(585,441)

  Proceeds from Sales of Assets

223,618

7,180

252,229

7,480

  Distributions, net of Investments In, from Equity Affiliates

(11,589)

2,400

(21,839)

3,870

        Net Cash Used in Investing Activities

(195,924)

(321,083)

(484,009)

(574,091)

Financing Activities:

  Proceeds from (Payments on) Short-Term Borrowings

90,250

(23,250)

  Payments on Miscellaneous Borrowings

(2,332)

(3,407)

(4,662)

(7,105)

  Proceeds from (Payments on) Securitization Facility

70,000

(130,000)

  Payments on Long Term Notes, including Redemption       Premium

(265,785)

(265,785)

  Proceeds from Issuance of Long-Term Notes

250,000

  Tax Benefit from Stock-Based Compensation

858

875

1,608

4,181

  Dividends Paid

(28,446)

(22,668)

(56,833)

(45,293)

  Issuance of Common Stock

403

457

  Issuance of Treasury Stock

1,313

109

5,012

  Debt Issuance and Financing Fees

(128)

(10,910)

(148)

(15,427)

      Net Cash Used in Financing Activities

(29,645)

(140,332)

(59,469)

(227,667)

Net Decrease in Cash and Cash Equivalents

(87,106)

(101,176)

(175,529)

(6,275)

Cash and Cash Equivalents at Beginning of Period

287,313

127,695

375,736

32,794

Cash and Cash Equivalents at End of Period

$200,207

$26,519

$200,207

$26,519

 

SOURCE CONSOL Energy Inc.



RELATED LINKS

http://www.consolenergy.com