Coal news and updates

Consol looking to sell Illinois Basin coal reserves

Consol Energy Inc. is looking to sell its Illinois Basin coal reserves as part of a larger effort to offload noncore assets, CEO Nicholas DeIuliis said Tuesday.

Speaking during the company’s quarterly earnings conference call, DeIuliis said noncore-asset sales are part of what he sees as Consol’s (NYSE: CNX) third set of business activities, activities that could unlock shareholder value.

Included in that third set, he said, is Consol’s master limited partnership with Noble Energy Inc. (NYSE: NBL) to run its midstream pipelines.

Work toward the partnership’s initial public offering is ongoing, and the company said it expects to disclose the registration statement next month.

DeIuliis said he efforts to unlock shareholder value beyond coal and natural gas are going to grow.

“While we have teams focused today on executing the Illinois Basin coal reserves and Marcellus midstream MLP event, we also have teams developing the next series of opportunities to unlock any deeper share outside of our core (natural gas) and coal,” DeIuliis he said.

“We increasingly think of all this ‘other’ as the third segment of Consol that supplements (natural gas) and coal. And we see just as much potential in this other segment as we do in natural gas and coal.”

Of course, the company has much to sell. As DeIuliis said during the call:

“We're effectively a 150-year-old company sitting with a fairly sizable key position in coal and a pretty meaningful position in gas.”

In fact, the company said during a recent analyst day that it potentially could sell off $1 billion worth of noncore assets over the next five years.

As for the Illinois Basin reserves, DeIuliis said Consol would be willing to either sell it as a whole or break it up – whichever would maximize its value. The company said may have up to 1 billion tons in reserve, but it is updating estimates, work that should be complete within the next few months.

Also on Tuesday, the company said it has signed on for transmission capacity in Spectra Energy Corp.’s Nexus pipeline, a 250-mile, large-diameter line running from northeastern Ohio northward to Chicago, Michigan and Ontario.

Chief Commercial Officer James Grech said Consol is to be an anchor shipper in the line. The company didn’t say how much capacity it is acquiring. The pipeline has a capacity of 2 billion cubic feet per day. It is to be put into service in 2017.

A Spectra spokesman said the company has sufficient capacity commitments to allow the project to proceed. And Consol said it believes it will, in fact, be built.

“We’re very optimistic about that line pipeline being built. It has a substantial existing infrastructure to build off of and has a very strong end-user commitment on the other end of the pipe,” Grech said.

Consol has a lot of gas to move to market. According to its quarterly results, production set a record at 51.9 billion cubic feet, 34 percent above the same time last year.

Source: www.bizjournals.com