PITTSBURGH, Sept. 5, 2017
/PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) announced today
several updates in connection with its participation in the
Barclays CEO Energy-Power Conference in New York.
First, in order to provide better clarity and visibility to the
market with respect to the company achieving its strategic goal of
separating its coal and E&P businesses, the company intends to
execute the spin-off transaction at the earliest possible time,
which is expected to be in the fourth quarter of 2017.
Second, CONSOL Energy is decreasing its 2017 E&P Division
production guidance to approximately 405-415 Bcfe, compared to the
previously stated guidance of 420-440 Bcfe. For the third quarter
of 2017, the company expects production of approximately 100 Bcfe,
which implies higher growth in the fourth quarter, driven in part
by the well turn-in-line (TIL) schedule peaking in November. The
company maintains previously announced 2017 total E&P capital
expenditures guidance of approximately $620-$645 million. Also, the company maintains
the previously announced 2018 E&P Division production guidance
of approximately 520-550 Bcfe, or approximately 30% growth compared
to 2017 based on the midpoint of the guidance ranges.
The decrease in 2017 production volumes is due to larger ceramic
completion designs increasing cycle times, operational issues, and
a tightening in the availability of field services. These issues
have added complexity and delayed several TILs in 2017. However,
the issues are transitory, and 2018 volumes will not be impacted.
In accordance with its NAV-driven philosophy, the company
determined not to sacrifice value solely to achieve 2017 production
within its previously announced guidance.
Third, for the Pennsylvania Mining Complex, the company is
decreasing guidance for 2017 adjusted EBITDA attributable to CONSOL
Energy to $345 million, which is a
decrease of $25 million from
previously stated guidance. The decrease is due to a reduction in
coal price realizations resulting from cooler than normal summer,
modest delivery impacts related to the railroads, and a one week
longwall permit delay. However, through optimization initiatives,
the company expects total consolidated coal capital expenditures to
decrease to $112-$120 million, which
is a reduction from the previously stated guidance of $120-$136 million.
As of midnight last night, the Pennsylvania Department of
Environmental Protection (DEP) has sought more time to review the
technical merits of the permit submittal for continued longwall
mining in the 4L panel at the company's Bailey Mine, in light of a
recent Environmental Hearing Board decision. As a result, the
longwall has been idled and workforce adjustments are being made.
This is the first time in the 35-year history of the Bailey Mine
that the company has failed to timely receive a needed mining
permit. The company maintains that this permit meets the necessary
criteria for approval, and the company is in ongoing communication
with Pennsylvania Governor Wolf's
office and the Secretary of the DEP asking that the permit be
issued in order to enable the company to get its miners back to
work and resume production. CONSOL will lose approximately 25,000
tons of production per day as a result of this permit delay. While
the company can make up some lost production in the fourth quarter,
if the permit is not issued in the near future, additional layoffs
will be likely and the impact on the company could be material. The
EBITDA guidance provided above assumes that the permit is issued in
the near future. The company hopes that the DEP resolves this
matter quickly, and the company will provide updates as new
information becomes available.
The company now expects full year 2017 adjusted EBITDA guidance
to be approximately $815 million,
which is a decrease of $55 million
from the previously stated guidance. Also, the company now expects
2017 leverage to be approximately 2.8x net debt to EBITDA, which is
an increase of 0.2x from previously stated guidance.
Finally, as stated in the previous quarter's earnings call,
CONSOL has continued to sell non-core assets, and since
August 1, 2017, the company has
closed on an additional $40 million,
which includes the sale of non-core Marcellus Shale acres in Allegheny and Westmoreland counties, Pennsylvania, for approximately $30 million, discussed on the previous quarter's
earnings call. Therefore, year-to-date, the company has closed on
$385 million of asset sales. In
addition, the company has entered into a contract to sell a large
block of surface acreage for approximately $25 million, which the company expects to close
early in the fourth quarter. Once closed, asset sales will total
approximately $410 million.
Share Repurchase Program
CONSOL Energy's Board of
Directors has approved a one-year share repurchase program of up to
$200 million. The repurchases will be
effected from time-to-time through open market purchases, privately
negotiated transactions, Rule 10b5-1 plans, accelerated stock
repurchases, block trades, derivative contracts or otherwise in
compliance with Rule 10b-18. The timing of any repurchases will be
based on a number of factors, including available liquidity, the
company's stock price, the company's financial outlook, and
alternative investment options. The share repurchase program does
not obligate the company to repurchase any dollar amount or number
of shares and the Board's authorization of the program may be
modified, suspended or discontinued at any time. The Board of
Directors will continue to evaluate the size of the stock
repurchase program based on CONSOL's free cash flow position,
leverage ratio, and capital plans.
Barclays CEO Energy-Power Conference Participation and
Presentation
CONSOL Energy's President and Chief Executive
Officer, Nicholas J. DeIuliis will
meet with investors and present today, September 5, 2017, at 2:25
pm ET at the Barclay's 2017 CEO Energy-Power Conference. The
presentation materials will be available on the company's website
at 6:45am ET. Also, the live webcast
will be available on CONSOL Energy's website at
www.consolenergy.com, and the replay will be archived there as
well.
Note: CONSOL Energy is unable to provide a reconciliation of
projected Adjusted EBITDA to projected operating income, the most
comparable financial measure calculated in accordance with GAAP,
due to the unknown effect, timing and potential significance of
certain income statement items. EBITDA guidance based on the
midpoint of production guidance.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is
a Pittsburgh-based energy
producer, and one of the largest independent natural gas
exploration, development and production companies, with operations
centered in the major shale formations of the Appalachian basin.
The company deploys an organic growth strategy focused on
developing its substantial resource base. As of December 31, 2016, CONSOL Energy had 6.3 trillion
cubic feet equivalent of proved natural gas reserves. CONSOL Energy
is a member of the Standard & Poor's Midcap 400 Index.
Additional information may be found at www.consolenergy.com.
Cautionary Statements
Various statements in this
release, including those that express a belief, expectation or
intention, may be considered forward-looking statements under
federal securities laws including Section 21E of the Securities
Exchange Act of 1934 (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," "will," 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: uncertainties as to the timing
and manner of the separation (whether by sale or spin-off) and
whether it will be completed (including any dropdowns of the coal
business); the possibility that various closing conditions for the
separation may not be satisfied; the impact of the separation on
our business; the expected tax treatment of the separation; the
risk that the coal and natural gas exploration and production
businesses will not be separated successfully or such separation
may be more difficult, time-consuming or costly than expected,
which could result in additional demands on our resources, systems,
procedures and controls, disruption of our ongoing business
and diversion of management's attention from other business
concerns; competitive responses to the separation; deterioration in
economic conditions in any of the industries in which our customers
operate may decrease demand for our products, impair our ability to
collect customer receivables and impair our ability to access
capital; prices for natural gas, natural gas and other liquids and
coal are volatile and can fluctuate widely based upon a number of
factors beyond our control including oversupply relative to the
demand available for our products, weather and the price and
availability of alternative fuels; an extended decline in the
prices we receive for our natural gas, natural gas liquids and coal
affecting our operating results and cash flows; foreign currency
fluctuations could adversely affect the competitiveness of our coal
and natural gas liquids abroad; our customers extending existing
contracts or entering into new long-term contracts for coal on
favorable terms; our reliance on major customers; our inability to
collect payments from customers if their creditworthiness declines
or if they fail to honor their contracts; the disruption of rail,
barge, gathering, processing and transportation facilities and
other systems that deliver our natural gas, natural gas liquids and
coal to market; a loss of our competitive position because of the
competitive nature of the natural gas and coal industries, or a
loss of our competitive position because of overcapacity in these
industries impairing our profitability; 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 environmental regulations including any
relating to greenhouse gas emissions on our operating costs as well
as on the market for natural gas and coal and for our securities;
the risks inherent in natural gas and coal operations, including
our reliance upon third party contractors, 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 transportation operations; obtaining and
renewing governmental permits and approvals for our natural gas and
coal 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 natural gas
and coal operations; our ability to find adequate water sources for
our use in natural gas drilling, or our ability to dispose of water
used or removed from strata in connection with our natural gas
operations at a reasonable cost and within applicable environmental
rules; the effects of stringent federal and state employee health
and safety regulations, including the ability of regulators to shut
down our operations; the potential for liabilities arising from
environmental contamination or alleged environmental contamination
in connection with our past or current natural gas and coal
operations; the effects of mine closing, reclamation, gas well
closing and certain other liabilities; uncertainties in estimating
our economically recoverable natural gas, oil and coal reserves;
defects may exist in our chain of title and we may incur additional
costs associated with perfecting title for natural gas and coal
rights on some of our properties or failing to acquire these
additional rights may result in a reduction of our estimated
reserves; the outcomes of various legal proceedings, which are more
fully described in our reports filed under the Securities Exchange
Act of 1934; exposure to employee-related long-term liabilities;
acquisitions and divestitures we anticipate may not occur or
produce anticipated benefits; our participation in joint ventures
may restrict our operational and corporate flexibility, and actions
taken by a joint venture partner may impact our financial position
and operational results; risks associated with our debt; replacing
our natural gas and oil reserves, which if not replaced, will cause
our natural gas and oil reserves and production to decline;
declines in our borrowing base could occur for a variety of
reasons, including lower natural gas or oil prices, declines in
natural gas and oil proved reserves, and lending regulations
requirements or regulations; our hedging activities may prevent us
from benefiting from near-term price increases and may expose us to
other risks; changes in federal or state income tax laws,
particularly in the area of percentage depletion and intangible
drilling costs, could cause our financial position and
profitability to deteriorate; failure to appropriately allocate
capital and other resources among our strategic opportunities may
adversely affect our financial condition; failure by Murray Energy
to satisfy liabilities it acquired from us, or failure to perform
its obligations under various arrangements, which we guaranteed,
could materially or adversely affect our results of operations,
financial position, and cash flows; information theft, data
corruption, operational disruption and/or financial loss resulting
from a terrorist attack or cyber incident; operating in a single
geographic area; certain provisions in our multi-year coal sales
contracts may provide limited protection during adverse economic
conditions, and may result in economic penalties or permit the
customer to terminate the contract; a majority of our common units
in CNX Coal Resources LP and CONE Midstream Partners LP are
subordinated, and we may not receive distributions from CNX Coal
Resources LP or CONE Midstream Partners LP; with respect to the
sale of the Buchanan and Amonate mines and other coal assets to
Coronado IV LLC - disruption to our business, including customer,
employee and supplier relationships resulting from this
transaction, and the impact of the transaction on our future
operating results; with respect to the termination of the joint
venture with Noble - disruption to our business, including customer
and supplier relationships resulting from this transaction, and the
impact of the transaction on our future operating and financial
results and liquidity; other factors discussed in the 2016 Form
10-K under "Risk Factors," as updated by any subsequent Form 10-Qs,
which are on file at the Securities and Exchange Commission. We
disclaim any obligation to update publicly any forward-looking
statements, whether in response to new information, future events
or otherwise, except as required by applicable law.
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SOURCE CONSOL Energy Inc.