PITTSBURGH, April 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 March 31, 2012 of $97 million, or $0.42 per diluted share, compared to $192 million, or $0.84 per diluted share from the year-earlier quarter. EBITDA(1), a non-GAAP financial measure, was $324 million for the quarter ended March 31, 2012. This compared to $466 million in the year-earlier quarter.

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"We have been managing our way through this challenging environment," commented J. Brett Harvey, chairman and CEO. "The very warm winter, weakened economy, and low natural gas prices have quickly turned a tight coal environment into a surplus.  Fortunately, CONSOL Energy began 2012 with all of our thermal coal contracted for the year at favorable pricing, nearly one-half of our expected gas production hedged at $5.25 per Mcf, and nearly $400 million of cash on the balance sheet.  I believe that CONSOL Energy is well-positioned to capture the next upcycle, as our lower cost mines remain well capitalized and our inventory levels only grew modestly."

Despite this environment, CONSOL has several important 2012 catalysts that drive future profitability improvements: 1) our exciting Utica Shale exploration play with 22 (gross) wells planned for the year, 2) our liquids-rich Marcellus Shale play with 39 (gross) wells planned, and 3) our Baltimore Terminal expansion in the third quarter which will continue driving our long term expectations for rising thermal and met coal exports. 

CONSOL Energy is re-starting the longwall at its Blacksville Mine on May 1. The company has largely concluded negotiations with thermal coal customers concerning deferred shipments, enabling us to resume our thermal guidance for the second quarter and beyond. CONSOL believes that it is effectively capturing the economic value of those deferrals for its shareholders.

"A similar situation exists in the coking coal markets," continued Mr. Harvey, "where overseas steelmakers have been taking advantage of a lull in the strong longer term market to pressure coal producers into accepting prices lower than the benchmark."

CONSOL idled its longwall at Buchanan, effective March 9, in an effort to refrain from selling its premium hard coking coal at a discount. As a result of extensive negotiations, CONSOL has now come to terms with its customers and, as a result, will re-start the longwall at Buchanan on May 1. Updated low-vol guidance also appears later in this release.

Cash flow from operations in the quarter was $229 million, as compared to $435 million in the year-earlier quarter. CONSOL continues to invest in its future, in both coal and gas, by spending $306 million in the 2012 first quarter on capital projects. In coal, CONSOL saw first production (but not sales) from its Amonate Mining Complex during the first quarter.

In gas, CONSOL Energy is exploring for oil and liquids in the Ohio Utica Shale, where CONSOL and its JV partner plan to drill 22 (gross) wells this year. Similarly in the Marcellus Shale, the company and its JV partner are maximizing value by drilling 39 (gross) wells in the liquids-rich area of the play. The results from the first 5 of these Marcellus Shale wells are due to be released during the first week in June. Many of the remaining 60 (gross) Marcellus Shale wells are being drilled on 100%-net revenue interest acreage, which enables the joint venture to earn an economic return at the current NYMEX gas strip.

There were several discrete items during the quarter including an impairment from the enactment of the Pennsylvania  Marcellus Shale impact fee, and the gain from the sale of some non-core properties. The net effect of these items on earnings was negligible.

CONSOL has taken proactive steps to reduce costs.  Full-year 2012 annual administrative and support service expenses is expected to remain flat with 2011 levels from hiring limitations, executive and corporate salary freezes, and other cost cutting measures. Our purchasing team has worked with suppliers and vendors to reduce price increases as well as reduce costs. We expect this process to continue throughout the year. 

(1) The 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:

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
		March 31,						March 31,						March 31,						March 31,						March 31,						March 31,
		2012						2011						2012						2011						2012						2011
Sales - Company Produced     (millions of tons)		1.0						1.4						1.0						1.1						13.3						14.2
Coal Production (millions of tons)		1.0						1.5						1.0						1.1						13.7						14.6
Average Realized Price Per Ton - Company Produced		$			157.78			$			165.49			$			66.28			$			77.40			$			61.39			$			57.82
Less:
Operating Costs Per Ton		$			70.86			$			52.26			$			40.43			$			30.21			$			40.61			$			33.08
Non-Operating Charges Per Ton		$			11.80			$			8.34			$			5.34			$			4.79			$			5.34			$			5.48
DD&A Per Ton		$			9.80			$			5.75			$			5.85			$			5.01			$			5.87			$			5.12
Total Cost Per Ton - Company Produced		$			92.46			$			66.35			$			51.62			$			40.01			$			51.82			$			43.68
Average Margin Per Ton		$			65.32			gas reserves, greenhouse gas emissions, gas production, gas margins, gas rights, higher adjusted gas volumes, quarter gas production, bank facility, natural gas operations, gas drilling, gas strip, bituminous coal mining complexes, gas division, gas producer, natural gas, fuel producer, natural gas industries, capital equipment, natural gas reserves, mining, unit gas costs, oil, expected gas production, gas operations, transportation facilities, net gas production, the annual gas hedge position, natural gas prices, realized unit gas prices, s&p 500, j. brett harvey, amonate mining complex, fob buchanan mine, blacksville mine, fob mine, usd, pittsburgh, blacksville, marcellus shale, noble energy, cnx gas corporation, eastern u.s., consol energy inc., united states, india, liability, baltimore terminal, pennsylvania, gas division, combined fund, −"gas direct administration, securities and exchange commission, generally accepted accounting principles, consol energy, financial ratio, income statement, net profit, natural gas, coalbed methane, net income, income, chairman and ceo, private, www.consolenergy.com Read source article Blog on news item Related content News: How Russia could fuel Asia’s growth 119 days ago - Forum:Blog Growing Asian demand presents a golden opportunity for Russia to diversify away from its primarily European export market, writes Nobuo Tanaka. Read the World Economic Forum... News: The Council Of The European Union Adopts Decision On Temporary Derogation From The EU Emissions Trading System Directive 29 days ago - News Articles The Council adopted1 today a decision derogating temporarily from directive 2003/87/EC establishing the EU scheme for greenhouse gas emission allowance trading (11/13,8352/13 ... News: VIDEO: Browne: Fracking is game changing 21 days ago - BBC News - Business Lord Browne told HARDtalk's Stephen Sackur of the huge gas reserves unlocked by fracking within the USA, saying it now represents 30% of American gas production. News: CONSOL Energy Reports First Quarter Results; Blacksville and Buchanan Longwalls Scheduled for May 1 Re-Start 390 days ago - PR Newswire Mining-Metals News PITTSBURGH, April 26, 2012 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX), the leading diversified fuel producer in the Eastern United States, reported net income for ... News: CONSOL Energy extends summer miners' vacation period at Blacksville No. 2 and Robinson Run Mines 333 days ago - PR Newswire Mining-Metals News   PITTSBURGH, June 22, 2012 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) today announced that it will extend the annual miners' vacation period at its Blacksvill... News: CONSOL Energy Reports Fourth Quarter Net Income of $196 Million, or $0.85 per Diluted Share; Record Annual 2011 Net Income of $632 Million, or $2.76 per Diluted Share 481 days ago - PR Newswire Mining-Metals News PITTSBURGH, Jan. 26, 2012 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX), the leading diversified fuel producer in the Eastern United States, reported net income for the quart... © MoneyScience 2011-2012 All Rights Reserved. VAT No: 902 7652 32 Company No. 6184038 Help | Contact | Disclaimer Terms & Conditions | Privacy Policy Advertising | Feeds