Diversified fuel producer CONSOL Energy Inc. CNX reported breakeven results in the fourth quarter of 2016. The Zacks Consensus Estimate was a loss of a penny.
Revenue
CONSOL Energy’s fourth-quarter revenues of $462 million lagged the Zacks Consensus Estimate of $619 million by 25.4% and declined 30.6% from the year-ago tally of $665.9 million.
The top-line decline was primarily due to a loss of $194.9 million on commodity derivative instruments. This was partially offset by strong contribution from natural gas, natural gas liquids (NGL) and oil sales.
Segment Performance
Pennsylvania (PA) Mining Operations Division
Pennsylvania Operations sold 7.1 million tons of coal in the reported quarter, compared with 5.0 million tons in the year-ago period.
Total cost of the coal sold was $33.90 per ton, compared with $39.70 in the year-ago quarter.
Total sales price per ton was $45.05, compared with $52.57 in the prior-year quarter. Despite a 14.3% year-over-year decline in sales price, contribution from coal sales was higher on a year-over-year basis due to an increase in sales volume.
Exploration & Production (E&P) Division
CONSOL Energy registered a 6% year-over-year increase in fourth-quarter 2016 gas production volumes to 101.3 billion cubic feet equivalent (Bcfe).
The average sales price of $2.77 per thousand cubic feet gas equivalent (Mcfe), when combined with unit costs of $2.27 per Mcfe, resulted in a margin of 50 cents per Mcfe. This reflects an increase from the year-ago average sales price of $2.78 per Mcfe and unit costs of $2.37 per Mcfe, which led to a margin of 41 cents per Mcfe.
CONSOL Energy Inc. Price, Consensus and EPS Surprise
CONSOL Energy Inc. Price, Consensus and EPS Surprise | CONSOL Energy Inc. Quote
Financial Update
As of Dec 31, 2016, the company’s cash and cash equivalents were $60.5 million, down from $72.6 million as of Dec 31, 2015.
Total long-term debts as of Dec 31, 2016 were $2.76 billion, up marginally from $2.74 billion as of Dec 31, 2015.
Cash from operating activities in fourth-quarter 2016 was $87.1 million, compared with $106.2 million in fourth-quarter 2015.
Capital expenditure in the fourth quarter of 2016 was $47.4 million, down significantly from the year-ago level of $118.7 million.
Guidance
CONSOL Energy expects 2017 and 2018 E&P Division production to be 415 Bcfe and 485 Bcfe, respectively.
CONSOL Energy expects consolidated 2016 Pennsylvania Mining Operations sales of 26 million tons in both 2017 and 2018.
Total consolidated capital expenditures for Pennsylvania Mining Operations are still expected to be $135 million and $140 million for 2017 and 2018, respectively.
Peer Releases
Alliance Resource Partners LP ARLP reported fourth-quarter 2016 adjusted earnings of $1.30 per share, outpacing the Zacks Consensus Estimate of 86 cents by 51.2%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SunCoke Energy Partners SXCP reported fourth-quarter 2016 adjusted earnings of 78 cents per share, missing the Zacks Consensus Estimate of $1.03 by 24.3%. The stock currently has a Zacks Rank #2 (Buy).
CNX Coal Resources LP’s CNXC reported earnings of 41 cents per unit in the fourth quarter, missed the Zacks Consensus Estimate of 59 cents by 30.5%. The stock currently has a Zacks Rank #3 (Hold).
Our View
CONSOL Energy’s focus on E&P assets is reaping benefits. The company is benefiting from record production levels as well as the drop in production costs per Mcfe.
The company exited the quarter with a strong liquidity position, which allowed the company to pay down its revolving credit facility and facilitated further development of its core assets.
CONSOL Energy currently has a Zacks Rank #2.
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