Coal and natural gas producer CONSOL Energy Inc. (CNX) yesterday came up with an operational update for the quarter ending on June 30, 2011.
Robust results at the company’s coal mines in the second quarter of 2011 have prompted it to raise its production forecasts for the full-year 2011.
Production at CONSOL Energy's Coal Division in the second quarter reached 15.4 million tons, primarily due to good operational results at its Buchanan and Shoemaker mines. The Buchanan Mine contributed about 1.4 million tons of low-vol metallurgical coal to total company production for the quarter.
Thermal coal inventories in the second quarter fell by 0.9 million tons to 1.6 million tons due to the higher-than-expected sales. The low-vol Buchanan inventory was unchanged from March 31, 2011 at 0.2 million tons.
This strong output at the Coal Division led to CONSOL raising its total annual coal production target to 62-63 million tons, up from 60-62 million tons projected earlier. For the third quarter, CONSOL expects total coal production to be slightly lower in the range of 14.4-14.8 million tons. The slide in production expected in the upcoming quarter is seasonal as most of CONSOL’s miners take vacations during the late summer months.
On the other hand, the low-vol metallurgical coal production guidance for the year is now expected to be 5.0 million tons, an increase from the previous guidance of 4.5 million tons.
Also a gas producer, CONSOL continues to ramp up its gas footprint in the United States. CONSOL's Gas Division embarked upon an 18% increase in gas production in the second quarter producing a record 37.5 Bcf of gas, up from 31.9 Bcf produced in the year ago quarter.
So far in 2011, CONSOL has drilled 40 natural gas wells in the Marcellus Shale, including 24 in Southwest Pennsylvania, ten in Central Pennsylvania, and six in Northern West Virginia. Going forward, the company expects to drill about 85 wells in 2011 provided its new rigs arrive on schedule.
On the gas side, CONSOL Energy re-affirmed its 2011 production guidance of 150-160 Bcf.
Based in Canonsburg, Pennsylvania, the company is scheduled to release its second quarter 2011 financial results on July 28, 2011. The Zacks Consensus earnings estimates for the second quarter 2011, fiscal 2011 and fiscal 2012 are 67 cents, $2.90 and $4.56 per share, respectively.
CONSOL Energy is a multi-fuel energy producer as well as energy services provider. It has 11 bituminous coal mining complexes in five states and reports proven and probable coal reserves of 4.4 billion tons. It is also a leading Eastern U.S. gas producer, with proved reserves of over 3.7 trillion cubic feet. The company primarily competes with Arch Coal Inc. (ACI) and Peabody Energy Corp. (BTU).
CONSOL Energy retains a short term Zacks #3 Rank (Hold), which supports our long term Neutral recommendation on the stock.
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