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CONSOL Energy Inc. Reports Operating Results (10-Q)

November 01, 2012 | About:
10qk

10qk

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CONSOL Energy Inc. (CNX) filed Quarterly Report for the period ended 2012-09-30.

Consol Energy Inc has a market cap of $8.01 billion; its shares were traded at around $36.51 with a P/E ratio of 25.3 and P/S ratio of 1.3. The dividend yield of Consol Energy Inc stocks is 1.4%. Consol Energy Inc had an annual average earning growth of 23.3% over the past 10 years. GuruFocus rated Consol Energy Inc the business predictability rank of 2.5-star.

Highlight of Business Operations:

CBM sales revenues were $95 million for the three months ended September 30, 2012 compared to $119 million for the three months ended September 30, 2011. The $24 million decrease was primarily due to a 13.5% decrease in average sales price per thousand cubic feet sold, as well as a 6.9% decrease in average volumes sold. The decrease in CBM average sales price is the result of lower general market prices for natural gas, offset, in part, by various gas swap transactions maturing in each period. The gas swap transactions qualify as financial cash flow hedges that exist parallel to the underlying physical transactions. These financial hedges represented approximately 11.4 billion cubic feet of produced CBM gas sales volumes for the three months ended September 30, 2012 at an average price of $5.34 per thousand cubic feet. For the three months ended September 30, 2011, these financial hedges represented 16.6 billion cubic feet at an average price of $5.27 per thousand cubic feet. CBM sales volumes decreased 1.6 billion cubic feet for the three months ended September 30, 2012 compared to the 2011 period primarily due to normal well declines without a corresponding increase in wells drilled and the Buchanan Mine idling, as previously discussed. Currently, the focus of the gas division is to develop its Marcellus and Utica acreage. At September 30, 2012, there were 4,493 gross CBM wells in production. At September 30, 2011, there were 4,397 gross CBM wells in production.

Shallow Oil and Gas sales revenues were $32 million for the three months ended September 30, 2012 compared to $39 million for the three months ended September 30, 2011. The $7 million decrease was primarily due to the 7.8% decrease in average sales price per thousand cubic feet sold. Shallow Oil and Gas sales volumes also decreased 10.3% for the three months ended September 30, 2012 compared to the 2011 period primarily due to normal well declines without a corresponding increase in wells drilled. Currently, the focus of the gas division is to develop its Marcellus and Utica acreage. Average sales price decreased primarily due to lower general market prices of natural gas in the period-to-period comparison. This decrease was offset, in part, by the result of various gas swap transactions that matured in the three months ended September 30, 2012. These gas swap transactions qualify as financial cash flow hedges that exist parallel to the underlying physical transactions. These financial hedges represented approximately 4.9 billion cubic feet of produced Shallow Oil and Gas gas sales volumes for the three months ended September 30, 2012 at an average price of $5.23 per thousand cubic feet. In the three months ended September 30, 2011, these financial hedges represented 3.9 billion cubic feet at an average price of $4.94 per thousand cubic feet. At September 30, 2012, there were 9,936 gross Shallow Oil and Gas wells in production. At September 30, 2011, there were 10,015 gross Shallow Oil and Gas wells in production.

CBM sales revenues were $283 million in the nine months ended September 30, 2012 compared to $349 million for the nine months ended September 30, 2011. The $66 million decrease was primarily due to a 16.7% decrease in average sales price per thousand cubic feet sold and a 2.6% decrease in average volumes sold. The decrease in CBM average sales price was the result of lower average market prices and various gas swap transactions that matured in each period. The gas swap transactions qualify as financial cash flow hedges that exist parallel to the underlying physical transactions. These financial hedges represented approximately 34.5 billion cubic feet of our produced CBM gas sales volumes for the nine months ended September 30, 2012 at an average price of $5.34 per thousand cubic feet. For the nine months ended September 30, 2011, these financial hedges represented 45.1 billion cubic feet at an average price of $5.37 per thousand cubic feet. CBM sales volumes decreased 1.8 billion cubic feet for the nine months ended September 30, 2012 compared to the 2011 year-to-date period primarily due to normal well declines without a corresponding increase in wells drilled and the Buchanan Mine idling, as previously discussed. Currently, the focus of the gas division is to develop its Marcellus and Utica acreage. At September 30, 2012, there were 4,493 gross CBM wells in production. At September 30, 2011, there were 4,397 gross CBM wells in production.

Shallow Oil and Gas sales revenues were $101 million for the nine months ended September 30, 2012 compared to $120 million for the nine months ended September 30, 2011. The $19 million decrease was primarily due to the 9.2% decrease in volumes sold as well as the 7.6% decrease in average sales price. The decrease in shallow oil and gas average sales price is the result of lower average market prices and various gas swap transactions that matured in each period. These gas swap transactions qualify as financial cash flow hedges that exist parallel to the underlying physical transactions. These financial hedges represented approximately 14.3 billion cubic feet of our produced shallow oil and gas sales volumes for the nine months ended September 30, 2012 at an average price of $5.23 per thousand cubic feet. For the nine months ended September 30, 2011, these financial hedges represented 8.0 billion cubic feet at an average price of $4.97 per thousand cubic feet. At September 30, 2012, there were 9,936 gross Shallow Oil and Gas wells in production. At September 30, 2011, there were 10,015 gross Shallow Oil and Gas wells in production.

Other income was $46 million for the nine months ended September 30, 2012 compared to a loss of $9 million for the nine months ended September 30, 2011. The $55 million increase was primarily due to $24 million of additional interest income relating to the notes receivable from the Noble joint venture transaction, $10 million of additional gains on dispositions of non-core acreage and equipment, and a $4 million increase relating to earnings from equity affiliates. Additionally, CONSOL incurred a $58 million loss on the Noble transaction during 2011, partially offset by a gain on the sale to Antero of an overriding royalty interest of $41 million during 2011.

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