Business, Government Legal News from throughout WVCONSOL reports record earnings, emphasis on 'wet' gas fields

CONSOL Energy reported record fourth-quarter and year-end earnings on Jan. 26 while also announcing it is concentrating its Marcellus and Utica shale gas activities in "wet" fields.

For the fourth quarter, CONSOL reported net income of $196 million, up from $104 million the year before. Net income for 2011 was $632 million, up from $347 million in 2010.

The earnings report said CONSOL set several annual records last year, including:

• Record gas production of 153.5 Bcf (net to CONSOL), an increase of 20 percent from the 127.9 Bcf produced in 2010. Gas production in 2011 would have been approximately 160 Bcf, or a 25 percent increase, had the company not sold assets to Noble Energy and Antero Resources during the year.
• Record overseas coal sales of 11.4 million tons, an increase of 68 percent from the 6.8 million tons sold overseas in 2010.
• Record sales revenue of $5.7 billion, an increase of 14 percent from the $5.0 billion in 2010.
• Record cash flow from operations of $1.5 billion, an increase of 36 percent from the $1.1 billion in 2010.

Also, the company's Baltimore Terminal shipped a record 12.6 million tons in 2011, besting the 1995 shipments of 12.4 million tons. The Baltimore Terminal is the only coal terminal on the East Coast serviced by both CSX and Norfolk Southern.

"CONSOL Energy has a world-class set of assets," said J. Brett Harvey, chairman and CEO. "In our Coal Division for 2011, we were able to combine reliable operations with astute marketing to generate record net income. Our record results were even more impressive when one realizes that, on the gas side, weakening gas prices throughout 2011 largely offset our record gas production. For CONSOL, 2011 was a year characterized by our ability to seize opportunities and, in some cases, to create opportunities."

Strategically, CONSOL Energy was successful in participating in the growth of world coal markets and in selling more of its crossover coal into lucrative met coal markets, the earnings release said.

Also on Jan. 26, CONSOL executives participated in the quarterly conference call with analysts.

President Nick DeIuliis told analysts, "The (joint ventures) we announced in 2011 are going to play a significant role in CONSOL's future. The shared expertise of Noble Energy, Hess Corp. and CONSOL is going to help generate the economic development of the Marcellus and Utica shales and is also going to derisk the capital investment on behalf of our shareholders."

He added, "We'll also be exploring in order to derisk our Utica acreage, and we're going to continue to migrate our activity and capital towards the liquids and oil portion of our holdings. … Our wet and liquids activity is now projected to be roughly half of our gas well count for 2012. And the first quarter shows the first step in the move towards liquids."