Consol gas plans in motion

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This year marks Consol's first as a company primarily focused on natural gas -- and how to make more of it.

"Our goal in 2014 is simple: growth," said Brett Harvey, the company's chairman and CEO.

Consol plans to spend $1.1 billion for gas operations this year. The majority of that is slated for the development of dry and wet Marcellus Shale acreage. That's twice as much as Consol spent on gas operations in 2012 and 15 percent more than last year.

Right now, it's a company in transition, company leaders said, explaining the many moving parts of Consol's balance sheet over the past quarter.

On Friday, the Cecil-based firm reported net income of $738 million, or $3.20 per share for the fourth quarter of 2013. The majority of that came from the sale of five West Virginia coal mines in December and a favorable tax decision, without which the company's profit from operations was $16 million.

During the same three months in 2012, Consol had net income of $150 million, or 65 cents per share.

Income for the full year was $660 million in 2013 and $388 million in 2012.

Revenue decreased year over year, dropping from $3.7 billion in 2012 to $3.3 billion last year.

As Consol shifts into "maintenance mode" for its remaining coal mines, the company is working to increase gas production by 30 percent annually through 2016.

It recently hired a new head for its gas division, Timothy Dugan, formerly of Chesapeake Energy.

Company leaders spoke excitedly to analysts of ways they are boosting the oil and gas yield from wells by drilling longer horizontal wells and squeezing more fractures onto each lateral. That increases the cost per well, but is expected to produce more salable product to compensate.

As Consol has discussed in previous quarters, the firm continues to explore selling or spinning out its midstream assets into a master limited partnership. Company officials said investors can expect sales of noncore assets throughout the year while the company may start to focus on a strategy for midstream in the second half of 2014.

"There's no fire sale here," Mr. Harvey said.

Anya Litvak: alitvak@post-gazette.com or 412-263-1455.


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