Consol shuts out media, cites need for focus in shareholder talks

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Consol Energy became the only company in the Pittsburgh region to bar reporters from attending its annual meeting, shutting the press out of a gathering on Wednesday that attracted about five shareholders.

The Cecil-based coal and natural gas producer closed its doors to the media for the second year in a row, saying the secret proceedings allow executives to focus on business, and that the company is transparent throughout the year.

"We're pretty open all the time," said J. Brett Harvey, Consol CEO and president, in an interview held after the meeting had adjourned.

The decision to keep the press out is unusual, even in an economic climate that has inspired some raucous shareholder affairs, corporate governance experts say.

The practice is not illegal, but "it's not appropriate," said Lev Janashvili, managing director at GMI Ratings, a corporate governance research firm in New York. "What does that decision reveal and suggest about the quality of leadership at the company?"

Shareholder meetings in Pittsburgh and across the country have taken on a charged tenor since the recession compelled many investors to raise questions about executive pay and corporate governance.

The other driller with headquarters in the region, EQT Corp., had security guards located inside the Downtown conference room that held its shareholder meeting in April, and had all attendees wanded with metal detectors.

Last month, shareholder activists at PNC Financial Services Group disrupted the annual meeting by shouting questions about the company directors' stance on mountaintop removal mining, prompting CEO Jim Rohr to rush through the agenda and cut the event short.

But Consol's private meeting on Wednesday was characterized as such a placid affair that Mr. Harvey said he would be ribbing Mr. Rohr on how much smoother Consol's meetings go.

About 20 people attended the closed meeting, though the crowd was mostly company executives, with about five shareholders showing up with questions about gas leases and the company's opinion on Utica Shale prospects, said Mr. Harvey.

In a statement, the company said, "Consol Energy's attendance policy at our annual shareholder meetings is limited to shareholders only, as our executives want to address their questions directly while also ensuring their safety and security. Consol Energy executives do not make any presentations during the meeting, as all information is provided in advance."

Mr. Janashvili said companies should avoid "any step back" from full transparency.

"It does not build trust at a time like this when you're supposed to be reporting on everything that matters," he said.

The Wednesday meeting was the first shareholder gathering since Consol posted a net loss for the first quarter of 2013.

For the first three months of the year, Consol had a net loss of $2 million, or 1 cent per share. That's down from a net income of $97 million, or 42 cents a share, in the same quarter one year ago. First-quarter revenue was $1.29 billion, down from 2012's $1.43 billion.

To help encourage new investors, Consol is preparing to shed assets and focus on its growing gas division, Mr. Harvey said on Wednesday. Investors interested in coal companies tend to focus on quarterly earnings, whereas gas investors are more focused on the long-term, he said.

The company's growing presence in Pennsylvania's Marcellus Shale and Ohio's Utica Shale will be funded in part through the selling or restructuring of other elements of its portfolio, such as its barge or pipeline businesses.

A master-limited partnership or sale-leaseback of the assets are possible avenues expected to be pursued this year, he said. Consol also is negotiating with firms to export natural gas from Atlantic ports to overseas markets, though Mr. Harvey declined to say which markets the company is targeting.

One shareholder resolution that failed Wednesday called on Consol to create a contingency plan outlining what the company would do if demand for fossil fuels plummets.

Mr. Harvey also announced Wednesday that the company had successfully sealed off a portion of its Blacksville No. 2 coal mine in Greene County, where a March fire idled operations and cost the company $15.2 million. Consol is working with the Mine Safety and Health Administration on a timetable to re-establish operations.

"We think tomorrow's good," Mr. Harvey joked.

Consol closed at 35.79 Wednesday, up 1.05.

businessnews

Erich Schwartzel: eschwartzel@post-gazette.com or 412-263-1455.


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