Consol Energy is, once again, not feeling the love. At least not as much love as it thinks it deserves.
The Cecil-based coal and gas producer told investors Thursday that it is feverishly looking at opportunities to sell, spin-out or restructure assets so that its share price would more accurately reflect the value of its various segments.
Consol reported a loss for the second quarter of $12.8 million, or 5 cents per share. At this time last year, Consol had net income of $153 million, or 67 cents per share. Total revenue during the three months ended June 30 was $1.2 billion.
"Everything is on the table," chairman and CEO Brett Harvey repeated during a call with analysts.
Along with some of its assets, the company may also be looking to unload employees, possibly on the coal side, as it shifts from capital projects to maintenance.
With the new BMX mine nearly completed and scheduled to open in early 2014, Consol's coal division will be in "harvest mode," which is how Mr. Harvey describes a steady investment between $300 million to $350 million for operations and upkeep.
The money that Consol is looking for from various deals will be invested on the gas side. According to Mr. Harvey, the company's strategy will be to drill rich Marcellus wells as quickly as possible, transition its activity in the Utica Shale from a focus on exploration to production, and drill dry gas as prices permit.
Mr. Harvey also indicated the company isn't ruling out splitting its gas and coal divisions into separate companies, which would repeat a cycle that began in 2005. That year, Consol took CNX Gas, then its coalbed methane drilling subsidiary, public only to fold it back into the parent company five years later.
"The coal business is definitely out of favor," Mr. Harvey said. And "as the gas business gets bigger and bigger and bigger, it's confusing on why you invest in Consol. Are you investing for gas or investing for coal?"
The analysts are split on that, Mr. Harvey said, suggesting that investors might be getting a kind of "conglomerate discount" which could be keeping the share price below what the company would like.
"We think that we need to bring that forward and let our shareholders bask in the value of all these assets whether it's by sale or by structure. And we're working on that right now," he said.
An announcement about some asset sales is likely to come during the third quarter, Mr. Harvey said.
Consol may be taking a page out of EQT's book. The Downtown-based oil and gas company began talking about monetizing its assets a few years ago, to fund its growing production arm.
Last year, it spun out EQT Midstream LP. In December 2012, it announced a deal with Peoples Natural Gas to sell its utility, Equitable Gas, pending regulatory approvals. EQT said Thursday it expects to have all approvals in place by the end of the year.
"When I became CEO, the strategy became pick what we want to invest in and [monetize] what we don't," Dave Porges, CEO of EQT told investors during the company's earnings call Thursday.
EQT has been strategically shedding assets ever since. In 2011, it sold the Langley natural gas processing complex and liquids pipeline to MarkWest Energy Partners LP for $270 million and its Big Sandy natural gas pipeline to Spectra Energy Partners LP for $390 million. Last year, it spun out its midstream assets into a publicly-traded master limited partnership, EQT Midstream LP. Earlier this month, EQT Corp. announced it has sold its Sunrise pipeline and the Jefferson compressor station to the midstream firm for $570 million.
Thursday, the company reported positive results for the past quarter, nearly tripling income from the same time last year. EQT reported net income of $86.9 million, or 57 cents per share, compared with $31.4 million, or 21 cents per share for the second quarter of 2012.
The company attributed the good showing to "increased production sales, higher prices, increased gathered volumes, and increased transmission capacity sales and throughput."
EQT Midstream LP posted net income of $17.9 million, or 50 cents per share.businessnews
Anya Litvak: email@example.com or 412-263-1455