Coal and gas producer Consol Energy's profit falls 40 pct on charges, revenue up, shares fall
Associated Press
07/29/10 1:05 PM EDT
CHARLESTON, W.VA. — Coal and natural gas producer Consol Energy Inc. said Thursday its profit fell more than 40 percent in the second quarter because of acquisition expenses and other costs. Its revenue rose more than 20 percent.
Consol, based in Canonsburg, Pa., said charges related to its purchase of the Appalachian oil and gas business of Virginia's Dominion Resources Inc., a legal settlement and costs from a mine reclamation project drove earnings down by more than $60 million.
The company said its net income fell to $67 million, or 29 cents per share, in the period ended June 30 compared with $113 million, or 62 cents per share, a year ago. Excluding one-time items, it said adjusted earnings amounted to 45 cents per share.
Revenue rose to a company record $1.29 billion from $1.07 billion a year ago.
Analysts surveyed by Thomson Reueters expected higher earnings of 66.5 cents per share on revenue of $1.34 billion.
Its shares fell $2.14, or 5.5 percent, to $36.47 in midday trading.
Consol, which operates primarily in West Virginia and Pennsylvania, said income from its gas division rose slightly to $33.5 million in the quarter. The division, which includes numbers from its recent purchase of Dominion's Appalachian oil and gas business and its majority stake in CNX Gas, saw its production grow about 42 percent. Production costs rose, while the average sale price fell.
The company also said it plans to increase its investment in the natural gas business by deploying more rigs in the Marcellus Shale region by the end of the year.
On the coal side, Consol said it produced about 13.2 million tons of thermal coal for power generation and 1.7 million tons of steel-making metallurgical coal. The company also noted that the U.S. metallurgical coal market has eased recently, as steel production has slightly outpaced demand. The thermal coal outlook also is expected to benefit from unseasonably hot weather in the eastern part of the country.
