It was big news a couple years ago when CONSOL Energy sold its major West Virginia coal holdings to Murray Energy. And now CONSOL, long a mainstay of West Virginia’s coal industry, has dropped this announcement, as reported by Taylor Kuykendall:
CONSOL Energy Inc. plans to divest itself of its Miller Creek and Fola mines in West Virginia, the last two coal mines the company held in Central Appalachia, by paying another producer $44 million to take the properties off its hands.
CONSOL, which has other mines run by its master limited partnership CNX Coal Resources LP in Northern Appalachia, will transfer the mines to Booth Energy’s Southeastern Land in exchange for Booth taking on $103 million in liabilities for the mines. An agreement disclosed in a U.S. SEC filing on July 25 said CONSOL will pay Booth $44 million over time, including $27 million at the closing of the sale.
Miller Creek is still an active mine site, producing 2.1 million tons of coal in 2015, while the Fola site is idled and last produced 1.3 million tons in 2012.
The CONSOL SEC filing added:
The Miller Creek Complex is a premier asset in Central Appalachia, but no longer fits our portfolio. Taken together, the Miller Creek and Fola Complexes generated negative EBIDA in 2015 and are expected to generate negative EBITDA in 2016. These transactions constitute an important step in continuing to strengthen CEI’s balance sheet, enhancing liquidity, reducing our operational and regulatory risk profile and assisting with CEI’s transition to a pure play E&P business. In association with the transactions, the Miller Creek and Fola assets and liabilities are classified as held for sale in discontinued operations on CEI’s Consolidated Balance Sheets, their results of operations are included in discontinued operations on the Consolidated Statement of Income, and the reclassification of these assets resulted in an impairment charge of $356 million in the quarter. These assets were acquired in 2007 and the write down reflects the deterioration in the Central Appalachian coal market since then. The transactions are expected to close in the third quarter.