Value Pickings • 13 Comments
Munger Fan • 15 Comments
Oct. 28, 2013, 2:29 PM
- Investors' negative initial reaction to news that Consol Energy (CNX +0.9%) will sell five Appalachian coal mines for $3.5B to focus on natural gas turned positive as a consensus forms that the decision was a “positive for streamlining the company."
- “We’ll look at everything," CEO Brett Harvey said on a call with analysts but implied that a more radical break-up of the group was more likely to come after it realizes its ambitions for increasing gas production.
- CNX is selling ~28% of its coal EBITDA with the transaction, and the remaining coal has "optionality," allowing CNX to seek the highest margin; it is retaining the premium Buchanan mine, with 5M tons of production capacity, and the Western Allegheny joint venture, which is ramping to 1M tons of production capacity.
Oct. 28, 2013, 8:15 AM
- Consol Energy (CNX) agrees to sell its Consolidation Coal Company subsidiary, which contains all five of its longwall coal mines in West Virginia, to a subsidiary of Murray Energy in a deal valued at $3.5B, which CNX calls a "transformative step" in advancing its E&P growth strategy.
- The mines being sold produced a combined 28.5M tons of thermal coal in 2012; CNX's river and dock operations, including a fleet of 21 towboats and 600 barges, are part of the transaction.
- CNX cuts its dividend in half to an annual rate of $0.25/share, which it says reflects the increased emphasis on growth.
- Says the deal will de-lever $2.4B in balance sheet liabilities, and expects to record ~$1.3B of pre-tax gain in Q4.
- CNX -1.9% premarket.
Oct. 18, 2013, 2:41 PM
- Consol Energy (CNX +0.6%) would be valued at as much as $50/share, 32% higher than yesterday's close, if it follows through on splitting its coal and natural gas businesses, Deutsche Bank and Raymond James say.
- Antero Resources (AR), a shale gas producer with similar acreage and reserve quality to CNX, made a strong trading debut last week, indicating there may be unrealized value in Consol, Brean Capital's Lucas Pipes says.
- CNX "holds tremendous long-term value, a substantial amount of which is locked up within" the gas business, RJ says; CNX could wait for production volumes and commodity prices to improve until each business is self-reliant, or it could immediately spin off the gas portion, leaving the debt with the coal company which generates enough cash flow to support it.
Dec. 6, 2012, 9:18 AM
Investors seem to take seriously the latest takeover chatter surrounding Walter Energy (WLT), sending shares +7.5% premarket as vague rumors circulate that bidders could emerge. BHP Billiton (BHP) is said to be interested again; Glencore (GLCNF.PK) could be another candidate; Anglo American has been mentioned in the past. Other coal names are up: ANR +1.9%, CNX +1.6%, ACI +1.3%, BTU +0.8%.| Dec. 6, 2012, 9:18 AM | 5 Comments