Consol Energy: Deep Dive Into Gas Assets' Profitability Confirms Value Even At Current Prices
Value Pickings • 13 Comments
Value Pickings • 13 Comments
Consol Energy: A Bargain Net Asset Play That David Einhorn Likes For Good Reason
Munger Fan • 15 Comments
Munger Fan • 15 Comments
Wed, Mar. 16, 11:57 AM
- The bad news coming from Peabody Energy and other coal companies could damage Joy Global (JOY -0.3%), as Axiom Capital analyst Gordon Johnson notes that 59% of JOY's 2015 revenues came from the sale of equipment to coal miners globally.
- "Along these lines, we feel the announcement by BTU today could have incrementally negative implications for JOY’s ability to achieve its FY 2016 guidance,” Johnson writes.
- According to Johnson, JOY’s OEM revenues historically have an 87% correlation to the mining capex of the big five U.S. coal miners: Peabody (BTU -43.6%), Arch Coal (ACI -3.4%), Consol Energy (CNX -1.4%), Alliance Resource Partners (ARLP -0.1%) and Cliff Natural Resources (CLF -8.4%).
Tue, Mar. 1, 5:45 PM| Tue, Mar. 1, 5:45 PM | 7 Comments
Mon, Feb. 29, 9:17 AM
Mon, Feb. 29, 7:45 AM
- Consol Energy (NYSE:CNX) +3.3% premarket after agreeing to sell its Buchanan mine in Virginia and other metallurgical coal reserves to Coronado IV for $420M, and suspending its dividend in conjunction with the sale.
- CNX says it will suspend its dividend beginning with the first declared quarterly dividend after the transaction closes.
- The sale includes ~400M tons of proved coal reserves, which includes ~88M tons associated with the Buchanan mine; it does not include any gas rights, and CNX will retain the right to extract and sell gas at the mines and other properties.
Fri, Feb. 26, 1:22 PM
- Consol Energy (CNX +4%) is initiated with an Outperform rating and $21 price target at FBR Capital, which says CNX has caught up to and in some cases surpassed the performance of the best E&P producers in Appalachia and has significant unrecognized value in its undeveloped acreage.
- The firm says CNX is one of the best ways to express a bullish view on U.S. natural gas with a free option on global GDP growth through its coal export opportunities, and would accumulate shares at current levels, given their attractive risk/reward profile and long-term potential.
Wed, Feb. 10, 9:49 AM
- Coal stocks open with strong gains after yesterday's decision by the U.S. Supreme Court to block proposed regulations of coal fired power plants, likely pushing out a potential hearing after the presidential election: BTU +12.7%, CLD +19.7%, CNX +2.2%, CNXC +5.2%.
- The court’s order is temporary and is not a ruling on the merits, but it indicates the court’s conservative majority has misgivings about the emissions plan, and signals the rules could run into trouble in the courts, which could hurt the Obama administration’s ability to follow through on U.S. commitments in the Paris climate deal.
- FBR Capital says that while it does not foresee any near-term change to its outlook for coal companies, the delay could improve the long-term perception toward coal producers in maintaining meaningful market share as a fuel for domestic electricity generation (Briefing.com).
- FBR believes Westmoreland Coal (WLB -4.4%) and Alliance Resource Partners (ARLP -1.4%) could receive the most sustainable valuation benefit and investor interest following the Supreme Court action.
- ETFs: KOL
Wed, Feb. 10, 9:15 AM
Fri, Jan. 29, 3:44 PM
- Consol Energy (CNX +16.7%) says its free cash flow will enable it to ride out weak commodity prices, helping drive shares as much as 22% higher.
- CNX, whose $0.11/share loss was worse than expected, nevertheless said cash flow from operations rose to $102M in Q4 from $87M in the year-ago quarter.
- "With our internal free cash flow plan, we are confident we can ride out this volatile market," CFO David Khani said in today's earnings conference call.
- CNX also said it would continue to pay a dividend, after cutting its quarterly payout to $0.01/share from $0.625 last year.
- CNX also said it will temporarily idle its Harvey coal mine in Pennsylvania, months after it idled the Miller Creek Complex in West Virginia.
- Shares had plunged 77% over the previous year prior to today.
Fri, Jan. 22, 12:33 PM
- Morgan Stanley analyst Evan Kurt expects steel prices to continue to rise and average $445/ton in 2016, which he says may result in downward revisions to Wall Street estimates for U.S. Steel (X -1.2%), AK Steel (AKS -1%) and Nucor (NUE +0.2%).
- Kurt calls Steel Dynamics "the safest way to play a modest steel market recovery,” while heavily shorted names such as X and AKS could squeeze into results, "but we would sell the news."
- The firm rates STLD at Overweight with a $27 price target, while X, AKS and NUE are all rated Equal Weight with respective targets of $19, $5 and $59; Cliffs Natural Resources (CLF -7.3%), rated Underweight with a $2 target, is called a “high cost producer in an oversupplied iron ore market.”
- "No need to own coal names into the quarter,” Kurt writes, as coal market conditions have deteriorated with a warmer than normal winter leading to large build-ups of coal inventories; he downgrades Consol Energy (CNX -0.8%) and Foresight Energy (FELP +11.4%) to Equal Weight with respective $29 and $12 price target.
Thu, Jan. 21, 12:45 PM
Fri, Jan. 15, 10:57 AM
- The Obama administration announces it will place a moratorium on new leases for coal mining on public lands, while the Interior Department studies the environmental impact and conducts a review of leases that could take three years.
- The moratorium is limited to new coal leasing, with exceptions for the metallurgical coal used in steel production, and companies that already hold federal coal leases such as Peabody Energy (BTU -9.2%) can continue to mine those reserves during and after the moratorium.
- Nearly 40% of U.S. coal now comes from federal land, much of it from the Powder River Basin in Wyoming and Montana.
- KOL -4.5%, CLD -7.6%, CNX -6.6%, CLF -6.6%, WLB -5.3%, ARLP -2.5%.
Mon, Jan. 11, 2:49 PM
- Arch Coal (ACI -50.7%) is cut in half following news it has filed Chapter 11 bankruptcy and will be delisted from the NYSE, and the miner says its discussions with customers indicate that even after tumbling domestic coal demand the past eight years, "2016 pricing will remain weaker than previously anticipated."
- ACI's default on $3.2B of debt bring the metals and mining sector’s trailing 12-month default rate to 15% from 11% at the end of December and the default rate for the coal subsector an "unprecedented" 43%, according to Fitch Ratings.
- Analysts say investors should expect more such bankruptcies among commodity companies this year, as a strong dollar and slowing global demand growth should keep downward pressure on commodity prices.
- ACI's bankruptcy helps drag down other mining names today: BTU -19%, CNX -10.8%, YZC -2.3%, NRP -7.2%, CLD -11.4%, WLB -5.1%, ARLP +0.1%, KOL -2.6%.
Wed, Jan. 6, 7:52 AM
- Consol Energy (NYSE:CNX) -5.6% premarket after saying will cut the 2016 capex budget for its oil and gas division by 41%, now planning to spend $205M-$325M rather than its previous estimate of $400M-$500M.
- CNX says the capex reduction reflects continued benefits from drilling and completion efficiencies and the deferral of mainly wet gas completions into 2017; CNX believes it may partially offset the deferral of activity through potential production benefits related to additional gathering system debottlenecking projects in H2 2016.
- CNX also cuts its 2016 sales forecast for its coal division to 27M-32M tons from its earlier outlook for 30.6M-33.4M tons, and says it expects coal prices to fall further due to unusually warm winter weather and low natural gas prices; 2016 coal capex is estimated at $170M-$190M.
- Separately, CNX Coal Resources (NYSE:CNXC), which was spun off from Consol and mines coal used in power generation, cuts its 2016 sales forecast to 4.4M-5.2M tons from a previous outlook for 5M-5.4M tons.
Dec. 28, 2015, 12:57 PM
- Much like oil/gas firms (hurt by fresh oil price declines), coal, gold, and silver miners are having a rough day. End-of-year tax and fund selling could be playing a role. Comex gold is down a moderate 0.6%, and Comex silver down 3.2%. The S&P is down 0.5%.
- Notable coal decliners: Peabody Energy (BTU -13.6%), Westmoreland Coal (WLB -6.4%), CONSOL Energy (CNX -9%), and Cloud Peak Energy (CLD -4%).
- Notable gold decliners: Goldcorp (GG -3.5%), Barrick Gold (ABX -3.1%), Newmont Mining (NEM -4%), Kinross Gold (KGC -3.8%), Gold Fields (GFI -6.7%), AngloGold Ashanti (AU -5%), Harmony Gold (HMY -6.5%), and Sibanye Gold (SBGL -4.2%).
- Notable silver decliners: Silver Wheaton (SLW -3.8%), Pan American Silver (PAAS -3.6%), First Majestic Silver (AG -6.9%), Tahoe Resources (TAHO -4.9%), and Coeur Mining (CDE -5.8%).
- ETFs: GLD, SLV, IAU, AGQ, PSLV, PHYS, USLV, SIVR, SGOL, ZSL, UGL, DGP, GTU, GLL, UGLD, DZZ, SLVO, GLDI, DSLV, OUNZ, DGL, DBS, DGZ, DGLD, USV, GEUR, UBG, GYEN, TONS, QGLDX
Dec. 11, 2015, 3:59 PM
- Consol Energy (CNX -8%) is sharply lower - along with nearly every other energy-related stock - despite announcing it had signed new supply deals for the next three years that are expected when coupled with other recent commitments to significantly improve production from its mines in Pennsylvania over its current projections.
- CNX says the new deals total ~10.8M tons while the other recent commitments add another 650K tons, and will increase its operations by 93% next year, by 61% in 2017 and by 49% in 2018, based on the 26M ton midpoint of its production guidance range.
- CNX also reaffirms a $50-$55 price range for committed tonnage across its entire coal division in 2016.
Nov. 20, 2015, 12:14 PM
- Peabody Energy (BTU -4.8%) and Cloud Peak Energy (CLD -5.1%) are downgraded to Sell at UBS, which says U.S. coal prices remain "cornered by market and regulatory forces."
- UBS says it sees the U.S. coal space remaining in a prolonged state of oversupply, with limited cost reduction potential left in the U.S. coal production base.
- "Any recovery in gas prices may come too late for the highly levered U.S. coal players, and even those with healthier balance sheets are having damage progressively inflicted as higher price legacy multi-year contracts roll off, cash burn continues, and utilities reduce forward coal purchases," UBS says.
- The firm maintains its Sell rating on Arch Coal (ACI -6.4%) and cuts its stock price target by 67% to $0.50; it also cuts targets for BTU by 82% to $6, CLD by 55% to $2.50, and Consol Energy (CNX -0.7%) by 10% to $9 with a Neutral rating.
CONSOL Energy, Inc. engages in the exploration and production of oil, gas, and coal. It operates through the Exploration and Production, and Coal segments. The Exploration and Production segment produces pipeline natural gas for sale primarily to natural gas wholesalers. The Coal segment mines,... More
Sector: Basic Materials
Industry: Industrial Metals & Minerals
Country: United States
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