Consol Energy To Pursue IPOs For Thermal Coal, Metallurgical Coal Businesses

(RTTNews) - Natural gas and coal producer Consol Energy, Inc. (CNX) announced Wednesday plans to pursue the initial public offerings of a Thermal Coal MLP and Metallurgical Coal subsidiary as it continues efforts to unlock inherent value of its assets. The launch of the IPOs are primarily subject to the final approval of Consol Energy's board of directors and prevailing market conditions.

"In addition to focusing on the steady execution of our core businesses, we have been hard at work on creating structural transparency, bringing value forward and taking advantage of opportunities for share count reduction," President and CEO Nick DeIuliis said in a statement.

The move will enable Consol Energy to boost net asset value per share and improve transparency into the value of the coal assets. It will also provide Consol Energy additional vehicles for accessing the capital markets on favorable terms.

Additionally, the move will help the company retain control of the assets in order to continue to realize the operational synergies that exist between its natural gas and coal businesses.

Consol Energy noted that it would designate separate management teams to run each of these businesses so as to most effectively maintain operational focus.

The Pittsburgh-based company said its board has already the authorized the management to pursue the formation of a master limited partnership for its thermal coal business. It then expects to launch an IPO of the MLP in mid-2015.

The thermal coal business will comprise of operations located in Pennsylvania, including its Bailey Mine, Enlow Fork Mine, Harvey Mine and the related preparation plant.

Following the closing of the IPO, Consol Energy would own the general partner of the MLP, any incentive distribution rights and a majority of the limited partner interests of the MLP.

Consol Energy also said its board has authorized the structuring and formation of a subsidiary entity that will own its metallurgical coal properties and related mining operations. The company will then look to float an IPO for up to 20 percent of the subsidiary's equity in the second half of 2015.

The metallurgical coal subsidiary's assets will include the Buchanan mine and related preparation plant and the company's interest in its Western Allegheny Energy joint venture.

Following the closure of the IPO's, Consol Energy will be left with its core oil and gas exploration and production business, its interest in Cone Midstream Partners LP (CNNX), a controlling interest in thermal coal MLP and in the metallurgical coal subsidiary.

Additionally, Consol Energy announced that its board of directors has approved a two-year share repurchase program of up to $250 million.

Consol Energy is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin.

"The structural moves completed in 2014 and anticipated for 2015 are intended to improve CONSOL's valuation by providing straightforward, sum-of-the-parts analytics and reducing the risk to the E&P growth plan, which we continue to target at 30% year-over-year growth in 2015 and 2016," Deluliis added.

CNX closed Wednesday's regular trading session at $34.96, down $1.14 or 3.16% on a volume of 3.11 million shares. However, the stock gained $1.05 or 3.00% in after-hours trading.