CNX’s initial assets include a 20% undivided interest in, and operational control over, Consol's Pennsylvania mining complex, which consists of three underground mines and related infrastructure that produce high-Btu (British thermal units) bituminous thermal coal that is sold primarily to electric utilities in the eastern US, its core market.

“We believe that our ability to efficiently produce and deliver large volumes of high-quality coal at competitive prices, the strategic location of our mines, the industry experience of our management team and our relationship with Consol Energy position us as a leading producer of high-Btu thermal coal in the Northern Appalachian Basin and the eastern US,” CNX said in its prospectus.

The Pennsylvania mining complex, which includes the Bailey mine, the Enlow Fork mine and the newly opened Harvey mine, has extensive high-quality coal reserves, which the company mines from the Pittsburgh No 8 coal seam – a large contiguous formation of uniform, high-Btu thermal coal that is ideal for high productivity, low-cost longwall operations.

As of December 31, 2014, the Pennsylvania mining complex included 785.6 million tonnes (157.1Mt net to CNX’s 20% interest on a pro forma basis) of proven and probable coal reserves with an average gross heat content of about 13,000Btu per pound and an average sulphur content of 2.37%.

“Based on our current production capacity, these reserves are sufficient to support over 27 years of production,” CNX said.

“In addition, all of our reserves exhibit thermoplastic behavior suitable for coke-making and contain an average of approximately 39% volatile matter [on a dry basis], which enables us, if market dynamics are favourable, to capture greater margins from selling our coal in the metallurgical market to coke-makers and steel manufacturers who utilise modern coke-making technologies.

“The design of the Pennsylvania mining complex is optimised to produce large quantities of coal on a cost efficient basis.

“We are able to sustain high production volumes at comparatively low operating costs due to, among other things, Consol Energy’s significant investments in technologically advanced longwall mining systems, logistics infrastructure and safety.”

CNX currently operates five longwalls and 18 continuous mining sections at the Pennsylvania mining complex.

The current production capacity of the Pennsylvania mining complex’s five longwalls is 28.5Mt of coal per year, and it produced approximately 26.1Mt (5.2 million tonnes net to its 20% interest on a pro forma basis) of coal for the year ended December 31, 2014.

CNX also recently upgraded its preparation plant, which is connected via conveyor belts to each of the mines, to clean and process up to 8200t of coal per hour.

Its onsite logistics infrastructure at the preparation plant includes a new dual-batch train load-out facility capable of loading up to 9000t of coal per hour and 31km of track linked to separate Class I rail lines owned by Norfolk Southern and CSX.

This enables the company to simultaneously accommodate multiple unit trains and “significantly increases” its efficiency in meeting our customers’ transportation needs.

CNX believe it is well positioned to compete with coal producers in all four primary coal producing basins in the US, primarily because of:

• Its transportation cost advantage compared to producers in the Illinois Basin and the Powder River Basin that incur higher rail transportation rates to deliver coal to its core market in the eastern US;

• Its favorable operating environment compared to producers in the Central Appalachian Basin, where production has been declining and is expected to continue to decline primarily due to the basin’s high cost production profile, reserve degradation and difficult permitting environment; and
• the high-quality characteristics of its coal, which enables CNX to compete for demand from a broader range of coal-fired power plants compared to mining operations in basins that typically produce coal with a comparatively lower heat content, such as the Illinois Basin and Powder River Basin, mining operations in basins that typically produce coal with a comparatively higher sulphur content, such as the Illinois Basin and most areas in the Northern Appalachian Basin, and mining operations in basins that typically produce coal with a comparatively higher chlorine content, such as the Illinois Basin.

“For example, our recoverable coal reserves have an average gross heat content of approximately 13,000Btu per pound and an average sulphur content of 2.37% compared to an average gross heat content of 11,619Btu per pound and an average sulphur content of 2.74% for other coal master limited partnerships, based on publicly available data,” the company added.

“In addition, our logistics infrastructure and proximity to coal-fired power plants in the eastern US provide us with operational and marketing flexibility, reduce the cost to deliver coal to our core market and allow us to realize higher netback prices.”

CNX believes that these advantages, combined with its ability to maintain low operating costs, allow it to generate favorable margins compared to its peers.

It also has good access to international coal markets through its long-standing commercial relationship with “leading coal trading and brokering company” that maintains a broad market presence with foreign coal consumers and through Consol’s Baltimore Marine Terminal.

That terminal provides coal transshipments directly from rail cars to ocean-going vessels and is the only coal marine terminal on the East Coast served by two rail lines – Norfolk Southern and CSX.

Bank of America Merrill Lynch, Wells Fargo Securities, Citigroup, Jefferies, Scotia Howard Weil, Credit Suisse, JP Morgan, Evercore ISI, BB&T Capital Markets, Goldman, Sachs, The Huntington Investment Company, Stifel and Nomura are acting as book-running managers of the IPO.

Clarksons Platou Securities, Cowen and Company and Tuohy Brothers are co-managers of the offering.