Indeed, from an operational standpoint CNX’s second quarter came in ahead of expectations – mainly due to higher shipments.
The company did incur some difficulties getting its coal tonnes though. It had four longwall moves, encountered difficult mining conditions at the Enlow Fork mine and had difficult longwall recovery conditions during one of the Bailey mine longwall moves.
CNX Coal CEO Jimmy Brock said the company completed its first year as a public earlier in July and had made significant progress on the marketing and operations fronts.
“At the time of the initial public offering we had a significant open position in our 2016 sales book while utility inventories were building and the price for coal was declining,” he said.
“Today we are fully sold out for 2016 and 79% sold for 2017. The shipment schedule is improving and for the first time we have an opportunity to optimise our customer mix.
“On the operational front we inherited historical costs and as we entered the weak winter period, customer deferrals forced us to reduce work schedules and eventually idle the Harvey mine.”
Harvey restarted earlier in the second quarter and CNX is running its five longwalls on a five days a week schedule.
“We have achieved significant cost reductions through productivity improvements, headcount reductions and extracting value from suppliers,” Brock said.
“This has helped us reposition the mines to successfully compete and gain market share even outside of our core regions while many of our competitors remain in financial distress.
“While commodity markets still remain challenging the warm winter weather and falling export prices seem to be finally giving way to a hot summer and rising export prices.”
Natural gas prices have also risen about a third to around $US3 per million British thermal units, which also helps set CNX up for a good run into the second half of 2016.
CNX produced 1.2 million short tons of coal in the June quarter and sold the lot, getting an average realised price of $40.61 per ton – down from the $56.21/t it was getting at the same time last year.
However, its average cost per ton sold was $34.46, down considerably from the $44.15/t in the second quarter of 2015.