Consol to float off thermal coal and metallurgical coal subsidiaries

CONSOL Energy will form a master limited partnership (MLP) for the company's thermal coal business which will be floated off, as well as a portion of its metallurgical operations which form part of a restructure of the company.

Lou Caruana

The purpose of the MLP would be to own interests in certain of Consol’s thermal coal properties and related mining operations located in Pennsylvania, including its Bailey mine, Enlow Fork mine, Harvey mine and the related preparation plant.

Consol expects to start the initial public offering of the MLP in mid-2015. Following the closing of the IPO by the MLP, Consol would own the general partner of the MLP, any incentive distribution rights and a majority of the limited partner interests of the MLP.

Consol will separately pursue the structuring and formation of a subsidiary entity for the purpose of owning its metallurgical coal properties and related mining operations, with a view to conducting an IPO of up to 20% of the subsidiary's equity in the second half of 2015.

The subsidiary's assets would include Consol’s Buchanan mine and related preparation plant and its interest in its Western Allegheny Energy joint venture.

After transactions, Consol would consist primarily of its core oil and gas exploration and production business, its interest in CONE Midstream Partners LP, a controlling interest in its cashflow-generating thermal coal MLP and a controlling interest in its metallurgical coal subsidiary.

Separately, Consol has approved a two-year share repurchase program of up to $US250 million.

Consol CEO Nick DeIuliis said: “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.

“The culmination of the structural moves completed in 2014 and anticipated for 2015 are intended to improve Consul'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.

“The stock repurchase program reaffirms our belief in the value inherent in Consol Energy, and our commitment to returning value to our shareholders.

“Further, these restructuring transactions reaffirm Consol Energy's commitment to our coal businesses.”

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