Consol Sees $835 - $865 Million in 2013 Capital Spending
Consol Energy Inc. expects to invest between $835 million and $865 million in its coal, gas, and water businesses in 2013, less than the $1.5 billion the coal and gas producer in October estimated it invested in coal and gas projects in 2012.
The latest amount adjusts for between $455 million and $640 million in proceeds from asset sales.
Chief Executive J. Brett Harvey noted that once Consol has completed its BMX mine, it doesn't expect to invest in new, major coal-growth projects. In 2014 and beyond, it expects annual coal investments to approach maintenance-of-production levels of $5 to $6 a ton.
Consol said it will fund the net investment for this year through its cash flow from operations.
Within its coal-operations category for 2013, Consol expects to invest $318 million for maintenance-of-production projects. Meanwhile, within its gas-operations category, the company expects to invest about $835 million to $935 million.
Consol also noted it will spend $600 million on continuing to develop its Marcellus Shale assets, which includes drilling capital of $415 million.
The company projects its 2013 gas production to be between 170 billion of cubic feet equivalent to 180 bcfe, of which 95% is expected to be dry gas. It said the total production, if achieved, will be an increase of between 8% and 15%, compared with actual 2012 production of 156.3 bcfe.
U.S. coal producers have battled major challenges as lower natural-gas prices sap demand for coal, leading coal miners to slash production and lay off workers.
As the energy market shifts, Consol has been developing its natural-gas operations. In a partnership with Hess Corp., it is jointly developing its Utica Shale holdings in Ohio.
In October, the company said it swung to a third-quarter loss as the energy company's revenue suffered from softer-than-expected coal production. And it agreed to sell nonproducing coal assets in western Canada for $127 million in two separate deals at the end of 2012, continuing to sell assets to focus on its core business.
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