CNX » Topics » Capital Projects Update

This excerpt taken from the CNX 8-K filed Oct 23, 2008.

Capital Projects Update

CONSOL Energy continues to make progress with its development initiatives. To alleviate the development issues encountered this year, the company has plans for seven longwall face extensions that are scheduled to be completed between January 2009 and January 2011. During 2009, CONSOL expects to complete longwall face extension at Bailey, Loveridge and Robinson Run. In 2010, three additional longwall face extensions are scheduled to be complete, with the seventh and final longwall face extension expected to be finished in January 2011. A longwall face extension typically increases mine production by 300,000 to 500,000 tons per year, requires fewer longwall moves, decreases the amount of mine development, and reduces development lead time for longwall panels.

 

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In addition, the company expects to develop a new area within Mine 84 that contains a large concentration of metallurgical coal. This project is expected to be completed during the first quarter of 2009 and should yield approximately 600,000 tons per year of low sulfur, high-volatile metallurgical coal for the next several years.

At CONSOL’s Shoemaker Mine, the upgrade of the underground haulage system is on schedule and is expected to be completed during the first quarter of 2010. Annual production is expected to be 6.0 million tons per year. Currently, Shoemaker is running on a limited basis with the older haulage system as construction of the newer, more efficient belt haulage system is completed.

A new slope and overland belt at the Bailey Mine is expected to be completed in the fourth quarter of 2009. This project should reduce underground mining delays and increase availability, and by reducing the time and distance coal is transported underground.

This excerpt taken from the CNX 8-K filed Jul 31, 2008.

Capital Projects Update

CONSOL Energy made progress with several low-cost, brownfield coal projects that were identified earlier this year. These projects include six longwall face extensions at four of the company’s mines in Northern Appalachia. Each longwall face extension is expected to take 12 to 18 months to complete and all are expected to be completed between 2009 and 2013. A face extension can increase production between 300,000 and 500,000 tons per year.

 

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The company also continued the permitting process to add a third longwall mining system at the Bailey Mine in Pennsylvania. Full completion of this project is expected during 2011 with first full-year production in 2012. The additional longwall mining system is expected to increase production by 5.0 million to 6.5 million tons per year.

In addition, the upgrade of the underground haulage system at the Shoemaker Mine in West Virginia is on-schedule with the previously announced early 2010 start date. This upgrade is expected to increase production at Shoemaker to approximately 6.0 million tons per year. In order to offset production shortfalls at other mines, the company has elected to run Shoemaker on a limited basis utilizing the older haulage system while construction continues on the new belt haulage. The company expects to produce approximately 800,000 tons of coal from Shoemaker during the second half of the year.

In a recent development related to the Shoemaker Mine, CONSOL announced plans earlier this week to develop, through a joint venture with Synthesis Energy Systems Inc., the joint venture’s first U.S. coal gasification plant to be located West Virginia. The plant is expected to be a ‘mine mouth’ facility with feedstock being supplied from the Shoemaker complex. “We believe we have another business prospect that is similar to the CNX Gas opportunity that we capitalized on several years ago,” said Harvey. “More specifically, we are able to capture the coal tailings from our prep plant, where there is an ongoing disposal cost, and convert that waste, along with some raw coal, into a profitable business endeavor. The end products could be approximately 720,000 metric tons of methanol or approximately 100 million gallons of gasoline per year.”

The company also continued with plans to expand capacity at the Buchanan Mine in Virginia to 6 million tons per year by early 2011. The capacity expansion involves upgrades to the existing preparation plant, the construction of a new 7,200 ton raw coal storage silo, upgrades to the water delivery and treatment system for the preparation plant, the installation of a new vertical coal transport belt to augment the existing skip hoist, and modifications to the existing underground haulage system. The preparation plant project, including the water delivery system and the silo construction, is already underway.

“We believe that our coal and natural gas assets plus the widening spectrum of development opportunities place us in a unique position in the energy markets,” concluded Harvey. “We have high expectations for the coal, natural gas, both unconventional and conventional, as well as coal-to-liquid projects we have identified and believe these projects will make us a much stronger energy company over the next five years through the diversification of our revenue streams.”

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CONSOL Energy Inc., a high-Btu bituminous coal and coal bed methane company, is a member of the Standard & Poor’s 500 Equity Index and has annual revenues of $3.8 billion. It has 17 bituminous coal mining complexes in six states and reports proven and probable coal reserves of 4.5 billion tons. CONSOL Energy was named one of America’s most admired companies in 2005 by Fortune magazine. It received the U.S. Department of the Interior’s Office of Surface Mining National Award for Excellence in Surface Mining for the company’s innovative reclamation practices in 2002, 2003 and 2004. Also in 2003, the company was listed in Information Week magazine’s “Information Week 500” list for its information technology operations. In 2002, the company received a U.S. Environmental Protection Agency Climate Protection Award. Additional information about the company can be found at its web site: www.consolenergy.com.

 

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Definition: EBIT is defined as earnings (excluding cumulative effect of accounting change) before deducting net interest expense (interest expense less interest income) and income taxes. EBITDA is defined as earnings (excluding cumulative effect of accounting change) before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization. Although EBIT and EBITDA are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that it is useful to an investor in evaluating CONSOL Energy because it is widely used to evaluate a company’s operating performance before debt expense and its cash flow. EBIT and EBITDA do not purport to represent cash generated by operating activities and should not be considered in isolation or as a substitute for measures of performance in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT or EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies. Reconciliation of EBITDA and EBIT to the income statement is as follows:

EXCERPTS ON THIS PAGE:

8-K
Oct 23, 2008
8-K
Jul 31, 2008
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