This excerpt taken from the CNX 8-K filed Oct 23, 2008.
On October 13, CONSOL received the National Association of State Land Reclamationists (NASLR) Outstanding Reclamation Project of 2008 Award. CONSOL was recognized for reforestation efforts at its Illinois surface mines, (Burning Star No. 2, Burning Star No. 4 and Burning Star No. 5), where almost three million trees were planted on 3,000 acres of reclaimed mined land. CONSOL was recognized for exceeding all of the requirements of the reclamation laws.
This excerpt taken from the CNX 8-K filed Jul 31, 2008.
In July, CONSOL Energy Inc. and Synthesis Energy Systems Inc. (SES), a global industrial gasification company, announced plans to develop through a joint venture their first U. S. coal gasification plant in West Virginia. CONSOL (through its subsidiary Terra Firma Company) and SES formed Northern Appalachia Fuel LLC (NAF), as the company through which the development will occur. The Board of Directors of both companies authorized funds for development activities, including the front-end engineering design (FEED) package. Each member company will contribute
equally to this phase of the project. NAF is finalizing agreements with Aker Solutions US Inc., a subsidiary of Aker Solutions ASA (OSL: AKSO), to perform the FEED. The FEED will include a carbon management strategy which may focus on carbon sequestration in a deep saline aquifer.
It is expected that the plant will be a mine mouth facility with feedstock supplied directly from CONSOLs nearby Shoemaker complex. Coal will be converted to syngas utilizing SESs proprietary U-Gas technology. It also is expected that syngas will be used to produce approximately 720,000 metric tons per year of methanol which can be converted into approximately 100 million gallons/year of gasoline.
This excerpt taken from the CNX 8-K filed Jul 26, 2007.
Production at the Buchanan Mine was suspended on Monday, July 9, 2007 after several roof falls in previously mined areas damaged some of the ventilation controls inside the mine, requiring a general evacuation of the mine by employees. No one was injured during the evacuation.
Air monitoring continues to show an overall improvement in the underground mine atmosphere, with declines in carbon monoxide levels in some monitoring stations of as much as 89 percent from the highest level recorded. There are now 68 established monitoring stations that are measuring gas levels in the mine every two hours. Overall levels of carbon monoxide continue to decline, indicating that there is no active combustion in the mine. In addition, cameras inserted in several bore holes showed no smoke or signs of combustion in the mine and temperature readings from boreholes indicate the mine temperatures are at ambient levels. Other gas levels being measured are in expected ranges.
The mine continues to be ventilated and engineers believe that carbon monoxide in the mine is progressively being swept from the mine by the active ventilation flow. Inert gas is being pumped into several of the holes as a precautionary measure and to
flush carbon monoxide from the mine. Once all monitoring stations show acceptable levels of the gases being monitored, and agency approval is secured, teams can re-enter the mine to repair areas where the ventilation controls have been disrupted.
The source of the carbon monoxide has not been determined. Engineers theorize that it may be from an ignition of a small amount of methane caused by one of the roof falls that occurred, but a final determination cannot be made until teams re-enter the mine.
The mine continues to ship coal from above ground inventories, although total shipments per week are lower than normal. Customers who purchase coal from Buchanan have been notified that a force majeure condition exists that may result in a reduction in deliveries under their sales agreement with the mine.
This excerpt taken from the CNX 8-K filed Apr 26, 2007.
In April, affiliates of CONSOL Energy Inc (NYSE:CNX) and The Pittsburg and Midway Coal Mining Co. (P&M), entered into a joint venture agreement to develop the proposed Youngs Creek Mine north of Sheridan, Wyoming. CONSOL of Wyoming LLC., and Chevron NPRB, LLC., formed a new company, Youngs Creek Mining Company, LLC., to develop and operate the mine. Youngs Creek Mining Company received coal reserves and land totaling approximately 315 million tons of sub-bituminous Powder River Basin coal with an estimated heat content of 9,350 Btu/lb and an average sulfur content of 0.47%. Based on initial feasibility studies, the mine has the potential to reach 15 million tons per year when at full production. Engineering, environmental and permitting work are in progress, and the companies anticipate that permits for the mine will be submitted in late 2008. However, both companies stress that actual mine construction will not start until the joint venture has sufficient coal sales under contract to justify the planned investment.
This excerpt taken from the CNX 8-K filed Jan 26, 2006.
In January, CONSOL Energy announced that it had entered into a coal sales agreement with American Electric Power (AEP) for the sale of up to 82.5 million tons of high-Btu bituminous coal to various AEP coal-fired power stations over a 15-year period beginning in 2007 and running through 2021. The coal will come from the Shoemaker and McElroy mines and will be shipped to AEP power plants that have or will be equipped to have scrubbers.
As a result of the new contract, the company announced that it will begin a major capital improvement project for the Shoemaker Mine, replacing the mines older, rail haulage system with a new, more efficient conveyor belt haulage system.
Also in January, CONSOL Energy announced that it had agreed to purchase Mon River Towing and J.A.R. Barge Lines, LP from the Guttman Group, a private concern. The acquisition will increase the size of CONSOL Energys towboat fleet from 5 to 18 and increase the number of barges from about 300 to more than 650, increasing coal transportation capacity from 11 million tons to about 24 million tons. The transaction closed on January 20, 2006.
This excerpt taken from the CNX 10-Q filed Aug 3, 2005.
NOTE 16SUBSEQUENT EVENTS:
In July 2005, CONSOL Energy announced that it had created CNX Gas Corporation (CNX Gas), a wholly owned subsidiary of CONSOL Energy, to conduct its gas exploration and production activities. CONSOL Energy contributed substantially all of the assets of its gas business, including all of CONSOL Energys rights to coalbed methane associated with 4.5 billion tons of coal reserves owned or controlled by CONSOL Energy as well as all of CONSOL Energys rights to conventional gas. CONSOL Energy entered into various agreements with CNX Gas that will define various operating and service relationships between the two companies.
Subsequently, CNX Gas, entered into an agreement to sell approximately 24.3 million shares in a private transaction and granted a 30 day option to purchase an additional 3.6 million shares. The shares are being sold to qualified institutional and accredited investors in a private transaction exempt form registration under Rule 144A, Regulation S and Regulation D. The shares have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Following the close of the transaction, CNX Gas expects to receive approximately $365,400 in net proceeds (approximately $420,200 if the option is exercised) that it will use to pay a special dividend to CONSOL Energy. CONSOL Energy intends to use the proceeds of the special dividend to accelerate efficiency projects in its coal segment and to make acquisitions. In addition, CONSOL Energy has agreed to pay approximately $6,000 in expenses related to this transaction.
Following the close of the transaction, CONSOL Energy will hold approximately 122.9 million shares, or approximately 83.5 percent (81.5 percent if the option is exercised), of the then outstanding shares of CNX Gas common stock (before issuance of any shares under CNX Gas 2.5 million share equity incentive plan).
CONSOL Energy had net income of $41 million for the three months ended June 30, 2005 compared to $26 million for the three months ended June 30, 2004. Net income for the 2005 period was improved primarily due to increased average sales prices for coal. This increase was offset, in part, by costs related to the Buchanan fire and higher cost per units sold for both coal and gas. Higher coal unit costs were primarily due to increased expenses related to supplies, labor, contractor mining fees and other post employment benefits. Higher gas unit costs were primarily due to increased well maintenance expenses, enhanced stimulation on existing frac wells (wells drilled into the coal seam) expenses and firm transportation expenses. Increased revenues were offset by costs related to the Buchanan Mine fire. Net income in the 2005 period included additional income tax expense due primarily to higher pre-tax earnings.
Total coal sales for the three months ended June 30, 2005 were 17.4 million tons, of which 17.0 million tons were produced by CONSOL Energy operations or sold from inventory of company-produced coal. This compares with total coal sales of 17.3 million tons for the three months ended June 30, 2004, of which 16.7 million tons were produced by CONSOL Energy operations or sold from inventory of company-produced coal. Overall, production of 16.5 million tons remained consistent in the period-to-period comparison. McElroy Mine production increased 0.9 million tons related to running two longwall mining units in the 2005 period compared to running one longwall mining unit in the 2004 period. Production also increased due to the reactivation of Emery Mine, which was idled in the 2004 period and the opening of the Miller Creek complex in October 2004. These increases in production were offset by a 0.9 million tons reduction at Buchanan Mine in the 2005 period. Buchanan Mine experienced a fire that developed in the mine after a large rock fall behind its longwall mining section on February 14, 2005. The mine was temporarily sealed in order to extinguish the fire. Coal production resumed on June 16, 2005. As of June 30, 2005, total costs related to extinguishment efforts at the Buchanan Mine were approximately $36.9 million, net of expected insurance recovery. However, we also expect to file a claim for a business interruption insurance recovery at some point, none of which has been recorded at June 30, 2005. Total insurance recoveries for the Buchanan fire are limited to $75 million. Production decreases in the period-to-period comparison were also due to Enlow Fork Mine experiencing more challenging mining conditions in the 2005 period.
Our gas production was also impacted by the Buchanan Mine fire. Gross gas production of 2.2 billion cubic feet for the three months ended June 30, 2005 and 3.6 billion cubic feet for the six months ended June 30, 2005 is estimated to have been impaired due to the shutdown of the Buchanan longwall. Before the mine fire, approximately 20% of CONSOL Energys total gas production was associated with mining activity at the Buchanan Mine. These Buchanan impacts are in addition to an estimated 3 billion cubic feet curtailment for the year ended December 31, 2005, previously disclosed, related to congestion on the interstate pipeline that transports our Virginia gas that we expect could reduce gas production. Of the 3 billion cubic feet projected curtailment for the year, 0.9 billion cubic feet has already been curtailed in the six months ended June 30, 2005.
Sales volumes of coalbed methane gas, including a percentage of the sales of equity affiliates equal to our interest in these affiliates, decreased 5.1% to 12.9 billion cubic feet in the three months ended June 30, 2005 period compared with 13.6 billion cubic feet in the three months
ended June 30, 2004 period. The decrease in sales volumes is primarily due to the loss in production from the Buchanan Mine fire and pipeline curtailments, offset, in part, by an increase in production as a result of additional wells coming on line from the ongoing drilling program and results of the enhanced stimulation of existing frac wells (wells drilled into the coal seam). Our average sales price for coalbed methane gas, including sales of equity affiliates increased 0.8% to $5.02 per thousand cubic feet in the 2005 period compared with $4.98 per thousand cubic feet in the 2004 period.
CONSOL Energy restated first quarter 2004 net income by approximately $2.2 million to reflect the recognition of favorable effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 as of March 8, 2004 in accordance with authoritative accounting implementation guidance.
In April 2005, CONSOL Energy completed a $750 million Senior Secured Loan Agreement to replace an existing facility of $600 million. The new agreement is a five-year revolving credit facility.
In May 2005, CONSOL Energy announced that it planned to expand the Enlow Fork Mine in southwestern Pennsylvania. The expansion project, which is subject to final approval by the CONSOL Energy Board of Directors, is expected to add approximately seven million tons of additional capacity and be running by 2010.
In July 2005, CONSOL Energy announced that it had created CNX Gas Corporation, a wholly owned subsidiary of CONSOL Energy, to conduct its gas exploration and production activities. CONSOL Energy contributed substantially all of the assets of its gas business, including all of CONSOL Energys rights to coalbed methane associated with 4.5 billion tons of coal reserves owned or controlled by CONSOL Energy as well as all of CONSOL Energys rights to conventional gas. CONSOL Energy entered into various agreements with CNX Gas that will define various operating and service relationships between the two companies.
In conjunction with the creation of the new company, several CONSOL Energy executives will resign their positions with CONSOL Energy to become employees of the new company. They include: Ronald Smith, Executive Vice-President; Nicholas DeIuliis, Senior Vice President; and Gary Bench, Vice President. In addition, a separate Board of Directors has been created to govern CNX Gas. CONSOL Energy Director Phillip Baxter will resign from the Board to become Chairman of the Board of CNX Gas. In addition, CONSOL Energy Board of Director members J. Brett Harvey, James Altmeyer, Sr., and Raj Gupta will serve on both boards.
Subsequently, CNX Gas, entered into an agreement to sell approximately 24.3 million shares in a private transaction and granted a 30 day option to purchase an additional 3.6 million shares. The shares are being sold to qualified institutional and accredited investors in a private transaction exempt from registration under Rule 144A, Regulation S and Regulation D. The shares have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Following the close of the transaction, CNX Gas expects to receive approximately $365.4 million in net proceeds (approximately $420.2 million if the option is exercised) that it will use to pay a special dividend to CONSOL Energy. CONSOL Energy intends to use the proceeds of the special dividend to accelerate efficiency projects in its coal segment and to make acquisitions. In addition, CONSOL Energy has agreed to pay approximately $6.0 million in expenses related to this transaction.
Following the close of the transaction, CONSOL Energy will hold approximately 122.9 million shares, or approximately 83.5 percent (81.5 percent if the option is exercised), of the then outstanding shares of CNX Gas common stock (before issuance of any shares under CNX Gas 2.5 million share equity incentive plan). At the price paid in the transaction, CONSOL Energys shares of CNX Gas would be valued at approximately $1.966 billion.
In July 2005, Standard & Poors Rating Services affirmed its BB- (12th lowest out of 22 rating categories) corporate credit and its other ratings on CONSOL Energy and upgraded the outlook from stable to positive. Standard & Poors defines an obligation rated BB as less vulnerable to nonpayment than other speculative issues. However, the rating indicates that an obligor faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions, which could lead to the obligors inadequate capacity to meet its financial commitment on the obligation.
This excerpt taken from the CNX 8-K filed Apr 28, 2005.
In April, the company amended an existing Senior Secured Loan Agreement, replacing a $400 million short-term borrowing facility and a $200 million Tranche B facility. The amended agreement, which includes more favorable pricing and flexibility, provides a five-year, $750 million revolving credit facility. The facility is secured by the assets of the company and will be used for general corporate purposes including, working capital, capital expenditures, and letter of credit needs. The annual pre-tax savings from the re-pricing are estimated to be about $7 million.
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