TORONTO (miningweekly.com) – US fossil fuels producer Consol Energy on Tuesday reported a 34% increase in second-quarter natural gas output, in line with its strategy to leverage increased revenue from the sector, as slumping coal prices persisted.

The Pittsburgh-based company said it had completed three new wells and placed them in production in the Utica Shale region of Noble County, in Ohio.

The NYSE-listed company’s exploration and production division produced 51.9-billion cubic feet equivalent for the second quarter ended June 30, up 34% more than the 38.6-billion cubic feet equivalent produced in the comparable quarter a year earlier.

Gas output was in-line with guidance of 50-billion cubic feet equivalent to 52-billion cubic feet equivalent, net to Consol.

During the period, the company recorded net output of 542-million cubic feet a day of natural gas, 1 209 bbl/d of oil/condensates and 3 514 bbl/d of natural gas liquids.

CEO Nicholas DeIuliis said Consol was becoming more efficient and reducing times to move rigs and turn on a well, increasing stages completed per day. "These improvements will not only help compress cycle times but will also result in growing our gas production even more efficiently," he said.

Consol had a total of ten rigs with 48 wells drilled and 51 completed in the Marcellus Shale in the second quarter. It had four rigs operating in the Utica Shale, with 11 wells drilled and 12 completed in the second quarter. Three new wells in production in Utica were turned into production last week, which was early in the third quarter. It had initial production of 23-million cubic feet a day.

Consol’s coal division produced 8.3-million tons in the period, including one-million tons of low-volatile coking coal from the company's Buchanan mine. These results were in line with expectations of 8.1-million tons to 8.5-million tons, which included low-volatile tons of between 850 000 t and 950 000 t.

Costs were impacted by geological issues at the Enlow Fork mine and equipment issues at the Harvey mine, which were partially offset by outperformance at the Bailey mine. Of the seven-million tons of thermal coal produced in the quarter, 6.5-million tons were from Northern Appalachia and 500 000 t were from Central Appalachia.

The company lifted its full-year gas guidance by almost 10% and predicted about 30% growth through 2016. However, Consol lowered expectations for metallurgical coal and warned that it would post a loss for the second quarter, mainly owing to one-time expenses.

The company said it expected a second-quarter loss when it reported the quarter's financial results on July 29, impacted by a bond refinancing, completing a new revolving credit facility and a pension settlement charge, offset, in part, by income from a coal contract buyout.