TORONTO (miningweekly.com) – US-based coal and gas producer Consol Energy beat analyst estimates for its fourth-quarter earnings despite lower coal sales and lower prices, as its focus on cost containment during 2012 paid off to deliver the lowest quarterly cost per ton of coal for any quarter in 2012.
The company on Thursday said its overall costs per ton sold in the quarter ended December 31, were down 8% to $48.21 a short ton, which signified a decrease of $4.43/t from the $52.64/t in the fourth quarter of 2011.
Costs per ton sold for low-volatile coal were $2.86 higher than the previous year's quarter, owing to inventory valuation changes, while price-related royalties and production taxes declined significantly. Costs per ton sold for high-volatile coal were $8.23 lower than the fourth quarter 2011, as a result of fewer maintenance and repair projects, including the higher-cost Fola mine being idle during the quarter.
Costs per ton sold for thermal coal were $3.92 lower than the same quarter a year earlier, as mines were either idled or production was decreased to manage inventories.
Consol reported its net income declined by 23% to $150-million or 65c a share in the fourth quarter, down from $196-million or 85c a share a year earlier. Excluding discreet items, the company earned 43c a share, which was above analyst estimates of 24c a share.
The company said total company sales revenue was $1.2-billion in the quarter, which was 14% lower year-on-year, but the highest ever achieved in a fourth quarter. The decrease was mainly attributable to the 500 000 t less coal sales volumes, as well as lower average sales prices for the company's low-volatile coal at $129/t and high-volatile coal at $68/t, free-on-board mines.
However, thermal coal average sales prices increased to $63/t.
Coal margins, across all of the company's sales, were $18.20/t, a decrease of 68c/t from the year-earlier quarter.
The company reported net income of $9.4-million from its natural gas division, which was nearly flat to the year-earlier quarter, after adjusting for that quarter's $33-million (after-tax) gain from the Hess transaction. Higher production volumes were also offset by smaller margins.
"Consol Energy continued to re-balance its world-class portfolio of assets in 2012, while successfully managing our coal and gas businesses through a very challenging environment. Consol executed well in a tough macro environment characterised by a tepid economy and unusually warm winter weather,” chairperson and CEO Brett Harvey said during a conference call to discuss the company’s fourth-quarter results.
The company said it expected to sell between 55-million and 57-million tons of coal across all categories this year, while natural gas production was expected to rise to between 170 Bcfe (billions of cubic feet equivalent) and 180 Bcfe.
It would also continue to sell noncore assets in an attempt to close the gap between the company’s share price and the value of all of its assets.
The company’s NYSE-listed shares traded at $31.27 apiece on Thursday.