Consol Energy will pay millions to unload Appalachian coal mines

July 26, 2016

Consol Energy Inc. announced that it has agreed to sell its Miller Creek and Fola thermal coal complexes in West Virginia to Southeastern Land, a subsidiary of Booth Energy as part of a larger move to transition away from coal and fully into natural gas. The transactions are expected to cost Consol Energy $44 million to complete.

Under the deal, Kentucky-based Southeastern will assume $103 million in liabilities for the mines, according to a Securities and Exchange Commission filing. Consol, meanwhile, will pay Southeastern $27 million at closing, and an added $17 million over four years.

The St. Louis Post-Dispatch reported that Miller Creek consists of two surface mines, two underground mines and a preparation plant. The facility produced 2.1 million tons of coal in 2015, Consol spokesman Brian Aiello said. The Fola site is idled and last produced 1.3 million tons in 2012. Both facilities will lose money this year, David Khani, Consol's chief financial officer told the Post-Dispatch.

“From a Consol perspective, this will actually help our leverage ratios and operating cash flows and such,” Khani said in a telephone interview.

The deal marks Consol’s exit from Central Appalachia, the country’s most storied coal-mining region but one that's suffered the most in the industry's recent years of downturn. Consol is retaining its stake in three Pennsylvania coal mining sites that are operated by CNX Coal Resources, the master-limited partnership it created last year.



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