Coal and natural gas company CONSOL Energy Inc. (CNX) announced the closure of its Mine 84, located near Washington, Pennsylvania. The company said the mine which had been in operation for decades producing thermal and metallurgical coal is no longer competitive. The company pointed out that the mine was idled in the first quarter of 2009.
CONSOL Energy said the closure will incur total pre-tax charges of $116 million. Of the total cost, about $111 million will be non-cash while $5 million will result in future cash expenditures. Pre-tax cash savings from the closure is estimated to be around $18 million annually.
This action forms a distinctive part of the company’s ongoing efforts to reallocate resources to more profitable coal operations and Marcellus shale drilling activities. Going forward, CONSOL will re-assess the opportunities to access the metallurgical reserves in the Mine 84 area.
CONSOL currently has 32 hourly employees and 13 salary employees working at Mine 84 recovering equipment and preparing for final sealing. The company plans to accommodate all employees into other active operations in nearby locations.
Based in Canonsburg, Pennsylvania, CONSOL Energy is a multi-fuel energy producer as well as energy services provider. It has 11 bituminous coal mining complexes in five states and reports proven and probable coal reserves of 4.4 billion tons. It is also a leading Eastern U.S. gas producer, with proved reserves of over 3.7 trillion cubic feet. The company primarily competes with Arch Coal Inc. (ACI) and Peabody Energy Corp. (BTU).
CONSOL Energy is scheduled to release its second quarter 2011 financial results on July 28, 2011. The Zacks Consensus earnings estimates for second quarter 2011, fiscal 2011 and fiscal 2012 are 67 cents, $2.89 and $4.51 per share, respectively.
CONSOL Energy retains a short term Zacks #3 Rank (Hold), which supports our long term Neutral recommendation on the stock.
