Consolidated Energy Weighed Down by Costs

Consol Energy Inc. posted a sharply wider loss in the second quarter, hurt by a hefty impairment expense and soaring production and exploration costs.

The Pittsburgh-based energy company also said its MetCo initial public offering, which had been planned for the fourth quarter, was being put on hold due to the continued degradation of metallurgical-coal prices. Prices for metallurgical coal, which is used in steelmaking, have steeply declined this summer.

Shares of Consol rose 5.6% to $18.32 in midday trading but have still fallen 54% in the past 12 months.

Consol said it is evaluating the possibility of a future drop-down sale of the mettalurgical-coal business to its CNX Coal Resources LP, which went public earlier this month, or partnering with a third party to grow the assets. Consol said it plans to make a decision by the end of the year.

"Consol is focused on managing through what continues to be a very challenging commodity price environment," Chief Executive Nicholas DeIuliis said.

Overall for the period ended June 30, the company reported a loss of $603 million, or $2.64 a share, compared with a loss of $25 million, or 11 cents a share, a year ago. Excluding certain items, Consol posted a loss of 37 cents a share.

Consol said while it saw increased production, its top line was hurt by depressed commodity prices. Total revenue fell 31% to $648.9 million.

Analysts had projected per-share earnings of 1 cent and revenue of $798.6 million, according to Thomson Reuters.

Total costs and expenses jumped 61% to $1.54 billion in the quarter. Consol posted a $829 million pretax impairment expense in its exploration and production properties. Meanwhile, its costs associated with exploration and production more than quadrupled, rising to $1.09 billion from $237.1 million.

Write to Cassandra Jaramillo at [e-mail]

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