PITTSBURGH, Pa. — Consol Energy, in a move to shift focus toward natural gas production, will sell five of its longwall coal mines in West Virginia to a subsidiary of Murray Energy Corporation based in St. Clairsville, Ohio.
The $3.5 billion sale was announced Monday morning.
“The sale of these five mines, assets that have long contributed to America’s economic strength and our company’s legacy, was a very difficult decision for our team,” said J. Brett Harvey, Consol’s chairman and CEO.
Consol’s River and Dock Operations are also included in the transaction.
During a conference call with shareholders Monday, Harvey and other company officials said Consol would reinvest in its natural gas operations in the Mountain State. “We have a sizeable Marcellus shale footprint in West Virginia which will take a significant amount of labor and capital to develop,” said Harvey.
Nick Deluliis, Consol Energy president, said the move is necessary to generate growth for the company. “Natural gas is a growth outlet for the company,” said Deluliis on Monday’s MetroNews “Talkline.”
“That thermal coal segment, we don’t see it going away. We see those mines operating for 20 years plus out into the future,” he said of the sites Murray is buying. “But the prospects for growth, in terms of creating incremental production, or pricing expansion beyond the stable, profitable cash flows we see there, is limited compared to something like natural gas.”
Senate President Jeff Kessler said Consol’s move is a sign of changing times. “Energy production in this state, which has been so reliant on coal, is transitioning into the gas,” Kessler said.
United Mine Workers of America President Cecil Roberts said the sale was “no great surprise” and would change nothing for union works at the five coal mines set to be sold. “Our collective bargaining agreement does not go away with this transaction and our members remain covered by its provisions,” Roberts said.
Consol officials said the goal was to close the deal with Murray Energy, which is subject to a number of conditions, before the end of the year.