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CONSOL (CNX) Q2 Loss Wider than Expected, E&P View Up
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Diversified fuel producer CONSOL Energy Inc. (CNX - Free Report) reported an adjusted loss of 21 cents per share for the second quarter of 2016, wider than the Zacks Consensus Estimate of a loss of 17 cents.
GAAP loss was $2.05 per share compared with a loss of $2.64 per share in the prior-year quarter. The difference between GAAP and operating figures in the reported quarter was due to adjustments of certain one-time items.
Revenue
CONSOL Energy’s second quarter total revenues of $285.8 million lagged the Zacks Consensus Estimate of $581 million by 50.8% and year-ago revenue of $545.6 million by 47.6%.
The decline in total revenues was primarily due to the significant drop in contribution from its Coal division.
CONSOL Energy's Pennsylvania Operations sold 6.2 million tons in the 2016 second quarter, compared with 5.7 million tons during the year-earlier quarter.
During the quarter, Pennsylvania Operations’ total unit costs were $34.46 per ton, compared with $44.15 per ton in the year-earlier quarter.
Pennsylvania Operations’ total sales price per ton was $40.61 compared with $56.21 in the year-earlier quarter. The steep 27.3% decline in the sales price adversely impacted the top line of the company.
Exploration & Production (E&P) Division
CONSOL Energy registered a 32% year-over-year increase in second-quarter 2016 gas production volumes to 99.3 billion cubic feet equivalent (Bcfe).
The average sales price of $2.50 per thousand cubic feet gas equivalent (Mcfe), when combined with unit costs of $2.27 per Mcfe, resulted in a margin of 23 cents per Mcfe. This was an increase from the year-earlier quarter, which saw an average sales price of $2.68 per Mcfe and unit costs of $2.76 per Mcfe, leading to a loss of 8 cents per Mcfe.
Financial Update
As of June 30, 2016, the company’s cash and cash equivalents were $97.6 million, up from $72.6 million as of Dec 31, 2015.
Total long-term debts as of June 30, 2016, were $2.76 billion, up marginally from $2.74 billion as of Dec 31, 2015.
Cash from operating activities in second-quarter 2016 was $95.3 million compared with $65.8 million in second-quarter 2015.
Capital expenditure in the second quarter of 2016 was $37.6 million, down significantly from the comparable year-ago level of $329.9 million.
Guidance
CONSOL Energy expects 2016 Pennsylvania Operations sales to be approximately 22.5–25.5 million tons. The company reiterated its 2016 total Coal division capital expenditure guidance between $105 million and $125 million. The capital expenditure includes Pennsylvania Operations coal capital expenditures of $90–$100 million.
CONSOL Energy raised its 2016 E&P Division production guidance to 380–385 Bcfe from its prior expectation of 378 Bcfe.
Upcoming Peer Releases
SunCoke Energy Inc. (SXC - Free Report) is set to report second-quarter 2016 results on Jul 28. The Zacks Consensus Estimate for the quarter stands at a loss of 1 cent per share.
Cloud Peak Energy Inc. is set to report second-quarter 2016 results on Jul 28. The Zacks Consensus Estimate for the quarter stands at a loss of 34 cents per share.
Natural Resource Partners LP (NRP - Free Report) is set to report second-quarter 2016 results on Aug 4. The Zacks Consensus Estimate for the quarter stands at 87 cents per share.
Our View
CONSOL Energy’s focus on E&P assets is yielding positive results, even though the loss in the reported quarter was wider than expected.
We believe the high quality E&P assets in Marcellus and Utica shales will help the company to achieve its enhanced 2016 E&P production guidance.
CONSOL Energy currently has a Zacks Rank #2 (Buy).
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CONSOL (CNX) Q2 Loss Wider than Expected, E&P View Up
Diversified fuel producer CONSOL Energy Inc. (CNX - Free Report) reported an adjusted loss of 21 cents per share for the second quarter of 2016, wider than the Zacks Consensus Estimate of a loss of 17 cents.
GAAP loss was $2.05 per share compared with a loss of $2.64 per share in the prior-year quarter. The difference between GAAP and operating figures in the reported quarter was due to adjustments of certain one-time items.
Revenue
CONSOL Energy’s second quarter total revenues of $285.8 million lagged the Zacks Consensus Estimate of $581 million by 50.8% and year-ago revenue of $545.6 million by 47.6%.
The decline in total revenues was primarily due to the significant drop in contribution from its Coal division.
CONSOL ENERGY Price, Consensus and EPS Surprise
CONSOL ENERGY Price, Consensus and EPS Surprise | CONSOL ENERGY Quote
Segment Performance
Coal Division
CONSOL Energy's Pennsylvania Operations sold 6.2 million tons in the 2016 second quarter, compared with 5.7 million tons during the year-earlier quarter.
During the quarter, Pennsylvania Operations’ total unit costs were $34.46 per ton, compared with $44.15 per ton in the year-earlier quarter.
Pennsylvania Operations’ total sales price per ton was $40.61 compared with $56.21 in the year-earlier quarter. The steep 27.3% decline in the sales price adversely impacted the top line of the company.
Exploration & Production (E&P) Division
CONSOL Energy registered a 32% year-over-year increase in second-quarter 2016 gas production volumes to 99.3 billion cubic feet equivalent (Bcfe).
The average sales price of $2.50 per thousand cubic feet gas equivalent (Mcfe), when combined with unit costs of $2.27 per Mcfe, resulted in a margin of 23 cents per Mcfe. This was an increase from the year-earlier quarter, which saw an average sales price of $2.68 per Mcfe and unit costs of $2.76 per Mcfe, leading to a loss of 8 cents per Mcfe.
Financial Update
As of June 30, 2016, the company’s cash and cash equivalents were $97.6 million, up from $72.6 million as of Dec 31, 2015.
Total long-term debts as of June 30, 2016, were $2.76 billion, up marginally from $2.74 billion as of Dec 31, 2015.
Cash from operating activities in second-quarter 2016 was $95.3 million compared with $65.8 million in second-quarter 2015.
Capital expenditure in the second quarter of 2016 was $37.6 million, down significantly from the comparable year-ago level of $329.9 million.
Guidance
CONSOL Energy expects 2016 Pennsylvania Operations sales to be approximately 22.5–25.5 million tons. The company reiterated its 2016 total Coal division capital expenditure guidance between $105 million and $125 million. The capital expenditure includes Pennsylvania Operations coal capital expenditures of $90–$100 million.
CONSOL Energy raised its 2016 E&P Division production guidance to 380–385 Bcfe from its prior expectation of 378 Bcfe.
Upcoming Peer Releases
SunCoke Energy Inc. (SXC - Free Report) is set to report second-quarter 2016 results on Jul 28. The Zacks Consensus Estimate for the quarter stands at a loss of 1 cent per share.
Cloud Peak Energy Inc. is set to report second-quarter 2016 results on Jul 28. The Zacks Consensus Estimate for the quarter stands at a loss of 34 cents per share.
Natural Resource Partners LP (NRP - Free Report) is set to report second-quarter 2016 results on Aug 4. The Zacks Consensus Estimate for the quarter stands at 87 cents per share.
Our View
CONSOL Energy’s focus on E&P assets is yielding positive results, even though the loss in the reported quarter was wider than expected.
We believe the high quality E&P assets in Marcellus and Utica shales will help the company to achieve its enhanced 2016 E&P production guidance.
CONSOL Energy currently has a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>