Companies

Consol Energy loses $24.9 million, but grows gas production



Consol Energy Inc. more than doubled its gas production during the past three months, compared with the same period in 2013, but like other Marcellus Shale operators, it’s eager to get its gas out of this region and to more lucrative markets.

The Cecil-based company, like its peers, has been hamstrung by a lack of pipelines to take the growing quantity of Appalachian gas elsewhere. With so many competitors trying to squeeze their product into limited pipeline space, the price in this region is lower than the Henry Hub price, the national benchmark.

When it comes to natural gas prices, “volatility is the key word,” said Consol’s Chief Commercial Officer Jim Grech said in a conference call with analysts on Tuesday.

Consol announced Tuesday that it has signed a memorandum of understanding to be the anchor shipper on the proposed NEXUS pipeline that would carry gas into Michigan. The company said it already has a “very strong end user commitment on the other end of the pipe.”

Range Resources said it sells its gas into 21 different markets using 11 interstate pipelines, partly to manage price volatility.

“The midstream industry recognizes the dramatic volume growth coming from the Marcellus and Utica plays. And there had been numerous announcements of ... pipeline projects to move this growing volume from the Northeast to other markets,” said Ray Walker, chief operating officer for the Texas-based firm.

The attractive markets are in the southeast, where utilities are building new natural gas-fired power plants, and the Gulf Coast, where the petrochemical industry is booming and there are liquefied natural gas terminals to ship U.S. gas abroad, Mr. Walker said. The Midwest is also an appealing destination, Range reported.

Consol lost $24.9 million, or 11 cents per share, during the past three months, the company reported Tuesday. That widens the loss from $12.5 million, or 5 cents per share, during the second quarter last year. Revenue for the quarter was $937 million, up from $828 million during the comparable period in 2013.

In the next five years, Consol expects to sell or otherwise monetize about $1 billion in assets.

Anya Litvak: alitvak@post-gazette.com or 412-263-1455. First Published July 29, 2014 9:27 AM

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