Higher prices for coal and natural gas helped Consol Energy Inc. record its highest profits in 15 years, as total revenues jumped more than 35 percent, the Cecil, Washington County-based company said Thursday.
However, Consol's joint venture to construct an $800 million synthetic gasoline plant near Wheeling, W.Va., has fallen through, as partner Synthesis Energy Systems wasn't able to secure financing.
For the quarter ended Sept. 30, Consol's profits totalled $90.1 million, or 49 cents a share, compared to a loss of $5.4 million, or 3 cents a share, one year ago.
"The strength of coal and gas markets over the last 12 months has allowed us to continually and systematically lock in higher prices that drive the average price up as older contracts are replaced with newer, higher priced ones," CEO J. Brett Harvey said, in a statement. The record performance came despite coal production problems, the company said.
Total revenues were nearly $1.2 billion, up from $868.4 million in the year-earlier period. For the quarter, Consol's average price for natural gas rose year-over-year by 41.5 percent, while coal prices jumped 26.8 percent.
Analysts surveyed by Thomson Reuters, on average, expected earnings of 46 cents per share on revenue of $1.1 billion.
Houston-based Synthesis Energy said that "due to the difficult financial environment, SES and Consol Energy will cease funding the engineering design package for the Benwood synthetic gasoline project." Benwood, is located three miles south of Wheeling.
Consol remains committed to building a coal gasification plant in northern West Virginia, and is looking for a new partner, spokesman Tom Hoffman said.
"We're keenly interested in developing a coal conversion facility, in Northern West Virginia," Hoffman said. "With expiration of the joint venture agreement, we are now free to talk with other technology partners. We bring capital, coal and maybe land, but we don't have the technical expertise."
The new coal-to-gas plant was projected to annually convert a 1.2-million-ton mixture of newly mined coal, plus coal generally inseparable from rock, into 793,800 tons of methanol for chemical industry usage, or 100 million gallons of regular unleaded gasoline.
The new plant would use coal from Consol's Shoemaker Mine, which is undergoing modernization, including installation of a conveyor system, to be completed in 2010. The new coal gasification plant could have been on-line as early as 2012, Consol estimated.
The complete plant would employ 60 full-time workers.
"We're still committed and Consol is still committed, and they are the biggest piece in the project," West Virginia Gov. Joe Manchin's spokeswoman, Lara Ramsburg said.
The Manchin administration and the Regional Economic Development Partnership in the West Virginia counties of Ohio, Marshall and Wetzel had agreed to providing financing and tax incentives over a 10-year period for the project once jobs had been created.
Consol's shares closed yesterday at $26.31, down $1.52.
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