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CONSOL Energy's 2020 Coal Sales Slump 31.5% on Production Bottlenecks Amid Pandemic



By Tyler Godwin

February 10, 2021 - CONSOL Energy reported coal sales of 18.7 million st in 2020, down 31.5% from 27.3 million st sold in 2019, while sales are expected to recover to between 22 million st and 24 million st in 2021, the company said Feb. 9.

The Canonsburg, Pennsylvania-based company said in its quarterly earnings statement that production at its three mines that make up the Pennsylvania Mining Complex – Bailey, Enlow Fork and Harvey – fell to 5.9 million st in Q4, down from 6.7 million st a year earlier, as a result of "significant production bottlenecks due to transportation delays as our supply chain partners continued to struggle with crew availability due to the ongoing COVID-19 pandemic," CONSOL said.

The company ran four of its five longwalls and increased its productive capacity for the second straight quarter, as the capacity utilization increased to over 80% in Q4.

"For the foreseeable future, we expect to run four out of our five longwalls, as we are able to significantly lower our operating cost structure while only losing 3 million to 4 million [short] tons from our 2019 production levels," CEO and President Jimmy Brock said on the Feb. 9 earnings call.

Coal sales were also at 5.9 million st in Q4, which generated an average revenue per ton of $39.05/st, compared with 4.5 million st sold in Q3 at $40.55/st and 6.7 million st sold at $45.14/st in the year-ago quarter.

Average cash costs of coal sold were at $27.49/st in Q4, resulting in an average cash margin of $11.56/st, compared with average cash costs of $30.38/st and an average cash margin of $14.76/st in the year-ago quarter.

For the year, CONSOL's average cash costs of coal sold were $29.12/st, resulting in an average cash margin per ton of $12.19/st, down from $30.97/st and $16.20/st, respectively, in 2019.

Export Market

Throughput volumes at CONSOL's Marine Terminal in Baltimore were at 3.1 million st in the fourth quarter, up from 2 million st in Q3 and 2.5 million st in the year-ago quarter.

Terminal revenues and operating costs were at $17.4 million and $4.6 million during the quarter, compared with $16.5 million and $4.9 million, respectively, in the year-ago quarter.

Net income at CMT was at $8.9 million in Q4, up from $8.6 million in the year-ago quarter.

For the year, terminal revenues were at $66.8 million, down from the record-high $67.36 million in 2019, while CMT's net income was at $32.5 million in 2020, down from $33.8 million a year earlier.

2021 Booked Sales Rise to 18.2 Million st

CONSOL said it increased its 2021 contracted sales by 5 million st during the fourth quarter to 18.2 million st, at an average revenue per ton of $41.56/st assuming a PJM West power price of $24.79/MWh.

Vice President of Marketing and Sales Bob Braithwaite said on the call that exports make up just under 5 million st of the contracted 18.2 million st.

"My expectation is with this cold weather upon us now, natural gas prices where they're at, we will see a spot market for domestic coal in 2021," Braithwaite said. "But I will say that it's so long as these export markets remain strong, pricing remains strong."

Average cash cost of coal sold per ton is expected between $27/st and $29/st in 2021, which would result in an average cash margin between $12.56/st and $14.56/st.

Consol's contracted volumes for 2022 also increased to 5.6 million st, while Braithwaite added that prices are "in slight contango to what we are currently seeing for 2021."