Diversified fuel producer CONSOL Energy Inc. CNX reported an adjusted loss of 28 cents per share for the third quarter of 2015, much wider than the Zacks Consensus Estimate of a loss of 2 cents. The company had reported earnings of 9 cents per share in the third quarter of 2014.

GAAP earnings were 52 cents per share as compared to a loss of 1 cent per share in the prior-year quarter. The difference between GAAP and operating loss in the reported quarter was due to adjustments of certain one-time items.

Revenue

CONSOL Energy’s quarterly revenues decreased 8% year over year to $813.9 million. However, revenues surpassed the Zacks Consensus Estimate of $719 million by 13.2%.

The decline in total revenues was primarily due to the depressed commodity price environment, which has taken its toll despite the improvement in production volumes.

Segment Performance

Coal Division

In the quarter, the company produced 7.3 million tons of coal. Of the total production, 5.8 million tons came from Pennsylvania operations, 1 million tons from Virginia and 0.5 million tons from Other operations.

The company sold 7.2 million tons of coal, which was slightly above the expected range of 6.6–7.1 million tons for the quarter. From its Pennsylvania operations, the company sold 5.7 million tons, down 8.1% year over year, with the sales price per ton down 7.1% to $56.99.

From its Virginia operations, the company sold 0.9 million tons of coal, down 10% year over year, with the sales price per ton down 26.6% to $51.82.

From its Other operations, the company sold 0.6 million tons, unchanged from the year-ago level. However, the sales price per ton was down 2% to $57.36.

Exploration & Production (E&P) Division

During the reported quarter, the company registered 33% year-over-year growth in gas production volumes to 86.1 billion cubic feet equivalent (Bcfe), which was higher than the guidance of 75–79 Bcfe.

Despite the increase in gas output, the full benefit could not be realized due to a year-over-year decline of $1.38 in the average selling price per one thousand cubic feet (Mcf).

Financial Update

As of Sep 30, 2015, the company’s cash and cash equivalents declined to $83.1 million from $176.9 million as of Dec 31, 2014.

Total long-term debts as of Sep 30, 2015, were $2.77 billion, lower than $3.3 billion as of Dec 31, 2014.

Cash from operating activities in the first nine months of 2015 was $404.3 million compared with $850.1 million in the same period of 2014.

Capital expenditure for the first nine months of 2015 was $895.1 million, lower than the comparable year-ago level of $1,174.6 million.

Guidance

CONSOL Energy expects 2015 coal sales in the range of 28.9−29.9 million tons. The company expects 2016 coal sales to fall within 30.6−33.4 million tons.

CONSOL Energy projects fourth-quarter 2015 gas production of 92–97 Bcfe and 2015 production of 325–330 Bcfe. Gas production is expected to improve 39% in 2015 and 20% in 2016 over prior-year levels.

Total gas production hedged by the company for the third quarter is 63.3 Bcfe, at an average price of $3.50 per Mcf.

Coal Releases

CNX Coal Resources LP CNXC reported adjusted earnings of 62 cents per share in the third quarter of 2015, beating the Zacks Consensus Estimate of 54 cents.

Westmoreland Coal Co. WLB reported a loss of $1.20 per share in the third quarter of 2015, much wider than the Zacks Consensus Estimate of a loss of 63 cents.

Peabody Energy BTU reported a loss of $8.13 per share in the third quarter of 2015, narrower the Zacks Consensus Estimate of a loss of $8.25.

Zacks Rank

CONSOL Energy currently has a Zacks Rank #3 (Hold).

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