Consol Energy has agreed to sell all five of its longwall coal mines in West Virginia to a subsidiary of Murray Energy for $3.5bn.
The mines being sold under the deal include McElroy mine, Shoemaker mine, Robinson Run mine, Loveridge mine, and Blacksville No. 2 mine.
The mines, which are being operated as Consol Energy’s Consolidation Coal Company (CCC) subsidiary, produced 28.5 million tonnes of thermal coal in 2012.
The transaction also includes river and dock operations with a fleet of 600 barges and 21 towboats, which transported 19.3 million tonnes of coal and other commodities along the upper Ohio River system in 2012.
Consol said it would receive $850m in cash and $184m in value from future payments, and Murray would take on $2.4bn in liabilities. Consol Energy chairman and CEO Brett Harvey said the sale of the five mines was a very difficult decision for the company.
“In advancing our E&P growth strategy, we expect that West Virginia will continue to play an important role,” Harvey added.
The transaction, which also gives Murray Energy around 1.1 billion tonnes of coal reserves, is expected to be completed by the end of 2013.
Consol Energy said it is retaining coal assets that align with its long term strategic objectives.
The company is keeping the Pennsylvania operations, which include the Bailey, Enlow Fork, and soon-to-be-completed BMX mines.
The mines, with five longwalls, and with estimated production of nearly 24 million tons in 2014, produce a high-Btu Pittsburgh-seam coal that is lower in sulfur than many Northern Appalachian coals.
Buchanan mine in southwestern Virginia and the Miller Creek mining complex in southern West Virginia will also be retained by Consol.
Consol also said that the sale enhances its ability to grow its gas production, which will enable the company to extend its gas production guidance range to 210-225 Bcfe, of which approximately 7%-8% are expected to be liquids or condensates.
Image: The mines being sold produced 28.5 million tonnes of thermal coal in 2012. Photo: Courtesy of FreeDigitalPhotos.net.