Consol Energy sells Fairmont Supply subsidary, forecasts production growth

Posted January 20, 2015

Sam Kusic
Pittsburgh Business Times

Consol Energy Inc. (NYSE:CNX) has sold its industrial supply subsidiary, Fairmont Supply Co., for an undisclosed amount, the Canonsburg company said in its fourth-quarter earnings statement.

Fairmont sells mining, drilling and industrial supplies and has 27 customer service centers throughout the U.S. according to Consol's most recent 10-K. Additionally, Fairmont provides supply procurement and management services.

Consol was a Fairmont customer; its coal and natural gas divisions accounted for 37 percent of Fairmont's sales.

Consol did not identify the buyer, and a Consol spokeswoman referred questions to Fairmont, which did not immediately respond to a request for comment.

Fairmont was part of what Consol's considers its "other" category of assets, some of which the company has been selling off. In its fourth-quarter statement, Consol disclosed that it also sold some of its Illinois Basin coal reserves to two strategic buyers and a 50 percent working interest in about 3,400 Utica Shale acres in West Virginia.

All told, sales of these other assets yielded $252 million in cash. Consol is looking to sell $1 billion worth of noncore assets by 2019.

Also on Friday, Consol said it is budgeting for $1 billion in capital expenditures in its gas division, which is down about $100 million, or 9 percent, from the 2014 budget. However, Consol said it expects to increase production 30 percent in 2015.

The company's production grew by more than 30 percent in 2014, reaching 235.7 billion equivalent cubic feet.

During a conference call with analysts, CEO Nick DeIuliis said Consol is advancing its stacked pay program, a program in which different wells targeting different shale formations are drilled on the same well pad.

DeIuliis said Consol is drilling dry gas Utica Shale wells from existing pads in Westmoreland and Greene counties.

He said the company's stacked pay opportunities are expected to meaningfully improve options for production growth and lower capital costs.