CONSOL Energy (US:CEIX)2020-11-05 22:47Financial Data and Key Metrics Changes - CONSOL Energy reported a third quarter 2020 attributable net loss of $7.2 million or $0.28 per diluted share compared to a net income of $4.3 million or $0.16 per diluted share in Q3 2019 [31] - Adjusted EBITDA for Q3 2020 was $68.3 million, showing significant improvement from Q2 2020 levels as operations began to recover from pandemic-driven demand decline [31] - The company ended Q3 2020 with cash and cash equivalents of $22 million, a reduction from $33 million at the end of Q2 2020, primarily due to debt repayment [32] Business Line Data and Key Metrics Changes - Coal production at the Pennsylvania Mining Complex was 4.5 million tons in Q3 2020, down from 6.5 million tons in the same quarter last year, but nearly double the production in Q2 2020 [11] - The average cash cost of coal sold per ton decreased to $28.64 in Q3 2020 from $32.78 in Q3 2019, reflecting successful cost control measures [12] - The CONSOL Marine Terminal had a throughput volume of 2 million tons in Q3 2020, down from 2.4 million tons in the year-ago period, but terminal revenues improved to $17 million from $16.3 million [14] Market Data and Key Metrics Changes - Coal share in the generation fleet improved to 23% in August 2020 from 15% in April 2020, despite overall electricity generation increasing by 45% [16] - Henry Hub natural gas spot prices averaged $2 per million BTU in Q3 2020, a 16% decline compared to Q3 2019, but improved from a 34% year-over-year decrease in Q2 2020 [17] - The active US gas rig count stood at 74 as of October 2, 2020, a reduction of 70 rigs compared to the same period in 2019, indicating reduced capital expenditures in the E&P sector [18] Company Strategy and Development Direction - The company is focused on deleveraging its balance sheet and improving liquidity, having completed multiple transactions to boost income and financial flexibility [10] - A merger agreement with CCR was announced to simplify corporate structure, enhance credit metrics, and improve access to capital [28] - The company is also pursuing technology-driven growth initiatives, including the Coal FIRST project aimed at developing an advanced coal-based power plant [39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand recovery in Q4 2020, driven by higher natural gas prices and improved market conditions [9] - The company expects a rebound in coal burn and demand for coal in 2021, with projections indicating a 21% increase in domestic coal burn [18] - Management highlighted the importance of maintaining liquidity and managing costs while preparing to capitalize on market improvements [35] Other Important Information - The company has contracted 13.2 million tons for 2021, with expectations of securing additional volumes during the domestic RFP season [22] - The company is actively managing its surety bond obligations and has issued $17 million of letters of credit to surety providers [49] - A settlement was reached with Murray debtors addressing open matters related to workers' compensation and black lung claims [42] Q&A Session Summary Question: What does the company expect for Q4 production and costs? - Management expects Q4 to be significantly better than Q3, running all four longwalls without any moves, aiming for cash costs below $30 per ton [45] Question: Can you provide insight on the financial impact of the Murray situation? - Specific financial impacts cannot be disclosed, but management suggested reviewing the Q for more details [46] Question: How is the company positioned regarding surety bonds? - The company has been successful in minimizing liquidity impacts and anticipates issuing more letters of credit in Q4 [49] Question: What is the appropriate liquidity level for the company? - Liquidity needs vary with market conditions, and management is comfortable with current access to the revolving credit facility [50] Question: Can you clarify the cash proceeds from asset sales? - The company expects $15 million to $20 million in Q4 and $20 million to $25 million in Q2 2021 from asset sales [54] Question: What is the pricing outlook for contracted tons in 2021? - Current negotiations suggest pricing may be slightly below the $43 average for 2021, but there is potential for improvement as market conditions stabilize [73]