“These agreements demonstrate that even as markets continue to be challenged, customers are still incentivized to contract for term commitments to assure that they have a reliable supply of coal,” said Nick DeIuliis, president and CEO, CONSOL Energy. “The Pennsylvania operation’s coal has a quality advantage due to its high [calorific value] that not only optimizes plant performance, but also travels well to compete in nontraditional markets.
“Even as the domestic market for coal is in the midst of a permanent structural shift, we are capturing market share in the Upper Midwest, Ohio River Valley and southeastern U.S. regions, which have traditionally been served by our competitors in the Central Appalachian and Illinois Basins,” said DeIuliis.
In 2016, the Pennsylvania operations are expected to generate positive free cash flow, he added. For 2017 and 2018, where CONSOL has committed pricing, the pricing is in steady contango. For sold tons that are not priced in 2017 and 2018, their agreements are structured so that they will realize increases as natural gas prices improve and the new market realities begin to bring coal supply and demand into equilibrium.
CONSOL Energy reaffirmed its previous estimated price range across the entire coal division for committed and priced tons in 2016 of $50/ton-$55/ton.