This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Follow CONSOL Energy's Transformation

NEW YORK (TheStreet) -- CONSOL Energy (CNX - Get Report) is one of the oldest and largest players in the American coal industry, operating since the days of President Lincoln. Although the company has been the largest producer of coal from underground mines in the United States, it has been working to reduce its exposure to coal in favor of natural gas.

It has recently received the anti-trust clearance related to the sale of its coal mines in West Virginia while at the same time identifying thousands of natural gas locations at Marcellus Shale and will drill 120 wells this year.

Following a drop in income in 2012, and persistent weakness in market conditions, investors expected the current year to be a tough one. It was. According to its recent quarterly results, in the first nine months of 2013, CONSOL Energy swung from an income of $239 million in 2012 to a loss of $78 million in 2013.

However, CONSOL Energy is a company in transition using the cash flows from its struggling coal division to expand its natural gas and NGL operations, where it sees its long-term future. Despite current woes, in the long run the company could yield significant returns for the shareholders due to the considerable increase in its gas output on the back of divestitures, drop in coal capital expenditure and strong liquidity.

CONSOL Energy has struggled due to the weakness in the domestic coal market. Prices of coking coal have been under pressure due to the excess supply while the cheaper gas from shale formations had a negative impact on the demand of thermal coal. Moreover, stricter environmental regulation for coal fired power-plants has also made things difficult. Since CONSOL Energy gets most of its revenues from coal, therefore, the business has struggled with top- and bottom-line growth.

The company's exposure towards natural gas makes CONSOL Energy a unique energy firm with two separate, seemingly unrelated business units in coal and natural gas. The company is clearly not like other coal producers. This is evident in the performance of its shares. In the last 12 months, the Market Vectors Coal ETF (KOL) has dropped by 20%. On the other hand, CONSOL's shares have risen by 16% in the corresponding period.

CONSOL Energy is the biggest holding in the Coal ETF, which includes 32 other leading coal producers from around the world. Without CONSOL at the top, the performance of this fund could have been worse.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
KOL $7.62 0.13%
CNX $7.52 2.45%
AAPL $118.88 0.96%
FB $105.74 -1.13%
GOOG $748.28 -1.02%


Chart of I:DJI
DOW 17,812.19 +19.51 0.11%
S&P 500 2,089.14 +2.55 0.12%
NASDAQ 5,102.8080 +0.33 0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs