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CONSOL Energy Announces Operations Update

Stocks in this article: CNX

PITTSBURGH, Jan. 24, 2014 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) is providing an operations update for the quarter ended December 31, 2013.

(Logo:  http://photos.prnewswire.com/prnh/20120416/NE87957LOGO )

"Despite the potential for distractions during a quarter with a major asset transaction, CONSOL Energy's gas operations and mines performed with distinction," commented J. Brett Harvey, chairman and CEO. "In natural gas, we again set quarterly and annual production records, while positioning ourselves to accelerate production growth in 2014. Our culture of continuous improvement yielded improved completion techniques in the Marcellus Shale, as well as substantial improvements for drilling costs per lateral foot, on an annual basis. Our coal mines ran well in the quarter as we also work to complete, in early 2014, three major projects, which are detailed below."

In our gas business, our goals for 2013 included further reducing drilling costs per lateral foot drilled in both the Marcellus and Utica Shale, increasing completion effectiveness, streamlining our drill ready processes prior to the arrival of the drilling rig that will allow for increased future activity levels, and increasing cooperation and communication with our JV partners in the Marcellus and Utica shales to facilitate increased future drilling and completion activities in both projects. 

On the drilling side, CONSOL satisfied its 2013 goal of reducing costs per lateral foot drilled by identifying and minimizing the relative proportion of nonproductive time such as mobilizing rigs, running casing, and waiting on cement. In 2013, the cost per lateral foot was $378, compared to the previous year of $529 per lateral foot. For all-in drilling and completion (D&C) costs for a 6,000 foot lateral, the total cost in 2013 was approximately $6.7 million per well, or $1.1 million per 1,000 feet, which includes the cost of wells drilled utilizing short stage lengths (SSL) and reduced cluster spacing (RCS). To illustrate the value of longer laterals, the all-in D&C costs of a 4,800 foot lateral would increase to $1.3 million per 1,000 feet, which excludes any costs associated with SSL and RCS. Utilization of SSL and RCS increases well costs by approximately $1.2 million per well, or $240,000 per 1,000 feet.  

CONSOL's Gas Division produced 48.5 Bcfe for the 2013 fourth quarter, or 16% more than the 41.8 Bcfe produced in the 2012 fourth quarter. Annual 2013 gas production was 172.4 Bcfe (net to CONSOL).

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