NEW YORK (TheStreet) -- This has been a rough year for coal stocks because of weak coal prices. The resolve by the U.S. and China to reduce carbon emissions by clamping down on coal consumption has not helped. But the 150-year-old Consol Energy (CNX) remains an exception.
That's because the Canonsburg, Pa., company has been monetizing its coal assets and increasing its focus on natural gas production.
So far this year, the global coal stocks, as represented by the Market Vectors Coal ETF (KOL) , have fallen by 24%. In the U.S., coal miners Peabody Energy (BTU) and Arch Coal (ACI) have tanked by 59% and 58%, respectively, while Alpha Natural Resources (ANR) has plunged by 77% this year. On the other hand, Consol Energy has dropped by just 8% in this period, settling near $35 when markets closed on Christmas Eve, despite all the fears related to its traditional business.
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Consol Energy produces both thermal and metallurgical coal. The former is used in power generation while the latter, commonly known as coking or met coal, is used for making steel. Although the company generates a majority of its revenue from coal sales, the segment lacks any meaningful growth and its contribution to the total revenue has been decreasing.
In the first nine months of this year, Consol Energy's revenue from coal sales climbed by just 1%. During this period, coal's contribution to total revenue slipped from 62% last year to 56% this year.
Consol Energy's growth, on the other hand, has been driven by its natural gas business. In the first nine months of this year, the company's revenue from hydrocarbon sales increased by 42% while its contribution to total revenue, unlike coal business, has grown from 21% in 2013 to 27% in 2014.
This robust growth of natural gas business will likely continue in the future as the company is targeting 30% annual production growth through 2016, mainly from the prolific Marcellus and Utica shale formations that extends from Virginia to New York.