Jan 21, 2014 3 min read

CANONSBURG – Consol Energy Inc. said Tuesday it expects to invest $1.5 billion in 2014 to accelerate its growth in natural gas production.

The Southpointe-based coal and natural gas production company reiterated its 2014 natural gas production growth target of 30 percent, and said in a press releae it is seeking a range of 215 to 235 billion cubic feet for the year.

“Our 2014 Capital Budget advances our E&P growth strategy,” said J. Brett Harvey, chairman and chief executive officer.

“We executed in 2013 by selling low-growth, non-core coal assets. Our primary sale, which closed last month, yielded approximately $1 billion dollars in cash when taking into account after-tax proceeds and related administrative cost reductions. We will apply these funds toward our aggressive 2014 natural gas drilling program.

Harvey added that once the company’s BMX longwall starts late in the first quarter, “we expect our coal business to also generate meaningful cash to support the capital program for the E&P segment of our company.”

Within the gas operations category, Consol expects to invest about $1.1 billion, much of which will be directed toward drilling and completion costs in the highly productive Marcellus and Utica shales.

Approximately half of its total drilling capital will target the liquids-rich areas within these two plays.

On the dry side, Consol said the drilling will primarily focus on those areas in the Marcellus that have established superior economics resulting from high net revenue interest, economies of scale, or reservoir performance.

In the Marcellus Shale joint venture, Consol and its partner plan to operate an average of four to five horizontal rigs each to drill at least a combined 162 gross wells. At least 88 of the joint venture wells will be drilled in the liquids-rich areas of the play, including two within the recently acquired acreage that lies beneath the Pittsburgh International Airport.

At least 74 wells are planned to target the dry gas area of the joint venture. These dry locations include six Upper Devonian laterals in Washington County

In the Utica Shale joint venture, a total of 32 gross wells are planned to be drilled within the liquids-rich corridor that runs across Harrison, Belmont, Guernsey, and Noble counties of Ohio.

Separate from the joint venture activity, Consol said it expects to invest $24 million in Monroe County, Ohio.

The coalbed methane program will again be kept at minimal drilling levels, with the expected drilling of only 71 wells. Total capital for the 2014 CBM drilling program is estimated to be $34 million.

Consol projects its 2014 natural gas production to be between 215 and 235 Bcfe, of which between 5 and 8 percent is expected to be NGLs/condensates/oil. With the continued focus on the liquids-rich areas of its plays, the company expects that mix to increase to 10 to 15 percent by the end of 2016, while overall volumes are expected to increase 30 percent per year over the same time period.

Within the coal operations category for 2014, Consol anticipates investing $200 million to complete the BMX Mine in mid-March. The underground mine is adjacent to the company’s Bailey and Enlow Fork mines in Southwestern Pennsylvania. On a full-year basis, the single-longwall BMX Mine is expected to produce 5 million annual tons of high-quality Pittsburgh seam coal to be sold in either the high-vol or thermal markets.

Due to the well capitalized nature of the company’s retained coal assets following last month’s divestiture, it anticipates that maintenance-of-production capital for the year will be held to under $4.25 per ton on the 31 million tons expected to be produced for the year.