CONSOL Energy Inc. said it is taking a "transformative step" by moving away from coal mining and increasing exploration and production in the company's shale natural gas arm.
The company, which has a handful of Utica Shale wells in Mahoning County and many in southeastern Ohio, on Monday announced it has entered into an agreement to sell its Consolidation Coal Company subsidiary to a subsidiary of Murray Energy Corporation.
The $3.5 billion deal transfers all five of CONSOL's longwall coal mines in West Virginia and enhances CONSOL's ability to grow its gas production.
"While this transaction furthers CONSOL's E&P growth strategy, the sale of these five mines - assets that have long contributed to America's economic strength and our company's legacy - was a very difficult decision for our team," said CONSOL chairman and CEO J. Brett Harvey. "We concluded that the time had come to sell these mature assets to ownership whose strategic direction is more aligned with those mines."
"We expect that West Virginia will continue to play an important role," Harvey said. "We have a sizeable Marcellus Shale footprint in West Virginia, which will take a significant amount of labor and capital to develop."
Assets included in the transaction included McElroy Mine, Shoemaker Mine, Robinson Run Mine, Loveridge Mine, and Blacksville No. 2 Mine. CONSOL is retaining some coal assets including the Pennsylvania Operations, which include the Bailey, Enlow Fork, and soon-to-be-completed BMX mines along with its flagship Buchanan Mine in southwestern Virginia and Miller Creek Mining Complex in southern West Virginia.
The parties expect to close the transaction by year's end.