Attached files
| file | filename |
|---|---|
| 8-K - 8-K - CNX Resources Corp | a8k-buchanansale.htm |
| EX-99.1 - EXHIBIT 99.1 - CNX Resources Corp | ex991-pressreleasebuchanan.htm |
Exhibit 99.2
On March 31, 2016, in accordance with the terms of the previously announced Membership Interest and Asset Purchase Agreement (the “Purchase Agreement”), dated February 26, 2016, among CONSOL Energy Inc., a Delaware corporation along with certain of its subsidiaries (CONSOL Mining Holding Company LLC, CONSOL Buchanan Mining Company LLC (“BMC”), CONSOL Amonate Mining Company LLC, CONSOL Mining Company LLC, CNX Land LLC, CNX Marine Terminals Inc., CNX RCPC LLC, Consol Pennsylvania Coal Company LLC and CONSOL Amonate Facility LLC), collectively “CONSOL”, and Coronado IV LLC, a Delaware company (the “Purchaser”), Coronado purchased (i) the membership interests in BMC, which owns and operates the Buchanan Mine located in Mavisdale, Virginia, (ii) various assets relating to the Amonate Mining Complex located in Amonate, Virginia (the “Amonate Assets”), (iii) CONSOL’s Russell County, Virginia coal reserves and (iv) CONSOL’s Pangburn Shaner Fallowfield coal reserves located in Southwestern, Pennsylvania (the “Transaction”). Various CONSOL assets were excluded from the sale (the “Excluded Assets”). The Excluded Assets include coalbed methane, natural gas and minerals other than coal, current assets of BMC, certain coal seams, certain surface rights, and the Amonate Preparation Plant. Coronado assumed only specified liabilities and various CONSOL liabilities were excluded and not assumed (the “Excluded Liabilities”). The Excluded Liabilities included BMC’s indebtedness, trade payables and liabilities arising prior to closing as well as the liabilities of the CONSOL subsidiaries other than BMC which are parties to the Purchase Agreement.
The following unaudited pro forma condensed consolidated balance sheet as of December 31, 2015 and unaudited pro forma consolidated statement of income of CONSOL for the year ended December 31 2015 give effect to this sale. The unaudited pro forma condensed consolidated financial statements have been prepared by management of CONSOL based upon the historical financial statements of CONSOL and the adjustments and assumptions in the accompanying notes to the unaudited pro forma condensed consolidated financial statements.
The unaudited pro forma condensed consolidated balance sheet reflects the closing transaction as if such a transaction had been consummated on December 31, 2015.
The unaudited pro forma condensed consolidated statement of income set forth the effect of the disposition as if it had occurred on January 1, 2015.
The unaudited pro forma condensed consolidated financial statements may not be indicative of the results that actually would have occurred if the sale had occurred on the dates indicated or which may be obtained in the future. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes of CONSOL included in its Annual Report on Form 10-K for the year ended December 31, 2015.
1
Exhibit 99.2
CONSOL ENERGY INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2015
(000 OMITTED)
As Reported | Pro Forma Adjustments | Pro Forma | |||||||||
Revenues and Other Income: | |||||||||||
Natural Gas, NGLs and Oil Sales | $ | 726,921 | $ | 1,538 | (a) | $ | 728,459 | ||||
Gain on Commodity Derivative Instruments | 392,942 | — | 392,942 | ||||||||
Coal Sales | 1,657,865 | (247,546 | ) | (a) | 1,410,319 | ||||||
Other Outside Sales | 30,967 | — | 30,967 | ||||||||
Production Royalty Interests and Purchased Gas Sales | 59,631 | — | 59,631 | ||||||||
Freight-Outside Coal | 25,597 | (1,584 | ) | (a) | 24,013 | ||||||
Miscellaneous Other Income | 145,968 | (29 | ) | (a) | 145,939 | ||||||
Gain on Sale of Assets | 74,510 | (129 | ) | (a) | 74,381 | ||||||
Total Revenue and Other Income | 3,114,401 | (247,750 | ) | 2,866,651 | |||||||
Costs and Expenses: | |||||||||||
Exploration and Production Costs | |||||||||||
Lease Operating Expense | 98,997 | — | 98,997 | ||||||||
Transportation, Gathering and Compression | 355,923 | — | 355,923 | ||||||||
Production, Ad Valorem, and Other Fees | 30,438 | — | 30,438 | ||||||||
Direct Administrative and Selling | 46,192 | — | 46,192 | ||||||||
Depreciation, Depletion and Amortization | 370,374 | — | 370,374 | ||||||||
Exploration and Production Related Other Costs | 10,119 | — | 10,119 | ||||||||
Production Royalty Interests and Purchased Gas Costs | 46,544 | — | 46,544 | ||||||||
Other Corporate Expenses | 90,583 | — | 90,583 | ||||||||
Impairment of Exploration and Production Properties | 828,905 | — | 828,905 | ||||||||
General and Administrative | 54,244 | — | 54,244 | ||||||||
Total Exploration and Production Costs | 1,932,319 | — | 1,932,319 | ||||||||
Coal Costs | |||||||||||
Operating and Other Costs | 863,199 | (155,357 | ) | (a) | 707,842 | ||||||
Royalties and Production Taxes | 78,844 | (13,751 | ) | (a) | 65,093 | ||||||
Direct Administrative and Selling | 33,476 | (4,680 | ) | (a) | 28,796 | ||||||
Depreciation, Depletion and Amortization | 279,209 | (48,995 | ) | (a) | 230,214 | ||||||
Freight Expense | 25,597 | (1,584 | ) | (a) | 24,013 | ||||||
General and Administrative Costs | 29,836 | (4,202 | ) | (a) | 25,634 | ||||||
Other Corporate Expenses | 39,687 | (10,257 | ) | (a) | 29,430 | ||||||
Total Coal Costs | 1,349,848 | (238,826 | ) | 1,111,022 | |||||||
Other Costs | |||||||||||
Miscellaneous Operating Expense | 64,096 | — | 64,096 | ||||||||
General and Administrative Costs | — | — | — | ||||||||
Depreciation, Depletion and Amortization | 18 | — | 18 | ||||||||
Loss on Debt Extinguishment | 67,751 | — | 67,751 | ||||||||
Interest Expense | 199,269 | (8,105 | ) | (c) | 191,164 | ||||||
Total Other Costs | 331,134 | (8,105 | ) | 323,029 | |||||||
Total Costs and Expenses | 3,613,301 | (246,931 | ) | 3,366,370 | |||||||
(Loss) Earnings Before Income Tax | (498,900 | ) | (819 | ) | (499,719 | ) | |||||
Income Tax (Benefit) Expense | (134,425 | ) | 287 | (b) | (134,138 | ) | |||||
Net (Loss) Income | (364,475 | ) | (532 | ) | (365,581 | ) | |||||
Less: Net Income (Loss) Attributable to Noncontrolling Interests | 10,410 | — | 10,410 | ||||||||
Net (Loss) Income Attributable to CONSOL Energy Shareholders | $ | (374,885 | ) | $ | (532 | ) | $ | (375,417 | ) | ||
2
Exhibit 99.2
CONSOL ENERGY INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2015
(CONTINUED)
(Dollars in thousands, except per share data) | As Reported | Pro Forma | |||||||
(Loss) Earnings Per Share: | |||||||||
Basic | $ | (1.64 | ) | $ | (1.64 | ) | |||
Dilutive | $ | (1.64 | ) | $ | (1.64 | ) | |||
CONSOL ENERGY INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2015
(000 OMITTED)
As Reported | Pro Forma Adjustments | Pro Forma | |||||||||
ASSETS | |||||||||||
Current Assets: | |||||||||||
Cash and Cash Equivalents | $ | 72,578 | $ | 402,799 | (d) | $ | 475,377 | ||||
(402,799 | ) | (g) | |||||||||
Accounts and Notes Receivable: | |||||||||||
Trade | 200,508 | 200,508 | |||||||||
Other Receivables | 122,095 | (213 | ) | (e) | 121,882 | ||||||
Inventories | 97,438 | (13,764 | ) | (e) | 83,674 | ||||||
Recoverable Income Taxes | 13,887 | — | 13,887 | ||||||||
Prepaid Expenses | 298,257 | (928 | ) | (e) | 297,329 | ||||||
Total Current Assets | 804,763 | (14,905 | ) | 789,858 | |||||||
Property, Plant and Equipment: | |||||||||||
Property, Plant and Equipment | 15,574,946 | (978,994 | ) | (e) | 14,595,952 | ||||||
Less—Accumulated Depreciation, Depletion and Amortization | 5,905,569 | 509,274 | (e) | 6,414,843 | |||||||
Total Property, Plant and Equipment—Net | 9,669,377 | (469,720 | ) | 9,199,657 | |||||||
Other Assets: | |||||||||||
Investment in Affiliates | 237,330 | — | 237,330 | ||||||||
Other | 218,432 | 21,157 | (e)/(d) | 239,589 | |||||||
Total Other Assets | 455,762 | 21,157 | 476,919 | ||||||||
TOTAL ASSETS | $ | 10,929,902 | $ | (463,468 | ) | $ | 10,466,434 | ||||
3
Exhibit 99.2
CONSOL ENERGY INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2015
(000 OMITTED)
As Reported | Pro Forma Adjustments | Pro Forma | |||||||||
LIABILITIES AND EQUITY | |||||||||||
Current Liabilities: | |||||||||||
Accounts Payable | $ | 271,394 | $ | — | $ | 271,394 | |||||
Current Portion of Long-Term Debt | 6,650 | (76 | ) | (e) | 6,574 | ||||||
Short-Term Notes Payable | 952,000 | (402,799 | ) | (g) | 549,201 | ||||||
Other Accrued Liabilities | 450,893 | (3,840 | ) | (e)/(h) | 447,053 | ||||||
Total Current Liabilities | 1,680,937 | (406,715 | ) | 1,274,222 | |||||||
Long-Term Debt: | |||||||||||
Long-Term Debt | 2,712,911 | — | 2,712,911 | ||||||||
Capital Lease Obligations | 35,294 | (375 | ) | (e) | 34,919 | ||||||
Total Long-Term Debt | 2,748,205 | (375 | ) | 2,747,830 | |||||||
Deferred Credits and Other Liabilities: | |||||||||||
Deferred Income Taxes | 74,629 | — | 74,629 | ||||||||
Postretirement Benefits Other Than Pensions | 630,892 | — | 630,892 | ||||||||
Pneumoconiosis Benefits | 113,032 | — | 113,032 | ||||||||
Mine Closing | 299,280 | (9,485 | ) | (e) | 289,795 | ||||||
Gas Well Closing | 164,634 | (1,385 | ) | (e) | 163,249 | ||||||
Workers’ Compensation | 69,812 | (1,218 | ) | (e) | 68,594 | ||||||
Salary Retirement | 91,596 | — | 91,596 | ||||||||
Reclamation | 34,150 | — | 34,150 | ||||||||
Other | 166,959 | — | 166,959 | ||||||||
Total Deferred Credits and Other Liabilities | 1,644,984 | (12,088 | ) | 1,632,896 | |||||||
TOTAL LIABILITIES | 6,074,126 | (419,178 | ) | 5,654,948 | |||||||
Stockholders’ Equity: | |||||||||||
Common Stock, $0.01 Par Value; 500,000,000 Shares Authorized, 229,054,236 Issued and Outstanding at December 31, 2015; 230,265,463 Issued and Outstanding at December 31, 2014 | 2,294 | — | 2,294 | ||||||||
Capital in Excess of Par Value | 2,435,497 | — | 2,435,497 | ||||||||
Preferred Stock, 15,000,000 Shares Authorized, None Issued and Outstanding | — | — | — | ||||||||
Retained Earnings | 2,579,834 | (44,765 | ) | (f) | 2,535,069 | ||||||
Accumulated Other Comprehensive Loss | (315,598 | ) | 475 | (e) | (315,123 | ) | |||||
Common Stock in Treasury, at Cost—No Shares at December 31, 2015 and 2014 | — | — | — | ||||||||
Total CONSOL Energy Inc. Stockholders’ Equity | 4,702,027 | (44,290 | ) | 4,657,737 | |||||||
Noncontrolling Interest | 153,749 | — | 153,749 | ||||||||
TOTAL EQUITY | 4,855,776 | (44,290 | ) | 4,811,486 | |||||||
TOTAL LIABILITIES AND EQUITY | $ | 10,929,902 | $ | (463,468 | ) | $ | 10,466,434 | ||||
4
Exhibit 99.2
CONSOL ENERGY INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
DECEMBER 31, 2015
1. | Basis of Presentation |
The unaudited pro forma condensed consolidated balance sheet as of December 31, 2015 and unaudited pro forma condensed consolidated statement of income for the year ended December 31, 2015 are derived from and should be read in conjunction with CONSOL's audited consolidated financial statements in its Annual Report on Form 10-K for the period ended December 31, 2015.
2. | Proforma Adjustments and Assumptions |
The adjustments are based on currently available information for certain estimates and assumptions and, therefore, the actual effects of these transactions may differ from the pro forma adjustments. A general description of these transactions and adjustments is provided as follows:
(a) These adjustments reflect the elimination of operating revenues, expenses and other income to reflect the consummation of the sale as if it occurred as of January 1, 2015.
(b) This adjustment represents the estimated income tax effect of the pro-forma adjustments. The tax effect of the pro-forma adjustments was calculated using the federal statutory rate of 35% for the period presented.
(c) CONSOL expects to utilize the net proceeds from the sale to repay a portion of the amounts outstanding under its senior secured credit agreement. This adjustment represents a reduction in interest expense associated with the amounts outstanding under the senior secured credit agreement using an average borrowing rate of 1.98%.
(d) This adjustment represents the receipt of $402.8 million of net cash consideration at the closing of the transaction. An additional $22.0 million of proceeds was put in escrow per the terms of the purchase agreement and will be released over the next two years.
(e) These adjustments reflect the elimination of assets and liabilities attributable to the sale as of December 31, 2015.
(f) This adjustment reflects the loss of $44.8 million arising from the transaction based on the net book value of the assets and liabilities sold as of December 31, 2015.
(g) As discussed in (d) above, CONSOL expects to use the proceeds from the transaction to repay a portion of the debt outstanding under its senior secured credit agreement.
(h) This adjustment represents an accrual for estimated transactions fees of $6.2 million.
5