UPDATE 3-Consol to sell assets amid weak coal market

Thu Jan 31, 2013 1:54pm EST

* 4th-quarter coal costs per ton sold fall 8 pct

* Adj EPS $0.43 vs est $0.24 - Thomson Reuters I/B/E/S

* Revenue $1.4 bln vs est $1.3 mln

By Garima Goel

Jan 31 (Reuters) - Consol Energy Inc plans to sell more assets this year to navigate a difficult market after raising $350 million last year from the sale of non-core coal reserves in the United States and Canada.

"We look at the number of assets we have and decide where they fit in the mix going forward," Chief Executive Brett Harvey said on a post-earnings conference call on Thursday.

"We've also developed a way of looking at all of our assets that are also core functions but are undervalued in our share price."

The company recorded a pretax gain of $90 million from the sale of some properties in the fourth quarter, when profit before income tax was $198.4 million.

Brean Capital analyst Lucas Pipes said the potential of Consol's asset sale remained "underappreciated".

Consol said it sold 91 percent of the electricity-generating thermal coal it produced last year in the domestic markets, where utilities are increasingly switching to cheaper natural gas.

Benchmark Australia Newcastle thermal coal prices fell 16 percent last year, forcing many companies in the United States, Indonesia and Australia to idle high-cost mines and sell properties.

REIGNING IN COSTS

Consol reported a better-than-expected adjusted profit of 43 cents per share in the December quarter as cost cuts helped offset weak prices of coal. Analysts on average had expected 24 cents, according to Thomson Reuters I/B/E/S,

Net income fell 23 percent to $150 million, while revenue and other income fell 10 percent to $1.39 billion.

Costs-per-ton-sold fell 8 percent to $48.21, the lowest last year. Simmons & Co analysts said the cost cuts were stronger than their expectation.

The shutdown of Consol's higher-cost Fola mine near Bickmore in West Virginia, fewer maintenance projects and less overtime brought down costs in the fourth quarter.

"The active footprint in many of our mines is smaller," Chief Financial Officer William Lyons said on the call.

Lyons said the company's BMX mine in Western Pennsylvania - slated to come online in the first half of 2014 - will be its lowest-cost coal operation.

Pittsburg-based Consol forecast coal sales volumes of 56.3 million tons for the year, around last year's levels.

Coal miner Peabody Energy Corp on Tuesday forecast an adjusted loss of between 4 cents and 26 cents per share in the first quarter, against analysts' estimates of a loss of 9 cents.

Consol's shares were up about 1 percent at $31.46 in afternoon trading on the New York Stock Exchange on Thursday. The stock has fallen about 38 percent since touching a year-high of $38.22 in early February.

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