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CNX income bounces back in recent quarter after slow year

CNX Coal Resources LP reported an increase in net income in the fourth quarter of 2016, according to a recent earnings report.

The coal producer earned about $11.7 million in net income in the recent quarter, up from the roughly $11.5 million reported in the fourth quarter of 2015 and a significant increase from the $6.4 million reported in the third quarter of 2016. This jump stands in stark contrast to that reported in the 12 months leading up to the end of 2016, in which CNX saw a net income of about $25.9 million compared to the previous 12-month period's roughly $64.5 million.

Part of this growth in the recent quarter compared to the full 12-month period had to do with a huge increase in production and sales — the company put out 1.8 million tons of coal in the fourth quarter of 2016 compared to 1.2 million tons in the same quarter of 2015. "Our marketing team delivered these record production volumes to our customers as coal regained market share from natural gas and coal export markets remained strong," CEO Jimmy Brock said.

This happened despite the average realized price of coal per ton dropping from $52.57 per ton in the fourth quarter of 2015 to $45.05 per ton in the recent quarter. CNX noted that the average price jumped by about 2% compared to the third quarter of 2016, however.

Brock said that team had taken advantage of opportunities in both the seaborne and domestic markets and had produced record volumes in its Pennsylvania mining complex.

The company said in the earnings release that roughly 8.5% of the 1.8 million tons sold in the recent quarter was sent to end users in high vol metallurgical markets in Asia and South America.

Analysts recently said that CNX stood to benefit from the possible rollback of the Stream Protection Rule, particularly at the Pennsylvania mining complex. The rollback is expected to pass a House of Representatives vote this week.

The company's reported coal revenue was nearly $80.3 million in the recent quarter compared to about $65.6 million in the last quarter of 2015.

The company reaffirmed guidance for 2017 as well, including a predicted 6.25 million to 6.75 million tons of sales, and adjusted EBITDA of $90 million to $110 million and maintenance capital expenditures of $30 million to $36 million.

"Heading into the first quarter of 2017, we expect production and sales volume to return to a more typical annual run-rate than we saw in the fourth quarter," the company said in the report.

CNX is a master limited partnership sponsored by CONSOL Energy Inc.