CONSOL EnergyInc. plans to divest itself of its Miller Creek and Fola mines inWest Virginia, the last two coal mines the company held in Central Appalachia,by paying another producer $44 million to take the properties off its hands.
CONSOL, which has other mines run by its master limitedpartnership CNX Coal Resources LPin Northern Appalachia, will transfer the mines to Booth Energy's SoutheasternLand in exchange for Booth taking on $103 million in liabilities for the mines.An agreement disclosed in a U.S. SEC filing on July 25 said CONSOL will payBooth $44 million over time, including $27 million at the closing of the sale.
Booth also agreed to pay CONSOL an overriding royaltyinterest of 2% on all coal mined and sold from the Fola assets.
According to the release, together the Miller Creek and Folacomplexes generated negative EBITDA in 2015 and are expected to generatenegative EBITDA in 2016. CONSOL said the Miller Creek complex was a "premierasset," though it "no longer fits our portfolio."
Reclassification of the assets, acquired in 2007 beforerapid deterioration in the Central Appalachia coal market, resulted in animpairment charge of $356 million.
According to CONSOL's website, Miller Creek about 2.1 million tonsof coal in 2015. Fola is currently idled. CONSOL has increasingly focused onnatural gas and previously had divested five of its major longwall coal minesin West Virginia through a saleto Murray Energy Corp.
CONSOL's master limited partnership the highest level of coal salessince early 2015 in its earnings release July 25.