Businessweek

CONSOL Energy Inc. produces coal and natural gas for global energy and raw material markets, which include the electric power generation industry and the steelmaking industry. The company engages in developing unconventional gas resources, including the early development of coalbed methane (CBM) production in the eastern United States. It controls considerable resource positions in other unconventional shale plays, including Chattanooga, New Albany, Utica, Huron, and other shales. DETAIL COAL OPERATIONS The company controlled approximately 4.2 billion tons of proved and probable coal reserves located in northern Appalachia, the mid-western United States, central Appalachia, and the western United States as of December 31, 2012. Marketing and Sales The company sells coal produced by its mining complexes and additional coal that is purchased by the company for resale from other producers. It maintains the United States sales offices in Charlotte, Philadelphia, and Pittsburgh. In addition, it sells coal through agents and to brokers and unaffiliated trading companies. DETAIL GAS OPERATIONS The company’s gas operations are located throughout Appalachia. CBM The company has the rights to extract CBM in Virginia from approximately 271,000 net CBM acres, which cover a portion of its coal reserves in central Appalachia. It produces gas primarily from the Pocahontas #3 seam, which is the primary coal seam mined by its Buchanan Mine. The company also has the right to extract CBM in northwestern West Virginia and southwestern Pennsylvania from approximately 902,000 net CBM acres, which contain various recoverable coal reserves in northern Appalachia. It produces gas primarily from the Pittsburgh #8 coal seam. In central Pennsylvania, the company has the right to extract CBM from approximately 263,000 net CBM acres, which contain various recoverable coal reserves, as well as leases from other coal owners. In addition, it controls 810,000 net CBM acres in Illinois, Kentucky, Indiana, and Tennessee. The company also has the right to extract CBM on 139,000 net acres in the San Juan Basin, 128,000 net acres in eastern Ohio and central West Virginia, and 20,000 net acres in the Powder River Basin. Marcellus Shale The company had the rights to extract natural gas in Pennsylvania, West Virginia, and New York from approximately 347,000 net Marcellus Shale acres as of December 31, 2012. The company has a joint venture with Noble Energy, Inc. (Noble Energy) regarding its Marcellus Shale oil and gas assets and properties in West Virginia and Pennsylvania. The joint venture holds approximately 624,000 net Marcellus Shale acres in those states, as well as the producing Marcellus Shale Wells, which the company had owned. It holds a 50% interest in the joint venture. The company also holds a 50% interest in a related gathering company to which it contributed its existing Marcellus Shale gathering assets. The company and Noble Energy drilled a record 89 gross wells in the Marcellus Shale in 2012. The company also completed 51 Marcellus Shale wells. Shallow Oil and Gas The shallow oil and gas acreage position of the company was approximately 648,000 net acres primarily in West Virginia, Pennsylvania, Virginia, New York, San Juan Basin, and Powder River Basin as of December 31, 2012. Other Gas Utica: The company controlled approximately 83,000 net acres of Utica Shale potential in eastern Ohio as of December 31, 2012. Additionally, it controls various acres in southwestern Pennsylvania and northern West Virginia that contain the rights to the Utica Shale. To facilitate the delineation and the development of the Utica Shale in Ohio, the company has a joint venture with Hess Ohio Developments, LLC (Hess). The Hess joint venture owns approximately 160,000 net acres of Utica Shale rights in Ohio. It holds a 50% interest in the joint venture. Joint operations are conducted in accordance with a joint development agreement. New Albany: The company controls approximately 277,000 net acres of rights to gas in the New Albany Shale in Kentucky, Illinois, and Indiana. The New Albany Shale is a formation contai