CONSOL Energy and MarkWest Sign Agreement to Accelerate Natural Gas Development at MarkWest’s Majorsville III Plant
PITTSBURGH, Jan. 31, 2012 /PRNewswire/ — CONSOL Energy Inc. (NYSE: CNX), the leading diversified fuel producer headquartered in the Eastern U.S., today announced that the company recently amended a previous agreement with MarkWest Energy Partners, LP (NYSE: MWE). Under the amendment, CONSOL Energy, through a subsidiary, contracted for the full 200,000 Mcf per day of capacity in MarkWest’s Majorsville III plant. This will be in addition to the 30,000 Mcf per day that the company already had under contract in MarkWest’s Majorsville II processing plant.
There are associated agreements covering the fractionation and sale of the NGLs out of MarkWest’s Houston, PA fractionation and marketing complex. At the close of the joint venture agreement between CONSOL Energy and Noble Energy in 2011, these agreements were assigned in part to Noble Energy, but are expected to be split evenly by both companies at the end of January 2012. These agreements will enable Noble Energy to continue its development efforts in the wet gas portion of the joint venture acreage.
“This agreement is expected to enable CONSOL Energy and Noble Energy to accelerate and maintain long-term production in the wet portion of the Marcellus shale, and to keep us on track with the flexible drilling schedule we outlined when we partnered with Noble Energy last year,” commented Randy Albert, Chief Operating Officer of CONSOL Energy’s Gas division.
Top holes on two Majorsville drill pads have already been completed and the horizontal wells are currently being drilled. CONSOL Energy anticipates first production from this area in Q2 2012, also representing the company’s first production from the wet area of its Marcellus acreage. By year-end 2012, CONSOL Energy and Noble Energy anticipate 20 well completions at Majorsville.
MarkWest’s Majorsville plant sits in the center of the joint venture’s Majorsville acreage, thus keeping gathering cost to a minimum. The residue gas from the plant will initially be sold into long-term firm transportation agreements that CONSOL Energy’s subsidiary CNX Gas Company LLC has under contracts on Columbia Transmission and Texas Eastern Pipelines.
CONSOL Energy Inc., the leading diversified fuel producer headquartered in the Eastern U.S., is a member of the Standard & Poor’s 500 Equity Index and the Fortune 500. It has 12 bituminous coal mining complexes in four states and reports proven and probable coal reserves of 4.4 billion tons. It is also a leading Eastern U.S. gas producer, with proved reserves of over 3.7 trillion cubic feet. Additional information about CONSOL Energy can be found at its web site: www.consolenergy.com.
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These risks, contingencies and uncertainties relate to, among other matters, the following: deterioration in economic conditions in any of the industries in which our customers operate, or sustained uncertainty in financial markets cause conditions we cannot predict; an extended decline in prices we receive for our coal and gas affecting our operating results and cash flows; our customers extending existing contracts or entering into new long-term contracts for coal; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our coal and gas to market; a loss of our competitive position because of the competitive nature of the coal and gas industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted regulations relating to greenhouse gas emissions on the demand for coal and natural gas, as well as the impact of any adopted regulations on our coal mining operations due to the venting of coalbed methane which occurs during mining; foreign currency fluctuations could adversely affect the competitiveness of our coal abroad; the risks inherent in coal and gas operations being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; our focus on new gas development projects and exploration for gas in areas where we have little or no proven gas reserves; decreases in the availability of, or increases in, the price of commodities and services used in our mining and gas operations, as well as our exposure under “take or pay” contracts we entered into with well service providers to obtain services of which if not used could impact our cost of production; obtaining and renewing governmental permits and approvals for our coal and gas operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our coal and gas operations; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down a mine or well; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current coal and gas operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable coal and gas reserves; costs associated with perfecting title for coal or gas rights on some of our properties; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; the impacts of various asbestos litigation claims; increased exposure to employee related long-term liabilities; increased exposure to multi-employer pension plan liabilities; minimum funding requirements by the Pension Protection Act of 2006 (the Pension Act) coupled with the significant investment and plan asset losses suffered during the recent economic decline has exposed us to making additional required cash contributions to fund the pension benefit plans which we sponsor and the multi-employer pension benefit plans in which we participate; lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan exceeding total service and interest cost in a plan year; acquisitions and joint ventures that we recently have completed or entered into or may make in the future including the accuracy of our assessment of the acquired businesses and their risks, achieving any anticipated synergies, integrating the acquisitions and unanticipated changes that could affect assumptions we may have made and divestitures we anticipate may not occur or produce anticipated proceeds including joint venture partners paying anticipated carry obligations; the anti-takeover effects of our rights plan could prevent a change of control; increased exposure on our financial performance due to the degree we are leveraged; replacing our natural gas reserves, which if not replaced, will cause our gas reserves and gas production to decline; our ability to acquire water supplies needed for gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; our hedging activities may prevent us from benefiting from price increases and may expose us to other risks; and other factors discussed in the 2010 Form 10-K under “Risk Factors,” as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
SOURCE CONSOL Energy Inc.