Murray Energy to Buy Coal Assets From Consol for $850 Million
Murray Energy Corp., the largest closely held U.S. coal producer, agreed to buy assets including five West Virginia mines from for about $850 million to add capacity in Appalachia.
Consol will also receive almost $184 million in future royalty payments, the Canonsburg, Pennsylvania-based company said today in a statement. Murray will take on $2.4 billion of balance-sheet liabilities, Consol said.
U.S. demand for thermal coal is rebounding this year after an increase in the price of natural gas, which competes with coal as a source of electricity. Peabody Energy Corp, the largest U.S. producer, said Oct. 17 that domestic usage in 2013 will be as much as 55 million tons more than in last year.
Murray, founded by Chief Executive Officer Robert E. Murray in 1988, operates eight mines that produce about 30 million tons of coal a year, according to the company's website. The St. Clairsville, Ohio-based company has operations in Ohio, Pennsylvania, Utah and the Illinois Basin mining region, which covers parts of Kentucky and Illinois.
Consol is selling the assets after re-evaluating its corporate structure. The company, which also has natural gas operations, said Oct. 11 it was considering 'all options' because shareholders weren't recognizing the full value of its assets. Consol was echoing a July statement in which the company said it was evaluating its corporate structure.
Consol runs 12 mining complexes in the U.S., according to its website.
To contact the reporter on this story: Gerrit De Vynck in Toronto at gdevynck@bloomberg.net
To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net
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