CONSOL Energy Inc. (CNX), Kinder Morgan Energy Partners LP (KMP): Is Shipping Coal a Profitable Business?

Page 1 of 2

CONSOL Energy Inc. (NYSE:CNX) mines coal and drills for oil and gas. But it also owns the infrastructure used to move coal, including barges and a port. These are boring but vital assets that shouldn’t be overlooked, and CONSOL Energy Inc. (NYSE:CNX) isn’t the only coal company that owns them.

Making changes
In its second quarter earnings release, CONSOL Energy Inc. (NYSE:CNX) states that it “stepped up its asset sale process to include coal and gas transportation infrastructure.” Moreover, the company is “evaluating” its corporate structure, looking for ways to unlock value for shareholders.

Essentially, CONSOL Energy Inc. (NYSE:CNX) doesn’t believe its assets are being properly valued by the market. That’s not unreasonable, since the stock is currently trading for around 1.5 times book value when it has historically traded for more than three times book value. Part of the problem is clearly the overhang of a tough coal market, so corporate actions of some sort, either asset sales or spinoffs, would likely help to highlight the value, and perhaps speed up the growth, of the company’s oil and gas business.

CONSOL Energy Inc. (NYSE:CNX)

What it owns
In addition to its core coal and drilling businesses, CONSOL Energy Inc. (NYSE:CNX) also owns Fairmont Supply Company, CNX Marine Terminals, 21 towboats, five harbor boats, and approximately 600 barges, among other assets. Less than 40% of Fairmont’s $244 million in sales were to CONSOL Energy Inc. (NYSE:CNX) in 2012. About 40% of the material that passed through the CNX Terminal was mined by other companies. And of the almost 20 million tons of commodities handled by CONSOL’s boats, only about 8 million came from CONSOL. The transportation assets had revenues of $126 million in 2012.

These assets only made up a small portion of CONSOL’s over $5.4 billion in revenues last year, but they have financial and strategic value that is being overlooked by Wall Street. And their revenue streams are less affected by volatile commodity price swings. Selling these assets shouldn’t be too difficult and could be an important catalyst for a higher share price as the company reinvests proceeds in its core businesses. Investors should keep an eye on this process.

Not looking to sell
However, CONSOL isn’t the only company that owns such assets. For example, coal infrastructure assets account for about 15% of Natural Resource Partners LP (NYSE:NRP)’ top line, and about half of the revenue it derives from businesses other than coal royalties. This limited partnership, however, isn’t looking to monetize these assets; it wants to expand its non-coal businesses to further diversify its revenues.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

The 10 Biggest Tax Havens in the World to Stash Your Money

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!