February 8, 2011

The following is reported by PR newswire:  "CONSOL Energy Inc. (NYSE: CNX), the leading diversified fuel producer in the Eastern U.S., has proved gas reserves of 3.7 trillion cubic feet (Tcf) as of December 31, 2010. This is an increase of 1.8 Tcf, or 95%, from the 1.9 Tcf reported at year-end 2009. The proved developed reserves (PDP) increased by 86% and the proved undeveloped reserves (PUD) increased 107%. Of the 3.7 Tcf of proved reserves, 52%, are categorized as proved developed and 48% are classified as proved undeveloped.

CONSOL Energy invested $255.7 million in drilling capital in 2010. This yielded extensions and discoveries of 621.3 Bcf, resulting in a drill bit finding cost of $0.41 per Mcfe. The net impacts of revisions, which include pricing and production, yielded another 380.0 Bcf. The 621.3 Bcfe from extensions and discoveries, when divided by 2010 production of 127.9 Bcf, means that the company replaced 486% of its 2010 production through the drill bit.

"CONSOL Energy had another very successful year in adding proved gas reserves," commented J. Brett Harvey, chairman and chief executive officer. "We saw solid growth in our coalbed methane reserves and a nice jump in our Marcellus Shale PDP bookings from our 2010 program. The reserves from our 2010 Marcellus Shale program averaged 5.5 Bcf per well. When you consider that our laterals averaged 3,400 feet, this means that we booked about 1 Bcf of reserves for every 600 feet of lateral."

The company also has total proved, probable, and possible reserves (also known as "3P reserves") of 14.2 Tcf as of December 31, 2010. This is an increase of 7.7 Tcf, or 118%, in 3P reserves from the 6.5 Tcf reported at year-end 2009. The company's 3P reserves have been determined in accordance with the guidelines of the Society of Petroleum Engineers Petroleum Resources Management System (SPE-PRMS).

As reported on January 27, 24 horizontal wells were drilled in the Marcellus Shale in 2010, and 13 were turned on line. Total well costs averaged $4.1 million. The expected ultimate recovery (EUR) averaged 5.5 Bcf per well. The average lateral was 3,400 feet. Maximum 24-hour production averaged 3.7 MMcf per well per day, while 30-day production averaged 3.4 MMcf per well per day. Total daily production from the Marcellus Shale grew from 14 MMcf per day as of December 31, 2009 to 40 MMcf per day as of December 31, 2010."

January 29, 2011

WVmetronews, the voice of West Virginia, published the following on January 29, 2011:  "Two coal giants in the Appalachian region may soon become one.  Alpha Natural Resources, the nation’s 4^th largest coal producer, announced in a joint press release with Massey Energy that Alpha will acquire West Virginia’s largest coal producer.   "Alpha and Massey believe the new entity will be well positioned to capitalize on strong global demand trends for coal, including the metallurgical coal used in the steel manufacturing process," the companies said in a news release Saturday. "Further, the combination is expected to permit Alpha and Massey to benefit from geographical and asset diversification, including operations and reserves in Central and Northern Appalachia, the Illinois Basin and the Powder River Basin in Wyoming."

The combined company will hold 110 coal mines and coal reserves of nearly five-billion tons. The price tag in the buyout is $8.5 billion dollars.  The purchase will be in both cash and stock.  "This transaction represents a tremendous opportunity for Massey to partner with our Central Appalachian neighbor, Alpha, to create a new industry leader.”  Said Massey CEO Baxter Phillips. “After a careful review of a wide range of strategic opportunities, our board unanimously determined that this is the right course for our company. The merger with Alpha offers Massey stockholders an immediate and substantial premium, as well as the opportunity to participate in the significant value creation opportunities our combination presents.”

“We're very pleased that Massey has chosen to join forces with Alpha and commit to this truly transformational deal.” said Alpha CEO Kevin Crutchfield. "Together, we will be America's largest supplier of metallurgical coal for the world's steel industry and a highly diversified supplier of thermal coal to electric utilities in the U.S. and overseas, the strategic and operational fit of our two companies is clear and compelling."  Massey is headquartered in Richmond, Virginia.  Alpha is based in Abingdon, Virginia.

The announcement of Massey’s buyout comes more than a month after the retirement of controversial Massey CEO Don Blankenship.  The company is also facing intense scrutiny from federal and state regulators as the investigation continues into the explosion at the company’s Upper Big Branch Mine in Montcoal in April 2010.   Twenty-nine miners were killed in the explosion constituting the worst US mining accident in 40-years.  "Together, we are committed to creating a stronger company that has the scale to capitalize on further growth opportunities, succeed in a changing regulatory landscape and maintain the absolute highest standards in safety and environmental excellence," Crutchfield said.

Alpha has secured $3.3 billion from Morgan Stanley and Citi to arrange the transaction.  The purchase is subject to the approval of shareholders of both Massey and Alpha.  The deal is also subject to regulatory approval.

Alpha ranked fourth in the nation’s coal production in 2010.  The company already has holdings in Virginia, West Virginia, Kentucky, Pennsylvania, and Wyoming.