Last month, the entry of Mitsui & Co.
You might remember Dominion from a large asset sale back in 2007, when the firm unloaded $6.5 billion worth of oil and gas assets onto Loews
Many of you no doubt think of CONSOL first and foremost as a coal company, and for good reason. This is the largest producer of high-BTU bituminous coal in the country. Coalbed methane gas production was a natural outgrowth of this business, and that led to the spinoff of CNX Gas
Judging by today's sell-off, this diversification is not being embraced by a fair portion of CONSOL's investor base. You can imagine the complaints:
- Tougher to value.
- Less of a pure play on coal.
- Diversion of management focus.
I should point out that CONSOL's $1 billion 2010 budget was also split 60/40 between coal and gas. In a recent presentation slide, the company unequivocally stated that it "is especially interested in increasing its footprint in the Marcellus Shale." This move hardly comes out of left field.
Coal is a hot commodity today, but I would suggest that management is taking a longer view here. Carbon constraints are highly likely in the future. Rather than stick its head down a mine shaft, the company appears to be positioning itself to continue to thrive in such an environment, where natural gas may well dethrone King Coal. This strikes me as a wise bit of succession planning.
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