UPDATE: Global Hunter Securities Initiates Coverage on CONSOL Energy with Neutral Rating, $35 PT

In a report published Friday, Global Hunter Securities initiated coverage on CONSOL Energy CNX with a Neutral rating and $35.00 price target. Global Hunter noted, “CONSOL Energy (CNX) is a Pittsburgh-based coal and natural gas producer. The company's corporate strategy is to move into higher-value coal and natural gas areas and build CNX into a large integrated energy company. CNX is a low-cost coal producer and its growth has been primarily organic. It has 12 bituminous coal mining complexes in five states with 2011 coal production of 62.6 million tons, and proven and probable coal reserves of 4.5 billion tons. Its premium Appalachian coals are sold worldwide to electricity generators and steelmakers. Last year its exports ran 11.4 million tons of coal. Its coal division is spending $662 million to develop the 5.0 million ton BMX project, which will produce a crossover coal that can serve the met, PCI or thermal markets and start production the first quarter of 2014. Its natural gas division has been transformed from a pure-play coalbed methane producer to a full-fledged natural gas exploration and production operation. It is a leading producer of Marcellus Shale gas and has an exploration program in the Utica Shale as well. It has proven natural gas reserves of more than 3.5 trillion cubic feet with 2011 production of 153.5 Bcf. Its proved, probable and possible natural gas resource is 20.2 Tcf. It is developing its wet gas acreage, which can achieve a sale price up to an additional $2.00 per Mcf. Last year it did not drill any wet gas wells; however, this year it plans on drilling 49 wet gas wells. We are initiating coverage on CONSOL Energy with a Neutral rating and a $35 price target. Our valuation is based on its median EV/EBITDA multiple over the last three years of 7.5x our 2013 EBITDA estimate of $1.37 billion.” CONSOL Energy closed on Thursday at $32.50.