Consol Energy Names DeIuliis to Succeed Harvey as CEO

Pittsburgh Tribune-Review
21 March 2014
By John D. Oravecz, Business Writer

Calling his promotion to CEO more “evolution” than revolution, Nicholas DeIuliis said on Friday that Consol Energy Inc. is nevertheless working on another big deal that will add value for shareholders.

By the end of the year, Consol hopes to complete a transaction to either sell its mid-stream natural gas assets — 150 miles of pipelines and six processing stations — or convert them into a dividend-paying master limited partnership, either of which could boost its stock, he said.

The Cecil-based natural gas and coal producer said Chairman and CEO J. Brett Harvey will become executive chairman, and DeIuliis, now president, will be promoted to chief executive after Consol's annual meeting on May 7. He was nominated to the company's board of directors.

Harvey, 63, CEO since 1998, has changed the makeup of the company, downsizing its coal business and expanding natural gas exploration and production.

In 2010, Consol acquired Dominion Resources' gas exploration and production business in the Appalachian Basin for $3.5 billion, and last year sold five West Virginia coal mines for $3.5 billion to Ohio-based Murray Energy Corp.

“Nick has been with the company for a long time, so I don't think it's a big surprise,” said Thomas F. Hoffman, president of Carbon Communications Consultants and a former Consol executive.

“Harvey deserves a lot of credit. Years ago, Consol's market capitalization was less than a billion dollars, and today it's $8 billion. It's hard to argue with that track record of success,” Hoffman said. Market capitalization is the total value of a company's traded shares.

Its stock closed at $40.70, up 48 cents, or 1.2 percent, and during the day hit a 52-week high of $41.03.

Even so, DeIuliis said Consol is not receiving credit in the markets for some of its most valuable assets. He mentioned two: its Baltimore coal export terminal and its mid-stream gas gathering assets — the network of pipelines that connect wells to major pipelines and gas processing stations. Four stations are in West Virginia, with others in Westmoreland and Greene counties.

“We're now in assessment mode to evaluate ways to get that recognition in the market,” DeIuliis said in an interview.

The focus is on a transaction involving the midstream assets, he said.

“There are mid-stream companies that get substantial value in the investment community. Our job is to communicate the value they contribute to Consol, and find a transaction that will be reflected in our share price.”
An outright sale or a spin-off into a master limited partnership are two options, DeIuliis said.

Several companies that needed cash to speed development of Marcellus shale gas reserves have turned to master limited partnerships, which are attractive to investors because they offer high yields, low taxes and stability.

In 2012, Pittsburgh-based EQT Corp. raised $262.5 million when it spun off its midstream assets into EQT Midstream Partners LP, which operates a 700-mile natural-gas pipeline system in the Marcellus region, and pays an annual dividend of 2.72 percent. That compares with a 7.1 percent dividend by Williams Partners LP and a 5.26 percent annual payout by MarkWest Energy Partners LP, other master limited partnerships developed to raise cash for expansion.

Consol's midstream assets “will have significant growth,” DeIuliis said. A decision on a sale or spinoff will be reached by about June 30, with the goal of completing a transaction by the end of the year, he said.

In a statement, Harvey said, “I am proud to have led the company through a defining period in Consol Energy's 150-year history, and have concluded that the time has come to execute our long-planned transition to a new generation of leadership.”

DeIuliis, 45, has served as president since February 2011, and has been with the company for 23 years, also holding the posts of chief operating officer and senior vice president of strategic planning.

“Nick has been a valuable part of my executive leadership team through the years, and has very effectively and successfully managed the day-to-day operations of the company,” Harvey said.
As executive chairman, Harvey will continue to work with Consol's executive team, DeIuliis said.

“The way I think of this is he's been here for a long time and has a lot of experience, and even though he may be ready for a change, his involvement and participation will not go away,” he said. “It's the best type of transition you can hope for. It's a deep bench.”

John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or

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