Under the agreement, Murray Energy will pay $850m in cash as well as $184m in future royalty payments for the acquisition of coal mines which include McElroy mine, Shoemaker mine, Robinson Run mine, Loveridge mine, and Blacksville No. 2 mine.
The mines, which are being operated as Consol Energy’s Consolidation Coal Company (CCC) subsidiary, produced 28.5 million tonnes of thermal coal in 2012.
Consol chairman and CEO Brett Harvey said the transaction advances the company’s E&P growth strategy.
"In advancing our E&P growth strategy, we expect that West Virginia will continue to play an important role," Harvey added.
Additionally, Murray would assume $2.4bn of Consol’s liabilities which include a $105m of workers’ compensation, $149m in environmental costs and the remaining in other workers’ benefits.
The transaction, which also gives Murray Energy around 1.1 billion tonnes of coal reserves, is expected to be completed by the end of 2013.
"We have a sizeable Marcellus Shale footprint in West Virginia, which will take a significant amount of labor and capital to develop," Harvey continued.
In addition to improving Consol’s ability to grow its gas production, the transaction will enable Consol to extend its gas growth production targets beyond 2014.
