Peabody Energy has agreed to a gas-for-coal swap with Pittsburgh-based CNX Gas Corp.
St. Louis-based Peabody gets 41 million tons of coal reserves in West Virginia and Kentucky and $15 million from CNX, the companies said Monday.
In exchange, CNX gets the rights to coalbed methane, oil and natural gas on 860,000 acres of land spread across West Virginia, New Mexico, the Illinois Basin and the Powder River Basin in Montana and Wyoming.
The bulk of the coal reserves, 27 million tons, are located near Peabody's Federal No. 2 Mine in Monongalia County. The additional reserves are expected to double the life of the mine, Peabody said.
The Federal mine produces about 4.6 million tons of coal annually and employs about 490 people. It's also part of the Kentucky and West Virginia operations that Peabody plans to spin off as a separate public company called Patriot Coal Co. Peabody plans to distribute Patriot's stock to its shareholders later this year.
While none of the land Peabody is trading contains proven reserves, CNX expects to add at least 258 billion cubic feet of unproven gas reserves.
Pittsburgh-based coal company Consol Energy owns 81.5 percent of CNX, which produces coalbed methane and natural gas.
Peabody is the world's largest coal company with $5.3 billion in revenue in 2006 and has operations in Appalachia, the Illinois Basin, the Powder River Basin and overseas.
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