The deal for Consol’s Consolidation Coal subsidiary, which includes the mines and related assets, includes $US850 million in cash, $US184 million in value of future payments and a liabilities acquisition of $US2.4 billion.

The mines being sold are McElroy, Shoemaker, Robinson Run, Loveridge and Blacksville No. 2, which collectively produced 28.5 million tons of thermal coal last year.

In all, Murray is taking over about 1.1 billion short tons of reserves from the massive and bountiful Pittsburgh No. 8.

Murray also will take over Consol’s river and dock operations transaction, including a fleet of 21 towboats and 600 barges that transported a combined 19.3Mt of coal and other commodities last year along the upper Ohio River system, and the now-closed Eighty-Four mine.

Consol officials called the sale a “transformative step” in the advancement of its exploration and production growth strategy but said it was not an easy choice.

“While this transaction furthers CONSOL's E&P growth strategy … the sale of these five mines – assets that have long contributed to America's economic strength and our company's legacy – was a very difficult decision for our team,” chairman and chief executive officer J Brett Harvey said.

“The employees at these mines are among the safest and most productive miners anywhere in the world. In the end, we concluded that the time had come to sell these mature assets to ownership whose strategic direction is more aligned with those mines.

Murray Energy chairman, president and CEO Robert Murray said: “No company has developed a better legacy with its employees, with its customers, with the financial markets, with the regulatory agencies, or with the public in general, over many decades, than has Consol and Consolidation Coal.

“Murray Energy intends to preserve this well-earned legacy.”

Murray operates six underground longwall mining systems and 23 continuous mining units, and Consolidation Coal, Murray said, operated an equal number of each.

Additionally, Murray said, his company built virtually all of its own mining machinery, including the longwall systems.

“With our expertise, we will be able to efficiently operate the acquired Consolidation Coal mines and provide their employees with an opportunity for long term employment,” Murray chief operating officer and executive vice president Robert Moore said.

“Most especially, Murray Energy operates safe coal mines, with a particular emphasis on fire protection. This will help assure the protection of the health and safety of our new employees.”

Murray added that the combined companies would allow Murray Energy to better serve electric utility customers with accurate qualities and reliable product at a low cost.

“This is truly a momentous time for the combined employees of Murray Energy … and for our company,” he said.

Consol will retain a portion of its coal holdings, including the Buchanan complex in Virginia and its high-producing Enlow Fork and Bailey mines in western Pennsylvania, among others.

It called its remaining holdings, which have five longwalls and will produce nearly 24Mt in 2014, its “low cost” holdings.

“[They] produce a high-Btu [British thermal unit] Pittsburgh-seam coal that is lower in sulphur than many Northern Appalachian coals,” Murray said.

“It can be sold domestically or abroad, as either thermal coal or high-vol coking coal.”

Additionally, Consol has long been open about its desire to extend its gas production and growth in the sector.

The company’s 2014 gas production guidance range is 210-225 Bcfe, of which 7-8% are expected to be liquids or condensates.

For 2015 and 2016, the company expects 30% annual gas production growth.

"In advancing our E&P growth strategy, we expect that West Virginia will continue to play an important role," Harvey said.

"We have a sizeable Marcellus Shale footprint in West Virginia, which will take a significant amount of labor and capital to develop."

The sale is expected to close by the end of the year, pending customary conditions.

Deutsche Bank Securities acted as financial advisor to Murray Energy.

Goldman Sachs and Deutsche Bank are providing committed financing to Murray Energy in connection with the transaction with Goldman Sachs leading the financing and Kirkland & Ellis acted as its counsel, officials said.

UMWA response

The nation’s largest industry union, the United Mine Workers of America, said that the news of the purchase was “no great surprise” and said it will be business as usual for its members going forward.

“This changes nothing for our members with respect to the terms and conditions of their employment,” president Cecil Roberts said.

“Our collective bargaining agreement does not go away with this transaction, and our members remain covered by its provisions.

“There will be no changes in pay, benefits, insurance, schedules, working conditions, safety provisions, grievance procedures or any other language in the contract.”

According to the UMWA, there are about 2800 active hourly union workers and about 23,000 retirees that will be impacted by the transaction.

“This is yet another in what has been a long list of financial transactions in the coalfields over which we have no control,” he said.

“It’s not the first time coal mines have been sold to new owners, and it won’t be the last.

“But one thing has remained constant throughout all that time: UMWA miners are the safest, most productive coal miners in the world, no matter who owns the mine where they work. That’s not going to change, and neither is our commitment to represent them to the best of our ability.”