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CHARLESTON, W.Va. -- Murray Energy and CONSOL Energy said Thursday that they had finalized a $3.5 billion deal for Murray to buy CONSOL's five large underground coal mines in northern West Virginia.The deal dramatically increases Murray's annual production, its coal reserves and its employees in what the Ohio-based company said in a statement is a "truly transformative event for Murray Energy and its combined employees."Murray and its subsidiaries now employ about 7,100 workers and operate 13 active mines with a dozen longwall systems and 46 continuous mining units."This production and reserve base will allow Murray Energy to even better serve its electric utility customers with affordable, reliable and high-quality coal supplies," Murray Energy said.The mines involved - CONSOL's McElroy, Shoemaker, Blacksville, Loveridge and Robinson Run - are five of the top six underground mines in West Virginia, with nearly 30 million tons of combined production in 2012, according to federal Mine Safety and Health Administration data. The deal also includes coal reserves, related river transportation and dock facilities, and other assets.In Thursday's release, privately held Murray Energy announced the names of the reorganized companies, saying, for example, that the Consolidation Coal name has been changed to Murray American Energy Inc.Murray said that the mines are now organized under the following companies and mine names: The Ohio County Coal Company's Ohio County Mine, formerly Shoemaker Mine; the Marshall County Coal Company's Marshall County Mine, formerly McElroy Mine; the Marion County Coal Company's Marion County Mine, formerly Loveridge Mine; the Harrison County Coal Company's Harrison County Mine, formerly Robinson Run Mine; and The Monongalia County Coal Company's Monongalia County Mine, formerly Blacksville Mine.Prior to the CONSOL deal, most of Murray Energy's mines were non-union operations. The Powhatan No. 6 Mine, operated by Murray's Ohio Valley Coal Co., is unionized.Hourly workers at the mines Murray is purchasing from CONSOL have long been United Mine Workers members and are currently working under a UMW contract that runs through the end of 2016, said union spokesman Phil Smith.Murray Energy owned the Crandall Canyon Mine in Utah, where a series of collapses in August 2007 killed six miners and three rescue workers.Last year, Murray Energy's Genwal Resources Inc., which operated Crandall Canyon, pleaded guilty in U.S. District Court in Salt Lake City to two criminal violations of mandatory health and safety standards under the Federal Mine Safety and Health Act. Murray Energy has said the deaths were the result of a "tragic seismic event," and that the violations were not the cause of the collapse.In its statement Thursday, Murray Energy said, "The focus at Murray Energy is on operating very safe coal mines, with a particular emphasis on fire protection and emergency preparedness."The health and safety of all of our employees is foremost," the company said.For Pittsburgh-based CONSOL, the deal allows a greater focus on its increasing interest in the region's growing natural gas market. The mines being sold represent roughly half of CONSOL's annual production, but CONSOL is keeping its Bailey and Enlow Fork mines in Pennsylvania and its soon-to-be-opened BMX Mine, also in western Pennsylvania. Also, CONSOL will retain its Buchanan Mine in southwestern Virginia, and the Miller Creek Mining Complex in Mingo County.CONSOL CEO J. Brett Harvey said completion of the Murray transaction allows his company to focus on achieving natural gas production targets for 2014 and a hoped-for 30 percent annual gas production growth in 2015 and 2016.CONSOL said the total consideration paid in the transaction includes $850 million in cash paid at the closing and future payments expected to total nearly $184 million in value from the retention of a royalty on select reserves and tolling fees at CONSOL's Baltimore Terminal.CONSOL is also "significantly de-levering its balance sheet" in the deal, with Murray Energy acquiring $2.4 billion of CONSOL balance sheet liabilities, including $2.1 billion for employee retirement benefits. Murray is also acquiring more than $940 million in CONSOL UMWA 197 Pension Trust obligations.Reach Ken Ward Jr. at or 304-348-1702.

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