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ITEM 1.	CONDENSED FINANCIAL STATEMENTS

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(A)	Included in the Coal segment are sales of $136,576 to First Energy and $181,566 to Xcoal Energy & Resources each comprising over 10% of sales.

(B)	Includes equity in earnings of unconsolidated affiliates of $1,483, $2,037 and $3,648 for Coal, Gas and All Other, respectively.

(C)	Includes investments in unconsolidated equity affiliates of $21,090, $132,545 and $55,638 for Coal, Gas and All Other, respectively.

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(E)	Includes equity in earnings of unconsolidated affiliates of $4,240, $517 and $1,074 for Coal, Gas and All Other, respectively.

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(J)	Included in the Coal segment are sales of $379,726 to Xcoal Energy & Resources comprising over 10% of sales

(K)	Includes equity in earnings of unconsolidated affiliates of $8,702, $1,001 and $1,609 for Coal, Gas and All Other, respectively.

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ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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•	In June 2012, CONSOL Energy announced that it acquired a minority equity interest in Epiphany Solar Water

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•	In June 2012, CONSOL Energy sold its non-producing Northern Powder River Basin assets in southern Montana and northern Wyoming for $170 million in cash to Cloud Peak Energy. Additionally, CONSOL Energy retained an 8% production royalty interest on approximately 200 million tons of permitted fee coal. This transaction resulted in a pre-tax gain of $151 million.

•	In June 2012, CONSOL Energy expanded an existing mining joint venture with a privately-held company in Central Pennsylvania. The joint venture will self-fund, through retained earnings, a $54 million (gross) expansion in 2012 and 2013. The expansion will enable CONSOL Energy's share of high-vol A and mid-vol forecasted coal production to increase from 150,000 tons in 2012 to 900,000 tons in 2015.

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In April 2012, CONSOL Energy announced certain changes to the salaried other post-retirement benefit plan that current retirees and current active employees will receive as of January 1, 2014. The change provides a fixed annual retiree medical contribution into a Health Reimbursement Account for eligible employees. The money in the account can be used to help pay for a commercial medical plan, Medicare Part B and Part D premiums and other qualified expenses. Employees who work or worked in corporate or operational support positions at retirement and who are age 50 or older at December 31, 2013 will receive the revised benefit in lieu of the current retiree medical and prescription drug coverage. Employees who work or worked in corporate or operations support positions who are under age 50 at December 31, 2013 will receive no retiree medical or prescription drug benefit. CONSOL Energy remeasured the salaried other postretirement plan as of March 31, 2012 to recognize these changes. The remeasurement reflects the reduction in benefits and the change in discount rate from 4.51% at December 31, 2011 to 4.57% at March 31, 2012. The remeasurement resulted in a reduction of approximately $80.6 million of Other Post-Retirement Benefits (OPEB) liability with a corresponding offset to Other Comprehensive Income, net of applicable deferred taxes. The change resulted in a $3.1 million reduction in OPEB expense compared to what was originally expected to be recognized for the three months ended June 30, 2012. Additionally, the change will result in a $6.3 million reduction to OPEB expense compared to what was originally expected to be recognized for the remaining six months of 2012. The change was made to align CONSOL Energy's corporate and operational support compensation package more closely with our peer group.

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Pennsylvania enacted Act 13 of 2012, which provides for the comprehensive regulation of Marcellus Shale development in Pennsylvania. Among other things, Act 13 requires an impact fee be paid annually on all nonconventional gas wells drilled in the state. The annual fee is based on annual average sales price and is modified annually for a 15-year period for each well. The impact fee also required the first year fee be paid on all applicable wells drilled before January 1, 2012 with subsequent annual fees to apply each year thereafter. CONSOL Energy's retroactive impact fee related to wells drilled prior to January 1, 2012 was approximately $4 million.

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West Virginia has an alternative bond system (ABS) for coal mine reclamation which consists of (i) individual site bonds posted by the permittee that are less than the full estimated reclamation cost plus (ii) a bond pool (Special Reclamation Fund) funded by a per ton fee on coal mined in the State which is used to supplement the site specific bonds if needed in the event of bond forfeiture. The Special Reclamation Fund is currently underfunded. As a result of a decision by the U.S District Court in West Virginia in a citizens' suit concerning the adequacy of the Special Reclamation Fund, effective July 1, 2012, the rate per ton fee on coal mined in the state of West Virginia will be increased from $0.144 cents per ton to $0.279 per ton. CONSOL Energy expects to produce approximately 15 million tons of coal in West Virginia during the second half of 2012.

•	In April 2012, CONSOL Energy sold its non-producing Elk Creek reserves in southern West Virginia. The transaction resulted in cash proceeds of approximately $25 million and a gain on sale of assets of approximately $10 million.

•	Challenges in the overall environment in which we operate create increased risks that we must continuously monitor and manage. These risks include (i) increased prices for commodities such as diesel fuel, synthetic rubber and steel that we use in our operations (although prices for some of these commodities declined during the quarter from

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Federal and state environmental regulators are reviewing our operations more closely and are more strictly interpreting and enforcing existing environmental laws and regulations, resulting in increased costs and delays. For example, we entered into a consent decree with the EPA and the West Virginia Department of Environmental Protection pursuant to which we agreed to construct an advanced technology mine water treatment plant and related facilities to reduce high levels of total dissolved solids in water discharges from certain of our mines in Northern West Virginia, at a total estimated cost of approximately $200 million.  The new facility must be placed into service no later than May 2013.

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Federal and state regulators have proposed regulations which, if adopted, would adversely impact our business.   These proposed regulations could require significant changes in the manner in which we operate and/or would increase the cost of our operations. For example, the Department of Interior, Office of Surface Mining Reclamation and Enforcement (OSM) is currently preparing an environmental impact statement relating to OSM's consideration of five alternatives for amending its coal mining stream protection rules.  All of the alternatives, except the no action alternative, could make it more costly to mine our coal and/or could eliminate the ability to mine some of our coal.  Another example is the Cross-State Air Pollution Rule (CSAPR) that was finalized by the EPA on July 6, 2011, although the effective date of the rule has been stayed by a court.  CSAPR replaces the Clean Air Interstate Rule and regulates the amount of sulfur dioxide (SO2) and nitrogen oxide (NOx) that power plants in 23 eastern States can emit in order to meet clean air requirements in downwind states.  Another example is the Mercury and Air Toxic Standards issued by the EPA on December 16, 2011.  The new regulations set mercury and air toxic standards for new and existing coal and oil fired electric utility steam generating units and include more stringent new source performance standards (NSPS) for particulate matter (PM), SO2 and NOx.  Some older coal fired power plants may be retired or have operation time reduced rather than install additional expensive emission controls which could reduce the amount of coal consumed.   On April 18, 2012, the EPA published new final New Source Performance Standards for gas wells and related facilities.  These rules apply to wells that were hydraulically fractured after August, 23, 2011 and require the implementation by January 1, 2015 of technologies that capture the gas that is currently vented or flared during completion (hydrofracturing) of a well.  Low pressure wells, including coalbed methane wells, are excluded from these new standards.

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In April 2012, the EPA published its proposed New Source Performance Standards (NSPS) for carbon dioxide emissions from coal powered electric generating units.  The public comment period has run and publication of the final rules is expected soon. The proposed rules will apply to new power plants and to existing plants that make major modifications. If the rules are adopted as proposed, the only new coal fired power plants that will be able to meet the proposed emission limits will be coal fired plants with carbon dioxide capture and storage (CCS). Commercial scale CCS is not likely to be available in the near future, and if available, it may make coal fired electric generation units uneconomical compared to new gas fired electric generation units. Thus, if finalized the proposed rules could seriously threaten the construction of new coal fired electric generating units.

•	On June 11, 2012, the governor of Ohio signed amendments to Ohio's existing oil and gas laws that regulate the natural gas industry's hydraulic fracturing and ancillary activities in the Utica/Point Pleasant shale.  CONSOL Energy is currently reviewing the amendments for their potential impacts to our growing operations in that State.

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On May 25, 2012, CONSOL Energy received a citizens' Notice of Intent to Sue from the Sierra Club, the Ohio Valley Environmental Coalition and the West Virginia Highlands Conservancy alleging violations of the Clean Water Act relating to selenium at its Fola mining complex in central West Virginia.  CONSOL Energy is currently in discussions with the West Virginia Department of Environmental Protection concerning a consent order with the State relating to the alleged violations.

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In late June, CONSOL Energy received informal notification from the Pennsylvania Department of Environmental Protection of the Department's intent pursuant to a Technical Guidance Document entitled “Surface Water Protection-Underground Bituminous Coal Mining” to require a change in the mine plan of a pending application for a permit for expansion of the Company's Bailey East longwall mine.  This change in mine plan could have a material effect on CONSOL Energy's forecasted production for 2015.  Although CONSOL Energy does not agree that a modification of its mining plan is necessary to comply with applicable regulatory performance standards, CONSOL Energy is currently reviewing the notification and any modifications that would be required if CONSOL Energy is compelled to modify its application.

•	CONSOL Energy continues to explore potential sales of non-core assets.

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•	Average costs per ton sold increased due to fewer tons sold. Fixed costs are allocated over fewer sales tons, resulting in higher unit costs.

•	Average costs per ton sold increased due to the idling of longwalls at the Blacksville mine and the Buchanan mine during April 2012. The decrease in tonnage negatively impacted the average operating costs per ton sold by approximately $1.80 per ton.

•	Average labor and labor-related costs per ton increased as a result of the impact of the $2.00 per hour worked United Mine Workers of America (UMWA) contract wage increases, offset, in part, by fewer hours worked.

•	Average operating supplies and maintenance costs per ton increased due to increased gas well plugging expenses and increased maintenance project expenses.

•	Average subsidence costs per ton decreased due to the settlement of a previously incurred subsidence liability for an amount lower than expected.

•	Average provision costs per ton decreased due to the improvement in other postretirement benefits discussed in the long-term liabilities section below.

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•	Lower direct administrative, selling and other costs per unit due to decreased actual dollars due to reduced direct administrative labor and other costs.

•	Lower units-of-production depreciation, depletion and amortization rates for producing properties. These rates were generally calculated using the net book value of assets divided by either proved or proved developed reserve additions. Increased proved and proved developed reserves relative to the net book value of the producing assets resulted in a lower units-of-production rate.

•	Lower lifting costs that were the result of decreased road maintenance and well tending costs.

•	Employee wages and related expenses decreased $2 million in the period-to-period comparison primarily attributable to lower salary other post-retirement benefit expenses in the period-to-period comparison. The lower expenses relate to changes in the discount rates and other assumptions and a modification to the benefit plan for certain salaried employees.

•	Consulting and professional services decreased $2 million in the period-to-period comparison primarily due to a

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•	Miscellaneous general and administrative expenses decreased $2 million in the period-to-period comparison due to various corporate projects that occurred throughout both periods, none of which were individually material.

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•	Average operating costs per thermal ton sold increased due to fewer tons sold. Fixed costs are allocated over less tons, resulting in higher unit costs.

•	Average operating costs per thermal ton sold increased due to the idling of the Blacksville Mine longwall during April 2012. The decrease in tonnage negatively impacted the average operating costs per thermal ton sold by approximately $1.01 per ton.

•	Average operating supplies & maintenance cost per thermal ton sold increased due to the timing of major equipment overhaul costs and timing of gas well plugging expenditures in the period-to-period comparison.

•	Labor and related benefits average costs per thermal ton sold increased. This was primarily due to the impact of the wage increases of $2.00 per hour worked related to the United Mine Workers of America (UMWA) collective bargaining agreement in the period-to-period comparison, offset, in part, by fewer overtime hours worked.

•	Production taxes average cost per thermal ton sold increased due to the $2.50 per ton higher average sales price.

•	Subsidence costs per thermal ton sold decreased due to the settlement of a previously incurred subsidence liability for an amount lower than expected.

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•	Subsidence cost per high volatile metallurgical ton sold decreased due to a settlement of a previously incurred subsidence liability for an amount lower than expected.

•	Royalty cost per high volatile metallurgical ton sold decreased due to lower average realized price per ton sold.

•	Average operating supplies & maintenance cost per high volatile metallurgical ton sold increased due to additional

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•	Average operating costs per low volatile ton sold primarily increased due to fewer tons sold. Fixed costs are allocated over less tons, resulting in higher unit costs.

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•	Average operating costs per low volatile ton sold also increased due to the idling of the Buchanan Mine longwall during April 2012. The decrease in tonnage negatively impacted the average operating costs per low volatile ton sold by approximately $12.14 per ton.

•	Average gas well plugging and degasification costs increased due to an increased number of degasification wells drilled in the current period.

•	Average production taxes and royalties were improved due to lower realized pricing on sales tons.

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•	Abandonment of long-lived assets were $115 million for the three months ended June 30, 2011 as a result of the 2011 decision to permanently idle Mine 84.

•	Purchased coal costs decreased approximately $25 million in the period-to-period comparison primarily due to coal purchases to fulfill various contracts during a railroad bridge outage that occurred in the 2011 period.

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Freight expense is based on weight of coal shipped, negotiated freight rates and method of transportation (i.e. rail, barge, truck, etc.) used for the customers to which CONSOL Energy contractually provides transportation services. Freight revenue is the amount billed to customers for transportation costs incurred. Freight expense is offset in freight revenue. Freight expense decreased $10 million primarily due to decreased shipments on contracts for which CONSOL Energy contractually provides transportation services.

•	Coal contract buyouts decreased due to comparison period including the cost of buying out of a lower priced sales contract in order to sell the tons on higher priced contracts.

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Closed and idle mine costs increased approximately $19 million for the three months ended June 30, 2012 compared to the three months ended June 30, 2011.  The increase was the result of a $32 million addition to the Fola Complex reclamation liabilities in the three months ended June 30, 2012 as a result of changes in the mine plan due to new regulatory requirements, water and selenium treatment estimates, and the decision to idle mining due to market conditions. The current period Fola Complex adjustment was an increase of $24 million compared to the Fola Complex reclamation liability adjustment recognized in the three months ended June 30, 2011. Closed and idle mine costs decreased $10 million as the result of  a decision to permanently abandon Mine 84 in 2011. Closed and idle mine costs increased $5 million due to other changes in the operational status of various other mines, between idled and operating throughout both periods, none of which were individually material.

•	Other expenses related to the coal segment decreased $2 million in the period-to-period comparison due to various miscellaneous transactions which occurred throughout both periods, none of which were individually material.

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•	Lease Expiration costs increased $12 million due to various lease expirations at locations where CONSOL Energy allowed primary term leases to expire because of unfavorable drilling economics.

•	Dry Hole Costs increased $2 million primarily due to a favorable settlement involving defective pipe in 2011 which reduced expenses.

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•	Exploration expenses increased $1 million due to various transactions that occurred throughout both periods, none of which were individually material.

•	The short-term incentive compensation program is designed to increase compensation to eligible employees when CNX Gas reaches predetermined targets for safety, environmental compliance, production, and unit costs.

•	Stock-based compensation decreased $1 million in the period-to-period comparison due to various changes in share-based compensation programs, none of which were individually material.

•	Unutilized firm transportation costs represent excess pipeline transportation capacity that the gas division obtained to enable gas production to flow on an uninterrupted basis as sales volumes increase. These costs remained consistent in the period-to-period comparison.

•	Bank fees remained consistent in the period-to-period comparison.

•	Other expenses increased $1 million due to various transactions that occurred throughout both periods, none of which were individually material.

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•	On April 11, 2011, CONSOL Energy redeemed all of its outstanding $250 million, 7.875% senior secured notes due March 1, 2012 in accordance with the terms of the indenture governing these notes. The loss on extinguishment of debt was $16 million, which primarily represented the interest that would have been paid on these notes if held to

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•	Interest expense decreased $6 million primarily due to an increase in capitalized interest due to higher capital expenditures for major construction projects in the current period. Interest expense also decreased due to lower borrowings on the revolving credit facilities.

•	Evaluation fees for non-core asset dispositions decreased $3 million in the period-to-period comparison due to various corporate initiatives that were completed in 2011.

•	Bank fees decreased $2 million due to lower borrowings on the revolving credit facilities in the period-to-period comparison.

•	Other corporate items decreased $6 million due to various transactions that occurred throughout both periods, none of which were individually material.

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•	Average costs per ton sold increased due to fewer tons sold. Fixed costs are allocated over fewer sales tons, resulting in higher unit costs.

•	The idle longwalls at the Blacksville mine and the Buchanan mine during March and April 2012 resulted in an increase in unit costs of approximately $1.23 per ton as the fixed costs were allocated over fewer tons.

•	Average operating supplies and maintenance costs per ton sold increased due to additional equipment maintenance, timing of major equipment overhaul costs, increased fuels and lubricants and use of pumpable cribs for roof support.

•	Average labor and labor related expenses per ton sold increased primarily as a result of the impact of the $2.00 per hour worked UMWA contract wage increases, offset, in part, by lower overtime.

•	Average depreciation, depletion and amortization per ton sold increased due to additional assets placed into service after the 2011 period.

•	Average provision costs per ton decreased due to the improvement in other postretirement benefits discussed in the long-term liabilities section below.

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•	Higher volumes in the period-to-period comparison due to the on-going drilling program, offset, in part, by 6.2 billion cubic feet divested in the Noble and Antero transactions resulted in lower average costs per thousand cubic feet sold. Fixed costs are allocated over increased volumes, resulting in lower unit costs.

•	Lower depreciation, depletion and amortization rates per thousand cubic feet sold due to increased sales volumes reducing the unit cost of straight line depreciation since actual dollars were consistent in the period-to-period comparison.

•	Lower direct administrative, selling and other costs per thousand cubic feet sold due to increased sales volumes and decreased actual dollars due to reduced direct administrative labor and other costs.

•	Gathering costs increased slightly in the period-to-period comparison due to increased transportation charges.

•	Consulting and professional services decreased $3 million in the period-to-period comparison due to a reduction in CONSOL Energy's advertising and promotion campaign.

•	Employee wages and related expenses decreased $1 million primarily attributable to lower salary OPEB expenses in the period-to-period comparison. The lower expenses relate to changes in the discount rates and other assumptions and a modification to the benefit plan for certain salaried employees.

•	Miscellaneous general and administrative expenses decreased $3 million in the period-to-period comparison due to various transactions, none of which were individually material.

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•	Average operating costs per thermal ton sold increased due to fewer tons sold. Fixed costs are allocated over less tons, resulting in higher unit costs.

•	Average operating costs per thermal ton sold increased due to the idling of the Blacksville Mine longwall during March and April 2012. The decrease in tonnage negatively impacted the average operating costs per thermal ton sold by approximately $1.01 per ton.

•	Average operating supplies & maintenance cost per thermal ton sold increased due to the timing of major equipment overhaul costs and timing of gas well plugging expenditures in the period-to-period comparison.

•	Labor and related benefits increased per thermal ton sold due to higher costs and lower volumes sold. This was primarily due to the impact of the wage increases of $2.00 per hour worked related to the new collective bargaining agreement in the period-to-period comparison, offset, in part, by fewer overtime hours worked.

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•	Average operating supplies & maintenance cost per high volatile metallurgical ton sold increased due to additional

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•	Average coal preparation costs per ton sold decreased due to fewer maintenance projects completed at preparation plants in the period-to-period comparison.

•	Royalty cost per high volatile metallurgical ton sold decreased due to lower average realized price per ton sold.

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•	Average operating costs per low volatile metallurgical tons sold increased due to fewer tons sold. Fixed costs are then allocated over less tons, thereby increasing unit costs.

•	Average operating costs per low volatile ton sold increased due to the idling of the Buchanan Mine longwall during March and April 2012. The decrease in tonnage negatively impacted the average operating costs per low volatile ton sold by approximately $14.07 per ton.

•	Average operating supplies and maintenance costs per low volatile ton sold increased due to increased equipment maintenance for belts and continuous mining equipment and increased contractor services.

•	Labor and related benefits were impaired on a cost per ton sold basis due to lower volumes sold. Labor and related benefit dollars spent were consistent in the 2012 period compared to the 2011 period.

•	Preparation plant and power average cost per ton sold were impaired primarily due to lower tons sold.

•	Royalty cost per low volatile ton sold decreased due to the lower average sales price per ton sold.

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•	Abandonment of long-lived assets were $115 million for the six months ended June 30, 2011 as a result of the 2011 decision to permanently idle Mine 84.

•	Purchased coal costs decreased approximately $26 million in the period-to-period comparison primarily due to coal purchases to fulfill various contracts during a railroad bridge outage that occurred in the 2011 period.

•	Coal contract buyout costs decreased $5 million as a result of a lower priced coal sales contract being bought out in 2011 in order to sell the tons on a higher priced contract.

•	Freight expense is based on weight of coal shipped, negotiated freight rates and method of transportation (i.e. rail, barge, truck, etc.) used by the customers to which CONSOL Energy contractually provides transportation services. Freight revenue is the amount billed to customers for transportation costs incurred. Freight expense is offset by freight revenue.

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Closed and idle mine costs increased approximately $13 million for the six months ended June 30, 2012 compared to the six months ended June 30, 2011.  The increase was the result of a $32 million addition to the Fola Complex reclamation liabilities in the six months ended June 30, 2012 as a result of changes in the mine plan due to new regulatory requirements, water and selenium treatment estimates, and the decision to idle mining due to market conditions. The current period Fola Complex adjustment was an increase of $24 million compared to the Fola Complex reclamation liability adjustment recognized in the six months ended June 30, 2011. Closed and idle mine costs decreased $10 million as the result of a 2011 decision to permanently abandon Mine 84 in 2011.  Closed and idle mine costs decreased $1 million due to other changes in the operational status of various other mines, between idled and operating throughout both periods, none of which were individually material.

•	Other expenses related to the coal segment decreased $3 million for the six months ended June 30, 2012 compared to the six months ended June 30, 2011 due to various transactions that occurred throughout both periods, none of which were individually material.

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•	Lease Expiration costs increased $12 million due to various lease expirations at locations where CONSOL Energy allowed primary lease terms to expire because of unfavorable drilling economics.

•	Dry Hole Costs increased $5 million primarily due to a favorable settlement involving defective pipe in 2011 which reduced expenses in the six months ended June 30, 2011.

•	Exploration expenses were consistent on a period-to-period basis.

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PA impact fees are related to legislation in the state of Pennsylvania (Act 13 of 2012, House Bill 1950) which was signed into law during the first quarter of 2012. This legislation permits Pennsylvania counties to impose annual fees on unconventional gas wells located within their borders. As part of the legislation, all unconventional wells which were drilled prior to January 1, 2012 were assessed an initial fee related to periods prior to 2012. The $4 million represents this one-time initial assessment on wells drilled prior to January 1, 2012. On-going PA impact fees which relate to current year wells drilled are included as part of ad valorem, severance and other taxes in the Marcellus gas segment.

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Variable interest earnings are related to various adjustments a third party entity reflected in its financial statements. CONSOL Energy held no ownership interest, but guaranteed bank loans the entity held related to its purchases of drilling rigs. Also, CONSOL Energy was the main customer of the third party, and based on analysis, was the primary beneficiary. Therefore, the entity was fully consolidated and the earnings impact was fully reversed in the non-controlling interest line discussed below. In July 2011, the drilling contract with the variable interest entity was bought out and the variable interest entity was subsequently deconsolidated.

•	The short-term incentive compensation program is designed to increase compensation to eligible employees when CNX Gas reaches predetermined targets for safety, production and unit costs. Short-term incentive compensation expense was higher for the 2012 period compared to the 2011 period due to the projected higher payouts related to the periods presented.

•	Stock-based compensation was higher in the period-to-period comparison primarily due to the increased allocation from CONSOL Energy as a result of an increase in total CONSOL Energy stock-based compensation expense. Stock-based compensation costs are allocated to the gas segment based on revenue and capital expenditure projections between coal and gas.

•	Bank Fees remained consistent in the period-to-period comparison.

•	Unutilized firm transportation costs represent pipeline transportation capacity the gas segment has obtained to enable gas production to flow uninterrupted as sales volumes increase.

•	Other corporate related expense increased $2 million in the period-to-period comparison due to various transactions that occurred throughout both periods, none of which were individually material.

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•	On April 11, 2011, CONSOL Energy redeemed all of its outstanding $250 million, 7.875% senior secured notes due March 1, 2012 in accordance with the terms of the indenture governing these notes. The loss on extinguishment of debt was $16 million, which primarily represented the interest that would have been paid on these notes if held to maturity.

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Interest Expense decreased $13 million in the period-to-period comparison. Interest expense decreased $9 million due to an increase in capitalized interest due to higher capital expenditures for major construction projects in the current period. Capital expenditures for coal activities increased $180 million in the period-to-period comparison. Interest expense also decreased $2 million in the period-to-period comparison primarily due to the 2011 redemption of the 7.875% notes that were due in 2012, being replaced by the 2011 issuance of the 6.375% senior unsecured notes due March 2021. Additionally, a $3 million decrease in interest expense is due to lower borrowings on the revolving credit facilities. The increases were offset, in part, by $1 million due to various transactions that occurred in both periods, none of which were individually material.

•	Bank fees decreased $4 million due to lower borrowings on the revolving credit facilities in the period-to-period comparison.

•	Evaluation fees for non-core asset dispositions decreased $2 million in the period-to-period comparison due to various corporate initiatives that began after 2010.

•	Other corporate items decreased $4 million due to various transactions that occurred throughout both periods, none of which were individually material.

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•	Operating cash flow decreased $20 million in 2012 due to lower net income in the period-to-period comparison.

•	Operating cash flows decreased due to various other changes in operating assets, operating liabilities, other assets and other liabilities which occurred throughout both years, none of which were individually material.

•	During the 2012 period, $35 million was contributed to CONE in order to meet the operating and capital expenditure needs of the joint venture. The joint venture, of which CONSOL Energy owns 50%, was established on September 30, 2011 to develop and operate the gas gathering system in the Marcellus Shale play.

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Total capital expenditures increased $129 million to $714 million in the six months ended June 30, 2012 compared to $585 million in the six months ended June 30, 2011. Capital expenditures for the gas segment decreased $79 million primarily due to a decrease in CBM drilling and gathering system expenditures in the period-to-period comparison. Capital expenditures for coal and other activities increased $208 million in the period-to-period comparison. The ongoing development and expenditures of the BMX mine, which is scheduled to go on-line in 2014, increased $49 million in the period-to-period comparison. Capital expenditures for the Northern West Virginia RO system were $61 million for the 2012 period. The remaining $98 million increase was due to various projects throughout both periods, none of which were individually material.

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Proceeds from the sale of assets increased $245 million in the period-to-period comparison primarily due to the sale of CONSOL Energy's non-producing Northern Powder River Basin (PRB) assets on June 29, 2012, which resulted in proceeds of $170 million, the sale of the Elk Creek property in June 2012, which resulted in proceeds of $26 million, and the sale of the Burning Star No. 4 property in February 2012, which resulted in proceeds of $13 million. See Note 2 - Acquisitions and Dispositions, in the Consolidated Financial Statements included in this Form 10-Q for more information. Various other transactions occurred throughout both periods, none of which were individually material.

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•	In 2011, proceeds of $250 million were received in connection with the issuance of $250 million of 6.375% senior unsecured notes due in March 2021.

•	In 2011, CONSOL Energy repaid $130 million of borrowings under the accounts receivable securitization facility.

•	In 2011, CONSOL Energy paid outstanding borrowings of $23 million under the revolving credit facilities. CONSOL Energy had no amounts outstanding on the revolving credit facilities for the six months ended June 30, 2012.

•	In April 2011, CONSOL Energy paid $266 million, including a make-whole provision, to redeem the 7.875% notes that were due in March 2012.

•	Dividends of $57 million were paid in 2012 compared to $45 million in 2011. This is due to the increase of the quarterly dividend by 25%, or $0.10 per share, to $0.125 per share in the 2012 period.

(a)	Long-Term Liabilities—Employee Related include other post-employment benefits, work-related injuries and illnesses. Estimated salaried retirement contributions required to meet minimum funding standards under ERISA are excluded from the pay-out table due to the uncertainty regarding amounts to be contributed. Estimated 2012 contributions are expected to approximate $110 million.

(b)	Other long-term liabilities include mine reclamation and closure and other long-term liability costs.

(c)	The significant obligation table does not include obligations to taxing authorities due to the uncertainty surrounding the ultimate settlement of amounts and timing of these obligations.

•	An aggregate principal amount of $1.5 billion of 8.00% senior unsecured notes due in April 2017. Interest on the notes is payable April 1 and October 1 of each year. Payment of the principal and interest on the notes are guaranteed by most of CONSOL Energy’s subsidiaries.

•	An aggregate principal amount of $1.25 billion of 8.25% senior unsecured notes due in April 2020. Interest on the notes is payable April 1 and October 1 of each year. Payment of the principal and interest on the notes are guaranteed by most of CONSOL Energy’s subsidiaries.

•	An aggregate principal amount of $250 million of 6.375% notes due in March 2021. Interest on the notes is payable March 1 and September 1 of each year. Payment of the principal and interest on the notes are guaranteed by most of CONSOL Energy's subsidiaries.

•	An aggregate principal amount of $103 million of industrial revenue bonds which were issued to finance the

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•	$31 million in advance royalty commitments with an average interest rate of 6.73% per annum.

•	An aggregate principal amount of $62 million of capital leases with a weighted average interest rate of 6.35% per annum.

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•	deterioration in global economic conditions in any of the industries in which our customers operate, or sustained uncertainty in financial markets cause conditions we cannot predict;

•	a significant or extended decline in prices we receive for our coal and natural gas affecting our operating results and cash flows;

•	our customers extending existing contracts or entering into new long-term contracts for coal;

•	our reliance on major customers;

•	our inability to collect payments from customers if their creditworthiness declines;

•	the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our coal and natural gas to market;

•	a loss of our competitive position because of the competitive nature of the coal and natural gas industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability;

•	our inability to maintain satisfactory labor relations;

•	coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions;

•	the impact of potential, as well as any adopted regulations relating to greenhouse gas emissions on the demand for coal and natural gas

•	foreign currency fluctuations could adversely affect the competitiveness of our coal abroad;

•	the risks inherent in coal and natural gas operations being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results;

•	decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining operations;

•	decreases in the availability of, an increase in the prices charged by third party contractors or, failure of third party contractors to provide quality services to us in a timely manner could impact our profitability;

•	obtaining and renewing governmental permits and approvals for our coal and gas operations;

•	the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our coal and natural gas operations;

•	our ability to find adequate water sources for our use in gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules;

•	the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down a mine or natural gas well;

•	the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current coal and gas operations;

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•	the effects of mine closing, reclamation, gas well closing and certain other liabilities;

•	uncertainties in estimating our economically recoverable coal and gas reserves;

•	costs associated with perfecting title for coal or gas rights on some of our properties;

•	the impacts of various asbestos litigation claims;

•	the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934;

•	increased exposure to employee-related long-term liabilities;

•	our accruals for obligations for long-term employee benefits are based upon assumptions which, if inaccurate, could result in our being required to expend greater amounts than anticipated;

•	due to our participation in an underfunded multi-employer pension plan, we have exposure under that plan that extends beyond what our obligation would be with respect to our employees and in the future we may have to make additional cash contributions to fund the pension plan or incur withdrawal liability;

•	lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan exceeding total service and interest cost in a plan year;

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acquisitions and joint ventures that we recently have completed or entered into or may make in the future including the accuracy of our assessment of the acquired businesses and their risks, achieving any anticipated synergies, integrating the acquisitions and unanticipated changes that could affect assumptions we may have made and divestitures we anticipate may not occur or produce anticipated proceeds including joint venture partners paying anticipated carry obligations;

•	the terms of our existing joint ventures restrict our flexibility and actions taken by the other party in our gas joint ventures may impact our financial position;

•	the anti-takeover effects of our rights plan could prevent a change of control;

•	risks associated with our debt;

•	replacing our natural gas reserves, which if not replaced, will cause our gas reserves and gas production to decline;

•	our hedging activities may prevent us from benefiting from price increases and may expose us to other risks;

•	other factors discussed in our 2011 Form 10-K under “Risk Factors,” as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.

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ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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ITEM 4.	CONTROLS AND PROCEDURES

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ITEM 1.	LEGAL PROCEEDINGS

ITEM 6.	EXHIBITS

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