CONSOL ENERGY INC (Form: 10-K, Received: 02/19/2008 09:00:42)

For the Years
Ended December 31,

Total produced coalbed methane (in millions of cubic feet)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year ended December 31, 2007;

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission file number: 001-14901

CONSOL ENERGY INC.

(Exact name of registrant as specified in its charter)

Delaware

51-0337383

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

Consol Plaza

1800 Washington Road

Pittsburgh, Pennsylvania 15241

(Address of principal executive offices including zip code)

Registrant’s telephone number including area code: 412-831-4000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Name of exchange on which registered

Common Stock ($.01 par value)

Preferred Share Purchase Rights

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The aggregate market value of voting stock held by nonaffiliates of the registrant as of June 29, 2007, the last business day of the registrant’s most recently completed second fiscal quarter, based on the closing price of the common stock on the New York Stock Exchange on such date was $8,406,925,288.

The number of shares outstanding of the registrant’s common stock as of January 31, 2008 is 182,502,996 shares.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of Consol Energy’s Proxy Statement for the Annual Meeting of Shareholders to be held on April 29, 2008,

are incorporated by reference in Items 10, 11, 12, 13 and 14 of Part III.

TABLE OF CONTENTS


		Page

PART I

Item 1.	Business	4

Item 1A.	Risk Factors	33

Item 1B.	Unresolved Staff Comments	46

Item 2.	Properties	47

Item 3.	Legal Proceedings	47

Item 4.	Submission of Matters to a Vote of Security Holders	47

PART II

Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities	48

Item 6.	Selected Financial Data	50

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	55

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	93

Item 8.	Financial Statements and Supplementary Data	95

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	171

Item 9A.	Controls and Procedures	171

Item 9B.	Other Information	172

PART III

Item 10.	Directors and Executive Officers of the Registrant	173

Item 11.	Executive Compensation	174

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	174

Item 13.	Certain Relationships and Related Transactions and Director Independence	174

Item 14.	Principal Accounting Fees and Services	174

PART IV

Item 15.	Exhibits and Financial Statement Schedules	175

SIGNATURES		181

FORWARD-LOOKING STATEMENTS

Various statements in this document, including those that express a belief, expectation, or intention, as well as those that are not statements of historical fact, are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934). The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. When we use the words “believe,” “intend,” “expect,” “may,” “should,” “anticipate,” “could,” “would,” “will,” “estimate,” “plan,” “predict,” “project,” or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this document speak only as of the date of this document; we disclaim any obligation to update these statements unless required by securities law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. These risks, uncertainties and contingencies include, but are not limited to, the following:

•

an extended decline in prices we receive for our coal and gas affecting our operating results and cash flows;

•

reliance on customers extending existing contracts or entering into new long-term contracts for coal;

•

reliance on major customers;

•

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

•

the disruption of rail, barge and other systems that deliver our coal;

•

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

•

our inability to hire qualified people to meet replacement or expansion needs;

•

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

•

the inability to produce a sufficient amount of coal to fulfill our customers’ requirements which could result in our customers initiating claims against us;

•

increases in the price of commodities used in our mining operations could impact our cost of production;

•

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

•

the risks inherent in coal mining being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, accidents and weather conditions which could cause our results to deteriorate;

•

increases in the price of commodities used in our mining operations could impact our cost of production;

•

obtaining governmental permits and approvals for our operations;

•

the effects of proposals to regulate greenhouse gas emissions;

•

the effects of government regulation;

•

the effects of stringent federal and state employee health and safety regulations;

•

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

•

uncertainties in estimating our economically recoverable coal and gas reserves;

•

we do not insure against all potential operating risks;

•

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

•

increased exposure to employee related long-term liabilities;

•

our participation in multi-employer pension plans may expose us to obligations beyond the obligation to our employees;

•

lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan;

•

our ability to comply with laws or regulations requiring that we obtain surety bonds for workers’ compensation and other statutory requirements;

•

acquisitions that we recently have made 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;

•

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

•

risks in exploring for and producing gas;

•

new gas development projects and exploration for gas in areas where we have little or no proven gas reserves;

•

the disruption of pipeline systems which deliver our gas;

•

the availability of field services, equipment and personnel for drilling and producing gas;

•

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

•

costs associated with perfecting title for gas rights in some of our properties;

•

location of a vast majority of our gas producing properties in three counties in southwestern Virginia, making us vulnerable to risks associated with having our gas production concentrated in one area;

•

other persons could have ownership rights in our advanced gas extraction techniques which could force us to cease using those techniques or pay royalties;

•

the coalbeds and other strata from which we produce methane gas frequently contain water and the gas often contains impurities that may hamper production;

•

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

•

other factors discussed in our 2007 Form 10-K under “Risk Factors,” as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.

We are including this cautionary statement in this document to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf, of us.

Item 1.

Business .

CONSOL Energy’s History

We are a multi-fuel energy producer and energy services provider primarily serving the electric power generation industry in the United States. That industry generates approximately two-thirds of its output by burning coal or gas, the two fuels we produce. During the year ended December 31, 2007, we produced high-Btu bituminous coal from 17 mining complexes in the United States, including a fully consolidated, 49% owned,

variable interest entity, and a 49% equity affiliate. Coal produced from our mines has a high-Btu content which creates more energy per unit when burned compared to coals with lower Btu content. As a result, coals with greater Btu content can be more efficient to use. We are the majority shareholder (81.7%) of CNX Gas Corporation (CNX Gas). On January 29, 2008, we announced our intention to offer to acquire all of the shares of CNX Gas which we currently do not own. CNX Gas primarily produces pipeline-quality coalbed methane gas from our coal properties in the Northern and the Central Appalachian basin, and other western basins and oil and gas from properties in the Appalachian and Illinois Basins. We believe that the use of coal and gas to generate electricity will grow as demand for power increases.

Historically, we rank among the largest coal producers in the United States based upon total revenue, net income and operating cash flow. Our production of approximately 65 million tons of coal in 2007 accounted for approximately 6% of the total tons produced in the United States and approximately 13% of the total tons produced east of the Mississippi River during 2007. We are one of the premier coal producers in the United States by several measures:

•

We mine more high-Btu bituminous coal than any other United States producer;

•

We are the largest coal producer east of the Mississippi River;

•

We have the second largest amount of recoverable coal reserves among United States coal producers; and

•

We are the largest United States producer of coal from underground mines.

CNX Gas also ranks as one of the largest coalbed methane gas companies in the United States based on both their proved reserves and their current daily production. Our position as a gas producer is highlighted by several measures:

•

Our principal coalbed methane operations produce gas from coal seams (single layers or stratum of coal) with a high gas content;

•

We had approximately 155 million cubic feet of net average daily production for the month of December 2007;

•

At December 31, 2007, we had 2,989 net producing wells connected by approximately 1,301 miles of gathering lines and associated infrastructure; and

•

We controlled one of the largest coalbed methane reserve bases among publicly traded oil and gas companies in the United States with approximately 1.3 trillion cubic feet of net proved reserves of gas at December 31, 2007.

Additionally, we provide energy services, including river and dock services, terminal services, industrial supply services, coal waste disposal services and land resource services.

CONSOL Energy was organized as a Delaware corporation in 1991. We use “CONSOL Energy” to refer to CONSOL Energy Inc. and our subsidiaries, unless the context otherwise requires.

Industry Segments

Creek. It also includes the following mines acquired with the AMVEST Corporation and certain of its subsidiaries and affiliates (“AMVEST”) acquisition: Fola Complex and the Terry Eagle Complex. For the year ended December 31, 2007, the Metallurgical aggregated segment includes the following mines: Buchanan and Amonate. The Other Coal segment includes our purchased coal activities, idled mine cost, coal segment business units not meeting aggregation criteria, as well as various other activities assigned to the coal segment but not allocated to each individual mine. The principal activity of the Gas unit is to produce pipeline-quality methane gas for sale primarily to gas wholesalers. CONSOL Energy’s All Other segment includes terminal services, river and dock services, industrial supply services and other business activities, including rentals of building and flight operations. Financial information concerning industry segments, as defined by accounting principles generally accepted in the United States, for the years ended December 31, 2007, 2006 and 2005 is included in Note 27 of Notes to Audited Consolidated Financial Statements included as Item 8 in Part II of this Annual Report on Form 10-K.

Coal Operations

Mining Complexes

During the year ended December 31, 2007, CONSOL Energy had 17 active mining complexes, including a fully consolidated, 49% owned, variable interest entity, and a 49% equity affiliate, all located in the United States.

The following map provides the location of CONSOL Energy’s operations by region:

LOGO

The following table provides the location of CONSOL Energy’s mining complexes and the coal reserves associated with each.

CONSOL ENERGY MINING COMPLEXES

Proven and Probable Assigned and Accessible Coal Reserves as of December 31, 2007 and 2006


Mine/Reserve	Location	Reserve Class	Coal Seam	Average Seam Thickness (feet)	As Received Heat Value(1) (Btu/lb)		Recoverable Reserves(2)					Recoverable Reserves (tons in Millions) 12/31/2006
Mine/Reserve	Location	Reserve Class	Coal Seam	Average Seam Thickness (feet)	Typical	Range	Owned (%)		Leased (%)		Tons in Millions 12/31/2007
ASSIGNED—OPERATING
Northern Appalachia (Pennsylvania, Ohio, Northern West Virginia)
Enlow Fork	Enon, PA	Assigned	Pittsburgh	5.3	12,940	12,860 – 13,060	97	%	3	%	171.2	182.4
		Accessible	Pittsburgh	5.4	12,900	12,830 – 13,000	75	%	25	%	185.3	185.1
Bailey	Enon, PA	Assigned	Pittsburgh	5.7	12,950	12,860 – 13,060	21	%	79	%	43.4	53.2
		Accessible	Pittsburgh	5.7	12,900	12,830 – 13,000	44	%	56	%	144.2	144.2
Mine 84	Eighty Four, PA	Assigned	Pittsburgh	5.6	13,120	12,950 – 13,250	48	%	52	%	28.7	32.3
		Accessible	Pittsburgh	5.4	13,050	12,880 – 13,180	91	%	9	%	86.7	86.7
McElroy	Glen Easton, WV	Assigned	Pittsburgh	5.9	12,570	12,450 – 12,650	100	%	—	%	211.1	197.8
		Accessible	Pittsburgh	5.8	12,530	12,410 – 12,610	99	%	1	%	69.0	68.8
Loveridge	Fairview, WV	Assigned	Pittsburgh	7.7	13,150	13,070 – 13,370	97	%	3	%	22.3	28.9
		Accessible	Pittsburgh	7.5	13,100	13,020 – 13,320	89	%	11	%	61.6	61.6
Robinson Run	Shinnston, WV	Assigned	Pittsburgh	7.6	12,940	12,600 – 13,300	66	%	34	%	12.2	15.4
		Accessible	Pittsburgh	6.9	12,940	12,600 – 13,300	74	%	26	%	219.9	206.2
Blacksville 2	Wana, WV	Assigned	Pittsburgh	6.6	13,060	12,850 – 13,250	100	%	—	%	5.7	10.9
		Accessible	Pittsburgh	6.8	13,100	12,890 – 13,290	98	%	2	%	55.7	55.7
Harrison Resources(4)	Cadiz, OH	Assigned	Multiple	4.3	11,570	11,350 – 11,850	100	%	—	%	9.8	—

Central Appalachia (Virginia, Southern West Virginia, Eastern Kentucky)
Buchanan	Mavisdale, VA	Assigned	Pocahontas 3	5.7	13,980	13,700 – 14,200	13	%	87	%	47.1	49.9
		Accessible	Pocahontas 3	6.1	13,930	13,650 – 14,150	12	%	88	%	64.4	64.4
AMVEST—Fola Complex	Bickmore, WV	Assigned	Multiple	5.9	12,380	12,250 – 12,550	95	%	5	%	107.8	—
AMVEST—Terry Eagle Complex	Bickmore, WV	Assigned	Multiple	3.2	13,300	13,200 – 13,350	—	%	100	%	23.2	—
Mill Creek Complex	Deane, KY	Assigned	Multiple	3.7	12,430	12,350 – 12,650	90	%	10	%	11.6	12.5
		Accessible	Multiple	4.4	11,380	11,300 – 11,600	100	%	—	%	0.7	0.7
Jones Fork Complex	Mousie, KY	Assigned	Multiple	3.2	12,530	12,450 – 12,650	75	%	25	%	37.7	31.1
		Accessible	Multiple	2.8	12,330	12,250 – 12,450	88	%	12	%	1.7	3.5
Amonate Complex	Amonate, VA	Assigned	Multiple	3.8	13,100	12,850 – 13,350	72	%	28	%	21.9	22.9
Miller Creek Complex	Delbarton, WV	Assigned	Multiple	8.9	12,000	11,600 – 12,650	—	%	100	%	6.5	7.5
Southern West Virginia Energy(3)	Mingo County, WV	Assigned	Multiple	8.1	12,100	11,600 – 12,650	—	%	100	%	7.3	8.1
		Accessible	Multiple	7.1	11,900	11,600 – 12,650	—	%	100	%	9.1	9.1
Western U.S. (Utah)
Emery	Emery Co., UT	Assigned	Ferron I	7.5	12,260	12,000 – 13,000	81	%	19	%	18.0	19.0

Total Assigned Operating and Accessible											1,683.8	1,557.9

(1)

The heat value shown for assigned reserves is based on the quality of coal mined and processed during the year ended December 31, 2007. The heat value shown for accessible reserves is based on the same mining and processing methods as for the assigned reserves with adjustments made based on the variability found in exploration drill core samples. The heat values given have been adjusted to include moisture that may be added during mining or processing and for dilution by rock lying above or below the coal seam.

(2)

Recoverable reserves are calculated based on the area in which mineable coal exists, coal seam thickness, and average density determined by laboratory testing of drill core samples. This calculation is adjusted to account for coal that will not be recovered during mining and for losses that occur if the coal is processed after mining. Reserve calculations do not include adjustments for moisture that may be added during mining or processing, nor do the calculations include adjustments for dilution from rock lying above or below the coal seam. Reserves are reported only for those coal seams that are controlled by ownership or leases.

(3)

Southern West Virginia Energy (SWVE) is a variable interest entity as defined by Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51,” in which CONSOL Energy acquired a 49% ownership interest in 2005. Accordingly, reserve tonnage reflects 100% of SWVE.

(4)	Harrison Resources is an equity affiliate in which CONSOL Energy owns a 49% interest. Reserves reported equal CONSOL Energy’s 49% proportionate interest in Harrison Resources’ reserves.

Excluded from the table above are approximately 248.9 million tons of reserves at December 31, 2007 that are assigned to projects that have not produced coal in 2007 or 2006. These assigned reserves are in the Northern Appalachia (northern West Virginia), Central Appalachia (Virginia and eastern Kentucky) and Illinois Basin (Illinois) regions. These reserves are approximately 74% owned and 26% leased.

CONSOL Energy assigns coal reserves to each of our mining complexes. The amount of coal we assign to a mining complex generally is sufficient to support mining through the duration of our current mining permit. Under federal law, we must renew our mining permits every five years. All assigned reserves have their required permits or governmental approvals, or there is a high probability that these approvals will be secured.

In addition, our mining complexes may have access to additional reserves that have not yet been assigned. We refer to these reserves as accessible. Accessible reserves are proven and probable unassigned reserves that can be accessed by an existing mining complex, utilizing the existing infrastructure of the complex to mine and to process the coal in this area. Mining an accessible reserve does not require additional capital spending beyond that required to extend or to continue the normal progression of the mine, such as the sinking of airshafts or the construction of portal facilities.

Some reserves may be accessible by more than one mining complex because of the proximity of many of our mining complexes to one another. In the table above, the accessible reserves indicated for a mining complex are based on our review of current mining plans and reflects our best judgment as to which mining complex is most likely to utilize the reserve.

Assigned and unassigned coal reserves are proven and probable reserves which are either owned or leased. The leases have terms extending up to 30 years and generally provide for renewal through the anticipated life of the associated mine. These renewals are exercisable by the payment of minimum royalties. Under current mining plans, assigned reserves reported will be mined out within the period of existing leases or within the time period of probable lease renewal periods.

Coal Reserves

At December 31, 2007, CONSOL Energy had an estimated 4.5 billion tons of proven and probable reserves. Reserves are the portion of the proven and probable tonnage that meet CONSOL Energy’s economic criteria regarding mining height, preparation plant recovery, depth of overburden and stripping ratio. Generally, these reserves would be commercially mineable at year-end price and cost levels.

Reserves are defined in Securities and Exchange Commission (SEC) Industry Guide 7 as follows:

Proven (Measured) Reserves —Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed

sampling and (b) the sites for inspection, sampling and measurement are spaced so close and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.

Probable (Indicated) Reserves —Reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.

Spacing of points of observation for confidence levels in reserve calculations is based on guidelines in U.S. Geological Survey Circular 891 (Coal Resource Classification System of the U.S. Geological Survey). Our estimates for proven reserves have the highest degree of geologic assurance. Estimates for proven reserves are based on points of observation that are equal to or less than 0.5 mile apart. Estimates for probable reserves have a moderate degree of geologic assurance and are computed from points of observation that are between 0.5 to 1.5 miles apart.

An exception is made concerning spacing of observation points with respect to our Pittsburgh coal seam reserves. Because of the well-known continuity of this seam, spacing requirements are 3,000 feet or less for proven reserves and between 3,000 and 8,000 feet for probable reserves.

CONSOL Energy’s estimates of proven and probable reserves do not rely on isolated points of observation. Small pods of reserves based on a single observation point are not considered; continuity between observation points over a large area is necessary for proven or probable reserves.

Our reserve estimates are predicated on information obtained from our ongoing exploration drilling and in-mine sampling programs. Data including coal seam elevation, thickness, and, where samples are available, coal quality is entered into a computerized geological database. This information is then combined with data on ownership or control of the mineral and surface interests to determine the extent of reserves in a given area. Reserve estimates include mine recovery rates that reflect CONSOL Energy’s experience in various types of underground and surface coal mines.

CONSOL Energy’s reserve estimates are based on geological, engineering and market data assembled and analyzed by our staff of geologists and engineers located at individual mines, operations offices and at our principal office. The reserve estimates are reviewed and adjusted annually to reflect production of coal from reserves, analysis of new engineering and geological data, changes in property control, modification of mining methods and other factors. Information, including the quantity and quality of reserves, coal and surface control, and other information relating to CONSOL Energy’s coal reserve and land holdings, is maintained through a system of interrelated computerized databases.

Our estimate of proven and probable coal reserves has been determined by CONSOL Energy’s geologists and mining engineers. Approximately 95% of the amounts included in our 2007 coal reserves have been reviewed and confirmed by an independent third party consultant. The independent consultant reviewed the procedures used by us to prepare our internal estimate, verified the accuracy of selected property reserve estimates and retabulated reserve groups according to standard classifications of reliability.

CONSOL Energy’s proven and probable coal reserves fall within the range of commercially marketed coals in the United States. The marketability of coal depends on its value-in-use for a particular application, and this is affected by coal quality, such as, sulfur content, ash and heating value. Modern power plant boiler design aspects can compensate for coal quality differences that occur. Therefore, any of CONSOL Energy’s coals can be marketed for power generation.

CONSOL Energy’s reserves are located in northern Appalachia (63%), central Appalachia (13%), the mid-western United States (18%), the western United States (4%), and in western Canada (2%) at December 31, 2007.

The following table sets forth our unassigned proven and probable reserves by region:

CONSOL Energy—UNASSIGNED Recoverable Coal Reserves as of 12/31/07


		Recoverable Reserves 12/31/07(2)
Coal Producing Region	As Received Heat Value(1) (Btu/lb)	Owned (%)		Leased (%)		Tons (in millions)	Recoverable Reserves (tons in millions) 12/31/2006
Northern Appalachia (Pennsylvania, Ohio, Northern West Virginia)	11,400 – 13,500	77	%	23	%	1,331.8	1,233.5
Central Appalachia (Virginia, Southern West Virginia, Eastern Kentucky)	11,900 – 14,200	54	%	46	%	233.9	176.5
Illinois Basin (Illinois, Western Kentucky, Indiana)	11,500 – 11,900	43	%	57	%	780.6	697.5
Western U.S. (Wyoming)	9,400	100	%	—	%	169.1	252.7
Western Canada (Alberta)	12,400 – 12,900	—	%	100	%	77.9	129.1

Total		64	%	36	%	2,593.3	2,489.3

The heat value estimates for Northern Appalachian and Central Appalachian Unassigned coal reserves include adjustments for moisture that may be added during mining or processing as well as for dilution by rock lying above or below the coal seam. The mining and processing methods currently in use are used for these estimates. The heat value estimates for the Illinois Basin, Western U.S. and Western Canada Unassigned reserves are based primarily on exploration drill core data that may not include adjustments for moisture added during mining or processing, or for dilution by rock lying above or below the coal seam.

Recoverable reserves are calculated based on the area in which mineable coal exists, coal seam thickness, and average density determined by laboratory testing of drill core samples. This calculation is adjusted to account for coal that will not be recovered during mining and for losses that occur if the coal is processed after mining. Reserve calculations do not include adjustment for moisture that may be added during mining or processing, nor do the calculations include adjustments for dilution from rock lying above or below the coal seam.

The following table summarizes our proven and probable reserves as of December 31, 2007 by region and type of coal or sulfur content (sulfur content per million British thermal units). Proven and probable reserves include both assigned and unassigned reserves. The table classifies bituminous coal as high volatile A, B and C. High volatile A, B and C bituminous coals are classified on the basis of heat value. The table also classifies bituminous coals as medium and low volatile which are classified on the basis of fixed carbon and volatile matter. Coal is ranked by the degree of alteration it has undergone since the initial deposition of the organic material. The lowest ranked coal, lignite, has undergone less transformation than the highest ranked coal, anthracite. From the lowest to the highest rank, the coals are: lignite; sub-bituminous; bituminous and anthracite. The ranking is determined by measuring the fixed carbon to volatile matter ratio and the heat content of the coal. As rank increases, the amount of fixed carbon increases, volatile matter decreases, and heat content increases. Bituminous coals are further characterized by the amount of volatile matter present. Bituminous coals with high volatile matter content are also ranked. High volatile “A” bituminous coals have higher heat content than high volatile “C” bituminous coals. These characterizations of coal allow a user to predict the behavior of a coal when burned in a boiler to produce heat or when it is heated in the absence of oxygen to produce coke for steel production.

CONSOL ENERGY PROVEN AND PROBABLE RECOVERABLE COAL RESERVES

BY PRODUCING REGION AND PRODUCT (IN MILLIONS OF TONS) AS OF DECEMBER 31, 2007


	< 1.20 lbs						> 1.20 < 2.50 lbs						> 2.50 lbs						Total		Percentage By Region
	S02/MMBtu						S02/MMBtu						S02/MMBtu
By Region	Low Btu		Med Btu		High Btu		Low Btu		Med Btu		High Btu		Low Btu		Med Btu		High Btu
Northern Appalachia:
Metallurgical:
High Vol A Bituminous	—		—		—		—		—		162.3		—		—		—		162.3		3.6	%
Steam:
High Vol A Bituminous	—		—		—		—		—		137.7		57.6		134.2		2,304.4		2,633.9		58.2	%
Low Vol Bituminous	—		—		—		—		—		33.6		—		—		—		33.6		0.7	%

Region Total	—		—		—		—		—		333.6		57.6		134.2		2,304.4		2,829.8		62.5	%
Central Appalachia:
Metallurgical:
High Vol A Bituminous	—		4.9		31.3		—		—		20.6		—		—		—		56.8		1.3	%
Med Vol Bituminous	1.0		0.9		64.3		—		—		12.7		—		—		—		78.9		1.7	%
Low Vol Bituminous	—		—		130.6		2.3		—		—		—		—		—		132.9		2.9	%
Steam:
High Vol A Bituminous	34.2		75.1		14.2		70.5		45.8		89.5		0.4		1.7		11.2		342.6		7.6	%

Region Total	35.2		80.9		240.4		72.8		45.8		122.8		0.4		1.7		11.2		611.2		13.5	%
Midwest – Illinois Basin:
Steam:
High Vol B Bituminous	—		—		—		—		79.3		—		—		460.6		—		539.9		11.9	%
High Vol C Bituminous	—		—		—		—		159.5		—		108.4		—		—		267.9		5.9	%

Region Total	—		—		—		—		238.8		—		108.4		460.6		—		807.8		17.8	%
Northern Powder River Basin:
Steam:
Subbituminous B	—		—		169.1		—		—		—		—		—		—		169.1		3.7	%

Region Total	—		—		169.1		—		—		—		—		—		—		169.1		3.7	%
Utah – Emery Field:
High Vol B Bituminous	—		—		—		—		30.3		—		—		—		—		30.3		0.7	%

Region Total	—		—		—		—		30.3		—		—		—		—		30.3		0.7	%
Western Canada:
Metallurgical:
Med Vol Bituminous	30.1		47.7		—		—		—		—		—		—		—		77.8		1.8	%

Region Total	30.1		47.7		—		—		—		—		—		—		—		77.8		1.8	%

Total Company	65.3		128.6		409.5		72.8		314.9		456.4		166.4		596.5		2,315.6		4,526.0		100.0	%

Percent of Total	1.4	%	2.8	%	9.0	%	1.6	%	7.0	%	10.1	%	3.7	%	13.2	%	51.2	%	100.0	%

CONSOL ENERGY PROVEN AND PROBABLE RECOVERABLE COAL RESERVES BY PRODUCT

(MILLIONS OF TONS) AS OF DECEMBER 31, 2007

The following table classifies bituminous coal as high volatile A, B and C. High volatile A, B and C bituminous coals are classified on the basis of heat value. The table also classifies bituminous coals as medium and low volatile which are classified on the basis of fixed carbon and volatile matter.


	< 1.20 lbs						> 1.20 < 2.50 lbs						> 2.50 lbs						Total		Percentage By Product
	S02/MMBtu						S02/MMBtu						S02/MMBtu
By Product	Low Btu		Med Btu		High Btu		Low Btu		Med Btu		High Btu		Low Btu		Med Btu		High Btu
Metallurgical:
High Vol A Bituminous	—		4.9		31.3		—		—		182.9		—		—		—		219.1		4.8	%
Med Vol Bituminous	31.1		48.6		64.3		—		—		12.7		—		—		—		156.7		3.5	%
Low Vol Bituminous	—		—		130.6		2.3		—		—		—		—		—		132.9		2.9	%

Total Metallurgical	31.1		53.5		226.2		2.3		—		195.6		—		—		—		508.7		11.2	%
Steam:
High Vol A Bituminous	34.2		75.1		14.2		70.5		45.8		227.2		58.0		135.9		2,315.6		2,976.5		65.8	%
High Vol B Bituminous	—		—		—		—		109.6		—		—		460.6		—		570.2		12.6	%
High Vol C Bituminous	—		—		—		—		159.5		—		108.4		—		—		267.9		5.9	%
Low Vol Bituminous	—		—		—		—		—		33.6		—		—		—		33.6		0.7	%
Subbituminous B	—		—		169.1		—		—		—		—		—		—		169.1		3.8	%

Total Steam	34.2		75.1		183.3		70.5		314.9		260.8		166.4		596.5		2,315.6		4,017.3		88.8	%
Total	65.3		128.6		409.5		72.8		314.9		456.4		166.4		596.5		2,315.6		4,526.0		100.0	%

Percent of Total	1.4	%	2.8	%	9.0	%	1.6	%	7.0	%	10.1	%	3.7	%	13.2	%	51.2	%	100.0	%

The following table categorizes the relative Btu values (low, medium and high) for each of CONSOL Energy’s producing regions in Btu’s per pound of coal.


Region	Low	Medium	High
Northern, Central Appalachia and Canada	< 12,500	12,500 –13,000	> 13,000
Midwest Appalachia	< 11,600	11,600 –12,000	> 12,000
Northern Powder River Basin	< 8,400	8,400 – 8,800	> 8,800
Colorado and Utah	< 11,000	11,000 –12,000	> 12,000

Compliance Compared to Non-Compliance Coal

Coals are sometimes characterized as compliance or non-compliance coal. The phrase compliance coal, as it is commonly used in the coal industry, refers to compliance only with sulfur dioxide emissions standards and indicates that when burned, the coal will produce emissions that will meet the current standard without further cleanup. A coal considered a compliance coal for meeting sulfur dioxide standards may not meet an emission standard for a different pollutant such as mercury. Moreover, the term compliance coal is always used with reference to the then-current regulatory limit. Clean air regulations that further restrict sulfur dioxide emissions will likely reduce significantly the amount of coal that can be labeled compliance. Currently, a compliance coal will meet the power plant emission standard of 1.2 pounds of sulfur dioxide per million British thermal units of fuel consumed. At December 31, 2007, 0.6 billion tons, or 13 %, of our coal reserves met the current standard as a compliance coal. However, in March 2005 the U.S. Environmental Protection Agency promulgated new regulations that further restrict emissions. It is possible that no coal will be considered compliance coal with emission standards restricted to a level that requires emissions-control technology to be used regardless of the sulfur content of the coal. Our customers have responded to these new standards in many cases by retrofitting flue gas desulfurization systems (scrubbers) to many of their existing power plants. Because these systems remove sulfur dioxide before it is emitted into the atmosphere, our customers are less concerned about the sulfur content of our coal.

As a result of a 1998 court decision forcing the establishment of mercury emissions standards for power plants, the Environmental Protection Agency also promulgated a regulatory program for controlling mercury. CONSOL Energy coals have mercury contents typical for their rank and location (approximately 0.07-0.15 parts mercury per million British thermal unit). Because most CONSOL Energy coals have high heating values, they have lower mercury contents (on a pound per British thermal unit basis) than lower rank coals at a given mercury concentration. Eastern bituminous coals tend to produce a greater proportion of flue gas mercury in the ionic or oxidized form (which is captured by scrubbers installed for sulfur control) than sub-bituminous coal, including coals produced in the Powder River Basin. High rank coals also may be more amenable to other methods of controlling mercury emissions, such as by carbon injection. In the case of mercury, the determination of the existence of a compliance coal for mercury will be based on an analysis of the requirements of the new program and may result in a coal that is compliant for sulfur dioxide standards, but non-compliant for mercury. The first phase of the new federal standards for mercury emissions must be met beginning in 2010. Some states have adopted a similar control program for mercury but with more strict limits and a shorter time frame for compliance.

Production

In the year ended December 31, 2007, 96% of CONSOL Energy’s production came from underground mines and 4% from surface mines. Where the geology is favorable and reserves are sufficient, CONSOL Energy employs longwall mining systems in our underground mines. For the year ended December 31, 2007, 88% of our production came from mines equipped with longwall mining systems. Underground longwall systems are highly mechanized, capital intensive operations. Mines using longwall systems have a low variable cost structure compared with other types of mines and can achieve high productivity levels compared with those of other underground mining methods. Because CONSOL Energy has substantial reserves readily suitable to these operations, CONSOL Energy believes that these longwall mines can increase capacity at low incremental cost.

The following table shows the production, in millions of tons, for CONSOL Energy’s mines in the year ended December 31, 2007, 2006 and 2005, the location of each mine, the type of mine, the type of equipment used at each mine and the year each mine was established or acquired by us.


Mine	Location	Mine Type	Mining Equipment	Transportation	Tons Produced (in millions)			Year Established or Acquired
Mine	Location	Mine Type	Mining Equipment	Transportation	2007	2006	2005	Year Established or Acquired
Northern Appalachia
Enlow Fork	Enon, Pennsylvania	U	LW/CM	R R/B	11.2	10.7	9.8	1990
Bailey	Enon, Pennsylvania	U	LW/CM	R R/B	9.9	10.2	11.1	1984
McElroy	Glen Easton, West Virginia	U	LW/CM	B	9.7	10.5	10.4	1968
Loveridge	Fairview, West Virginia	U	LW/CM	R T	6.6	6.4	6.4	1956
Robinson Run	Shinnston, West Virginia	U	LW/CM	R CB	6.5	5.7	6.1	1966
Blacksville 2	Wana, West Virginia	U	LW/CM	R R/B T	5.1	5.0	5.3	1970
Mine No. 84	Eighty Four, Pennsylvania	U	LW/CM	R R/B T	3.6	3.5	3.8	1998
Harrison Resource Corporation(1)(6)	Cadiz, Ohio	S	S/L	R T	0.1	—	—	2007
Shoemaker	Moundsville, West Virginia	U	LW/CM	B	—	1.0	3.5	1966
Mahoning Valley	Cadiz, Ohio	S	S/L	R T	—	0.2	0.6	1979
Central Appalachia
Jones Fork(1)(3)	Mousie, Kentucky	U/S	CM	R T	3.1	3.1	2.9	1992
Buchanan(4)	Mavisdale, Virginia	U	LW/CM	R	2.8	5.0	1.7	1983
AMVEST-Fola Complex(1)(2)(3)	Bickmore, West Virginia	U/S	A S/L CM	R	1.8	—	—	2007
Mill Creek(1)	Deane, Kentucky	U/S	CM	R	1.1	2.1	2.8	1994
Southern West Virginia Resources(1)(3)(5)	Mingo County, West Virginia	U/S	CM/S/L	T R	0.8	1.2	0.5	2005
Miller Creek Complex(1)(3)	Delbarton, West Virginia	U/S	CM/S/L	T	0.6	0.9	1.2	2004
Amonate(1)	Amonate, Virginia	U/S	CM/S/L	R T	0.6	0.5	0.6	1925
VP-8(7)	Rowe, Virginia	U	LW/CM	R	—	0.3	1.2	1993
AMVEST-Terry Eagle Complex(2)	Jodie, West Virginia	U/S	CM A S/L	R T	0.1	—	—	2007
Western U.S.
Emery	Emery County, Utah	U	CM	T	1.0	1.1	1.2	1945

A= Auger

S = Surface

U = Underground

LW = Longwall

CM = Continuous Miner

S/L = Stripping Shovel and Front End Loaders

R = Rail

B = Barge

R/B = Rail to Barge

T = Truck

CB = Conveyor Belt

(1)	Harrison Resources, Amonate, Mill Creek, Miller Creek, Jones Fork, AMVEST-Fola Complex and Southern West Virginia Resources complexes include facilities operated by independent mining contractors.

(2)	Mine Acquired in AMVEST Corporation acquisition on July 31, 2007.

(3)	Mine was idled for part of the year ended December 31, 2007 due to market conditions.

(4)	Buchanan Mine was idled for part of the year ended December 31, 2007 after several roof falls in previously mined areas damaged some of the ventilation controls inside the mine.

(5)

The amounts shown for Southern West Virginia Energy (SWVE) represent 100% of SWVE production for the period the entity was a variable interest entity as defined by Financial Accounting Standards Board Interpretation No. 46(R), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.” CONSOL Energy acquired a 49% ownership interest in 2005.

(6)	Production amounts represent CONSOL Energy’s 49% ownership interest.

(7)	Mine was idled due to depletion of economic coal reserves.

Our sales of bituminous coal were at an average sales price per ton produced as follows:


	Years Ended December 31,
	2007		2006		2005
Average Sales Price Per Ton Produced	$	40.60	$	38.99	$	35.61

Construction of the new slope and overland belt at Robinson Run was completed and placed in service in 2007. This project provides for increased belt availability at the mine and has contributed to record production in 2007. Also, two major construction projects continued during 2007 at the Bailey Mine and Shoemaker Mine. The Bailey Mine’s new slope construction was ongoing, and the overland belt earthwork commenced in July 2007. Both the slope and overland belt construction are projected to be completed late in the first quarter of 2009. The Shoemaker Mine’s underground belt haulage project construction continued, and the new slope construction started in September 2007. This project is to be completed during the first quarter of 2010, subject to market conditions, allowing Shoemaker Mine to resume production. Both of these projects will provide for increased mine production through belt availability and cost improvements. These projects also enhance safety by allowing old areas of the mine to be sealed. Mines setting production records for the year ended December 31, 2007 were Enlow Fork Mine (11.2 million tons), Loveridge Mine (6.6 million tons) and Robinson Run Mine (6.5 million tons).

Title to coal properties that we lease or purchase and the boundaries of these properties are verified at the time we lease or acquire the properties by law firms retained by us. Consistent with industry practice, abstracts and title reports are reviewed and updated approximately five years prior to planned development or mining of the property. If defects in title or boundaries of undeveloped reserves are discovered in the future, control of and the right to mine reserves could be adversely affected.

The following table sets forth, with respect to properties that we lease to other coal operators, the total royalty tonnage, acreage leased and the amount of income (net of related expenses) we received from royalty payments for the years ended December 31, 2007, 2006 and 2005.


Year	Total Royalty Tonnage (in thousands)	Total Coal Acreage Leased	Total Royalty Income (in thousands)
2007	13,909	218,089	$	11,362
2006	16,445	281,165	$	14,757
2005	19,903	275,290	$	12,669

Royalty tonnage leased to third parties is not included in the amounts of produced tons that we report. Proven and probable reserves do not include reserves attributable to properties that we lease to third parties.

At December 31, 2007, CONSOL Energy operates approximately 23% of the United States’ longwall mining systems.

The following table ranks the 20 largest underground mines in the United States by tons of coal produced in calendar year 2006.

MAJOR U.S. UNDERGROUND COAL MINES—2006

In millions of tons


Mine Name	Operating Company	Production
Enlow Fork	CONSOL Energy	10.7
McElroy	CONSOL Energy	10.5
Bailey	CONSOL Energy	10.2
Twenty Mile	Peabody Energy Subsidiary	8.8
Cumberland Resources	Cumberland Resources, LP. (Foundation)	7.5
SUFCO	Arch Coal, Inc.	7.4
San Juan	BHP Billiton	7.0
Century	American Energy Corp. (Murray)	6.4
Loveridge	CONSOL Energy	6.4
Emerald Resources	Emerald Resources, LP. (Foundation)	5.9
Robinson Run	CONSOL Energy	5.7
West Elk	Arch Coal, Inc.	5.7
Elk Creek	Oxbow Mining, LLC	5.1
Blacksville 2	CONSOL Energy	5.0
Buchanan	CONSOL Energy	5.0
Dotiki	Webster County Coal LLC (Alliance)	4.7
Federal No. 2	Peabody Energy Subsidiary	4.5
Warrier	Warrier Coal, LLC (Alliance)	4.5
Powhatan No. 6	The Ohio Valley Coal Company (Murray)	4.3
Dugout Canyon	Arch Coal, Inc	4.2

Source: National Mining Association

Marketing and Sales

We sell coal produced by our mining complexes and additional coal that is purchased by us for resale from other producers. We maintain United States sales offices in Atlanta, Philadelphia and Pittsburgh and an overseas office in Brussels, Belgium. In addition, we sell coal through agents, brokers and unaffiliated trading companies. In 2007, we sold 65.5 million tons of coal , including our portion of equity affiliates and a consolidated 49% owned variable interest entity. Ninety-one percent (91%) of these sales were sold in domestic markets. Our direct sales to domestic electricity generators represented 64% of our total tons sold in 2007. We had approximately 140 customers in 2007. During 2007, no coal customers individually accounted for more than 10% of total revenue. However, the top four coal customers accounted for more than 25% of our total revenues.

Coal Contracts

We sell coal to customers under arrangements that are the result of both bidding procedures and unsolicited offers leading to extensive negotiations. We sell coal for terms that range from a single shipment to multi-year agreements for millions of tons. During the year ended December 31, 2007, approximately 90% of the coal we produced was sold under contracts with terms of one year or more. The pricing mechanisms under our multiple-year agreements typically consist of contracts with one or more of the following pricing mechanisms:

•

Fixed price contracts with pre-established prices; or

•

Periodically negotiated prices that reflect market conditions at the time; or

•

Base-price-plus-escalation methods which allow for periodic price adjustments based on inflation indices.

Several contracts provide the opportunity to periodically adjust the contract prices. Contract prices may be adjusted as often as quarterly based upon indices which are pre-negotiated. Many of our contracts have terms no longer than five years.

The following table sets forth, as of January 11, 2008, the total tons of coal CONSOL Energy is committed to deliver from 2008 through 2012.


	Tons of Coal to be Delivered (in millions of nominal tons)
	2008	2009	2010	2011	2012
(1) Commitments to deliver coal at predetermined prices	63.9	34.1	20.4	10.7	1.5
(2) Commitments to deliver coal at prices to be determined by mutual agreement of the parties, including some agreements which contain predetermined price ranges	1.4	11.5	17.5	16.4	21.9

	65.3	45.6	37.9	27.1	23.4

We routinely engage in efforts to renew or extend contracts scheduled to expire. Although there are no guarantees, we have been successful in renewing or extending contracts in the past.

Contracts also typically contain force majeure provisions allowing for the suspension of performance by the customer or us for the duration of specified events beyond the control of the affected party, including labor disputes and extraordinary geological conditions. Some contracts may terminate upon continuance of an event of force majeure for an extended period, which is generally three to twelve months. Contracts also typically specify minimum and maximum quality specifications regarding the coal to be delivered. Failure to meet these conditions could result in substantial price reductions, suspension of deliveries or termination of the contract, at the election of the customer. Although the volume to be delivered under a long-term contract is stipulated, we, or the buyer may vary the timing of delivery within specified limits.

Distribution

Coal is transported from CONSOL Energy’s mining complexes to customers by means of railroad cars, river barges, trucks, conveyor belts or a combination of these means of transportation. We employ transportation specialists who negotiate freight and equipment agreements with various transportation suppliers, including railroads, barge lines, terminal operators, ocean vessel brokers and trucking companies.

At December 31, 2007 we operated 25 towboats, 5 harbor boats and a fleet of more than 750 barges that serve customers along the Ohio, Allegheny and Monongahela Rivers. The barge operation allows us to control delivery schedules and has served as temporary floating storage for coal where land storage is unavailable.

Competition

The United States coal industry is highly competitive, with numerous producers selling into all markets that use coal. CONSOL Energy competes against other large producers and hundreds of small producers in the United States and overseas. The five largest producers are estimated by the 2006 National Mining Association Survey to have produced approximately 53% (based on tonnage produced) of the total United States production in 2006. The U.S. Department of Energy reported 1,424 active coal mines in the United States in 2006, the latest year for which government statistics are available. Demand for our coal by our principal customers is affected by:

•

the price of competing coal and alternative fuel supplies, including nuclear, natural gas, oil and renewable energy sources, such as hydroelectric power;

•

coal quality;

•

transportation costs from the mine to the customer; and

•

the reliability of supply.

Continued demand for CONSOL Energy’s coal and the prices that CONSOL Energy obtains are affected by demand for electricity, environmental and government regulation, technological developments and the availability and price of competing coal and alternative fuel supplies. We sell coal to foreign electricity generators and to the more specialized metallurgical coal market, both of which are significantly affected by international demand and competition.

Gas Operations

Our gas operations are primarily conducted by CNX Gas Corporation (CNX Gas), an 81.7% owned subsidiary of CONSOL Energy at December 31, 2007. Information presented below is 100% of CNX Gas’ basis; it does not include 18.3% minority interest reduction. CNX Gas primarily produces coalbed methane, which is gas that resides in coal seams. In the eastern United States, conventional natural gas fields typically are located in various types of sedimentary formations at depths ranging from 2,000 to 15,000 feet. Exploration companies often put their capital at risk by searching for gas in commercially exploitable quantities at these depths. By contrast, gas in the coal seams that we drill or anticipate drilling is typically in formations less than 2,500 feet deep which are usually better defined than deeper formations. CNX Gas believes that this contributes to lower exploration costs than those incurred by producers that operate in deeper, less defined formations. However, with CNX Gas’ entrance into shales and other horizontal drilling techniques, we expect to increase our exploration efforts in these emerging areas.

CNX Gas has not filed reserve estimates with any federal agency.

Areas of Operation

In the Appalachian Basin we operate principally in Central Appalachia and Northern Appalachia. We also operate in the Illinois Basin. The five areas we see playing prominent roles in our portfolio in the near future are as follows:

•

first, in Central Appalachia, Virginia coalbed methane (CBM), our traditional and largest area of operation, where we have typically produced CBM from vertical wells which we drill well ahead of mining and gob gas wells;

•

second, in Northern Appalachia, the Mountaineer CBM play in northwestern West Virginia and southwestern Pennsylvania, where our first major drilling program using vertical-to-horizontal well designs is into full scale development;

•

third, in Northern Appalachia, the Nittany CBM play in central Pennsylvania, where we have substantial holdings and transitioned initial exploratory testing activities into full scale development;

•

fourth, in the Illinois Basin, Cardinal, our New Albany shale play in western Kentucky, Indiana and Illinois, which has economic potential where we are in the midst of exploratory testing activities; and

•

last, we believe we have Appalachian shale potential in the Marcellus, Huron, and Chattanooga shales. Additional potential exists in the Trenton Black River formation which is thought to underlie nearly all of the Appalachian shales. We will continue to evaluate our acreage position in these areas, with the commencement of an exploration program in 2008.

Drilling

During 2007, 2006 and 2005, we drilled in the aggregate, 370, 272, and 184 net development wells, respectively, all of which were productive. Gob wells, and wells drilled by other operators that we participate in are excluded. As of December 31, 2007, we had no dry development wells and 32 wells are still in process. The following table illustrates the wells referenced above by geographic region:

Development Wells


	For the Years Ended December 31,
	2007	2006	2005
Central Appalachia	294	253	176
Northern Appalachia	76	19	8

Total	370	272	184

During 2007, 2006, and 2005, we drilled in the aggregate 9, 4 and 15 net exploratory wells, respectively. The following table illustrates the exploratory wells by geographic region:

Exploratory Wells


	For the Years Ended December 31,
	2007	2006	2005
Central Appalachia	3	2	2
Northern Appalachia	—	2	13
Other	6	—	—

Total	9	4	15

Five of the other wells drilled in 2007 are still being evaluated.

Production

The following table sets forth CNX Gas net sales volume produced for the periods indicated, including our portion of equity affiliates and intersegment transactions.

Average Sales Prices and Lifting Costs

The following table sets forth the average sales price, including hedging transactions, and the average net lifting cost, including our portion of equity interests, for all our gas production for the periods indicated. Lifting cost is the cost of raising gas to the gathering system and does not include depreciation, depletion or amortization.


	For the Years Ended December 31,
	2007		2006		2005
Average gas sales price including effects of financial settlements (per thousand cubic feet)	$	7.20	$	7.04	$	5.90
Average net lifting cost (per thousand cubic feet)	$	0.68	$	0.60	$	0.64

Productive Wells and Acreage

The following table sets forth at December 31, 2007, the number of CNX Gas’ producing wells, developed acreage and undeveloped acreage.


	Gross	Net(1)
Producing Wells	3,800	2,989
Proved Developed Acreage	230,545	228,569
Proved Undeveloped Acreage	71,434	69,350
Unproved Acreage	3,505,970	2,960,783

Most of our development wells and acreage are located in Central Appalachia. Some leases are beyond their primary term, but these leases are extended in accordance with their terms as long as certain drilling commitments are satisfied.

(1)

Net acres do not include acreage attributable to the working interests of our principal joint venture partners and the portions of certain proved developed acreage attributable to property we have leased to third-party producers. Additional adjustments (either increases or decreases) may be required as we further develop title to and further confirm our rights with respect to our various properties in anticipation of development. We believe that our assumptions and methodology in this regard are reasonable.

Sales

CNX Gas enters into physical gas sales transactions with various counterparties for terms varying in length. Reserves and production estimates are believed to be sufficient to satisfy these obligations. In the past, other than interstate pipeline outages related to maintenance, we have not failed to deliver quantities required under contract. CNX Gas has also entered into various gas swap transactions that qualify as financial cash flow hedges. These gas swap transactions exist parallel to the underlying physical transactions and represented approximately 18.4 billion cubic feet of our produced gas sales volumes for the year ended December 31, 2007 at an average price of $8.01 per thousand cubic feet. As of December 31, 2007, we expect these transactions will cover approximately 24.5 billion cubic feet of our estimated 2008 production at an average price of $8.30 per thousand cubic feet.

CNX Gas purchased firm transportation capacity on various interstate pipelines to ensure gas production flows to market. As of December 31, 2007, CNX Gas has secured firm transportation capacity to cover more than its 2008 hedged production.

The hedging strategy and information regarding derivative instruments used are outlined in item 7A, “Qualitative and Quantitative Disclosures About Market Risk” and in Note 25 to the Audited Consolidated Financial Statements in Item 8 of this Form 10-K.

Gas Reserves

The following table shows our estimated proved developed and proved undeveloped reserves. Reserve information is net of any royalty interest. Proved developed and proved undeveloped gas reserves are reserves that could be commercially recovered under current economic conditions, operating methods and government regulations. Proved developed and proved undeveloped gas reserves are defined by the Securities and Exchange Commission Rule 4.10(a) of Regulation S-X.


	Net Gas Reserves (millions of cubic feet)
	As of December 31,
	2007		2006		2005
	Consolidated Operations	Affiliates	Consolidated Operations	Affiliates	Consolidated Operations	Affiliates
Estimated proved developed reserves	667,726	3,584	609,700	2,200	549,574	2,672
Estimated proved undeveloped reserves	672,183	—	653,593	—	578,150	—

Total estimated proved developed and undeveloped reserves	1,339,909	3,584	1,263,293	2,200	1,127,724	2,672

Discounted Future Net Cash Flows

The following table shows our estimated future net cash flows and total standardized measure of discounted, at 10%, future net cash flows:


	Discounted Future Net Cash Flows ($ in thousands)
	As of December 31,
	2007		2006		2005
Future net cash flows (net of income tax)	$	3,609,195	$	2,483,887	$	5,149,938
Total standardized measure of after-tax discounted future net cash flows	$	1,389,540	$	934,891	$	1,870,794

Competition

We operate primarily in the eastern United States. CNX Gas believes that the gas market is highly fragmented and not dominated by any single producer. We believe that several of our competitors have devoted far greater resources than we have to gas exploration and development. CNX Gas believes that competition within our market is based primarily on operating cost and the proximity of gas fields to customers.

Power Generation

Through a joint venture with Allegheny Energy Supply Company, LLC, an affiliate of one of our largest coal customers, our 81.7% owned subsidiary, CNX Gas, owns a 50% interest in an 88-megawatt, gas-fired electric generating facility. This facility is used for meeting peak load demands for electricity. The facility is located in southwest Virginia and uses coalbed methane gas that we produce. Because it is a peaking power facility, it does not operate at all times of the year, but the facility does provide a potential sales outlet for CNX Gas of up to 22 million cubic feet per day.

Other

CONSOL Energy provides other services both to our own operations and to others. These include land services, industrial supply services, terminal services (including break bulk, general cargo and warehouse services), river and dock services, and coal waste disposal services.

Land Resources

CONSOL Energy is developing property assets previously used primarily to support our coal operations or property assets currently not utilized. CONSOL Energy expects to increase the value of our property assets by:

•

developing surface properties for commercial uses other than coal mining or gas development when the location of the property is suitable;

•

deriving royalty income from coal, oil and gas reserves CONSOL Energy owns but does not intend to develop;

•

deriving income from the sustainable harvesting of timber on land CONSOL Energy owns; and

•

deriving income from the rental of surface property for agricultural and non-agricultural uses.

CONSOL Energy’s objective is to improve the return on these assets without detracting from our core businesses and without significant additional capital investment.

Industrial Supply Services

Fairmont Supply Company, a CONSOL Energy subsidiary, is a general-line distributor of mining and industrial supplies in the United States. Fairmont Supply has 15 customer service centers nationwide. Fairmont Supply also provides integrated supply procurement and management services. Integrated supply procurement is a materials management strategy that utilizes a single, full-line distribution to minimize total cost in the maintenance, repair and operating supply chain. Fairmont Supply offers value-added services including on-site stores management and procurement strategies.

Fairmont Supply provides mine supplies to CONSOL Energy’s mining operations. Approximately 52% of Fairmont Supply’s sales in 2007 were made to CONSOL Energy’s mines.

In July 2007, Fairmont Supply Company completed the acquisition of Piping and Equipment, Inc. for a cash payment, net of cash acquired, of approximately $17 million. Piping & Equipment, Inc. is a specialty distributor of pipe, valve and fittings. Piping and Equipment has eight locations in Florida, Alabama, Louisiana and Texas.

Terminal Services

In 2007, approximately 6.9 million tons of coal were shipped through CONSOL Energy’s subsidiary, CNX Marine Terminal Inc.’s exporting terminal in the Port of Baltimore. Approximately 55% of the tonnage shipped was produced by CONSOL Energy coal mines. The terminal can either store coal or load coal directly into vessels from rail cars. It is also one of the few terminals in the United States served by two railroads, Norfolk Southern and CSX Transportation, Inc.

River and Dock Services

CONSOL Energy’s river operations, located in Monessen, Pennsylvania, transport coal from our mines, coal from other mines and non-coal commodities from river loadout facilities primarily along the Monongahela and Ohio Rivers in northern West Virginia and southwestern Pennsylvania. Products are delivered to customers along the Monongahela, Ohio and Allegheny rivers. At December 31, 2007, we operated 25 towboats, 5 harbor boats and more than 750 barges. In 2007, our river vessels transported a total of 21.7 million tons of coal and other commodities, including 7.3 million tons of coal produced by CONSOL Energy mines.

CONSOL Energy provides dock services for our mines at Alicia Dock, located on the Monongahela River in Fayette County, Pennsylvania. CONSOL Energy transfers coal from rail cars to barges for customers that receive coal on the river system.

Coal Waste Disposal Services

CONSOL Energy operates an ash disposal facility on a 61-acre site in northern West Virginia to handle ash residues for coal customers that are unable to dispose of ash on-site at their generating facilities. The ash disposal facility can process 200 tons of material per hour, and is expected to dispose of approximately 140 thousand tons of fly ash in the current contract year. CONSOL Energy has a long-term contract with a cogeneration facility to supply coal and take the residual fly ash and bottom ash. Bottom ash is disposed locally at the cogeneration facility for road construction and other purposes.

Employee and Labor Relations

At December 31, 2007, CONSOL Energy had 7,728 employees, 36% of whom were represented by the United Mine Workers of America (UMWA). A five-year labor agreement commenced January 1, 2007. This agreement expires December 31, 2011 and provides for a 20% across-the-board wage increase over its duration. Wages increased $1.50 per hour in 2007, and will increase $1.00 per hour in 2008 and $0.50 per hour for 2009 through 2011. Other terms of the agreement require additional contributions to be made into the employee benefit funds. Full health-care benefits for active and retired members and their dependents will continue with no increase in co-payments. Newly employed inexperienced employees represented by the UMWA, hired after January 1, 2007 will not be eligible to receive retiree health care benefits. In lieu of these benefits, these employees will receive a defined contribution benefit of $1 per each hour worked.

Laws and Regulations

The coal mining and gas industries are subject to regulation by federal, state and local authorities on matters such as the discharge of materials into the environment, employee health and safety, permitting and other licensing requirements, reclamation and restoration of properties after mining or gas operations are completed, management of materials generated by mining and gas operations, surface subsidence from underground mining, water discharge effluent limits, water appropriation, legislatively mandated benefits for current and retired coal miners, air quality standards, protection of wetlands, endangered plant and wildlife protection, limitations on land use, storage of petroleum products and substances that are regarded as hazardous under applicable laws, and management of electrical equipment containing polychlorinated biphenyls, or PCBs. In addition, the electric power generation industry is subject to extensive regulation regarding the environmental impact of its power generation activities, which could affect demand for CONSOL Energy’s coal and gas products. The possibility exists that new legislation or regulations may be adopted which would have a significant impact on CONSOL Energy’s mining or gas operations or our customers’ ability to use coal or gas and may require CONSOL Energy or our customers to change their operations significantly or incur substantial costs.

Numerous governmental permits and approvals are required for mining and gas operations. Regulations provide that a mining permit or modification can be delayed, refused or revoked if an officer, director or a stockholder with a 10% or greater interest in the entity is affiliated with or is in a position to control another entity that has outstanding permit violations. Thus, past or ongoing violations of federal and state mining laws by individuals or companies no longer affiliated with CONSOL Energy could provide a basis to revoke existing permits and to deny the issuance of additional permits. CONSOL Energy is, or may be, required to prepare and present to federal, state or local authorities data and/or analyses pertaining to the effect or impact that any proposed exploration for or production of coal or gas may have upon the environment, public and employee health and safety. All requirements imposed by such authorities may be costly and time-consuming and may delay commencement or continuation of exploration or production operations. Accordingly, the permits we need for our mining and gas operations may not be issued, or, if issued, may not be issued in a timely fashion. Permits we need may involve requirements that may be changed or interpreted in a manner which restricts our ability to conduct our mining and gas operations or to do so profitably. Future legislation and administrative regulations may increasingly emphasize the protection of the environment, employee health and safety and, as a consequence, the activities of CONSOL Energy may be more closely regulated. Such legislation and regulations, as well as future interpretations of existing laws, may require substantial increases in equipment and operating costs to CONSOL Energy and delays, interruptions or a termination of operations, the extent of which cannot be predicted.

While it is not possible to quantify the expenditures we incur to maintain compliance with all applicable federal and state laws, those costs have been and are expected to continue to be significant. We post surety performance bonds or letters of credit pursuant to federal and state mining laws and regulations for the estimated costs of reclamation and mine closing, often including the cost of treating mine water discharge when necessary. Compliance with these laws has substantially increased the cost of coal mining and gas production for all domestic coal and gas producers. We also post performance bonds or letters of credit pursuant to state oil and gas laws and regulations to guarantee reclamation of gas well sites and plugging of gas wells. We endeavor to conduct our mining and gas operations in compliance with all applicable federal, state and local laws and regulations. However, because of extensive and comprehensive regulatory requirements, violations during mining and gas operations occur from time to time. None of the violations to date, or the monetary penalties assessed have been material. CONSOL Energy made capital expenditures for environmental control facilities of approximately $17.6 million, $10.2 million, and $8.6 million for the years ended December 31, 2007, 2006 and 2005, respectively. CONSOL Energy expects to have capital expenditures of $14.6 million for 2008 for environmental control facilities.

Mine Health and Safety Laws

Mine accidents involving multiple fatalities occurred during the calendar years 2007 and 2006 at mines operated by other coal companies. These accidents attracted widespread public attention and have resulted in both federal government and some state government changes to statutory and regulatory control of mine safety, particularly for underground mines. Because nearly all of our mines are underground, these legislative and regulatory changes could affect our performance.

The actions taken thus far by federal and state governments include requiring: the caching of additional supplies of self-contained self rescuer (SCSR) devices underground; providing breathable air for all underground miners for 96 hours; the purchase and installation during the next several years of electronic communication and personal tracking devices underground; the placement, in various mine areas, of rescue chambers, structures designed to provide refuge for groups of miners for long periods of time during a mine emergency when evacuation from the mine is not possible which will provide breathable air for all underground miners for 96 hours; the possible reconstruction of existing seals in worked-out areas of mines; and additional training and testing requirements that created the need to hire additional employees.

In reviewing actions taken to date, we estimate that implementation of these new requirements could cost $35 million to $45 million during the period from 2006 until the end of 2009. The actual costs will depend primarily on: the number of additional SCSR oxygen units purchased, the design requirements as well as the extent of deployment of rescue chambers, final guidelines regarding sealed areas, final interpretation of other regulatory requirements, and final approval of mine-by-mine implementation plans.

We have reviewed our coal sales agreements to determine the degree to which costs related to these regulatory requirements may be passed through to customers. While the amount will vary by contract, we have been billing the cost of implementation to customers in most of our existing sales agreements. Responses from customers have varied.

Black Lung Legislation

Under federal black lung benefits legislation, each coal mine operator is required to make payments of black lung benefits or contributions to:

•

current and former coal miners totally disabled from black lung disease;

•

certain survivors of a miner who dies from black lung disease or pneumoconiosis; and

•

a trust fund for the payment of benefits and medical expenses to claimants whose last mine employment was before January 1, 1970, where no responsible coal mine operator has been identified

for claims (where a miner’s last coal employment was after December 31, 1969), or where the responsible coal mine operator has defaulted on the payment of such benefits. The trust fund is funded by an excise tax on U.S. production of up to $1.10 per ton for deep mined coal and up to $0.55 per ton for surface-mined coal, neither amount to exceed 4.4% of the gross sales price.

In addition to the federal legislation, we are also liable under various state statutes for black lung claims.

Retiree Health Benefits Legislation

The Coal Industry Retiree Health Benefit Act of 1992 (the Act) established the Combined Benefit Fund (the Combined Fund). The Combined Fund provides medical and death benefits for all beneficiaries including orphan retirees of the former UMWA Benefit Trusts who were actually receiving benefits as of July 20, 1992. The Act also created a second benefit fund for United Mine Worker retirees, the 1992 Benefit Plan. The 1992 Benefit Fund principally provides medical and death benefits to orphan UMWA-represented members eligible for retirement on February 1, 1993, and who actually retired between July 20, 1992 and September 30, 1994. The Act provides for the assignment of beneficiaries to former signatory employers or related companies and the allocation of unassigned beneficiaries (referred to as orphans) to companies using a formula set forth in the Act. The task of calculating the annual per beneficiary premium that assigned operators are obligated to pay to the Combined Fund is the responsibility of the Commissioner of Social Security. The UMWA 1993 Benefit Plan is a defined contribution plan that was created as the result of negotiations for the National Bituminous Coal Wage Agreement (NBCWA) of 1993. This plan provides health care benefits to orphan UMWA retirees who are not eligible to participate in the Combined Fund, the 1992 Benefit Fund, or whose last employer signed the 1993 or later NBCWA and who subsequently goes out of business.

The Coal Act required some of our subsidiaries to make premium payments to the Combined Fund and to the 1992 Benefit Plan for the cost of our retirees and orphan retirees in the Combined Fund and the 1992 Benefit Plan. In addition, the collective bargaining agreement with the United Mine Workers requires our signatory subsidiaries to make specified payments to the 1993 Benefit Plan through 2011. The Tax Relief and Health Care Act of 2006 (the 2006 Act) provides additional federal funding for these orphan costs by authorizing general fund revenues and expanding transfers of interest from the Abandon Mine Land (AML) trust fund. The additional federal funding, depending upon its magnitude and the amount of orphan benefits payable, should cover the orphan premium payments due under the Combined Fund as well as, after a phase-in period, the premium payments due under the 1992 Benefit Plan. The 1992 Plan has a phase-in period for the federal contributions. Federal contribution will be 25% in 2008, 50% in 2009, 75% in 2010 and 100% thereafter. In addition, federal contributions are also to be phased-in over this same period with respect to the costs for those orphan retirees as of December 31, 2006 under the 1993 Plan. Under the 2006 Act, these general fund contributions to the Combined Fund, the 1992 Benefit Plan, the 1993 Benefit Plan and certain Abandoned Mine Land payments to the states and Indian tribes are collectively limited by an aggregate annual cap of $490 million. These federal contributions do not apply to our subsidiaries’ assigned retired miners, and therefore our subsidiaries will continue to pay premium payments for our assigned retired miners who receive benefits under the Plans. In addition, our subsidiaries remain responsible for making orphan premium payments to these Plans to the extent that the federal contributions are not sufficient to cover the benefits.

Pension Protection Act

The Pension Protection Act of 2006 (the Pension Act) has simplified and transformed rules governing the funding of defined benefit plans, accelerated funding obligations of employers, made permanent certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), made permanent the diversification rights and investment education provisions for plan participants and encourages automatic enrollment in defined contribution 401(k) plans. In general, most provisions of the Pension Act of 2006 are in effect for plan years beginning on or after December 31, 2007. Plans generally are required to set a funding target of 100% of the present value of accrued benefits and sponsors are required to amortize unfunded liabilities over a 7-year period. The Pension Act includes a funding target phase-in provision consisting of a 92% funding target in

2008, 94% in 2009, 96% in 2010, and 100% thereafter. Plans with a funded ratio of less than 80%, or less than 70% using special assumptions, will be deemed to be “at risk” and will be subject to additional funding requirements. Our current funding ratio is 90%. Our intent is to meet the 100% requirement by 2011.

Environmental Laws

CONSOL Energy is subject to various federal environmental laws, including:

•

the Surface Mining Control and Reclamation Act of 1977,

•

the Clean Air Act,

•

the Clean Water Act,

•

the Toxic Substances Control Act,

•

the Endangered Species Act,

•

the Comprehensive Environmental Response, Compensation and Liability Act,

•

the Emergency Planning and Community Right to Know Act, and

•

the Resource Conservation and Recovery Act

as administered and enforced by United States Environmental Protection Agency (EPA) and/or authorized federal or state agencies, as well as state laws of similar scope, and other state environmental and conservation laws in each state in which CONSOL Energy operates.

These environmental laws require reporting, permitting and/or approval of many aspects of coal mining and gas operations. Both federal and state inspectors regularly visit mines and other facilities to ensure compliance. CONSOL Energy has ongoing compliance and permitting programs designed to ensure compliance with such environmental laws.

Given the retroactive nature of certain environmental laws, CONSOL Energy has incurred and may in the future incur liabilities in connection with properties and facilities currently or previously owned or operated as well as sites to which CONSOL Energy or our subsidiaries sent waste materials.

Surface Mining Control and Reclamation Act

The Surface Mining Control and Reclamation Act (“SMCRA”) establishes minimum national operational, reclamation and closure standards for all aspects of surface mining as well as most aspects of deep mining. The Act requires that comprehensive environmental protection and reclamation standards be met during the course of and following completion of mining activities. Permits for all mining operations must be obtained from the Federal Office of Surface Mining Reclamation and Enforcement (“OSM”) or, where state regulatory agencies have adopted federally approved state programs under SMCRA, the appropriate state regulatory authority. States that operate federally approved state programs may impose standards which are more stringent than the requirements of SMCRA and OSM’s regulations and in many instances, have done so. All states in which CONSOL Energy’s active mining operations are located have achieved primary jurisdiction for enforcement of the Act through approved state programs.

SMCRA permit provisions include requirements for coal exploration; baseline environmental data collection and analysis; mine plan development; topsoil removal, storage and replacement; selective handling of overburden materials; mine pit backfilling and grading; protection of the hydrologic balance; subsidence control for underground mines; refuse disposal plans; surface drainage control; mine drainage and mine discharge control and treatment; and site reclamation. The mining permit application process, whether state or federal, is initiated by collecting baseline data to adequately characterize the pre-mine environmental condition of the permit area. This work includes surveys of cultural resources, soils, vegetation and wildlife, and assessment of

surface and ground water hydrology, climatology and wetlands. In conducting this work, we collect geologic data to define and model the soil and rock structures and coal that we will mine. We develop mine and reclamation plans by utilizing this geologic data and incorporating elements of the environmental data. The mine and reclamation plan incorporates the provisions of SMCRA, the state programs and the complementary environmental programs that impact coal mining. Detailed engineering plans are included for all surface facilities built as part of the mine, including roads, ponds, shafts and slopes, boreholes, portals, pipelines and power lines, excess spoil disposal areas and coal refuse disposal facilities. Also included in the permit application are documents defining corporate ownership and control, property ownership and agreements pertaining to coal, minerals, oil and gas, water rights, rights of way and surface land and documents required by the OSM Applicant Violator System. We also must list all public and privately-owned structures located within minimum defined distances near to or above our mines and mining facilities. Once a permit application is prepared and submitted to the regulatory agency, it goes through an administrative completeness review and a separate technical review. Public notice of the proposed permit application is given in a local newspaper followed by a public comment period before a permit can be issued. Some mining permits take over a year to prepare, depending on the size and complexity of the mine and can take six months to three years to be issued. Regulatory authorities have considerable discretion in the timing of the permit issuance. The public has the right to comment on and otherwise participate in the permitting process, including through administrative appeals of permits and possibly further appeals in the courts. The mine operator must submit a bond or otherwise secure the performance of reclamation obligations, including, as deemed appropriate by the regulatory authority, a bond sufficient to cover the costs of long-term treatment of mine drainage discharges from closed facilities or ones from which a post-mining discharge is anticipated. The earliest a reclamation bond can be fully released is five years after reclamation has been completed, however, partial releases may be obtained as certain stages of reclamation are completed. All states impose on mine operators the responsibility for repairing or compensating for damage occurring on the surface as a result of mine subsidence, a possible consequence of longwall or other methods of underground mining, including an obligation to restore or replace water supplies adversely affected by underground mining. All states also impose an obligation on surface mining operations to replace domestic water supplies adversely affected by such operations. In addition, SMCRA imposes a reclamation fee on all current mining operations, the proceeds of which are deposited in the Abandoned Mine Reclamation Fund (AML Fund), which is used to restore unreclaimed and abandoned mine lands mined before 1977. The original amounts of the reclamation fees were $0.35 per ton for surface mined coal and $0.15 per ton for underground mined coal. The Tax Relief and Health Care Act of 2006 amended SMCRA to provide for two reductions (each being ten percent of the original fee amounts) that should take effect in federal fiscal years 2008 and 2013. Thus, from October 1, 2007 through September 30, 2012, the per ton fees will be $0.315 per ton for surface mined coal and $0.135 per ton for underground mined coal. From October 1, 2012 through September 30, 2021, the fees will be $0.28 per ton for surface mined coal and $0.12 per ton for underground mined coal.

Under the SMCRA, responsibility for unabated violations of SMCRA and other specified “environmental laws,” unpaid civil penalties and unpaid reclamation fees of subsidiaries and affiliates can be imputed to the “parents” and “related companies” if deemed to be owned “or” controlled by such entities. Data describing such ownership links must be provided by CONSOL Energy to the regulatory authorities. Similar “violations” by independent contract mine operators can also be imputed to other companies which are deemed, according to the regulations, to have “owned” or “controlled” the contract mine operator. Sanctions against the “owner” or “controller” are quite severe and can include being blocked from receiving new permits and revocation of any permits that have been issued since the time of the violations or, in the case of civil penalties and reclamation fees, since the time such amounts became due.

In the Commonwealth of Pennsylvania, where CONSOL Energy operates four longwall mines, approximately $16.0 million and $8.8 million of expenses were incurred during the years ended December 31, 2007 and 2006, respectively, to abate enforcement actions related to the impacts on streams from subsidence. Recent interpretations of technical guidance documents related to impacts of longwall mining on Pennsylvania streams requires additional analysis on stream flows and biological statistics. We have received violation notices for past longwall activities which resulted in lower stream flows and water pooling areas both of which we are in

the process of remediating. We also are completing additional stream analysis in order to comply with these recent interpretations at current Pennsylvania mining operations. Future Pennsylvania Department of Environmental Protection enforcement actions could cause CONSOL Energy to change mine plans, to incur significant costs, and potentially even shut down mines in order to meet compliance requirements. However, these impacts on streams have occurred primarily at the Bailey Mine. The degree to which the mine impacts a stream is related to the geology of the area, including the vertical distance from the stream channel to the coal seam. Over the next several years the coal seam being mined by the Bailey Mine becomes progressively deeper. This change in geologic setting is expected to lessen the adverse impacts on streams. We currently estimate expenses related to subsidence of streams in Pennsylvania will be approximately $7.8 million for the year ended December 31, 2008.

Clean Air Act and Related New Regulations

The federal Clean Air Act and similar state laws and regulations which regulate emissions into the air, affect coal mining, coal handling and processing, and gas processing operations primarily through permitting and/or emissions control requirements. For example, regulations relating to fugitive dust and coal combustion emissions could restrict CONSOL Energy’s ability to develop new mines or require CONSOL Energy to modify our operations. National Ambient Air Quality Standards (“NAAQS”) for particulate matter resulted in some areas of the country being classified as non-attainment for fine particulate. Because thermal dryers located at coal preparation plants burn coal and emit particulate matter, CONSOL Energy’s mining operations are likely to be directly affected where the NAAQS are implemented by the states. In addition, in September 2006, EPA promulgated revised particulate matter NAAQS.

CONSOL Energy believes we have obtained all necessary permits under the Clean Air Act. The expiration dates of these permits range from April 18, 2008 through March 18, 2015. CONSOL Energy monitors permits required by operations regularly and takes appropriate action to extend or obtain permits as needed.

The Clean Air Act also indirectly affects coal mining operations by extensively regulating the air emissions of the coal fired electric power generating plants operated by our customers. Coal contains impurities, such as sulfur, mercury and other constituents, many of which are released into the air when coal is burned. New environmental regulations governing emissions from coal-fired electric generating plants could affect demand for coal as a fuel source and affect the volume of our sales. For example, the federal Clean Air Act places limits on sulfur dioxide, nitrogen dioxide, and mercury emissions from electric power plants.

Further sulfur dioxide emission reductions are required by the Clean Air Interstate Rules (“CAIR”), which were promulgated by the EPA in 2005. In order to meet the federal Clean Air Act limits for sulfur dioxide emissions from electric power plants, coal users need to install scrubbers, use sulfur dioxide emission allowances (some of which they may purchase), blend high sulfur coal with low sulfur coal or switch to low sulfur coal or other fuels. The CAIR rules significantly reduce sulfur dioxide emission allowances available to electric power plants. More strict emission limits mean few coals can be burned without the installation of supplemental environmental control technology in the form of scrubbers. Many of our customers are in the process of installing scrubbers in response to the new emissions requirements. We estimate that by 2012, more than half of the installed, coal-fired power plant capacity east of the Mississippi will be scrubbed. The increase in scrubbed capacity allows customers to consider purchasing more of our higher sulfur coals.

In October 1998, the EPA finalized a rule requiring a number of eastern U.S. states to make substantial reductions in nitrogen oxide emissions by June 1, 2004. The installation of additional control measures to achieve these reductions makes it more costly to operate coal-fired power plants and could make coal a less attractive fuel. In addition, reductions in nitrogen oxide emissions can be achieved at a low capital cost through a combination of low nitrogen oxide burners and coal produced in western U.S. coal mines. As a result, changes in current emissions standards could also impact the economic incentives for eastern U.S. coal-fired power plants to consider using more coal produced in western U.S. coal mines. The CAIR rules promulgated in 2005 target electric utilities for further reductions in NOx and impose emissions caps for NOx on electric generating units that take effect in 2010.

In 2005, the EPA finalized the Clean Air Mercury Rule (“CAMR”) which imposes caps on mercury emissions from coal-fired electric generating units. The first phase of the emission caps take effect in 2010. The CAMR provides for an allocation of mercury emission allowances to individual power plants based on the type of coal fired in the unit. Units firing bituminous coal are allocated less emission allowances than those firing subbituminous coal. In addition, various states have promulgated or are considering more stringent emission limits on mercury emissions from coal-fired electric generating units. The CAMR rule and state regulation of mercury emissions from coal-fired electric generating units could impact the market for coal.

A regional haze program initiated by the EPA to protect and to improve visibility at and around national parks, national wilderness areas and international parks may restrict the construction of new coal-fired power plants whose operation may impair visibility at and around federally protected areas and may require some existing coal-fired power plants to install additional control measures designed to limit haze-causing emissions. These requirements could limit the demand for coal in some locations.

The United States Department of Justice, on behalf of the EPA, has filed lawsuits against several investor-owned electric utilities and brought an administrative action against one government-owned utility for alleged violations of the Clean Air Act. These lawsuits could require the utilities to pay penalties, install pollution control equipment or undertake other emission reduction measures which could positively or negatively impact their demand for CONSOL Energy coal. One such suit was settled in October 2007, by the owner of sixteen coal fueled electric generating plants located in Indiana, Kentucky, Ohio, Virginia and West Virginia. Although the utility did not admit any violations of the Clean Air Act, it agreed to annual sulfur dioxide and nitrogen oxides emission limits for all of its plants and it agreed to install additional emission controls on two of its plants.

Also, numerous proposals have been made at the international, national, regional and state levels that are intended to limit or capture emissions of greenhouse gases, such as carbon dioxide and several states have adopted measures intended to reduce greenhouse gas loading in the atmosphere. If comprehensive legislation focusing on greenhouse gas emissions is enacted by the United States or individual states, it may adversely affect the use of and demand for fossil fuels, particularly coal, as an energy source for electricity generation. Future regulation of greenhouse gases could occur in the United States pursuant to treaty obligations, regulation under the Clean Air Act, or regulation under state laws. In 2007, the U. S. Supreme Court held in Massachusetts v. EPA, that EPA had authority to regulate greenhouse gases under the Clean Air Act, reversing EPA’s interpretation of the act. This decision could lead to federal regulation of greenhouse gas emissions from coal fired electric generating stations which could adversely affect the demand for coal for electricity generation. Also, in 2005, seven northeastern states (Connecticut, Delaware, Maine, New Jersey, New Hampshire, New York and Vermont) signed the Regional Greenhouse Gas Initiative (RGGI), calling for a ten percent reduction of carbon dioxide emission by 2019, with compliance to begin in 2009. Maryland has also joined RGGI. In addition, California has enacted legislation to establish greenhouse gas emission standards for electric power generating plants in connection with new long-term power plant investments.

Clean Water Act

The federal Clean Water Act and corresponding state laws affect coal mining and gas operations by imposing restrictions on discharges into regulated surface waters. Permits requiring regular monitoring and compliance with effluent limitations and reporting requirements govern the discharge of pollutants into regulated waters. In combination with existing requirements, new requirements under the Clean Water Act and corresponding state laws; including those relating to protection of “impaired waters” so designated by individual states through the use of new effluent limitations known as Total Maximum Daily Load (“TMDL”) limits; anti-degradation regulations which protect state designated “high quality/exceptional use” streams by restricting or prohibiting “discharges” which result in degradation; and requirements to treat discharges from coal mining properties for non-traditional pollutants, such as chlorides and selenium; and “protecting” streams, wetlands, other regulated water sources and associated riparian lands from the surface impacts of underground mining, may cause CONSOL Energy to incur significant additional costs that could adversely affect our operating results, financial condition and cash flows.

The Army Corps of Engineers (the “COE”) is empowered to issue “nationwide” permits for specific categories of filling activity that are determined to have minimal environmental adverse effects in order to save the cost and time of issuing individual permits under Section 404 of the Clean Water Act. Individual permits are required for activities determined to have more significant impacts to waters of the United States. Nationwide Permit 21 authorizes the disposal of dredge-and-fill material from mining activities into the waters of the United States. Nationwide Permit 21 was renewed in 2007 allowing its continued use. On October 23, 2003, several citizens groups sued the COE in the U.S. District Court for the Southern District of West Virginia seeking to invalidate “nationwide” permits utilized by the COE and the coal industry for permitting most in-stream disturbances associated with coal mining, including excess spoil valley fills and refuse impoundments. The plaintiffs sought to enjoin the prospective approval of these nationwide permits and to enjoin some coal operators from additional use of existing nationwide permit approvals until they obtain more detailed “individual” permits. On July 8, 2004, the court issued an order enjoining the further issuance of Nationwide Permit 21 and rescinded certain listed permits where construction of valley fills and surface impoundments had not commenced. On August 13, 2004, the court extended the ruling to all Nationwide Permit 21 issued within the Southern District of West Virginia. Although CONSOL Energy had no operations that were interrupted, based on the District Court Opinion, we decided to convert certain current and planned applications for Nationwide Permit 21 in southern West Virginia to applications for individual permits. A similar lawsuit was filed on January 27, 2005 in the U.S. District Court for the Eastern District of Kentucky. However, the District Court for the Southern District of West Virginia opinion was reversed by the Fourth Circuit Court of Appeals. Because of legal challenges to the validity and use of Nationwide Permit 21, CONSOL Energy decided to apply for individual permits for its facilities as needed in southern West Virginia and Kentucky. In addition to the challenges to Nationwide Permit 21, another suit was filed in the Southern District of West Virginia in 2005 challenging the validity of COE determinations to issue individual permits for valley fills associated with certain surface mining operations. In March 2007, the District Court issued a decision remanding the individual permits back to the COE to, among other things, reconsider the COE’s determinations that the permits required adequate mitigation of the impacts of fills on streams. That District Court opinion is on appeal to the Fourth Circuit Court of Appeals. Although the 2007 District Court decision did not interrupt any of our mining operations, we amended mitigation plans in pending individual permit applications to address the concerns stated in the District Court decision. The various challenges to Nationwide Permit 21 and to individual COE permits resulted in a period of time when the COE was not issuing permits, which resulted in a backlog of pending permit applications. Thus, we may not receive COE permits when they are needed. Additional permit delays and costs have resulted from implementation by the COE and EPA of guidance on Clean Water Act jurisdictional determinations of waters of the United States, which was in response to the 2006 U.S. Supreme Court decision in Rapanos v. U.S. The Rapanos guidance is also likely to lead to an increase in streams and wetlands that are identified as requiring protection and/or mitigation under the Clean Water Act.

Comprehensive Environmental Response, Compensation and Liability Act (Superfund)

The Comprehensive Environmental Response, Compensation and Liability Act (Superfund) and similar state laws create liabilities for the investigation and remediation of releases of hazardous substances into the environment and for damages to natural resources. Our current and former coal mining operations incur, and will continue to incur, expenditures associated with the investigation and remediation of facilities and environmental conditions, including underground storage tanks, solid and hazardous waste disposal and other matters under the Comprehensive Environmental Response, Compensation and Liability Act and similar state environmental laws. We also must comply with reporting requirements under the Emergency Planning and Community Right-to-Know Act and the Toxic Substances Control Act.

From time to time, we have been the subject of administrative proceedings, litigation and investigations relating to environmental matters. We have been in the past and currently are named as a potentially responsible party at Superfund sites. We may become involved in future proceedings, litigation or investigations and incur liabilities that could be materially adverse to us.

Resource Conservation and Recovery Act

The federal Resource Conservation and Recovery Act (RCRA) and corresponding state laws and regulations affect coal mining and gas operations by imposing requirements for the treatment, storage and disposal of hazardous wastes. Facilities at which hazardous wastes have been treated, stored or disposed are subject to corrective action orders issued by the EPA which could adversely affect our results, financial condition and cash flows.

RCRA exempted fossil fuel combustion wastes from hazardous waste regulation until the EPA completed a report to Congress and made a determination on whether the wastes should be regulated as hazardous. In a 1993 regulatory determination, the EPA addressed some high volume-low toxicity coal combustion wastes generated at electric utility and independent power producing facilities, such as coal ash. In May 2000, the EPA concluded that coal combustion wastes do not warrant regulation as hazardous under RCRA resulting in coal combustion wastes remaining exempt from hazardous waste regulation. However, the EPA has also determined that national non-hazardous waste regulations under RCRA are needed for coal combustion wastes disposed in surface impoundments and landfills and used as mine-fill, and the Office Surface Mining is currently developing these regulations. The agency also concluded that beneficial uses of these wastes, other than for mine-filling, pose no significant risk and no additional national regulations are needed. Most state hazardous waste laws also exempt coal combustion waste, and instead treat it as either a solid waste or a special waste. The loss of the hazardous waste exemption for coal combustion waste, or the adoption of new regulations for disposing of coal combustion waste which impose significant additional costs, could adversely affect the demand for coal for electricity generation.

Federal Coal Leasing Amendments Act

Mining operations on federal lands in the western United States are affected by regulations of the United States Department of the Interior. The Federal Coal Leasing Amendments Act of 1976 amended the Mineral Lands Leasing Act of 1920 which authorized the leasing of federal coal lands for coal mining. The Federal Coal Leasing Amendments Act increased the royalties payable to the United States Government for federal coal leases and required diligent development and continuous operations of leased reserves within a specified period of time. Subtitle D of the Energy Policy Act of 2005 (Pub. L. 109-58) contained the Coal Leasing Amendments Act of 2005, which includes provisions designed to facilitate efficient and economic development of federal coal leases. The United States Department of the Interior has stated that it intends to promulgate new regulations and implement these 2005 amendments. Regulations adopted by the United States Department of the Interior to implement such legislation could affect coal mining by CONSOL Energy from federal coal leases for operations developed that would incorporate such leases. Currently, CONSOL Energy’s only active operation with federal coal leases is Emery Mine.

Endangered Species Act

The Federal Endangered Species Act (ESA) and similar state laws protect species threatened with extinction. Protection of endangered species may affect our ability to obtain permits, may delay issuance of mining permits, or may cause us to modify mining plans to avoid or minimize impacts to endangered species or their habitats. A number of species indigenous to the areas where we operate are protected under the ESA. Based on the species that have been identified and the current application of applicable laws and regulations, we do not believe that there are any species protected under the ESA or state laws that would materially and adversely affect our ability to mine coal from our properties.

Federal Regulation of the Sale and Transportation of Gas

Various aspects of CNX Gas’ operations are regulated by agencies of the federal government. The Federal Energy Regulatory Commission regulates the transportation and sale of natural gas in interstate commerce pursuant to the Natural Gas Act of 1938 and the Natural Gas Policy Act of 1978. While “first sales” by producers

of natural gas, and all sales of condensate and natural gas liquids can be made currently at uncontrolled market prices, Congress could reenact price controls in the future. In 1989, Congress enacted the Natural Gas Wellhead Decontrol Act, which removed all Natural Gas Act and Natural Gas Policy Act price and non-price controls affecting wellhead sales of natural gas effective January 1, 1993.

Regulations and orders set forth by the Federal Energy Regulatory Commission also impact the business of CNX Gas to a certain degree. Although the Federal Energy Regulatory Commission does not directly regulate CNX Gas’ production activities, the Federal Energy Regulatory Commission has stated that it intends for certain of its orders to foster increased competition within all phases of the natural gas industry. Additionally, the Federal Energy Regulatory Commission continues to review its transportation regulations, including whether to allocate all short-term capacity on the basis of competitive auctions and whether changes to its long-term transportation policies may also be appropriate to avoid a market bias toward short-term contracts. Additional Federal Energy Regulatory Commission orders were adopted based on this review with the goal of increasing competition for natural gas markets and transportation.

The Federal Energy Regulatory Commission has also issued numerous orders confirming the sale and abandonment of natural gas gathering facilities previously owned by interstate pipelines and acknowledging that if the Federal Energy Regulatory Commission does not have jurisdiction over services provided by these facilities, then such facilities and services may be subject to regulation by state authorities in accordance with state law. In addition, the Federal Energy Regulatory Commission’s approval of transfers of previously-regulated gathering systems to independent or pipeline affiliated gathering companies that are not subject to Federal Energy Regulatory Commission regulation may affect competition for gathering or natural gas marketing services in areas served by those systems and thus may affect both the costs and the nature of gathering services that will be available to interested producers or shippers in the future.

CNX Gas owns certain natural gas pipeline facilities that we believe meet the traditional tests which the Federal Energy Regulatory Commission has used to establish a pipeline’s status as a gatherer not subject to the Federal Energy Regulatory Commission jurisdiction.

Additional proposals and proceedings that might affect the gas industry may be pending before Congress, the Federal Energy Regulatory Commission, the Minerals Management Service, state commissions and the courts. CNX Gas cannot predict when or whether any such proposals may become effective. In the past, the natural gas industry has been heavily regulated. There is no assurance that the regulatory approach currently pursued by various agencies will continue indefinitely. Notwithstanding the foregoing, CNX Gas does not anticipate that compliance with existing federal, state and local laws, rules and regulations will have a material or significantly adverse effect upon the capital expenditures, earnings or competitive position of CNX Gas or its subsidiaries. No material portion of CNX Gas’ business is subject to renegotiation of profits or termination of contracts or subcontracts at the election of the federal government.

State Regulation of Gas Operations—United States

CNX Gas’ operations are also subject to regulation at the state and in some cases, county, municipal and local governmental levels. Such regulation includes requiring permits for the drilling of wells, maintaining bonding requirements in order to drill or operate wells and regulating the location of wells, the method of drilling and casing wells, the surface use and restoration of properties upon which wells are drilled, the plugging and abandoning of wells, the disposal of fluids used in connection with operations, and gas operations producing coalbed methane in relation to active mining. CNX Gas’ operations are also subject to various conservation laws and regulations. These include regulations that affect the size of drilling and spacing units or proration units, the density of wells which may be drilled and the unitization or pooling of gas properties. In addition, state conservation laws establish maximum rates of production from gas wells, generally prohibit the venting or flaring of gas and impose certain requirements regarding the ratability of production. A number of states have either enacted new laws or may be considering the adequacy of existing laws affecting gathering rates and/or services. Other state regulation of gathering facilities generally includes various safety, environmental and in

some circumstances, nondiscriminatory take requirements, but does not generally entail rate regulation. Thus, natural gas gathering may receive greater regulatory scrutiny of state agencies in the future. CNX Gas’ gathering operations could be adversely affected should they be subject in the future to increased state regulation of rates or services, although CNX Gas does not believe that it would be affected by such regulation any differently than other natural gas producers or gatherers. However, these regulatory burdens may affect profitability, and CNX Gas is unable to predict the future cost or impact of complying with such regulations.

Available Information

CONSOL Energy maintains a website on the World Wide Web at www.consolenergy.com . CONSOL Energy makes available, free of charge, on this website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), as soon as reasonably practicable after such reports are available electronically filed with, or furnished to the SEC, and are also available at the SEC’s website at www.sec.gov .

Executive Officers of The Registrant

Incorporated by reference into this Part I is the information set forth in Part III, Item 10 under the caption “Directors and Executive Officers of the Registrant” (included herein pursuant to Item 401 (b) of Regulation S-K).

Item 1A.

Risk Factors .

Investment in our securities is subject to various risks, including risks and uncertainties inherent in our business. The following sets forth factors related to our business, operations, financial position or future financial performance or cash flows which could cause an investment in our securities to decline and result in a loss.

A significant extended decline in the prices CONSOL Energy receives for our coal and gas could adversely affect our operating results and cash flows.

CONSOL Energy’s results of operations are highly dependent upon the prices we receive for our coal, which are closely linked to consumption patterns of the electric generation industry and certain industrial and residential patterns where gas is the principal fuel. Extended or substantial price declines for coal would adversely affect our operating results for future periods and our ability to generate cash flows necessary to improve productivity and expand operations. Prices of coal may fluctuate due to factors beyond our control such as overall domestic and global economic conditions; the consumption pattern of industrial consumers, electricity generators and residential users; technological advances affecting energy consumption; domestic and foreign government regulations; price and availability of alternative fuels; price of foreign imports and weather conditions. Any adverse change in these factors could result in weaker demand and possibly lower prices for our production, which would reduce our revenues.

Natural gas prices are volatile, and even relatively modest drops in prices can significantly affect our financial results and impede growth. Changes in natural gas prices have a significant impact on the value of our reserves and on our cash flow. In the past we have used hedging transactions to reduce our exposure to market price volatility when we deemed it appropriate. If we choose not to engage in, or reduce our use of hedging arrangements in the future, we may be more adversely affected by changes in natural gas and oil prices than our competitors who engage in hedging arrangements to a greater extent than we do. Prices for natural gas may fluctuate widely in response to relatively minor changes in the supply of and demand for natural gas, market uncertainty and a variety of additional factors that are beyond our control, such as: the domestic and foreign supply of natural gas; the price of foreign imports; overall domestic and global economic conditions; the consumption pattern of industrial consumers, electricity generators and residential users; weather conditions; technological advances affecting energy consumption; domestic and foreign governmental regulations; proximity and capacity of gas pipelines and other transportation facilities; and the price and availability of alternative fuels.

Many of these factors may be beyond our control. Earlier in this decade, natural gas prices were lower than they are today. Lower natural gas prices may not only decrease our revenues on a per unit basis, but may also limit our access to capital. A significant decrease in price levels for an extended period would negatively affect us in several ways including our cash flow would be reduced, decreasing funds available for capital expenditures employed to replace reserves or increase production; and access to other sources of capital, such as equity or long-term debt markets, could be severely limited or unavailable. Additionally, lower natural gas prices may reduce the amount of natural gas that we can produce economically. This may result in our having to make substantial downward adjustments to our estimated proved reserves. If this occurs or if our estimates of development costs increase, production data factors change or our exploration results deteriorate, accounting rules may require us to write down, as a non-cash charge to earnings, the carrying value of our natural gas properties. We are required to perform impairment tests on our assets whenever events or changes in circumstances lead to a reduction of the estimated useful life or estimated future cash flows that would indicate that the carrying amount may not be recoverable or whenever management’s plans change with respect to those assets. We may incur impairment charges in the future, which could have a material adverse effect on our results of operations in the period taken.

If customers do not extend existing contracts or do not enter into new long-term contracts for coal, profitability of CONSOL Energy’s operations could be affected.

During the year ended December 31, 2007, approximately 90% of the coal CONSOL Energy produced was sold under long-term contracts (contracts with terms of one year or more). If a substantial portion of CONSOL Energy’s long-term contracts are modified or terminated or if force majeure is exercised, CONSOL Energy would be adversely affected if we are unable to replace the contracts or if new contracts were not at the same level of profitability. The profitability of our long-term coal supply contracts depends on a variety of factors, which vary from contract to contract and fluctuate during the contract term, including our production costs and other factors. Price changes, if any, provided in long-term supply contracts may not reflect our cost increases, and therefore, increases in our costs may reduce our profit margins. In addition, in periods of declining market prices, provisions for adjustment or renegotiation of prices and other provisions may increase our exposure to short-term coal price volatility. As a result, CONSOL Energy may not be able to obtain long-term agreements at favorable prices (compared to either market conditions, as they may change from time to time, or our cost structure) and long-term contracts may not contribute to our profitability.

The loss of, or significant reduction in, purchases by our largest customers could adversely affect our revenues.

For the year ended December 31, 2007, we derived over 25% of our total revenues from sales to our four largest coal customers. At December 31, 2007, we had approximately 16 coal supply agreements with these customers that expire at various times from 2008 to 2021. We are currently discussing the extension of existing agreements or entering into new long-term agreements with some of these customers, but these negotiations may not be successful and these customers may not continue to purchase coal from us under long-term coal supply agreements. If any one of these four customers were to significantly reduce their purchases of coal from us, or if we were unable to sell coal to them on terms as favorable to us as the terms under our current agreements, our financial condition and results of operations could suffer materially.

Our ability to collect payments from our customers could be impaired if their creditworthiness declines.

Our ability to receive payment for coal sold and delivered depends on the continued creditworthiness of our customers. Our customer base has changed with deregulation as some utilities sold their power plants to their non-regulated affiliates or third parties. These new power plant owners may have credit ratings that are below investment grade. If the creditworthiness of our customers declines significantly, our $165 million accounts receivable securitization program and our business could be adversely affected.

Disruption of rail, barge, overland conveyor and other systems that deliver CONSOL Energy’s coal or an increase in transportation costs could make CONSOL Energy’s coal less competitive.

Coal producers depend upon rail, barge, trucking, overland conveyor and other systems to provide access to markets. Disruption of transportation services because of weather-related problems, strikes, lock-outs, break-downs of locks and dams or other events could temporarily impair our ability to supply coal to customers and adversely affect our profitability. Transportation costs represent a significant portion of the delivered cost of coal and, as a result, the cost of delivery is a critical factor in a customer’s purchasing decision. Increases in transportation costs could make our coal less competitive.

Competition within the coal and gas industries may adversely affect our ability to sell our products, or a loss of our competitive position because of overcapacity in these industries could adversely affect pricing which could impair our profitability.

CONSOL Energy competes with coal producers in various regions of the United States and with some foreign coal producers for domestic sales primarily to power generators. CONSOL Energy also competes with both domestic and foreign coal producers for sales in international markets. Demand for our coal by our principal customers is affected by the delivered price of competing coals, other fuel supplies and alternative generating sources, including nuclear, natural gas, oil and renewable energy sources, such as hydroelectric power. CONSOL Energy sells coal to foreign electricity generators and to the more specialized metallurgical coal market, both of which are significantly affected by international demand and competition.

Recent increases in coal prices could encourage the development of expanded capacity by new or existing coal producers. Any resulting overcapacity could affect our ability to sell coal or reduce coal prices and therefore reduce our revenues.

The gas industry is intensely competitive with companies from various regions of the United States and we may compete with foreign companies for domestic sales, many of whom are larger and have greater financial, technological, human and other resources. If we are unable to compete, our operating results and financial position may be adversely affected. For example, one of our competitive strengths is being a low-cost producer of gas. If our competitors can produce gas at a lower cost than us, it would effectively eliminate our competitive strength in that area. In addition, larger companies may be able to pay more to acquire new gas properties for future exploration, limiting our ability to replace gas we produce or to grow our production. Our ability to acquire additional properties and to discover new gas resources also depends on our ability to evaluate and select suitable properties and to consummate these transactions in a highly competitive environment.

We require a skilled workforce to run our business. If we cannot hire qualified people to meet replacement or expansion needs, we may not be able to achieve planned results.

Most of our workforce is comprised of people with technical skills related to the production of coal and gas. Approximately 55 percent of our workforce is 50 years of age or older. Based on our experience, we expect a high percentage of our employees to retire between now and the next five to seven years. This will require us to conduct an expanded and sustained effort to recruit new employees to replace those who retire and to fill new jobs as we grow our business. Some areas of Appalachia, most notably in eastern Kentucky, currently have a shortage of skilled labor. Because we have operations in this area, the shortage could make it more difficult to meet our staffing needs and therefore, our results may be adversely affected. Finally, a lack of qualified people may also affect companies that we use to perform certain specialized work. If these companies cannot find enough qualified workers, it may delay projects done for us or increase our costs.

The characteristics of coal may make it difficult for coal users to comply with various environmental standards, which are continually under review by international, federal and state agencies, related to coal combustion. As a result, they may switch to other fuels, which would affect the volume of CONSOL Energy’s sales.

Coal contains impurities, including sulfur, mercury, chlorine and other elements or compounds, many of which are released into the air when coal is burned. Stricter environmental regulations of emissions from coal-fired electric generating plants could increase the costs of using coal thereby reducing demand for coal as a fuel source, the volume of our coal sales and price. Stricter regulations could make coal a less attractive fuel alternative in the planning and building of utility power plants in the future.

For example, in order to meet the federal Clean Air Act limits for sulfur dioxide emissions from electric power plants, coal users will need to install scrubbers, use sulfur dioxide emission allowances (some of which they may purchase), or switch to other fuels. Each option has limitations. Lower sulfur coal may be more costly to purchase on an energy basis than higher sulfur coal depending on mining and transportation costs. The cost of installing scrubbers is significant and emission allowances may become more expensive as their availability declines. Switching to other fuels may require expensive modification of existing plants. Because higher sulfur coal currently accounts for a significant portion of our sales, the extent to which power generators switch to alternative fuel could materially affect us if we cannot offset the cost of sulfur removal by lowering the delivered costs of our higher sulfur coals on an energy equivalent basis.

Proposed reductions in emissions of mercury, sulfur dioxides, nitrogen oxides, particulate matter or greenhouse gases may require the installation of additional costly control technology or the implementation of other measures, including trading of emission allowances and switching to other fuels. For example, in 2005 the Environmental Protection Agency proposed separate regulations to establish mercury emission limits nationwide and to reduce the interstate transport of fine particulate matter and ozone through reductions in sulfur dioxides and nitrogen oxides throughout the eastern United States. The Environmental Protection Agency continues to require reduction of nitrogen oxide emissions in a number of eastern states and the District of Columbia and will require reduction of particulate matter emissions over the next several years for areas that do not meet air quality standards for fine particulates. In addition, Congress and several states may consider legislation to further control air emissions of multiple pollutants from electric generating facilities and other large emitters. Any new or proposed reductions will make it more costly to operate coal-fired plants and could make coal a less attractive fuel alternative to the planning and building of utility power plants in the future. To the extent that any new or proposed requirements affect our customers, this could adversely affect our operations and results.

CONSOL Energy may not be able to produce sufficient amounts of coal to fulfill our customers’ requirements, which could harm our relationships with customers.

CONSOL Energy may not be able to produce sufficient amounts of coal to meet customer demand, including amounts that we are required to deliver under long-term contracts. CONSOL Energy’s inability to satisfy contractual obligations could result in our customers initiating claims against us.

Foreign currency fluctuations could adversely affect the competitiveness of our coal abroad.

We compete in international markets against coal produced in other countries. Coal is sold internationally in U. S. dollars. As a result, mining costs in competing producing countries may be reduced in U.S. dollar terms based on currency exchange rates, providing an advantage to foreign coal producers. Currency fluctuations among countries purchasing and selling coal could adversely affect the competitiveness of our coal in international markets.

Coal mining is subject to conditions or events beyond CONSOL Energy’s control, which could cause our financial results to deteriorate.

CONSOL Energy’s coal mining operations are predominantly underground mines. These mines are subject to conditions or events beyond CONSOL Energy’s control that could disrupt operations and affect production and the cost of mining at particular mines for varying lengths of time. These conditions or events may have a significant impact on our operating results. Conditions or events have included:

•

variations in thickness of the layer, or seam, of coal;

•

amounts of rock and other natural materials intruding into the coal seam and other geological conditions that could affect the stability of the roof and the side walls of the mine;

•

equipment failures or repairs;

•

fires and other accidents; and

•

weather conditions.

Our mining operations consume significant quantities of commodities, the price of which is determined by international markets. If commodity prices increase significantly or rapidly, it could impact our cost of production.

Coal mines consume large quantities of commodities such as steel, copper, rubber products and liquid fuels. Some commodities, such as steel, are needed to comply with roof control plans required by regulation. The prices we pay for these products are strongly impacted by the global commodities market. A rapid or significant increase in cost of some commodities could impact our mining costs because we have a limited ability to negotiate lower prices, and, in some cases, do not have a ready substitute for these commodities.

CONSOL Energy must obtain for mining and drilling operations, governmental permits and approvals which can be a costly and time consuming process and can result in restrictions on our operations.

Regulatory authorities exercise considerable discretion in the timing and scope of permit issuance. Requirements imposed by these authorities may be costly and time consuming and may result in delays in the commencement or continuation of exploration or production operations. For example, CONSOL Energy often is required to prepare and present to federal, state and local authorities data pertaining to the effect or impact that proposed exploration for or production of coal may have on the environment. Further, the public has the right to comment on and otherwise participate in the permitting process, including through administrative appeals of permits and possibly further appeals in the courts. Accordingly, the permits CONSOL Energy needs may not be issued, or if issued, may not be issued in a timely fashion, or may involve requirements which restrict our ability to conduct our mining or gas operations or to do so profitably.

Proposals to regulate greenhouse gas emissions could impact the market for our fossil fuels, increase our costs, and reduce the value of our coal and gas assets.

Numerous proposals have been made at the international, national, regional, and state levels of government that are intended to limit emissions of greenhouse gas (GHGs), such as carbon dioxide and methane. Combustion of fossil fuels, such as the coal and gas we produce, results in the creation of carbon dioxide that is currently emitted into the atmosphere by coal and gas end users. Several states have already adopted measures requiring reduction of GHGs within state boundaries. If comprehensive regulations focusing on GHGs emission reductions were to be enacted by the United States or additional individuals states, it may adversely affect the use of and demand for fossil fuels, particularly coal. Further regulation of GHGs could occur in the United States pursuant to treaty obligations, regulation under the clean air act, or regulation under state law. In 2007, the U.S. Supreme Court held in Massachusetts v. Environmental Protection Agency (EPA), that EPA had authority to regulate GHG’s under the Clean Air Act, (the Act), reversing the EPA’s interpretation of the Act. This decision could lead to federal regulation of GHGs under the existing clean air act of coal-fired electric generation stations, which could adversely affect demand for our products.

In addition, many of our underground coal mines vent methane into the atmosphere for safety reasons. Coalbed methane enhances the greenhouse gas effect to a greater degree than carbon dioxide. If regulation of GHG emissions does not exempt coal mine methane, we may have to curtail production, pay higher taxes, or incur costs to purchase allowances that permit us to continue operations as they now exist.

Our gas operations primarily produce gas by capturing coalbed methane. If the coalbed methane is not extracted from the coal seam prior to mining, much of this gas would be liberated to the atmosphere when the coal is mined. The coalbed methane we capture is recorded, on a voluntarily basis, with the U.S Department of Energy. We have recorded the amounts we have captured since the early 1900’s. If regulation of GHGs does not give us credit for methane that would otherwise be released into the atmosphere, any value associated with our historical or future credits would be reduced or eliminated.

In addition, on February 4, 2008 three of Wall Street’s largest investment banks announced that they had adopted climate change guidelines for lenders to evaluate carbon risks in the financing of utility power plants which may make it more difficult for utilities to obtain financing for coal-fired plants.

Government laws, regulations and other legal requirements relating to protection of the environment, health and safety matters and others that govern our business increase our costs of doing business for both coal and gas, and may restrict our operations.

We are subject to laws, regulations and other legal requirements enacted or adopted by federal, state and local, as well as foreign authorities relating to protection of the environment and health and safety matters, including those legal requirements that govern discharges of substances into the air and water, the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites, groundwater quality and availability, plant and wildlife protection, reclamation and restoration of mining or drilling properties after mining or drilling is completed, the installation of various safety equipment in our mines, control of surface subsidence from underground mining and work practices related to employee health and safety. Complying with these requirements, including the terms of our permits, has had, and will continue to have, a significant effect on our costs of operations and competitive position. In addition, we could incur substantial costs, including clean up costs, fines and civil or criminal sanctions and third party damage claims for personal injury, property damage, wrongful death, or exposure to hazardous substances, as a result of violations of or liabilities under environmental and health and safety laws.

For example, the federal Clean Water Act and corresponding state laws affect coal mining and gas operations by imposing restrictions on discharges into regulated surface waters. Permits requiring regular monitoring and compliance with effluent limitations and reporting requirements govern the discharge of pollutants into regulated waters. In combination with existing requirements, new requirements under the Clean Water Act and corresponding state laws (including those relating to protection of “impaired waters” so designated by individual states through the use of new effluent limitations known as Total Maximum Daily Load (“TMDL”) limits; anti-degradation regulations which protect state designated “high quality/exceptional use” streams by restricting or prohibiting “discharges” which result in degradation; and requirements to treat discharges from coal mining properties for non-traditional pollutants, such as chlorides and selenium; and “protecting” streams, wetlands, other regulated water sources and associated riparian lands from the surface impacts of underground mining), may cause CONSOL Energy to incur significant additional costs that could adversely affect our operating results, financial condition and cash flows or may prevent us from being able to mine portions of our reserves. In addition, CONSOL Energy incurs and will continue to incur significant costs associated with the investigation and remediation of environmental contamination under the federal Comprehensive Environmental Response, Compensation, and Liability Act (Superfund) and similar state statutes and has been named as a potentially responsible party at Superfund sites in the past.

Additionally, the gas industry is subject to extensive legislation and regulation, which is under constant review for amendment or expansion. Any changes may affect, among other things, the pricing or marketing of gas production. State and local authorities regulate various aspects of gas drilling and production activities,

including the drilling of wells (through permit and bonding requirements), the spacing of wells, the unitization or pooling of gas properties, environmental matters, safety standards, market sharing and well site restoration. If we fail to comply with statutes and regulations, we may be subject to substantial penalties, which would decrease our profitability.

Our mines are subject to stringent federal and state safety regulations that increase our cost of doing business at active operations, and may place restrictions on our methods of operation. In addition, government inspectors under certain circumstances, have the ability to order our operation to be shut down based on safety considerations.

Stringent health and safety standards were imposed by federal legislation when the Federal Coal Mine Health and Safety Act of 1969 was adopted. The Federal Coal Mine Safety and Health Act of 1977 expanded the enforcement of safety and health standards of the Coal Mine Health and Safety Act of 1969 and imposed safety and health standards on all (non-coal as well as coal) mining operations. Regulations are comprehensive and affect numerous aspects of mining operations, including training of mine personnel, mining procedures, the equipment used in mine emergency procedures, mine plans and other matters. Several mining accidents at our competitors’ mines that resulted in fatalities in early 2006 led to adoption of additional safety regulations by the Mine Safety and Health Administration and the adoption in June 2006 of the Mine Improvement and New Emergency Response Act of 2006 (“the MINER Act”). The additional requirements of the MINER Act and implementing federal regulations include, among other things, expanded emergency response plans, providing additional quantities of breathable air for emergencies, installation of refuge chambers in underground coal mines, installation of two-way communications and tracking systems for underground coal mines, new standards for sealing mined out areas of underground coal mines, more available mine rescue teams and enhanced training for emergencies. Most states in which CONSOL Energy operates have programs for mine safety and health regulation and enforcement. We believe that the combination of federal and state safety and health regulations in the coal mining industry is, perhaps, the most comprehensive system for protection of employee safety and health affecting any industry. Most aspects of mine operations, particularly underground mine operations, are subject to extensive regulation. The various requirements mandated by law or regulation can have a significant effect on operating costs and place restrictions on our methods of operations. In addition, government inspectors under certain circumstances, have the ability to order our operation to be shut down based on safety considerations.

CONSOL Energy has reclamation and mine closure obligations. If the assumptions underlying our accruals are inaccurate, we could be required to expend greater amounts than anticipated.

The Surface Mining Control and Reclamation Act establishes operational, reclamation and closure standards for all aspects of surface mining as well as most aspects of deep mining. CONSOL Energy accrues for the costs of current mine disturbance and of final mine closure, including the cost of treating mine water discharge where necessary. Estimates of our total reclamation and mine-closing liabilities, which are based upon permit requirements and our experience were approximately $482 million at December 31, 2007. The amounts recorded are dependent upon a number of variables, including the estimated future retirement costs, estimated proven reserves, assumptions involving profit margins, inflation rates, and the assumed credit-adjusted risk-free interest rates. Furthermore, these obligations are unfunded. If these accruals are insufficient or our liability in a particular year is greater than currently anticipated, our future operating results could be adversely affected.

CONSOL Energy faces uncertainties in estimating our economically recoverable coal reserves, and inaccuracies in our estimates could result in lower than expected revenues, higher than expected costs and decreased profitability.

There are uncertainties inherent in estimating quantities and values of economically recoverable coal reserves, including many factors beyond our control. As a result, estimates of economically recoverable coal reserves are by their nature uncertain. Information about our reserves consists of estimates based on engineering, economic and geological data assembled and analyzed by our staff.

Some of the factors and assumptions which impact economically recoverable reserve estimates include:

•

geological conditions;

•

historical production from the area compared with production from other producing areas;

•

the assumed effects of regulations and taxes by governmental agencies;

•

assumptions governing future prices; and

•

future operating costs, including cost of materials.

Each of these factors may in fact vary considerably from the assumptions used in estimating reserves. For these reasons, estimates of the economically recoverable quantities of coal attributable to a particular group of properties, and classifications of these reserves based on risk of recovery and estimates of future net cash flows, may vary substantially. Actual production, revenues and expenditures with respect to our reserves will likely vary from estimates, and these variances may be material. As a result, our estimates may not accurately reflect our actual reserves.

We do not insure against all potential operating risks. We may incur losses and be subject to liability claims as a result of our operations.

We maintain insurance for some, but not all, of the potential risks and liabilities associated with our business. For some risks, we may not obtain insurance if we believe the cost of available insurance is excessive relative to the risks presented. As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially, and in some instances, certain insurance may become unavailable or available only for reduced amounts of coverage. As a result, we may not be able to renew our existing insurance policies or procure other desirable insurance on commercially reasonable terms, if at all. Although we maintain insurance at levels we believe are appropriate and consistent with industry practice, we are not fully insured against all risks, including drilling and completion risks that are generally not recoverable from third parties or insurance. In addition, pollution and environmental risks generally are not fully insurable. Losses and liabilities from uninsured and underinsured events and delay in the payment of insurance proceeds could have a material adverse effect on our financial condition, results of operations and cash flows.

Fairmont Supply Company, a subsidiary of CONSOL Energy, is a co-defendant in various asbestos litigation cases which could result in making payments in the future that are material.

One of our subsidiaries, Fairmont Supply Company (Fairmont), which distributes industrial supplies, currently is named as a defendant in approximately 25,000 asbestos claims in state courts in Pennsylvania, Ohio, West Virginia, Maryland, Mississippi and New Jersey. Because a very small percentage of products manufactured by third parties and supplied by Fairmont in the past may have contained asbestos and many of the pending claims are part of mass complaints filed by hundreds of plaintiffs against a hundred or more defendants, it has been difficult for Fairmont to determine how many of the cases actually involve valid claims or plaintiffs who were actually exposed to asbestos-containing products supplied by Fairmont. In addition, while Fairmont may be entitled to indemnity or contribution in certain jurisdictions from manufacturers of identified products, the availability of such indemnity or contribution is unclear at this time and, in recent years, some of the manufacturers named as defendants in these actions have sought protection from these claims under bankruptcy laws. Fairmont has no insurance coverage with respect to these asbestos cases. For year ended December 31, 2007, payments by Fairmont with respect to asbestos cases have not been material. Our current estimates related to these asbestos claims, individually and in the aggregate, are immaterial to the financial position, results of operations and cash flows of CONSOL Energy. However, it is reasonably possible that payments in the future with respect to pending or future asbestos cases may be material to the financial position, results of operations or cash flows of CONSOL Energy.

CONSOL and its subsidiaries are subject to various legal proceedings, which may have a material effect on our business.

We are party to a number of legal proceedings incident to normal business activities. There is the potential that an individual matter or the aggregation of many matters could have an adverse effect on our cash flows, results of operations or financial position. See Note 26 in the Note to the Audited Consolidated Financial Statements for further discussion.

CONSOL Energy has obligations for long-term employee benefits for which we accrue based upon assumptions which, if inaccurate, could result in CONSOL Energy being required to expense greater amounts than anticipated.

CONSOL Energy provides various long-term employee benefits to inactive and retired employees. We accrue amounts for these obligations. At December 31, 2007, the current and non-current portions of these obligations, included:

•

post retirement medical and life insurance ($2.5 billion);

•

coal workers’ black lung benefits ($182.9 million);

•

salaried retirement benefits ($70.2 million); and

•

workers’ compensation ($162.1 million).

However, if our assumptions are inaccurate, we could be required to expend greater amounts than anticipated. These obligations are unfunded, except for salaried retirement benefits, of which approximately 90% was funded at December 31, 2007. In addition, several states in which we operate consider changes in workers’ compensation and black lung laws from time to time. Such changes, if enacted, could increase our benefit expense.

Due to our participation in multi-employer pension and benefit plans, we have exposure under those plans that extend beyond what our obligation would be with respect to our employees.

We are obligated to contribute to multi-employer defined benefit plans for UMWA retirees which provides pension, medical and death benefits. In the event of a partial or complete withdrawal by us from any plan which is underfunded, we would be liable for a proportionate share of such plan’s unfunded vested benefits. Based on the limited information available from plan administrators, which we cannot independently validate, we believe that our portion of the contingent liability in the case of a full withdrawal or termination could be material to our financial position and results of operations. In the event that any other contributing employer withdraws from any plan which is underfunded, and such employer (or any member in its controlled group) cannot satisfy their obligations under the plan at the time of withdrawal, then we, along with the other remaining contributing employers, would be liable for our proportionate share of such plan’s unfunded vested benefits.

In addition, if a multi-employer pension plan fails to satisfy the minimum funding requirements, the Internal Revenue Service, pursuant to Section 4971 of the Internal Revenue Code (the “Code”) will impose an excise tax of 5% on the amount of the accumulated funding deficiency. Under Section 413(c)(5) of the Code, the liability of each contributing employer, including us, will be determined in part by each employer’s additional contributions in order to reduce the deficiency to zero, which may, along with the payment of the excise tax, have a material adverse impact on our financial results.

If lump sum payments made to retiring salaried employees pursuant to CONSOL Energy’s defined benefit pension plan exceed the total of the service cost and the interest cost in a plan year, CONSOL Energy would need to make an adjustment to operating results equaling the unrecognized actuarial gain or loss resulting from each individual who received a lump sum payment in that year, which may result in an adjustment that could materially reduce operating results.

CONSOL Energy’s defined benefit pension plan for salaried employees allows such employees to receive a lump-sum distribution for benefits earned up through December 31, 2005 in lieu of annual payments when they retire from CONSOL Energy. Statement of Financial Accounting Standards No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans for the Terminations Benefits,” requires that if the lump-sum distributions made for a plan year, which currently for CONSOL Energy is October 1 to September 30, exceed the total of the service cost and interest cost for the plan year, CONSOL Energy would need to recognize for that year’s results of operations an adjustment equaling the unrecognized actuarial gain or loss resulting from each individual who received a lump sum in that year. Lump sum payments in CONSOL Energy’s non-qualified pension plan exceeded the total of the service cost and the interest cost in the plan year ended September 30, 2007. This resulted in expense of $2.7 million in the year ended December 31, 2007. If lump sum payments again exceed the total of the service cost and the interest cost, the adjustment could materially reduce operating results.

Various federal or state laws and regulations require CONSOL Energy to obtain surety bonds or to provide other assurance of payment for certain of our long-term liabilities including mine closure or reclamation costs, workers’ compensation, coal workers’ black lung and other post employment benefits.

Federal and state laws and regulations require us to obtain surety bonds or provide other assurances to secure payment of certain long-term obligations including mine closure or reclamation costs, water treatment costs, federal and state workers’ compensation costs, and other miscellaneous obligations. The requirements and amounts of security are not fixed and can vary from year to year. It has become increasingly difficult for us to secure new surety bonds or renew such bonds without posting collateral. CONSOL Energy has satisfied our obligations under these statutes and regulations by providing letters of credit or other assurances of payment. The issuance of letters of credit under our bank credit facility reduces amounts that we can borrow under our bank credit facility for other purposes.

Acquisitions that we have completed, as well as acquisitions that we may undertake in the future, involve a number of risks, any of which could cause us not to realize the anticipated benefits.

We have completed several acquisitions and investments in the past. We continually seek to expand our operations and coal and gas reserves through acquisitions. If we are unable to successfully integrate the companies, businesses or properties we acquire, our profitability may decline and we could experience a material adverse effect on our business, financial condition, or results of operations. Acquisition transactions involve various inherent risks, including:

•

Uncertainties in assessing the value, strengths, and potential profitability of, and identifying the extent of all weaknesses, risks, contingent and other liabilities (including environmental liabilities) of acquisition candidates;

•

The potential loss of key customers, management and employees of an acquired business;

•

The ability to achieve identified operating and financial synergies anticipated to result from an acquisition;

•

Problems that could arise from the integration of the acquired business; and

•

Unanticipated changes in business, industry or general economic conditions that affect the assumptions underlying our rationale for pursuing the acquisition.

CONSOL Energy’s rights plan may have anti-takeover effects that could prevent a change of control.

On December 19, 2003, CONSOL Energy adopted a rights plan which, in certain circumstances, including a person or group acquiring, or the commencement of a tender or exchange offer that would result in a person or group acquiring, beneficial ownership of more than 15% of the outstanding shares of CONSOL Energy common stock, would entitle each right holder to receive, upon exercise of the right, shares of CONSOL Energy common stock having a value equal to twice the right exercise price. For example, at an exercise price of $80 per right, each right not otherwise voided would entitle its holders to purchase $160 worth of shares of CONSOL Energy common stock for $80. Assuming that shares of CONSOL Energy common stock had a per share value of $16 at such time, the holder of each right would be entitled to purchase ten shares of CONSOL Energy common stock for $80, or a price of $8 per share, one half its then market price. This and other provisions of CONSOL Energy’s rights plan could make it more difficult for a third party to acquire CONSOL Energy, which could hinder stockholders’ ability to receive a premium for CONSOL Energy stock over the prevailing market prices.

CONSOL Energy faces uncertainties in estimating proved recoverable gas reserves, and inaccuracies in our estimates could result in lower than expected reserve quantities and a lower present value of our reserves.

Natural gas reserve engineering requires subjective estimates of underground accumulations of natural gas and assumptions concerning future natural gas prices, production levels, and operating and development costs. As a result, estimated quantities of proved reserves and projections of future production rates and timing of development expenditures may be incorrect. We have in the past retained the services of independent petroleum engineers to prepare reports of our proved reserves. Over time, material changes to reserve estimates may be made, taking into account the results of actual drilling, testing, and production. Also, we make certain assumptions regarding future natural gas prices, production levels, and operating and development costs that may prove incorrect. Any significant variance from these assumptions to actual figures could greatly affect our estimates of our reserves, the economically recoverable quantities of natural gas attributable to any particular group of properties, the classifications of reserves based on risk of recovery, and estimates of the future net cash flows. Numerous changes over time to the assumptions on which our reserve estimates are based, as described above, often result in the actual quantities of gas we ultimately recover being different from reserve estimates.

The present value of future net cash flows from our proved reserves is not necessarily the same as the current market value of our estimated natural gas reserves. We base the estimated discounted future net cash flows from our proved reserves on prices and costs. However, actual future net cash flows from our gas and oil properties also will be affected by factors such as:

•

geological conditions;

•

changes in governmental regulations and taxation;

•

assumptions governing future prices;

•

the amount and timing of actual production;

•

future operating costs; and

•

capital costs of drilling new wells.

The timing of both our production and incurrence of expenses in connection with the development and production of natural gas properties will affect the timing of actual future net cash flows from proved reserves, and thus their actual present value. In addition, the 10% discount factor we use when calculating discounted future net cash flows may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with us or the natural gas and oil industry in general.

Our gas exploration and development activities may not be commercially successful.

The exploration for and production of gas involves risks. The cost of drilling, completing and operating wells for coalbed methane or other gas is often uncertain, and a number of factors can delay or prevent drilling operations or production, including:

•

unexpected drilling conditions;

•

title problems;

•

pressure or irregularities in geologic formations;

•

equipment failures or repairs;

•

fires or other accidents;

•

adverse weather conditions;

•

reductions in natural gas prices;

•

pipeline ruptures; and

•

unavailability or high cost of drilling rigs, other field services and equipment.

Our future drilling activities may not be successful, and our drilling success rate could decline. Unsuccessful drilling activities could result in higher costs without any corresponding revenues.

We have a limited operating history in certain of our gas operating areas, and our increased focus on new development projects in these and other unexplored areas increases the risks inherent in our gas and oil activities.

In 2008 and beyond we plan to conduct testing and development activities in areas where we have little or no proved reserves, such as certain areas in Pennsylvania and Kentucky. These exploration, drilling and production activities will be subject to many risks, including the risk that coalbed methane or natural gas is not present in sufficient quantities in the coal seam or target strata, or that sufficient permeability does not exist for gas to be produced economically. We have invested in property, and will continue to invest in property, including undeveloped leasehold acreage, that we believe will result in projects that will add value over time. Drilling for coalbed methane, natural gas and oil may involve unprofitable efforts, not only from dry wells but also from wells that are productive but do not produce sufficient net reserves to return a profit after deducting drilling, operating and other costs. We cannot be certain that the wells we drill in these new areas will be productive or that we will recover all or any portion of our investments.

Our gas business depends on transportation facilities owned by others. Disruption of, capacity constraints in, or proximity to pipeline systems could limit sales of our gas.

We transport our gas to market by utilizing pipelines owned by others. If pipelines do not exist near our producing wells, if pipeline capacity is limited or if pipeline capacity is unexpectedly disrupted, our gas sales could be limited, reducing our profitability. If we cannot access pipeline transportation, we may have to reduce our production of gas or vent our produced gas to the atmosphere because we do not have facilities to store excess inventory. If our sales are reduced because of transportation constraints, our revenues will be reduced, which will also increase our unit costs. If we cannot obtain transportation capacity and we do not have the ability to store gas, we may have to reduce production. If pipeline quality tariffs change, we might be required to install additional processing equipment which could increase our costs. The pipeline could curtail our flows until the gas delivered to the pipeline is in compliance.

Increased gas industry activity may create shortages of field services, equipment and personnel, which may increase our costs and may limit our ability to drill and produce gas.

Due to current industry demands, well service providers and related equipment are in short supply. The demand for qualified and experienced field personnel to drill wells and conduct field operations, including, geologists, geophysicists, engineers and other professionals, in the natural gas and oil industry can fluctuate significantly, often in correlation with natural gas and oil prices, causing periodic shortages. These shortages may lead to escalating prices, the possibility of poor services, ineffective drilling operations and personnel injuries. Such pressures will likely increase the actual cost of services, extend the time to secure such services and add costs for damages due to accidents sustained from the over use of equipment and inexperienced personnel. Higher oil and natural gas prices generally stimulate increased demand and result in increased prices for drilling equipment, crews and associated supplies, equipment and services. We believe that these shortages could continue. In addition, the costs and delivery time of equipment and supplies are substantially greater in periods of peak demand. Accordingly, we cannot assure that we will be able to obtain necessary drilling equipment and supplies in a timely manner or on satisfactory terms and we may experience shortages of, or material increases in the cost of, drilling equipment, crews and associated supplies, equipment and services in the future. Any such delays and price increases could adversely affect our ability to pursue our drilling program and our results of operations.

Unless we replace our natural gas reserves, our reserves and production will decline, which would adversely affect our business, financial condition, results of operations and cash flows.

Producing natural gas reservoirs generally are characterized by declining production rates that vary depending upon reservoir characteristics and other factors. Because total estimated proved reserves include our proved undeveloped reserves at December 31, 2007, production is expected to decline even if those proved undeveloped reserves are developed and the wells produce as expected. The rate of decline will change if production from our existing wells declines in a different manner than we have estimated and can change under other circumstances. Thus, our future natural gas reserves and production and, therefore, our cash flow and income are highly dependent on our success in efficiently developing and exploiting our current reserves and economically finding or acquiring additional recoverable reserves. We may not be able to develop, find or acquire additional reserves to replace our current and future production at acceptable costs.

We may incur additional costs and delays to produce gas because we have to acquire additional property rights to perfect our title to the gas estate.

Some of the gas rights we believe we control are in areas where we have not yet done any exploratory or production drilling. Most of these properties were acquired primarily for the coal rights, and, in many cases were acquired years ago. While chain of title work for the coal estate was generally fully developed, in many cases, the gas estate title work is less robust. Our practice is to perform a thorough title examination of the gas estate before we commence drilling activities and to acquire any additional rights needed to perfect our ownership of the gas estate for development and production purposes. We may incur substantial costs to acquire these additional property rights and the acquisition of the necessary rights may not be feasible in some cases. Our inability to obtain these rights may adversely impact our ability to develop these properties. Some states permit us to produce the gas without perfected ownership under an administrative process known as “forced pooling,” which requires us to give notice to all potential claimants and pay royalties into escrow until the undetermined rights are resolved. As a result, we may have to pay royalties to produce gas on acreage that we control and these costs may be material. Further, the forced pooling process is time consuming and may delay our drilling program in the affected areas. In addition, although we believe we have the right to extract and produce coalbed methane from locations where we possess rights to coal, in some cases we may not possess these rights. If we are unable in such cases to obtain those rights from their owners, we will not enjoy the rights to develop coalbed methane with our mining of coal. Our failure to obtain these rights may adversely impact our ability in the future to increase production and reserves. For example, we have substantial acreage in West Virginia for which we have not reviewed the title to determine what, if any, additional rights would be needed to produce coalbed methane from these locations or the feasibility of obtaining these rights.

Currently the vast majority of our gas producing properties are located in three counties in Virginia, making us vulnerable to risks associated with having our gas production concentrated in one area.

The vast majority of our gas producing properties are geographically concentrated in three counties in Virginia. As a result of this concentration, we may be disproportionately exposed to the impact of delays or interruptions of gas production from these wells caused by significant governmental regulation, transportation capacity constraints, curtailment of production, natural disasters or interruption of transportation of natural gas produced from the wells in this basin or other events which impact this area.

Other persons could have ownership rights in our advanced gas extraction techniques which could force us to cease using those techniques or pay royalties.

Although we believe that we hold sufficient rights to all of our advanced gas extraction techniques, other persons could contest our rights and claim ownership of one or more of our advanced techniques for extracting coalbed methane. For example, a third party has asserted that several of our drilling techniques infringed several patents that they hold. A successful challenge to one or more of our advanced extraction techniques could adversely impact our financial performance and results of operation. We might have to pay a royalty which would increase our production costs or cease using that technique which could raise our production costs or decrease our production of coalbed methane. In addition, we could incur substantial costs in defending patent infringement claims, obtaining patent licenses, engaging in interference and opposition proceedings or other challenges to our patent rights or intellectual property rights made by third parties or in bringing such proceedings.

The coal beds and other strata from which we produce methane gas frequently contain water and the gas often contains impurities, both of which may hamper our ability to produce gas in commercial quantities or economically.

Coal beds and other strata frequently contain water that must be removed in order for the gas to detach from the coal and flow to the well bore. Our ability to remove and dispose of sufficient quantities of water from the coal seam will determine whether or not we can produce gas in commercial quantities. The cost of water disposal may affect our profitability. Further, a substantial amount of our gas needs to be processed in order to make it salable to our intended customers. At times, the cost of processing this gas relative to the quantity of gas from a particular well, or group of wells, may outweigh the economic benefit of selling that gas, and our profitability may decrease due to the reduced production and sale of gas.

Our hedging activities may prevent us from benefiting from price increases and may expose us to other risks.

To manage our exposure to fluctuations in the price of natural gas, we enter into hedging arrangements with respect to a portion of our expected production. As of December 31, 2007, we had hedges on approximately 24.5 billion cubic feet of our targeted 2008 natural gas production. To the extent that we engage in hedging activities, we may be prevented from realizing the benefits of price increases above the levels of the hedges.

In addition, such transactions may expose us to the risk of financial loss in certain circumstances, including instances in which our production is less than expected, the counterparties to our futures contracts fail to perform the contracts, or if our gas hedges would no longer qualify for hedge accounting, we will be required to mark them to market. This may result in more volatility in our income in the future periods.

Item 1B.

Unresolved Staff Comments.

None.

Item 2.

Properties.

See “Coal Operations” and “Gas Operations” in Item 1 of this 10-K for a description of CONSOL Energy’s properties.

Item 3.

Legal Proceedings.

The first through eighteenth paragraphs of Note 26 of the Notes to the Audited Consolidated Financial Statements included as Item 8 in Part II of this Form 10-K are incorporated herein by reference.

Item 4.

Submission of Matters to a Vote of Security Holders.

None.

PART II

Item 5.

Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities.

Common Stock Market Prices and Dividends

Our common stock is listed on the New York Stock Exchange under the symbol CNX. The following table sets forth for the periods indicated the range of high and low sales prices per share of our common stock as reported on the New York Stock Exchange and the cash dividends declared on the common stock for the periods indicated. Information presented reflects the 2 for 1 stock split that occurred in May 2006.


	High		Low		Dividends
Year Period Ended December 31, 2007:
Quarter Ended March 31, 2007	$	39.90	$	29.15	$	0.07
Quarter Ended June 30, 2007	$	49.85	$	38.37	$	0.07
Quarter Ended September 30, 2007	$	50.21	$	34.37	$	0.07
Quarter Ended December 31, 2007	$	74.18	$	45.04	$	0.10
Year Period Ended December 31, 2006:
Quarter Ended March 31, 2006	$	37.70	$	30.00	$	0.07
Quarter Ended June 30, 2006	$	49.09	$	35.12	$	0.07
Quarter Ended September 30, 2006	$	48.90	$	28.07	$	0.07
Quarter Ended December 31, 2006	$	38.71	$	28.69	$	0.07

As of January 30, 2008, there were approximately 71,800 holders of record of our common stock. The computation of the approximate number of shareholders is based upon a broker search.

The following performance graph compares the yearly percentage change in the cumulative total shareholder return on the common stock of CONSOL Energy to the cumulative shareholder return for the same period of a peer group and the Standard & Poor’s 500 Stock Index. The peer group has changed from last year in order to be consistent with the peer group that is utilized for executive compensation benchmarking. The peer group is comprised of CONSOL Energy, Alliance Resource Partners, Alpha Natural Resources, Inc., Anadarko Petroleum Corp., Apache Corp., Cabot Oil & Gas Corp., Callon Petroleum Co., Comstock Resources, Inc., Denbury Resources, Inc., Devon Energy Corp., Encana Corp., EOG Resources, Inc., Foundation Coal Holdings, Inc., International Coal Group, Inc., James River Coal Co., Massey Energy Co., Newfield Exploration Co., Nexen Inc., Noble Energy Inc., Peabody Energy Corp., Penn Virginia Corp., Pioneer Natural Resources Co., Rio Tinto PLC (ADR), St. Mary Land & Exploration, Stone Energy Corp., Ultra Petroleum Corp., and Westmorland Coal Co. The previous peer group included CONSOL Energy, Allegheny Energy, Inc., Alpha Natural Resources, Inc., Apache Corp., Arch Coal, Inc., Barrick Gold Corp., Equitable Resources, Inc., Foundation Coal Holdings, Inc., Massey Energy Co., Peabody Energy Corp., and Vectren Corp. The graph assumes that the value of the investment in CONSOL Energy common stock and each index was $100 at December 31, 2002. The graph also assumes that all dividends were reinvested and that the investments were held through December 31, 2007.


	2002	2003	2004	2005	2006	2007
CONSOL Energy Inc.	100.0	153.1	213.8	273.9	273.3	396.9
Peer Group	100.0	139.3	171.4	229.0	231.4	293.0
Previous Peer Group	100.0	140.4	168.6	208.8	210.4	261.1
S&P 500 Stock Index	100.0	128.4	139.1	143.9	159.5	164.9

Cumulative Total Shareholder Return Among CONSOL Energy Inc., Peer Group and

S&P 500 Stock Index

LOGO

The above information is being furnished pursuant to Regulation S-K, Item 201 (e) (Performance Graph).

On January 30, 2008, CONSOL Energy’s board of directors declared a dividend of $0.10 per share, payable on February 22, 2008, to shareholders of record on February 7, 2008.

On December 21, 2005, CONSOL Energy’s Board of Directors announced a share repurchase program of up to $300 million of the company’s common stock during a 24-month period beginning January 1, 2006 and ending December 31, 2007. The program was not renewed. We repurchased common stock in each of the quarters of 2007 and 2006 as follows:


Period	Total Number of Shares Purchased	Average Price Paid Per Share
January 1, 2007 – March 31, 2007	730,000	$	35.05
April 1, 2007 – June 30, 2007	1,357,800	$	39.80
July 1, 2007 – September 30, 2007	—	$	—
October 1, 2007 – December 31, 2007	—	$	—

Total 2007 Purchases	2,087,800	$	38.14
January 1, 2006 – March 31, 2006	2,391,800	$	32.22
April 1, 2006 – June 30, 2006	158,000	$	41.28
July 1, 2006 – September 30, 2006	965,000	$	33.97
October 2, 2006 – December 31, 2006	—	$	—

Total 2006 Purchases	3,514,800	$	33.11

Total Purchases Under Program	5,602,600	$	34.98

See Part III, Item 12. “Security ownership of Certain Beneficial Owners and Management and Related Stockholders Matters” for information relating to CONSOL Energy’s equity compensation plans.

Item 6.

Selected Financial Data.

The following table presents our selected consolidated financial and operating data for, and as of the end of, each of the periods indicated. The selected consolidated financial data for, and as of the end of, each of the years ended December 31, 2007, 2006, 2005, 2004 and 2003 are derived from our audited consolidated financial statements. The selected consolidated financial and operating data are not necessarily indicative of the results that may be expected for any future period. The selected consolidated financial and operating data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes included in this report.

STATEMENT OF INCOME DATA

(In thousands except per share data)


	Year Ended December 31,
	2007			2006			2005			2004			2003
Revenue and Other Income:
Sales—Outside and Related Party	$	3,324,346		$	3,286,522		$	2,935,682		$	2,425,206		$	2,009,880
Sales—Purchased Gas		7,628			43,973			275,148			112,005			—
Sales—Gas Royalty Interests		46,586			51,054			45,351			41,858			32,442
Freight—Outside and Related Party(A)		186,909			162,761			119,811			110,175			114,582
Other Income		196,728			170,861			107,131			87,505			65,562
Gain on Sale of 18.5% interest in CNX Gas		—			—			327,326			—			—

Total Revenue and Other Income		3,762,197			3,715,171			3,810,449			2,776,749			2,222,466
Costs:
Cost of Goods Sold and Other Operating Charges (exclusive of depreciation, depletion and amortization shown below)		2,351,507			2,249,776			2,122,259			1,855,033			1,599,816
Purchased Gas Costs		7,162			44,843			278,720			113,063			—
Gas Royalty Interests Costs		39,921			41,879			36,501			32,914			24,200
Freight Expense		186,909			162,761			119,811			110,175			114,582
Selling, General and Administrative Expense		108,664			91,150			80,700			72,870			77,571
Depreciation, Depletion and Amortization		324,715			296,237			261,851			280,397			242,152
Interest Expense		30,851			25,066			27,317			31,429			34,451
Taxes Other Than Income		283,511			252,539			228,606			198,305			159,595
Restructuring Costs		—			—			—			—			3,606

Total Costs		3,333,240			3,164,251			3,155,765			2,694,186			2,255,973

Earnings (Loss) Before Income Taxes, Minority Interest and Cumulative Effect of Change in Accounting Principle		428,957			550,920			654,684			82,563			(33,507	)
Income Taxes (Benefits)		136,137			112,430			64,339			(32,646	)		(20,941	)

Earnings (Loss) Before Minority Interest and Cumulative Effect of Change in Accounting principle		292,820			438,490			590,345			115,209			(12,566	)
Minority Interest		(25,038	)		(29,608	)		(9,484	)		—			—
Cumulative Effect of Change in Accounting for Workers’ Compensation Liability, Net of Income Taxes of $53,080		—			—			—			83,373			—
Cumulative Effect of Change in Accounting for Mine Closing, Reclamation and Gas Well Closing Costs, Net of Income Taxes of $3,035		—			—			—			—			4,768

Net Income (Loss)	$	267,782		$	408,882		$	580,861		$	198,582		$	(7,798	)

Earnings (Loss) Per Share From Continuing Operations
Basic	$	1.47		$	2.23		$	3.17		$	0.64		$	(0.08	)

Dilutive	$	1.45		$	2.20		$	3.13		$	0.63		$	(0.08	)

Earnings (Loss) Per Share From Net Income
Basic(B)	$	1.47		$	2.23		$	3.17		$	1.10		$	(0.05	)

Dilutive(B)	$	1.45		$	2.20		$	3.13		$	1.09		$	(0.05	)

Weighted Average Number of Common Shares Outstanding:
Basic(C)		182,050,627			183,354,732			183,489,908			180,461,386			163,465,178

Dilutive(C)		184,149,751			185,638,106			185,534,980			182,399,890			163,465,178

Dividend Per Share	$	0.31		$	0.28		$	0.28		$	0.28		$	0.28

BALANCE SHEET DATA

(In thousands)


	Year Ended December 31,
	2007			2006		2005		2004			2003
Working (deficiency) capital	$	(333,242	)	$	174,372	$	194,578	$	(243,275	)	$	(358,459	)
Total assets		6,208,090			5,663,332		5,071,963		4,195,611			4,318,978
Short-term debt		247,500			—		—		5,060			68,760
Long-term debt (including current portion)		507,208			552,263		442,996		429,645			495,242
Total deferred credits and other liabilities		3,325,231			3,228,653		2,726,563		2,582,318			2,757,130
Stockholders’ equity		1,214,419			1,066,151		1,025,356		469,021			290,637

OTHER OPERATING DATA

(Unaudited)


	Year Ended December 31,
	2007		2006		2005		2004		2003
Coal:
Tons sold (in thousands)(D)(E)		65,462		68,920		70,401		69,537		63,962
Tons produced (in thousands)(E)		64,617		67,432		69,126		67,745		60,388
Productivity (tons per manday)(E)		41.29		38.41		37.95		40.51		41.26
Average production cost ($ per ton produced)(E)	$	33.68	$	32.53	$	30.06	$	27.54	$	26.24
Average sales price of tons produced ($ per ton produced)(E)	$	40.60	$	38.99	$	35.61	$	30.06	$	27.61
Recoverable coal reserves (tons in millions)(E)(F)		4,526		4,272		4,546		4,509		4,158
Number of active mining complexes (at period end)		15		14		17		16		15
Gas:
Net sales volume produced (in billion cubic feet)(E)		58.25		56.14		48.39		48.56		44.46
Average sale price ($ per mcf)(E)(G)	$	7.20	$	7.04	$	5.90	$	4.90	$	4.03
Average cost ($ per mcf)(E)	$	3.37	$	2.88	$	2.69	$	2.45	$	2.35
Proved reserves (in billion cubic feet)(E)(H)		1,343		1,265		1,130		1,045		1,004

CASH FLOW STATEMENT DATA

(In thousands)


	Year Ended December 31,
	2007			2006			2005			2004			2003
Net cash provided by operating activities	$	684,033		$	664,547		$	409,086		$	358,091		$	381,127
Net cash used in investing activities		(972,104	)		(661,546	)		(74,413	)		(400,542	)		(204,614	)
Net cash provided by (used in) financing activities		105,839			(119,758	)		(455	)		42,360			(181,517	)
OTHER FINANCIAL DATA (Unaudited) (In thousands)
Capital expenditures	$	1,039,838		$	690,546		$	532,796		$	420,965		$	300,848
EBIT(I)		421,978			531,009			664,451			108,616			(5,354	)
EBITDA(I)		746,693			827,246			926,302			389,013			236,798
Ratio of earnings to fixed charges(J)		7.48			11.36			15.95			2.76			—

(A)	See Note 27 of Notes to the Audited Consolidated Financial Statements for sales and freight by operating segment.

(B)

Basic earnings per share are computed using weighted average shares outstanding. Differences in the weighted average number of shares outstanding for purposes of computing dilutive earnings per share are due to the inclusion of the weighted average dilutive effect of employee and non-employee director stock options granted, totaling 2,099,124 shares, 2,283,374 shares, 2,045,072 shares, 1,938,504 shares and no shares for the year ended December 31, 2007, 2006, 2005, 2004 and 2003, respectively.

(C)

On May 4, 2006, CONSOL Energy’s Board of Directors declared a two-for-one stock split of the common stock. The stock split resulted in the issuance of approximately 92.5 million additional shares of common stock. Shares and earnings per share for all periods presented are reflected on a post-split basis.

(D)

Includes sales of coal produced by CONSOL Energy and purchased from third parties. Of the tons sold, CONSOL Energy purchased the following amount from third parties: 0.5 million tons in the year ended December 31, 2007, 1.3 million tons in the year ended December 31, 2006, 1.5 million tons in year ended December 31, 2005, 2.1 million tons in the year ended December 31, 2004 and 2.5 million tons in the year ended December 31, 2003. Also, includes 0.8 million and 1.1 million sales tons for the year ended December 31, 2007 and 2006, respectively, which is 100% of tons sold by our fully consolidated, 49% owned variable interest entity. Sales of coal produced by equity affiliates were 0.1 million ton in the year ended December 31, 2007, no tons in the year ended December 31, 2006, insignificant in the year ended December 31, 2005, 0.1 million tons in the year ended December 31, 2004 and 1.0 million tons in the year ended December 31, 2003.

(E)

Amounts include intersegment transactions. For entities that are not wholly owned but in which CONSOL Energy owns at least 50% equity interest, includes a percentage of their net production, sales or reserves equal to CONSOL Energy’s percentage equity ownership. For coal, amounts include 100% of our fully consolidated, 49% owned variable interest entity. Also for coal, Glennies Creek Mine is reported as an equity affiliate through February 2004. Glennies Creek Mine is reported as an equity affiliate for the entire 2003 period. Our proportionate share of the recoverable coal reserves for Glennies Creek Mine is 9.6 million tons at December 31, 2003. Line Creek was reported as an equity affiliate through February 2003. For gas, amounts include 100% of CNX Gas’ basis; they exclude the 18.3% minority interest reduction. Also for gas, Knox Energy makes up the equity earnings data in 2007, 2006, 2005, 2004 and 2003. Our proportionate share of proved reserves for gas equity affiliates is 3.6.x bcf, 2.2 bcf, 2.7 bcf, 2.4 bcf and 0.8 bcf at December 31, 2007, 2006, 2005, 2004 and 2003, respectively. Sales of gas produced by equity affiliates were 0.32 bcf in the year ended December 31, 2007; 0.22 bcf in the year ended December 31, 2006; 0.23 bcf in the year ended December 31, 2005; 0.20 bcf in the year ended December 31, 2004 and 0.08 bcf in the year ended December 31, 2003.

(F)	Represents proven and probable coal reserves at period end.

(G)	Represents average net sales price before the effect of derivative transactions.

(H)	Represents proved developed and undeveloped gas reserves at period end.

(I)

EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) and income taxes. EBITDA is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization. For 2004 and 2003 we have excluded the impacts of cumulative effects of accounting changes in the computation of EBIT and EBITDA. Although EBIT and EBITDA are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating CONSOL Energy because they are widely used in the coal industry as measures to evaluate a company’s operating performance before debt expense and cash flow. Financial covenants in our credit facility include ratios based on EBITDA. EBIT and EBITDA do not purport to represent cash generated by operating activities and should not be considered in isolation or as a substitute for measures of performance in accordance with generally accepted accounting principles. In addition, because EBIT and EBITDA are not calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies. Management’s discretionary use of funds depicted by EBIT and EBITDA may be limited by working capital, debt service and capital expenditure requirements, and by restrictions related to legal requirements, commitments and uncertainties. A reconcilement of EBIT and EBITDA to financial net income is as follows:


(Unaudited)) (In thousands)	Year Ended December 31,
(Unaudited)) (In thousands)	2007			2006			2005			2004			2003
Net Income (Loss)	$	267,782		$	408,882		$	580,861		$	198,582		$	(7,798	)
Add: Interest expense		30,851			25,066			27,317			31,429			34,451
Less: Interest income		(12,792	)		(15,369	)		(8,066	)		(5,376	)		(5,602	)
Less: Interest income included in export sales excise tax resolution		—			—			—			—			(696	)
Less: Cumulative Effect of Changes in Accounting for Workers’ Compensation Liability, net of Income Taxes of $53,080		—			—			—			(83,373	)		—
Less: Cumulative Effect of Changes in Accounting for Mine Closing, Reclamation and Gas Well Closing Costs, net of Income taxes of $3,035		—			—			—			—			(4,768	)
Add: Income Tax Expense (Benefit)		136,137			112,430			64,339			(32,646	)		(20,941	)

Earnings (Loss) before interest and taxes (EBIT)		421,978			531,009			664,451			108,616			(5,354	)
Add: Depreciation, depletion and amortization		324,715			296,237			261,851			280,397			242,152

Earnings before interest, taxes and depreciation, depletion and amortization (EBITDA)	$	746,693		$	827,246		$	926,302		$	389,013		$	236,798

(J)

For purposes of computing the ratio of earnings to fixed charges, earnings represent income from continuing operations before income taxes plus fixed charges. Fixed charges include (a) interest on indebtedness (whether expensed or capitalized), (b) amortization of debt discounts and premiums and capitalized expenses related to indebtedness and (c) the portion of rent expense we believe to be representative of interest. For the year ended December 31, 2003, fixed charges exceeded earnings by $24.7 million.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General

Net income was also impacted by $24 million of expense related to the previously recognized export excise tax receivable being reversed in the 2007 period. The Federal Circuit court had ruled that the damage claim for export excise taxes paid for the period 1991-1993 be repaid. The Government appealed a similar case to the U.S. Supreme Court. On December 3, 2007 the United States Supreme Court granted the Government’s appeal to hear that case. The Supreme Court’s granting of the appeal makes collection of the refund and interest by CONSOL Energy no longer highly probable because of adverse rulings by the Supreme Court during 2007 under the statute on which our claim for this period is based. Accordingly, CONSOL Energy reversed the export excise tax receivable until the Supreme Court decides the appeal. We intend to vigorously pursue this action, although there is no assurance that CONSOL Energy will receive any tax refund. Net income in the 2007 period was also impacted by a lower volume of produced coal sales, and higher cost per ton sold. Net income was also lower due to higher depreciation, depletion and amortization related to the additional assets received in the July 31, 2007 acquisition of AMVEST. Income tax expense also adversely impacted the period-to-period comparison. In 2006, income tax expenses were reduced by the release of certain valuation allowances related to state income taxes in Pennsylvania and West Virginia.

Reductions to net income were offset, in part, by two transactions which occurred in the 2007 period; an asset exchange and an asset sale that resulted in pretax income of approximately $100 million and net income of approximately $59 million. Net income reductions were also offset, in part, by the March 2007 settlement agreement with the Combined Fund that resolved all previous issues relating to the calculation of payments to the Combined Fund. Total pre-tax income, including interest, recognized related to the Combined Fund settlement was approximately $33 million. Reductions to net income were also offset, in part, by lower salary pension costs. Our defined benefit pension plan for salaried employees allows such employees to receive a lump-sum distribution in lieu of annual payments when they retire from CONSOL Energy and its subsidiaries. Statement of Financial Accounting Standards (SFAS) No. 88, “Employers’ Accounting for Settlement & Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” requires that when the lump-sum distributions made for a plan year, which for CONSOL Energy is October 1 to September 30, exceed the total of the service cost and interest cost for the plan year, an adjustment equaling the unrecognized actuarial gain or loss resulting from each individual who received a lump sum in that year be recognized. The total 2007 accelerated actuarial amortization was approximately $3 million of expense. The total 2006 accelerated actuarial amortization was approximately $18 million of expense.

Total coal sales for the year ended December 31, 2007 were 65.5 million tons, of which 64.9 million tons were produced by CONSOL Energy operations, our equity affiliates, consolidated variable interest entities, or sold from inventory of company-produced coal. This compares with total coal sales of 68.9 million tons for the year ended December 31, 2006, of which 67.6 million tons were produced by CONSOL Energy operations, consolidated variable interest entities, or sold from inventory of company-produced coal. Company-produced coal production was 64.6 million tons, including our portion of equity affiliates and consolidated variable interest entities, for the year ended December 31, 2007 compared to 67.4 million tons for the year ended December 31, 2006. Production was lower due to the continued idling of the Buchanan Mine as discussed above; McElroy Mine had lower production due to poor geological conditions and the idling of certain Central Appalachian mines due to market conditions. Lower production was offset, in part, by production from the AMVEST mines that were acquired on July 31, 2007.

Produced coalbed methane gas sales volumes, including a percentage of the sales of equity affiliates equal to our interest in these affiliates, increased 3.6% to 57.5 billion cubic feet for the year ended December 31, 2007 compared with 55.5 billion cubic feet in the year ended December 31, 2006 period. Sales volumes in the 2007 period increased as a result of additional wells coming online from our on-going drilling program, offset by reduced active and sealed gob production related to the idling of the Buchanan Mine. Our average sales price for coalbed methane gas, including sales of equity affiliates increased 2.0% to $7.19 per thousand cubic feet in the year ended December 31, 2007 compared with $7.05 per thousand cubic feet in the year ended December 31, 2006.

In January 2008, CONSOL Energy announced its intentions to offer to acquire all of the outstanding shares of CNX Gas Corporation that it does not currently own in a stock-for-stock transaction. CONSOL Energy currently owns 81.7% of the approximately 151 million shares of CNX Gas common stock outstanding.

On July 31, 2007, CONSOL Energy acquired AMVEST Corporation and certain subsidiaries and affiliates (AMVEST) for a cash payment, net of cash acquired, of approximately $297 million in a transaction accounted for under Statement of Financial Accounting Standards No. 141 (SFAS 141), “Business Combinations.” The coal reserves acquired consist of approximately 160 million tons of high quality, low sulfur steam and high-volatile metallurgical coal. Also included in the acquisition were four coal preparation plants, several fleets of modern mining equipment and a common short-line railroad that connects the coal preparation plants to the CSX and Norfolk and Southern rail interchanges. The results of operations of the acquired entities are included in CONSOL Energy’s Consolidated Statement of Income as of August 1, 2007. The AMVEST acquisition, when combined with CONSOL Energy’s subsidiaries’ adjacent coal reserves, creates a large contiguous block of coal reserves in the Central Appalachian region. Also, included in the acquisition was a highly-skilled workforce proficient in Central Appalachian surface mining. This workforce combined with CONSOL Energy’s and its subsidiaries’ underground mining expertise will allow us to build and transfer knowledge among operations to focus the best skill sets to development requirements of the various parts of this reserve block. See Note 2 in Item 8, Notes to the Audited Consolidated Financial Statements of this Form 10-K.

In August 2007, the Board of Directors of CONSOL Energy amended the company’s dividend policy, allowing the company to increase its dividend from $0.28 per share to $0.40 per share on an annualized basis, an increase of 43 percent.

In September 2007, CONSOL Energy entered into an agreement to investigate the development of coal-based gasification facilities to produce feedstock for various industrial chemical manufacturers. CONSOL Energy and Synthesis Energy Systems will also investigate the feasibility of producing substitute natural gas to meet the demand for clean, affordable energy.

CNX Gas, our 81.7% subsidiary, became a registered offset provider on the Chicago Climate Exchange (CCX) during the fourth quarter 2007. CCX is a rules-based Greenhouse Gas (GhG) allowance trading system. CCX emitting members make a voluntary but legally binding commitment to meet annual GhG emission reduction targets. Those emitting members who exceed their targets have surplus allowances to sell or bank; those who fall short of their targets comply by purchasing offsets which are called CCX Carbon Financial Instruments (CFI) contracts. As a CCX offset provider, CNX Gas is not bound to any emission reduction targets. An offset provider is an owner of an offset project that registers and sells offsets on its own behalf. In order to sell or trade CFI’s, approval must be received by the CCX Committee on Offsets and approved projects must then be validated by an independent CCX verifier. Once verified, CCX then issues CFI’s for each specific project. As of December 31, 2007, we are awaiting verification for several projects to convert captured coal mine methane into tradable credits. Credits are granted on the basis of avoiding methane emissions by diverting gas into gas pipelines for commercial sale. No CFI’s have been issued or received as of December 31, 2007, however we expect approval for these projects will be received during the first quarter 2008. Sales of these credits will be reflected in income as they occur.

In June 2007, CONSOL Energy and certain of its subsidiaries completed a $1 billion Senior Secured Loan Agreement, effective June 27, 2007, to replace an existing facility of $750 million. The new agreement, which includes more favorable pricing and flexibility, provides a five-year revolving credit facility.

In June 2007, CONSOL Energy, through a subsidiary, exchanged certain coal assets in Northern Appalachia to Peabody Energy in exchange for coalbed methane and gas rights. This transaction was accounted for as a non-monetary exchange under Statement of Financial Accounting Standards No. 153, “Exchanges of Non-Monetary Assets,” resulting in a pretax gain of $50 million.

In June 2007, CONSOL Energy, through a subsidiary, sold the rights to certain western Kentucky coal in the Illinois Basin to Alliance Resource Partners, L.P. for $53 million. This transaction resulted in a pretax gain of approximately $50 million.

In April and November 2007, the company amended its trade accounts receivable facility to allow CONSOL Energy to receive up to $165 million, an increase in capacity of $40 million over the December 31, 2006 trade accounts receivable facility. The amended facility also provides the ability to issue letters of credit and has reduced the associated fees.

Mine accidents involving multiple fatalities occurred during the calendar years 2006 and 2007 at mines operated by other coal companies. These accidents attracted widespread public attention and have resulted in both federal government and some state government changes to statutory and regulatory control of mine safety, particularly for underground mines. Because nearly all of our mines are underground, these legislative and regulatory changes could affect our performance.

evacuation from the mine is not possible which will provide breathable air for all underground miners for 96 hours; the possible reconstruction of existing seals in worked-out areas of mines; and additional training and testing requirements that created the need to hire additional employees.

In December 2006, the Surface Mining Act was amended. The Surface Mining Act amendments have several impacts on CONSOL Energy, including: the reduction over time in the production tax paid to fund the reclamation of abandoned mining sites; and the assumption of responsibility by the federal government by 2011 for so-called “orphan miners” who receive retirement benefits from several multi-employer funds into which CONSOL Energy contributes.

Results of Operations

Twelve Months Ended December 31, 2007 Compared with Twelve Months Ended December 31, 2006

Net Income

Net income changed primarily due to the following items (table in millions):


	2007			2006			Dollar Variance			Percentage Change
Coal Sales-Produced and Purchased	$	2,678		$	2,694		$	(16	)	(0.6	)%
Produced Gas Sales		410			389			21		5.4	%
Purchased Gas Sales		8			44			(36	)	(81.8	)%
Other Sales and Other Income		666			588			78		13.3	%

Total Revenue and Other Income		3,762			3,715			47		1.3	%
Coal Cost of Goods Sold—Produced and Purchased		1,737			1,785			(48	)	(2.7	)%
Produced Gas Cost of Goods Sold		129			107			22		20.6	%
Purchased Gas Cost of Goods Sold		7			45			(38	)	(84.4	)%
Other Cost of Goods Sold		526			399			127		31.8	%

Total Cost of Goods Sold		2,399			2,336			63		2.7	%
Depreciation, Depletion and Amortization		325			296			29		9.8	%
Other		585			532			53		10.0	%
Export Excise Tax Adjustment		24			—			24		100.0	%

Total Costs		3,333			3,164			169		5.3	%

Earnings Before Income Taxes and Minority Interest		429			551			(122	)	(22.1	)%
Income Tax Expense		(136	)		(112	)		(24	)	21.4	%

Earnings Before Minority Interest		293			439			(146	)	33.3	%
Minority Interest		(25	)		(30	)		5		(16.7	)%

Net Income	$	268		$	409		$	(141	)	(34.5	)%

CONSOL Energy had net income of $268 million for the year ended December 31, 2007 compared to $409 million for the year ended December 31, 2006. Net income for the 2007 period decreased in comparison to the 2006 period primarily due to several roof falls which suspended production at the Buchanan Mine in early July 2007. Production was suspended after several roof falls in previously mined areas damaged some of the ventilation controls inside the mine, requiring a general evacuation of the mine. We drilled bore holes and injected nitrogen in order to stabilize and evaluate the mine atmosphere. In the year ended December 31, 2007, we incurred expenses of $119 million, primarily classified as cost of goods sold and depreciation, depletion and amortization, in relation to these activities. These costs were offset, in part, by a $15 million advance under CONSOL Energy insurance policies. We have also received notice from our insurance carriers that an advance of $10 million will be paid related to business interruption coverage; $8 million related to the coal segment and $2 million related to the gas segment. We intend to pursue additional reimbursement under our existing insurance policies. Insurance coverage, after certain deductibles have been reached including a 90-day waiting period, includes property damage and cost recoveries as well as business interruption recoveries. There is no guarantee any additional recovery will be received under our policies. Net income was also adversely affected by reduced sales of coal from the Buchanan Mine. Customers who purchase coal from the mine were notified that a force majeure condition exists and deliveries under their sales agreements for coal from the mine were reduced during the year ended December 31, 2007. CNX Gas production was also adversely impacted by the idling of the Buchanan Mine. Also, the 2006 period included proceeds from the insurance company of $79 million; the coal segment recognized $69 million and the gas segment recognized $10 million, related to the 2005 skip hoist incident at the Buchanan Mine. Net income was also impacted by $24 million of expense related to the previously recognized Export Excise Tax receivable being reversed in the 2007 period. The Federal Circuit court had ruled that the damage claim for export excise taxes paid for the period 1991–1993 be repaid. The Government appealed a similar case to the U.S. Supreme Court. On December 3, 2007 the United States Supreme Court granted the Government’s new petition to hear that case. The Supreme Court’s granting of the appeal makes collection of the refund and interest by CONSOL Energy no longer highly probable because of adverse rulings by the Supreme Court during 2007 under the statute of which our claim for this period is based. Accordingly, CONSOL Energy reversed the export excise tax receivable until the Supreme Court decides the appeal. We intend to vigorously pursue this action, although there is no assurance that CONSOL Energy will receive any tax refund. Net income in the 2007 period was also impacted by a lower volume of produced coal sales, and higher cost per ton sold. Net income was also lower due to higher depreciation, depletion and amortization related to the additional assets received in the July 31, 2007 acquisition of AMVEST. Income tax expense also adversely impacted the period-to-period comparison. In 2006, income tax expense was reduced by the release of certain valuation allowances related to state income taxes in Pennsylvania and West Virginia.

Revenue

Revenue and other income increased due to the following items:


	2007		2006		Dollar Variance			Percentage Change
Sales
Produced Coal	$	2,640	$	2,620	$	20		0.8	%
Purchased Coal		38		74		(36	)	(48.6	)%
Produced Gas		410		389		21		5.4	%
Industrial Supplies		147		120		27		22.5	%
Other		89		84		5		6.0	%

Total Sales—Outside		3,324		3,287		37		1.1	%
Gas Royalty Interest		47		51		(4	)	(7.8	)%
Purchased Gas		8		44		(36	)	(81.8	)%
Freight Revenue		187		163		24		14.7	%
Other Income		196		170		26		15.3	%

Total Revenue and Other Income	$	3,762	$	3,715	$	47		1.3	%

The increase in company-produced coal sales revenue during 2007 was due to an increase in the average sales price per ton, partially offset by a decrease in sales volumes.


	2007		2006		Variance			Percentage Change
Produced Tons Sold (in millions)		64.8		67.6		(2.8	)	(4.1	)%
Average Sales Price Per Ton	$	40.74	$	38.77	$	1.97		5.1	%

Sales of company produced coal decreased in the period-to-period comparison due to the idling of the Buchanan Mine as previously discussed, lower production at the McElroy Mine due to poor geological conditions and the idling of certain Central Appalachian mines due to market conditions. Lower sales tons were offset, in part, by coal sales from the AMVEST mines that were acquired on July 31, 2007. Company coal production, excluding equity affiliates, was 64.5 million tons in 2007 compared to 67.4 million tons in 2006. The increase in average sales price primarily reflects stronger term prices negotiated in 2006 and early 2007 resulting from an overall improvement in prices in the eastern coal market for domestic and foreign power generators and steel producers. There was also a surge in spot market prices in the 2007 period.

Purchased coal sales consist of revenues from processing third party coal in our preparation plants for blending purposes to meet customer coal specifications, coal purchased from a third party and sold directly to our customers and revenues from processing third party coal in our preparation plants. The decrease of $36 million in company-purchased coal sales revenue was primarily due to lower sales volumes.

The increase in produced gas sales revenue in 2007 compared to 2006 was primarily due to higher average sales price per thousand cubic feet sold and higher sales volumes.


	2007		2006		Variance	Percentage Change
Produced Gas Sales Volumes (in billion cubic feet)		57.1		55.3	1.8	3.3	%
Average Sales Price Per Thousand Cubic Feet	$	7.18	$	7.04	0.14	2.0	%

The increase in average sales price is the result of realizing general price increases on higher hedging gains in the current year. We periodically enter into various gas swap transactions that qualify as financial cash flow hedges. These gas swap transactions exist parallel to the underlying physical transactions. These financial hedges represented approximately 18.4 billion cubic feet of our produced gas sales volume for the year ended December 31, 2007 at an average price of $8.01 per thousand cubic feet. In the prior year, these hedges represented

approximately 17.0 billion cubic feet at an average price of $7.42 per thousand cubic feet. Sales volumes increased as a result of additional wells coming online from our on-going drilling program, offset, in part, by decreased active and sealed gob production as a result of the idled Buchanan Mine. Also included within 2007 are the non-operating net revenue interest volumes and revenues associated with royalty and working interests. These volumes were not available in 2006. The associated revenues were included in other income in the prior period.

The $27 million increase in revenues from the sale of industrial supplies was primarily due to increased sales volumes. Sales volumes have increased primarily due to the July acquisition of Piping & Equipment Inc. See Note 2 in Item 8, Note to the Audited Financial Statements in this Form 10-K.

The $5 million increase in other sales was due to various transactions that occurred throughout both years, none of which were individually material.


	2007		2006		Variance			Percentage Change
Gas Royalty Interest Sales Volumes (in billion cubic feet)		7.2		7.6		(0.4	)	(5.3	)%
Average Sales Price Per Thousand Cubic Feet	$	6.44	$	6.76	$	(0.32	)	(4.7	)%

Included in royalty interest gas sales are the revenues related to the portion of production belonging to royalty interest owners sold by CNX Gas on their behalf. The decreased average sales price relates primarily to reductions in a provision for royalty settlements. The volatility in the monthly volumes, contractual differences among leases, as well as the mix of average and index prices used in calculating royalties also contributed to the variance.


	2007		2006		Variance			Percentage Change
Purchased Gas Sales Volumes (in billion cubic feet)		1.1		6.1		(5.0	)	(82.0	)%
Average Sales Price Per Thousand Cubic Feet	$	7.19	$	7.20	$	(0.01	)	(0.1	)%

Purchased gas sales volumes in the current year represent volumes of gas we sell at market prices that were purchased from third party producers, less our gathering and marketing fees. In 2006, purchased gas sales and volumes represented volumes of gas we simultaneously purchased from and sold to the same counterparties under contracts that were committed prior to January 1, 2006. Accordingly, Emerging Issues Task Force Issue No. 04-13 (EITF 04-13), which we adopted on January 1, 2006, did not apply to these transactions. All contracts entered into prior to January 1, 2006 expired in 2006, while all activity related to 2007 is reflected in transportation expense on a net basis.

Freight revenue 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.

Other income consists of interest income, gain or loss on the disposition of assets, equity in earnings of affiliates, service income, royalty income, derivative gains and losses, rental income and miscellaneous income.


	2007		2006		Dollar Variance			Percentage Change
Gain on Sales of Assets	$	112	$	10	$	102		1,020.0	%
Equity in Earnings of Affiliates		7		1		6		600.0	%
Litigation Settlement		5		—		5		100.0	%
Business Interruption Insurance		10		79		(69	)	(87.3	)%
Royalty Income		14		28		(14	)	(50.0	)%
Interest Income		13		15		(2	)	(13.3	)%
Other miscellaneous		35		37		(2	)	(5.4	)%

Total Other Income	$	196	$	170	$	26		15.3	%

Gain on sales of assets increased $102 million primarily due to two transactions that occurred in 2007. In June 2007, CONSOL Energy, through a subsidiary, exchanged certain coal assets in Northern Appalachia to Peabody Energy in exchange for coalbed methane and gas rights. This transaction was accounted for as a non-monetary exchange under Statement of Financial Accounting Standards No. 153 resulting in a pre-tax gain of $50 million. Also, in June 2007, CONSOL Energy, through a subsidiary, sold the rights to certain western Kentucky coal in the Illinois Basin to Alliance Resource Partners, L.P. for $53 million. This transaction resulted in a pre-tax gain of approximately $50 million. Gain on sales of assets also increased $2 million in the period-to-period comparison due to various miscellaneous transactions that occurred throughout both years, none of which were individually material.

Equity in Earnings of Affiliates increased $6 million in the year-to-year comparison due to various activities of our joint ventures, none of which were individually material.

A litigation settlement with a coal customer resulted in an additional $5 million of income in 2007.

In 2007, CONSOL Energy received notice from its insurance carriers that $25 million would be advanced toward the insurance claim related to several roof falls which suspended production at the Buchanan Mine in early July. The $25 million represents $10 million of business interruption reimbursement which was recognized in other income; the coal segment recognized $8 million and the gas segment recognized $2 million. The remaining $15 million of the reimbursement relates to cost recovery for activities at the Mine since production was suspended. These activities included the cost of drilling bore holes to monitor the mine atmosphere, the cost of injecting nitrogen in order to stabilize the mine atmosphere as well as various other costs incurred related to these activities. We intend to pursue additional reimbursement under our existing insurance policies. Insurance coverage, after certain deductibles have been reached including a 90 day waiting period, includes property damage and cost recoveries as well as business interruption recoveries. There is no guarantee any additional recovery will be received under our policies. In February 2005, Buchanan Mine experienced a fire that developed in the mine after a large rock fall behind the longwall mining section. The mine was temporarily sealed in order to extinguish the fire. Coal production resumed on June 16, 2005. During 2006, CONSOL Energy received proceeds from the insurance companies of $38 million. The $38 million was recognized as other income; the coal segment recognized $29 million and the gas segment recognized $9 million. Buchanan Mine also experienced a problem with the mine’s skip hoist mechanism on September 16, 2005 which caused the mine to be idled. Repairs to the skip hoist shaft and structures were completed and the mine resumed production on December 13, 2005. During 2006, CONSOL Energy recognized proceeds from the insurance companies of $41 million. The $41 million was recognized as other income; the coal segment recognized $40 million and the gas segment recognized $1 million.

Royalty income decreased $14 million primarily due to royalties received from third party gas sales now being classified in outside gas sales versus royalty income. In the prior period, the volumes were not available nor were they considered in the prior period reserve report.

Interest income decreased $2 million in the year-to-year comparison due to lower cash balances throughout 2007 compared to 2006. Lower cash balances were primarily the result of the purchase price paid for the July 31, 2007 acquisition of AMVEST and the June 2007 purchase of certain coalbed methane and gas reserves from Peabody Energy.

Other miscellaneous income decreased $2 million due to various transactions that occurred throughout both years, none of which were individually material.

Costs


	2007		2006		Dollar Variance			Percentage Change
Cost of Goods Sold and Other Charges
Produced Coal	$	1,685	$	1,705	$	(20	)	(1.2	)%
Purchased Coal		52		80		(28	)	(35.0	)%
Produced Gas		129		107		22		20.6	%
Industrial Supplies		141		119		22		18.5	%
Closed and Idle Mines		105		109		(4	)	(3.7	)%
Other		240		129		111		86.0	%

Total Cost of Goods Sold and Other Charges		2,352		2,249		103		4.6	%
Royalty Interest Gas		40		42		(2	)	(4.8	)%
Purchased Gas		7		45		(38	)	(84.4	)%

Total Cost of Goods Sold	$	2,399	$	2,336	$	63		2.7	%

Decreased cost of goods sold and other charges for company-produced coal was due mainly to lower sales volumes, offset, in part by an increase in the average unit cost per ton sold.


	2007		2006		Variance			Percentage Change
Produced Tons Sold (in million)		64.8		67.6		(2.8	)	(4.1	)%
Average Cost of Goods Sold and Other Charges Per Ton	$	26.01	$	25.22	$	0.79		3.1	%

Cost of goods sold and other charges for produced coal decreased $20 million mainly due to lower volumes of company-produced coal. Average cost of goods sold and other charges per ton increased in the year-to-year comparison primarily due to higher health and retirement costs, higher labor costs, higher supply costs and the lower volume impact on fixed unit costs. Higher health and retirement costs were attributable to additional contributions required to be made into employee benefit funds as a result of the five-year labor agreement with the United Mine Workers of America (UMWA) that commenced January 1, 2007. The contribution increase over 2006 was $3.50 per UMWA hour worked. Higher labor costs were due to the effects of wage increases at the union and non-union mines due to new labor contracts. Higher labor unit costs were also due to additional costs incurred to comply with health and safety standards. Supply costs increased due to additional costs incurred to comply with new federal and state safety regulations. These regulations require additional supplies of self-contained self rescuer devices and other safety items as previously discussed. Supply cost increases were also the result of higher costs for products and chemicals, such as roof control products and magnetite, used in the mining and coal preparation process. These increases were offset, in part, by income recorded as a result of the Combined Fund settlement. In March 2007, CONSOL Energy entered into a settlement agreement with the Combined Fund that resolved all previous issues relating to the calculation of the payments. The total income, including interest, as a result of this settlement was approximately $33.4 million, of which approximately $28.1 million impacted cost of goods sold and other charges for produced coal. Decreased costs also reflect the prior year adjustment which accelerated previously unrecognized actuarial losses related to our salary pension plan. Our defined benefit pension plan for salaried employees allows such employees to receive a lump sum distribution in lieu of annual payments when they retire from CONSOL Energy and its subsidiaries. Statement of Financial Accounting Standard (SFAS) No. 88, “Employers’ Accounting for Settlements & Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” requires that when the lump-sum distributions made for a plan year, which for CONSOL Energy is October 1 to September 30, exceeds the total of the service costs and interest costs for the plan year, an adjustment equaling the unrecognized actuarial gain or loss resulting from each individual who received a lump sum in that year be recognized. The total 2007 accelerated actuarial amortization was $2.7 million of expenses, of which $2.1 million impacted cost of goods sold and other charges for produced coal. The total prior year accelerated actuarial amortization was $17.8 million, of which $13.8 million impacted cost of goods sold and other charges for produced coal. Increased costs were also offset, in part,

by lower contract mining fees due to the idling of certain Central Appalachia contract mine locations. Royalty expenses were also lower in 2007 compared to 2006 due to a larger proportion of coal production coming from owned reserves versus leased reserves.

Purchased coal cost of goods sold consists of costs from processing purchased coal in our preparation plants for blending purposes to meet customer coal specifications, coal purchased and sold directly to the customer and costs for processing third party coal in our preparation plants. The decrease of $28 million in purchased coal cost of goods sold and other charges in 2007 was primarily due to lower volumes purchased.

Produced gas cost of goods sold and other charges increased due primarily to a 16.6% increase in unit cost of goods sold and other charges and a 3.3% increase in volumes of produced gas sold.


	2007		2006		Variance		Percentage Change
Produced Gas Sales Volumes (in billion cubic feet)		57.1		55.3		1.8	3.3	%
Average Cost Per Thousand Cubic Feet	$	2.25	$	1.93	$	0.32	16.6	%

The increase in average cost per thousand cubic feet of gas sold was primarily attributable to increased salary labor and related employee costs, increased gas well maintenance costs, increased compressor rental costs, increased power costs and the deferral of gob gas production related to the idling of Buchanan Mine. Salary labor and related employee costs increased due to the hiring of additional employees in 2007. Gas well maintenance costs increased due to the increased number of wells in-service compared to the prior year. Compressor rental costs increased due to more rentals in the current year. Power costs per unit were higher due to increased megawatt hour rates charged by the power companies in 2007, offset, in part, by credits received from the power company in 2007. These increases in unit costs were offset, in part, by lower firm transportation costs per unit and lower gas well closing costs. The firm transportation improvement was due to the in-service of the Jewell-Ridge Pipeline in October 2006. Also, gas well closing costs decreased due to a change in the lives for the wells to coincide with the reserve reports.

Industrial supplies cost of goods sold increased $22 million primarily due to the July acquisition of Piping & Equipment Inc. See Note 2 in Item 8, Notes to Audited Consolidated Financial Statements in this Form 10-K.

Closed and idle mine cost of goods sold and other charges decreased approximately $4 million in 2007 compared to 2006. Closed and idle mine cost of goods sold and other charges were improved $6 million due to additional expenses in the 2006 period related to reclamation liability adjustments and associated accretion expenses that were the result of updated engineering surveys. Closed and idle mine cost of goods sold and other charges also decreased $3 million due to various transactions that occurred throughout both years, none of which were individually material. This improvement was offset, in part, by $5 million of additional expenses due to Shoemaker being idled throughout all of 2007 and only a portion of 2006.

Other cost of goods sold and other charges increased due to the following items:


	2007		2006		Dollar Variance			Percentage Change
Buchanan roof collapse	$	95	$	—	$	95		100.0	%
Incentive compensation		35		24		11		45.8	%
Contract settlement		6		—		6		100.0	%
Accounts Receivable Securitization		3		—		3		100.0	%
Stock-based compensation		24		23		1		4.3	%
Miscellaneous transactions		77		82		(5	)	(6.1	)%

Total Miscellaneous Cost of Goods Sold and Other Charges	$	240	$	129	$	111		86.0	%

In July 2007, production at the Buchanan Mine was suspended after several roof falls in previously mined areas damaged some of the ventilation controls inside the mine, requiring a general evacuation of the mine. We drilled bore holes and injected nitrogen in order to stabilize and evaluate the mine atmosphere. In 2007, we have incurred cost of goods sold expenses of approximately $110 million in relation to these activities. We have also received notice from the insurance carriers that a $15 million advance will be paid to recover a portion of the cost incurred to date for this incident. We intend to pursue additional reimbursement under our existing insurance policies. Insurance coverage, after certain deductibles have been reached including a 90 day waiting period, includes property damage and cost recoveries as well as business interruption recoveries. There is no guarantee any additional recovery will be received under our policies.

Incentive compensation expense increased $11 million due to higher projected amounts expected to be paid to employees for 2007 compared to the projected amounts expected for 2006. The increase also relates to an actualization of the 2006 accrual which resulted in approximately $2 million of additional expense in 2007. The incentive compensation program is designed to increase compensation to eligible employees when CONSOL Energy reaches predetermined earnings targets and the employees reach predetermined performance targets.

During 2007, CONSOL Energy agreed to a settlement for a contract violation with a customer. The amount owed to the customer has been accrued as of December 31, 2007.

Accounts receivable securitization fees increased in the year-to-year comparison. Amounts have been drawn under this program since July 2007. No amounts were drawn under this program in 2006.

Stock-based compensation expense increased $1 million primarily as a result of additional awards granted in the 2007 period.

Miscellaneous cost of goods sold and other charges decreased $5 million due to various transactions that occurred throughout both periods, none of which were individually material.


	2007		2006		Variance			Percentage Change
Gas Royalty Interest Sales Volumes (in billion cubic feet)		7.2		7.6		(0.4	)	(5.3	)%
Average Cost Per Thousand Cubic Feet	$	5.52	$	5.54	$	(0.02	)	(0.4	)%

Included in royalty interest gas costs are the expenses related to the portion of production belonging to royalty interest owners sold by CNX Gas on their behalf. The decrease in volumes and costs relate to the volatility and contractual differences among leases, as well as the mix of average and index prices used in calculating royalties.


	2007		2006		Variance			Percentage Change
Purchased Gas Sales Volumes (in billion gross cubic feet)		1.1		6.1		(5.0	)	(82.0	)%
Average Cost Per Thousand Cubic Feet	$	6.66	$	7.34	$	(0.68	)	(9.3	)%

Purchased gas sales volumes in the current year represent volumes of gas we sell at market prices that were purchased from third party producers, less our gathering and marketing fees. In 2006, purchased gas costs and volumes represented volumes of gas we simultaneously purchased from and sold to the same counterparties under contracts that were committed prior to January 1, 2006. Accordingly, Emerging Issues Task Force Issue No. 04-13 (EITF 04-13), which we adopted on January 1, 2006, did not apply to these transactions. All contracts entered into prior to January 1, 2006 expired in 2006, while all activity related to 2007 is reflected in transportation expense on a net basis.

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 whom CONSOL Energy contractually provides transportation. Freight expense is billed to customers and the revenue from such billing equals the transportation expense.


	2007		2006		Variance		Percentage Change
Freight Expense	$	187	$	163	$	24	14.7	%

Selling, general and administrative costs have increased due to the following items:


	2007		2006		Dollar Variance			Percentage Change
Wages and salaries	$	40	$	35	$	5		14.3	%
Professional, consulting and other purchased services		29		23		6		26.1	%
Advertising and promotion		4		1		3		300.0	%
Rentals		4		2		2		100.0	%
Insurance		4		2		2		100.0	%
Employee benefits		8		11		(3	)	(27.3	)%
Other		20		17		3		17.6	%

Total Selling, General and Administrative	$	109	$	91	$	18		19.8	%

Wages and salaries have increased $5 million due to additional employees as a result of several acquisitions throughout 2007 and additional employees being hired after the 2006 period.

Costs of professional, consulting and other purchased services were higher in 2007 compared to 2006 primarily due to $4 million of additional costs incurred by our 81.7% subsidiary, CNX Gas, related to a new computer system and legal fees associated with outstanding legal cases. The remaining $2 million increase is due to various transactions that occurred throughout both periods, none of which are individually material.

Advertising and promotion expenses were $3 million higher in 2007 compared to 2006 due to an advertising campaign launched in the 2007 period to raise corporate awareness and recruit the next generation of employees.

Rentals of equipment, primarily computers, have increased $2 million in the year-to-year comparison due to additional employees that have been added related to growth of CNX Gas as well as several acquisitions that occurred throughout 2007.

Insurance expense increase of $2 million was primarily related to increased premium costs for property, business interruption and excess general liability insurance.

Employee benefits decreased due mainly to an acceleration in 2006 of previously unrecognized actuarial losses related to our salary pension plan. Our defined benefit pension plan for salaried employees allows such employees to receive a lump-sum distribution in lieu of annual payments when they retire from CONSOL Energy. Statement of Financial Accounting Standards (SFAS) No. 88, “Employers’ Accounting for Settlement & Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” requires that when the lump-sum distributions made for a plan year, which for CONSOL Energy is October 1 to September 30, exceed the total of the service cost and interest cost for the plan year, an adjustment equaling the unrecognized actuarial gain or loss resulting from each individual who received a lump-sum in that year be recognized. The total accelerated actuarial amortization recognized in 2007 was $2.7 million, of which $0.2 million impacted selling, general and administrative expense. The total accelerated actuarial amortization recognized in 2006 was $17.8 million, of which $2.1 million impacted selling, general and administrative expense.

Other selling, general and administrative costs increased $3 million due to miscellaneous costs related to various transactions that occurred throughout both years, none of which were individually material.

Depreciation, depletion and amortization increased due to the following items:


	2007		2006		Dollar Variance		Percentage Change
Coal	$	258	$	241	$	17	7.1	%
Gas:
Production		31		25		6	24.0	%
Gathering		18		13		5	38.5	%

Total Gas		49		38		11	28.9	%
Other		18		17		1	5.9	%

Total Depreciation, Depletion and Amortization	$	325	$	296	$	29	9.8	%

The increase in coal depreciation, depletion and amortization was primarily due to additional expense related to the assets received in the acquisition of AMVEST. The increase was also attributable to assets placed in service after December 31, 2006. Assets placed in service after December 31, 2006 include various airshafts, longwall assets, haulage assets and other projects completed at our mines. These increases were offset, in part, by a reduction in depletion expense due to depletion of economic reserves at VP#8 Mine and decreased amortization due to decreased production in 2007 compared to 2006.

The increase in gas production related depreciation, depletion and amortization was primarily due to an increase in units of production rates and increased production volumes year-to-year. These rates, which are recalculated annually, increased due to the higher proportion of capital assets placed in service versus the proportion of proved developed reserve additions. Rates are generally calculated using the net book value of assets at the end of the year divided by either proved or proved developed reserves. Gathering depreciation, depletion and amortization is recorded on the straight-line method and increased primarily as a result realizing a full year of the capital lease treatment of the Jewell-Ridge lateral, which went into service in October 2006.

Other depreciation, depletion and amortization increased $1 million primarily related to capitalized computer software being placed in service after December 31, 2006.

Interest expense increased in 2007 compared to 2006 due to the following items:


	2007			2006			Dollar Variance			Percentage Change
Capitalized lease	$	7		$	2		$	5		250.0	%
Revolver		5			—			5		100.0	%
Interest on unrecognized tax benefits		3			—			3		100.0	%
Long-term secured notes		28			30			(2	)	(6.7	)%
Other		(12	)		(7	)		(5	)	71.4	%

Total Interest Expense	$	31		$	25		$	6		24.0	%

In conjunction with the completion of the Jewell-Ridge lateral pipeline in October 2006, CNX Gas entered into a 15-year firm transportation agreement with ETNG, a subsidiary of Duke Energy. Also, in April 2006, CONSOL Energy entered into an agreement for the acquisition of longwall equipment. These agreements were required to be treated as capital leases under Statement of Financial Accounting Standards No. 13, “Accounting for Leases” and accordingly incur interest expense each period.

Revolver interest expense increased $5 million due to amounts being drawn on our revolving credit facility in 2007. The facility had $248 million outstanding at December 31, 2007. No amounts were drawn on the facility in 2006.

CONSOL Energy began recording interest on unrecognized tax benefits as a result of the adoption of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement 109” (FIN 48) in 2007. See Note 5 in Item 8, Notes to the Audited Financial Statements Data of this Form 10-K.

Interest on long-term debt decreased $2 million due to the planned June 2007 principal payment on our $45 million secured note.

Other reductions in interest expense were related to higher amounts of interest capitalized in 2007 compared to 2006. Higher capitalized interest was attributable to the higher level of capital projects funded from operating cash flow in 2007 compared to 2006.

Taxes other than income increased primarily due to the following items:


	2007		2006		Dollar Variance		Percentage Change
Production taxes:
Coal	$	175	$	157	$	18	11.5	%
Gas		13		12		1	8.3	%

Total Production Taxes		188		169		19	11.2	%
Other taxes:
Coal		79		71		8	11.3	%
Gas		5		4		1	25.0	%
Other		12		9		3	33.3	%

Other		96		84		12	14.3	%

Total Taxes Other Than Income	$	284	$	253	$	31	12.3	%

Increased coal production taxes are primarily due to $24 million of expense related to the Export Excise Tax receivable being reversed in the 2007 period. The Federal Circuit court had ruled that the damage claim for export excise taxes paid for the period 1991-1993 be repaid. The Government appealed a similar case to the U.S. Supreme Court. On December 3, 2007 the United States Supreme Court granted the Government’s appeal to hear that case. The Supreme Court’s appeal of the petition makes collection of the refund and interest by CONSOL Energy no longer highly probable because of adverse rulings by the Supreme Court during 2007 under the statute on which our claim for this period is based. Accordingly, CONSOL Energy reversed the export excise tax receivable until the Supreme Court decides the appeal. We intend to vigorously pursue this action, although there is no assurance that CONSOL Energy will receive any tax refund. Coal production taxes also include a $6 million improvement related to lower coal production in 2007 compared to 2006. Lower production reduces severance taxes, reclamation fee taxes and black lung excise taxes, although these reductions were somewhat offset by higher average sales prices. Gas production taxes increased $1 million due to higher severance taxes attributable to higher average sales prices for gas and higher gas sales volumes.

Other coal taxes have increased in 2007 due to property taxes which are based on current assessment values which have increased over the prior year primarily related to the acquisition of AMVEST, as previously discussed. Other coal taxes are also higher due to lower Virginia employment enhancement tax credits. Virginia provides a tax credit based on employment figures attributable to operations in that state. Due to the previously discussed Buchanan Mine situation, our employment figures have been temporarily reduced. The employment figure reduction has correspondingly reduced the tax credit that we earn.

Other gas taxes have increased in 2007 due to various transactions that occurred throughout both years, none of which were individually material.

Other taxes have increased $3 million due to various transactions that occurred throughout both periods, none of which were individually material.


	2007			2006			Variance			Percentage Change
Earnings Before Income Taxes	$	429		$	551		$	(122	)	(22.1	)%
Tax Expense	$	136		$	112		$	24		21.4	%
Effective Income Tax Rate		31.7	%		20.4	%		11.3	%

CONSOL Energy’s effective tax rate is sensitive to changes to the relationship between pre-tax earnings and percentage depletion. See Note 5 in Item 8, Notes to the Audited Financial Statements of this Form 10-K. CONSOL Energy’s 2006 effective income tax rate includes the impact of state income tax benefits resulting from a change in a state tax statute.

Minority Interest

Minority interest represents 18.3% of CNX Gas net income for the five month period ended December 31, 2007 which CONSOL Energy did not own. It also represents 18.5% of Gas’s net income for the seven month period ended July 31, 2007 which CONSOL Energy did not own. During the period ended December 31, 2007, CONSOL Energy purchased $10 million of CNX Gas shares on the open market. The purchase of the additional shares changed CONSOL Energy’s ownership percentage in CNX Gas from 81.5% to 81.7%.

Twelve Months Ended December 31, 2006 Compared with Twelve Months Ended December 31, 2005

Net Income

Net income changed primarily due to the following items (table in millions):


	2006			2005			Dollar Variance			Percentage Change
Coal Sales-Produced and Purchased (Outside and Related Party)	$	2,694		$	2,527		$	167		6.6	%
Produced Gas Sales		389			281			108		38.4	%
Gas Royalty Interest		51			45			6		13.3	%
Purchased Gas Sales		44			275			(231	)	(84.0	)%
Gain on Sale of 18.5% of CNX Gas		—			327			(327	)	(100.0	)%
Other Sales and Other Income		537			355			182		51.3	%

Total Revenue and Other Income		3,715			3,810			(95	)	(2.5	)%
Coal Cost of Goods Sold—Produced and Purchased		1,785			1,702			83		4.9	%
Produced Gas Cost of Goods Sold		107			79			28		35.4	%
Gas Royalty Interest Cost of Goods Sold		42			37			5		13.5	%
Purchased Gas Cost of Goods Sold		45			279			(234	)	(83.9	)%
Other Cost of Goods Sold		357			340			17		5.0	%

Total Cost of Goods Sold		2,336			2,437			(101	)	(4.1	)%
Other		828			719			109		15.2	%

Total Costs		3,164			3,156			8		0.3	%


Earnings before Income Taxes and Minority Interest		551			654			(103	)	(15.7	)%
Income Tax Expense		112			64			48		75.0	%

Earnings Before Minority Interest		439			590			(151	)	(25.6	)%
Minority Interest		(30	)		(9	)		(21	)	233.3	%

Net Income	$	409		$	581		$	(172	)	(29.6	)%

Net income for 2006 declined in comparison to 2005 primarily due to the 2005 gain on the sale of 18.5% of CNX Gas. In August 2005, CNX Gas, a subsidiary of CONSOL Energy, sold 27.9 million shares of common stock. CNX Gas received proceeds of $420 million, which it used to pay a special dividend to CONSOL Energy. The pre-tax gain recognized on this transaction was $327 million. In accordance with Statement of Financial Accounting Standards Board Statement No. 109, “Accounting for Income Taxes,” no deferred tax has been provided on this transaction as current tax law provides a means by which the excess of the reported amount of this investment over its tax basis can be recovered tax-free. Also, management has no current intention of entering into a transaction that would cause CNX Gas to leave the consolidated tax group. Net income was also impacted by the acceleration of previously unrecognized actuarial losses related to our salary pension plan. Our defined benefit pension plan for salaried employees allows such employees to receive a lump-sum distribution for benefits earned through December 31, 2005 in lieu of annual payments when they retire from CONSOL Energy. Statement of Financial Accounting Standards (SFAS) No. 88, “Employers’ Accounting for Settlements & Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” requires that when the lump-sum distributions made for a plan year, which for CONSOL Energy is October 1 to September 30, exceed the total of the service cost and interest cost for the plan year, an adjustment equaling the unrecognized actuarial gain or loss resulting from each individual who received a lump sum in that year be recognized. The total pre-tax accelerated actuarial amortization was $18 million and was included in costs of goods sold and other charges and selling, general and administrative costs. These decreases in net income were offset, in part, by $79 million of property and business interruption insurance proceeds recognized in other income related to the Buchanan Mine fire and skip hoist incident that occurred in 2005. Net income was also impacted by increased average sales prices for both coal and gas. Coal unit costs increased in the period-to-period comparison, impairing net income. Increased cost of goods sold and other charges were also attributable to higher supply costs, contract mining fees, labor costs, subsidence costs, and higher insurance premiums. Higher gas unit costs were primarily attributable to higher firm transportation costs and higher power costs.

Revenue

Revenue and other income increased due to the following items:


	2006		2005		Dollar Variance			Percentage Change
Sales
Produced Coal-Outside and Related Party	$	2,620	$	2,448	$	172		7.0	%
Purchased Coal		74		79		(5	)	(6.3	)%
Produced Gas		389		281		108		38.4	%
Industrial Supplies		120		93		27		29.0	%
Other		84		35		49		140.0	%

Total Sales-Outside		3,287		2,936		351		12.0	%
Gas Royalty Interest		51		45		6		13.3	%
Purchased Gas		44		275		(231	)	(84.0	)%
Freight Revenue (Outside and Related Party)		163		120		43		35.8	%
Gain on Sale of 18.5% of CNX Gas		—		327		(327	)	(100.0	)%
Other Income		170		107		63		58.9	%

Total Revenue and Other Income	$	3,715	$	3,810	$	(95	)	(2.5	)%

The increase in company produced coal sales revenue, including related party, during the 2006 period was due to the increase in average sales price per ton, offset, in part, by decreased sales volumes.


	2006		2005		Variance			Percentage Change
Produced Tons Sold (in millions)		67.6		68.9		(1.3	)	(1.9	)%
Average Sales Price Per Ton	$	38.77	$	35.54	$	3.23		9.1	%

Increased average sales price primarily reflects stronger prices negotiated in 2005 and early 2006 resulting from an overall improvement in prices in the eastern coal market for domestic and foreign power generators and steel producers. Sales of company produced coal decreased in the 2006 period due to lower company production causing fewer tons to be available for sale. Company produced coal production was 67.4 million tons in the 2006 period compared to 69.1 million tons in the 2005 period.

The decrease in company purchased coal sales revenue was due to lower sales tons in the 2006 period compared to the 2005 period, offset, in part, by increased average sales price per ton of purchased coal.


	2006		2005		Variance			Percentage Change
Purchase Tons Sold (in million)		1.3		1.5		(0.2	)	(13.3	)%
Average Sales Price Per Ton	$	55.87	$	52.81	$	3.06		5.8	%

Higher average sales prices were primarily due to sales of purchased coal tons being sold in higher priced export and metallurgical markets.

The increase in gas sales revenue was due to a higher average sales price per thousand cubic feet sold and increased volumes in the 2006 period compared to the 2005 period.


	2006		2005		Variance		Percentage Change
Produced Gas Sales Volumes (in billion cubic feet)		55.3		47.9		7.4	15.4	%
Average Sales Price Per thousand cubic feet (including effects of derivative transactions)	$	7.04	$	5.88	$	1.16	19.7	%

The increase in average sales price is primarily the result of selling the majority of our 2006 production at market rates that were higher than the prices we sold our gas under hedging contracts in 2005. CNX Gas enters into physical fixed price gas supply transactions with various counterparties for terms varying in length. CNX Gas also enters into financial gas swap transactions that qualify as financial cash flow hedges. These financial gas swap transactions exist parallel to the underlying physical transactions. These physical and financial hedges represented approximately 17.0 billion cubic feet of our produced gas sales volumes for the year ended December 31, 2006 at an average price of $7.42 per Mcf. For the year ended December 31, 2005, these hedges represented approximately 38.2 billion cubic feet of our produced gas sales volumes at an average price of $4.77 per Mcf. Sales volumes increased as a result of additional wells coming online from our on-going drilling program and the 2005 period sales volumes being negatively impacted by the shutdown of Buchanan Mine due to the mine fire.

The $27 million increase in revenues from the sale of industrial supplies was primarily due to increased sales volumes and higher average sales prices.

The $49 million increase in other sales was primarily attributable to revenues from river barge towing. CONSOL Energy has an initiative to increase towing revenues from outside parties now that we are no longer restricted under the Jones Act Bowater exemption. Prior to February 2004, foreign ownership of CONSOL Energy exceeded 25%, prohibiting us from providing river barge towing to third parties. In January 2006, CONSOL Energy completed the acquisition of Mon River Towing and J.A.R. Barge Line, LLC, which contributed to the increase in revenues.


	2006		2005		Variance			Percentage Change
Gas Royalty Interest Sales Volumes (in billion cubic feet)		7.6		6.6		1.0		15.2	%
Average Sales Price Per thousand cubic feet	$	6.76	$	6.92	$	(0.16	)	(2.3	)%

Included in royalty interest gas sales are the revenues related to the portion of production associated with royalty interest owners. The decrease in average sales price is a function of the average CNX Gas sales price being higher in the 2005 period than the 2006 period for royalty purposes. Sales volumes increased as a result of additional wells coming online from our on-going drilling program and the 2005 period sales volumes being negatively impacted by the shutdown of Buchanan Mine due to the mine fire.


	2006		2005		Variance			Percentage Change
Purchased Gas Sales Volumes (in billion cubic feet)		6.1		28.7		(22.6	)	(78.7	)%
Average Sales Price Per thousand cubic feet	$	7.20	$	9.59	$	(2.39	)	(24.9	)%

Included in purchased gas sales revenue are volumes of gas we simultaneously purchased from and sold to the same counterparties between the segmentation and interruptible pools on the Columbia Gas Transmission Corporation (TCO) pipeline in order to satisfy obligations to certain customers. In accordance with Emerging Issues Task Force 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent” (EITF 99-19), we have historically recorded our revenues and our costs on a gross basis. However, because we adopted Emerging Issues Task Force 04-13 ,”Accounting for Purchases and Sales of Inventory with the Same Counterparty” (EITF 04-13) on January 1, 2006, purchased gas sales and volumes have decreased. EITF 04-13 requires the combining of matching buy/sell transactions, done in contemplation of one another, that were committed to on or after January 1, 2006. The net result for transactions that meet the above criteria are reflected in transportation expense in the 2006 period. Additionally, there are low volumes of gas we purchase from third party producers at market prices less our gathering charge, which we then resell.

In July 2005, CONSOL Energy announced that it created CNX Gas Corporation, (CNX Gas) as a wholly owned subsidiary of CONSOL Energy, to conduct its gas exploration and production activities. In August 2005, CNX Gas sold 27.9 million shares of common stock. Proceeds of $420 million were received. CNX Gas used the proceeds to pay a special dividend to CONSOL Energy. The pre-tax gain recognized on this transaction was $327 million.

Other income consists of interest income, gain or loss on the disposition of assets, equity in earnings of affiliates, service income, royalty income, rental income and miscellaneous income.


	2006		2005		Dollar Variance			Percentage Change
Business Interruption Insurance	$	79	$	18	$	61		338.9	%
Royalty income		28		26		2		7.7	%
Interest income		15		8		7		87.5	%
Service income		13		11		2		18.2	%
Gain on sale of assets		10		15		(5	)	(33.3	)%
Equity in income of affiliates		1		3		(2	)	(66.7	)%
Harmar Trust Settlement		—		7		(7	)	(100.0	)%
Other miscellaneous		24		19		5		26.3	%

Total other income	$	170	$	107	$	63		58.9	%

Buchanan Mine experienced a fire that developed in the mine after a large rock fall behind our longwall mining section on February 14, 2005. The mine was temporarily sealed in order to extinguish the fire. Coal production resumed on June 16, 2005. CONSOL Energy filed an insurance claim for reimbursement of various costs and business interruption related to the fire at Buchanan Mine. During the year ended December 31, 2006,

CONSOL Energy received proceeds from the insurance companies of $38 million. The $38 million was recognized as other income; coal segment recognized $29 million and gas segment recognized $9 million. We had received and recognized as other income $18 million of insurance proceeds in the 2005 period. We have received a total of $70 million from the insurance companies since the incident occurred. No additional reimbursement from the insurance carriers related to this claim will be recovered. Buchanan Mine also experienced a problem with the mine’s skip hoist mechanism on September 16, 2005 which caused the mine to be idled. Repairs to the skip hoist shaft and structures were completed and the mine resumed production on December 13, 2005. CONSOL Energy filed an insurance claim for reimbursement of various costs and business interruption related to the skip incident at Buchanan Mine. During the year ended December 31, 2006, CONSOL Energy recognized proceeds from the insurance companies of $41 million. The $41 million was recognized as other income; coal segment recognized $40 million and gas segment recognized $1 million. No additional reimbursement from the insurance carriers related to this claim will be recovered.

Royalty income increased $2 million due primarily to higher gas prices and additional production on existing royalty contracts. Royalty income received from third parties is calculated as a percentage of the third party sales price.

Interest income increased due to our improved cash position throughout 2006 compared to 2005. The improved cash position was primarily due to the August 2005 sale of 18.5% interest in CNX Gas. The private sale of this stock resulted in $420 million of proceeds.

Service income represents various miscellaneous revenues from coal fines recovery projects, processing fees for third party coal and other miscellaneous activities. The increase in revenues is attributable to new agreements in 2006 with third parties which allow them to recover coal fines from preparation slurry ponds for a fee.

The decrease in gain on sale of assets in the 2006 period reflects various transactions that occurred throughout both periods, none of which were individually material.

The equity in income of affiliates decreased in the period-to-period comparison due primarily to CONSOL Energy’s portion of a 2005 period gain on sale of land by an affiliate.

Other income from the Harmar Environmental Trust (the Trust) Settlement was attributable to the Civil Division of the Court of Common Pleas of Allegheny County’s decision to terminate a Trust among CONSOL Energy and other parties. The Trust was established in 1988 to provide funding for water treatment related to the now closed Harmar Mine. Other parties funded the Trust. CONSOL Energy was responsible to complete water treatment activities, but all costs associated with these activities were funded by the Trust Agreement. Any excess funding upon completion of water treatment or a specified date in the future was to be distributed to parties that originally funded the trust. In the decision, all previously funded, but unused, amounts remaining in the Trust were distributed. CONSOL Energy’s portion of the distributed funds was $15 million. CONSOL Energy is responsible for the ongoing water treatment at this facility. CONSOL Energy recorded the funds and the present value of the water treatment liability resulting in $6.5 million of income in the 2005 period.

The $5 million increase in other income was due to various transactions that occurred throughout both periods, none of which were individually material.

Costs


	2006		2005		Dollar Variance			Percentage Change
Cost of Goods Sold and Other Charges
Produced Coal	$	1,705	$	1,613	$	92		5.7	%
Purchased Coal		80		89		(9	)	(10.1	)%
Produced Gas		107		79		28		35.4	%
Industrial Supplies		119		105		14		13.3	%
Closed and Idle Mines		109		69		40		58.0	%
Other		129		166		(37	)	(22.3	)%

Total Cost of Goods Sold and Other Charges		2,249		2,121		128		6.0	%
Gas Royalty Interest		42		37		5		13.5	%
Purchased Gas		45		279		(234	)	(83.9	)%

Total Cost of Goods Sold	$	2,336	$	2,437	$	(101	)	(4.1	)%

Increased cost of goods sold and other charges for company produced coal were due mainly to a 7.7% increase in cost per ton of produced coal sold, offset particularly by a 1.9% decrease in sales volumes.


	2006		2005		Variance			Percentage Change
Produced Tons Sold (in millions)		67.6		68.9		(1.3	)	(1.9	)%
Average Cost of Goods Sold and Other Charges Per Ton	$	25.22	$	23.42	$	1.80		7.7	%

Cost of goods sold and other charges for produced tons sold increased due mainly to an acceleration of previously unrecognized actuarial losses related to our salary pension plan. Our defined benefit pension plan for salaried employees allows such employees to receive a lump-sum distribution for benefits earned through December 31, 2005 in lieu of annual payments when they retire from CONSOL Energy. Statement of Financial Accounting Standards (SFAS) No. 88, “Employers’ Accounting for Settlements & Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” requires that when the lump-sum distributions made for a plan year, which for CONSOL Energy is October 1 to September 30, exceed the total of the service cost and interest cost for the plan year, an adjustment equaling the unrecognized actuarial gain or loss resulting from each individual who received a lump-sum in that year be recognized. The total accelerated actuarial amortization was $17.8 million, of which $13.8 impacted cost of goods sold and other charges for produced coal. Increased cost of goods sold and other charges were also attributable to higher supply costs, contract mining fees, labor costs, subsidence costs, and higher insurance premiums. Higher supply costs were attributable to additional maintenance projects and increased cost for electrical products, petroleum products and chemicals, such as diesel fuel and magnetite used in the mining and coal preparation process. Supply costs have also increased due to additional costs being incurred related to the adoption of new safety regulations, as previously discussed. Increased contract mining fees were attributable to increased fees negotiated with the contractors used primarily in our central Appalachian operations. Increased labor costs were attributable to increased employee counts and increased wages at certain mining operations. Employee counts have been increased in certain locations to maintain development rates ahead of the longwall mining units. New employees have also been added as trainees which will replace skilled employees expected to retire between now and the end of the decade. Increased employee counts were also necessary to maintain underground belt haulage systems and complete additional roof and rib support. Additional roof and rib support requirements have been necessary due to changes in underground geology and mining conditions. Labor rates were increased in order to stay competitive in certain labor markets. Higher subsidence costs reflect higher costs related to the Pennsylvania Department Environmental Protection regulation titled “Surface Water Protection-Underground Bituminous Coal Mining Operation.” The application of this regulation requires additional costs when mining may affect perennial and intermittent streams. Subsidence costs also increased due to the location of mining activities affecting more surface structures in the 2006 period than in the 2005 period. Higher insurance premiums are attributable to higher costs of property

damage and business interruption coverage in the 2006 period compared to the 2005 period. These increases in costs were offset, in part, by lower other post employment benefit costs, workers’ compensation costs and combined fund costs. Other post employment benefit costs were lower in the 2006 period compared to the 2005 period due to CONSOL Energy’s 2005 plan amendment removing the election of the Federal Subsidy provision of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act). Instead, we will coordinate benefits with available Medicare coverage considered the primary payer. Medicare is considered the primary payer under our plan. This plan amendment resulted in a reduction of the accumulated projected benefit obligation and will be amortized to earnings. Workers’ compensation expenses have been reduced due to lower state administrative fees charged by the state of West Virginia due to changes in that state’s workers’ compensation program. Unit costs were also improved due to lower combined fund costs as a result of lower monthly premiums as well as lower sales volumes in the period-to-period comparison.

Purchased coal cost of goods sold and other charges decreased in the 2006 period compared to the 2005 period.


	2006		2005		Variance			Percentage Change
Purchased Tons Sold (in millions)		1.3		1.5		(0.2	)	(13.3	)%
Average Cost of Goods Sold and Other Charges Per Ton	$	60.47	$	59.28	$	1.19		2.0	%

The higher average cost of purchased coal is primarily due to overall increases in prices for domestic coals.

Produced gas cost of goods sold and other charges increased due to increased sales volumes and higher unit costs.


	2006		2005		Variance		Percentage Change
Produced Gas Sales Volumes (in billion cubic feet)		55.3		47.9		7.4	15.4	%
Average Cost Per Thousand Cubic Feet	$	1.93	$	1.65	$	0.28	17.0	%

The increase in average cost per thousand cubic feet of gas sold was primarily attributable to firm transportation. Firm transportation costs increased approximately $0.13 per thousand cubic feet in the period-to-period comparison. Approximately $0.06 per thousand cubic feet of the firm transportation increase is the result of the application of EITF 04-13, “Accounting for Purchases and Sales of Inventory with the Same Counterparty” as of January 1, 2006. EITF 04-13 requires the combining of matching buy/sell transactions, done in contemplation of one another, committed to on or after January 1, 2006. The net result for transactions that meet the above criteria are reflected in transportation expense in the current year. Previously, these transactions were accounted for as purchased gas revenue and purchased gas expense. Approximately $0.07 per thousand cubic feet of the increase in firm transportation was due to additional fees to purchase firm transportation capacity on the TCO interstate pipeline in order to avoid potential curtailments on portions of shipment capacity allocated to CNX Gas. The potential curtailments are due to increased demand for pipeline access in the 2006 period. Unit costs also increased due to higher power costs. Power costs per unit were $0.06 per thousand cubic feet higher due to both increased megawatt hour rates charged by our power providers and the use of more electric compressors during 2006 period that were previously powered by gas for most of the 2005 period. Salary and wages have also increased approximately $0.08 per thousand cubic feet due to additional staffing added to achieve desired drilling and production results. Unit costs have increased due to an additional $0.04 per thousand cubic feet related to leasing and brokering of land. Produced gas cost of goods sold per unit also increased by $0.06 per thousand cubic feet due to various transactions that occurred throughout both periods, none of which were individually material. These increases in unit costs were offset, in part, by lower well maintenance costs per unit. Maintenance costs per unit decreased $0.09 per thousand cubic feet in the period-to-period comparison. This improvement was due to maintenance projects being accelerated in prior periods. The improvement was also due to efficiencies in the water collection infrastructure being realized subsequent to the improvements that were made in the 2005 period. Well maintenance costs per unit also decreased due to additional production in the period-to-period comparison.

Industrial supplies cost of goods sold increased $14 million primarily due to higher sales volumes and higher unit costs.

Closed and idle mine cost of goods sold increased $40 million in the 2006 period compared to the 2005 period. These expenses increased $28 million due to Shoemaker Mine, VP #8 Mine and various other locations being idle for the majority of the 2006 period. These locations were in production for the full 2005 period. The increase was also attributable to higher expenses related to mine closing, perpetual care water treatment and reclamation liability adjustments that were the result of updated engineering surveys. Survey adjustments resulted in $10 million of additional expense in the 2006 period for closed and idled locations compared to the results of the survey adjustment in the 2005 period. Closed and idle mine cost of good sold and other charges also increased $2 million due to various transactions that occurred throughout both periods, none of which were individually material.

Miscellaneous cost of goods sold and other charges decreased due to the following items:


	2006		2005		Dollar Variance			Percentage Change
Buchanan Mine fire	$	—	$	34	$	(34	)	(100.0	)%
Buchanan Mine skip hoist accident		—		3		(3	)	(100.0	)%
Sales contract buy outs		—		13		(13	)	(100.0	)%
Litigation settlements and contingencies		1		10		(9	)	(90.0	)%
Incentive compensation		24		35		(11	)	(31.4	)%
Bank fees		9		12		(3	)	(25.0	)%
Accounts receivable securitization fees		—		2		(2	)	(100.0	)%
Coal property holdings costs		9		10		(1	)	(10.0	)%
Terminal/River operations		51		24		27		112.5	%
Stock-based compensation expense		23		4		19		475.0	%
Miscellaneous transactions		12		19		(7	)	(36.8	)%

Total Miscellaneous Cost of Goods Sold and Other Charges	$	129	$	166	$	(37	)	(22.3	)%

CONSOL Energy’s Buchanan Mine, located near Keen Mountain, Virginia, experienced a large rock fall behind its longwall mining section on February 14, 2005. While caving behind the longwall is a normal part of the mining process, the size of this cave-in created a large air pressure wave that disrupted ventilation and also caused an ignition of methane gas in the area. CONSOL Energy temporarily sealed the mine in order to extinguish the fire that developed after the ignition. Various materials, including nitrogen foam and water were pumped into the mine in order to accelerate the process of creating an inert environment within the mine to extinguish the fire. Coal production resumed on June 16, 2005. Costs of goods sold incurred for the Buchanan Mine fire, net of expected insurance recovery, for the year ended December 31, 2005 were $34 million. The incident was covered under CONSOL Energy’s property and business interruption insurance policy as previously discussed.

On September 16, 2005, CONSOL Energy’s Buchanan Mine also had an accident with its skip hoist, the device that lifts coal from underground to the surface, forcing the mine to suspend coal production. The braking mechanism on the hoist failed to hold a loaded skip at the surface before it could dump its load. The loaded skip fell approximately 1,600 feet back through the shaft to the bottom. Simultaneously, the empty skip was propelled upward to the surface as the loaded skip fell, causing the empty skip to strike the top of the hoist mechanism before also falling back to the shaft bottom. Expenses related to clean up of the damaged hoist for the year ended December 31, 2005, were approximately $3 million. This accident was covered under our property and business interruption insurance policy.

In the 2005 period, agreements were made to buy out sales contracts with several customers in order to release tons committed under lower priced contracts for sale to other customers at higher pricing. No such agreements were made in the 2006 period.

Litigation settlements and contingencies in the 2005 period were attributable to a settlement agreement with certain lessors in western Kentucky. The settlement agreement included the transfer of certain properties and permits, as well as a cash payment to the lessors, with the lessors assuming all reclamation liability for the mine property which is being transferred. Various other contingencies were incurred in both periods, none of which were individually material.

Incentive compensation expense decreased due to a lower amount projected to be paid to employees for the 2006 period compared to the 2005 period. The lower amount expected to be paid to employees is due to CONSOL Energy falling short of the predetermined earnings level under the plan. The incentive compensation program is designed to increase compensation to eligible employees when CONSOL Energy reaches predetermined earnings targets and the employees reach predetermined performance targets.

Bank fees decreased primarily due to no borrowings on our credit facility being made throughout the 2006 period.

Accounts receivable securitization fees decreased in the period-to-period comparison. No amounts were drawn under this program in the 2006 period.

Lower coal property holding costs were attributable to decreased expenses related to leasehold surrenders in the 2006 period.

CONSOL Energy has an initiative to increase towing revenues for outside parties now that we are no longer restricted under the Jones Act Bowater exemption. Prior to February 2004, foreign ownership of CONSOL Energy exceeded 25%, prohibiting us from providing river barge towing to third parties. This initiative to increase revenues has also increased costs. In January 2006, CONSOL Energy completed the acquisition of Mon River Towing and J.A.R. Barge Lines, LLC, which also contributed to the increase in costs.

Effective January 1, 2006, CONSOL Energy adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment” (SFAS 123R). Stock-based compensation expense now includes compensation expense for all stock-based compensation awards granted prior to, but not yet vested as of January 1, 2006. The grant-date fair value is recognized on a straight-line basis over the requisite service period of the award, which is generally the option vesting term. Prior to implementing SFAS 123R, CONSOL Energy followed previously issued accounting guidance which did not require compensation expense to be recognized for stock option awards. Also, in April 2004, CONSOL Energy began to issue restricted stock units as part of its equity incentive plan. Compensation cost for the restricted stock units is based upon the closing share price at the date of grant and is recognized over the vesting period of the units. The increase in stock-based compensation expense in the 2006 period is also due to additional compensation costs for restricted stock unit grants that occurred in the 2006 period.

Miscellaneous cost of goods sold and other charges decreased $7 million due to various transactions that occurred throughout both periods, none of which were individually material.


	2006		2005		Variance			Percentage Change
Gas Royalty Interest Sales Volumes (in billion cubic feet)		7.6		6.6		1.0		15.2	%
Average Cost Per Thousand Cubic Feet	$	5.54	$	5.57	$	(0.03	)	(0.5	)%

Included in royalty interest gas costs are the expenses related to the portion of production associated with royalty interest owners. The decrease in average cost per unit is a function of the market price in the 2006 period compared to the 2005 period. Volumes increased as a result of additional wells coming online from our on-going drilling program and the 2005 period sales volumes being negatively impacted by the shutdown of Buchanan Mine due to the mine fire.


	2006		2005		Variance			Percentage Change
Purchased Gas Sales Volumes (in billion cubic feet)		6.1		28.7		(22.6	)	(78.7	)%
Average Cost Per Thousand Cubic Feet	$	7.34	$	9.71	$	(2.37	)	(24.4	)%

Included in purchased gas costs are volumes of gas we simultaneously purchased from and sold to the same counterparties between the segmentation and interruptible pools on the Columbia Gas Transmission Corporation (TCO) pipeline in order to satisfy obligations to certain customers. In accordance with EITF 99-19, we have historically recorded our revenues and our costs on a gross basis. However, because we adopted EITF 04-13 on January 1, 2006, purchased gas sales and volumes have decreased. The net result for transactions that meet the above criteria are reflected in transportation expense in the 2006 period. The decrease in costs per unit is a function of the average sales price, before the effects of financial swap transactions, being higher in the 2005 period than in the 2006 period. Additionally, there were small volumes of gas we purchase from third party producers at market prices less our gathering charge, which we then resell.


	2006		2005		Variance		Percentage Change
Freight expense	$	163	$	120	$	43	35.8	%

Selling, general and administrative costs have increased due to the following items:


	2006		2005		Dollar Variance		Percentage Change
Wages and salaries	$	32	$	27	$	5	18.5	%
Employee benefits		11		11		—	—
Professional, consulting and other purchased services		23		20		3	15.0	%
Other		25		23		2	8.7	%

Total Selling, General and Administrative	$	91	$	81	$	10	12.3	%

Wages and salaries have increased in the period-to-period comparison due to additional positions being added related to CNX Gas, an 81.5% owned subsidiary, being a separate publicly traded company.

Salary retirement costs increased due mainly to an acceleration of previously unrecognized actuarial losses related to our salary pension plan. Our defined benefit pension plan for salaried employees allows such employees to receive a lump-sum distribution in lieu of annual payments when they retire from CONSOL Energy. Statement of Financial Accounting Standards (SFAS) No. 88, “Employers’ Accounting for Settlements & Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” requires that when the lump-sum distributions for benefits earned through December 31, 2005 made for a plan year, which for CONSOL Energy is October 1 to September 30, exceed the total of the service cost and interest cost for the plan year, an adjustment equaling the unrecognized actuarial gain or loss resulting from each individual who received a lump-sum in that year be recognized. The total accelerated actuarial amortization was $17.8 million, of which $2.1 million impacted selling, general and administrative expense. The salary retirement increase was offset by a reduction in other post

employment benefits. Other post employment benefit costs were lower in the 2006 period compared to the 2005 period due to CONSOL Energy’s 2005 plan amendment removing the election of the Federal Subsidy provision of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act). Instead, we will coordinate benefits with available Medicare coverage considered the primary payer. This plan amendment resulted in a reduction of the accumulated projected benefit obligation and will be amortized to earnings.

Costs of professional, consulting and other purchased services were higher in the 2006 period compared to the 2005 period primarily due to additional costs related to CNX Gas being a separate publicly traded company throughout all of 2006, offset, in part, by a reduction in professional, consulting and other purchased services by CONSOL Energy.

Other selling, general and administrative costs increased $2 million due to various transactions that occurred throughout both periods, none of which were individually material.

Depreciation, depletion and amortization increased due to the following items:


	2006		2005		Dollar Variance		Percentage Change
Coal	$	241	$	214	$	27	12.6	%
Gas:
Production		25		23		2	8.7	%
Gathering		13		12		1	8.3	%

Total Gas		38		35		3	8.6	%
Other		17		13		4	30.8	%

Total Depreciation, Depletion and Amortization	$	296	$	262	$	34	13.0	%

The increase in coal depreciation, depletion and amortization was primarily attributable to assets placed in service after the 2005 period. Assets placed in service after the 2005 period include various airshafts, longwall assets, haulage assets and various other projects completed at our mines.

The increase in gas production related depreciation, depletion and amortization was primarily due to the net effect of additional volumes in the current year and a slightly lower unit-of-production rate in 2006 compared to 2005. Rates are generally calculated using the net book value of assets at January 1, divided by either proved or proved developed reserves. Gathering depreciation, depletion and amortization is recorded on the straight-line method and increased due to additional assets being placed in service in 2006, including the effects of the Jewell Ridge lateral pipeline. The Jewell Ridge lateral pipeline was completed in October 2006. CNX Gas entered into a 15 year firm transportation agreement with ETNG, a subsidiary of Duke Energy, at pre-determined fixed rates. The present value of the payments under this firm transportation agreement is approximately $67 million. In addition to providing us with transportation flexibility, the Jewell Ridge lateral will provide access for our production to growing Southeastern and East Coal markets.

Other depreciation increased $4 million in the 2006 period primarily due to the January 2006, acquisition of Mon River Towing and J.A.R. Barge Lines, LLC. The acquisition included 13 towboats and more than 350 barges with the capacity to transport 13 million tons of coal annually.

Interest expense decreased in the 2006 period compared to the 2005 period.


	2006			2005		Dollar Variance			Percentage Change
Long-term Secured notes	$	24		$	24	$	—		—
Capitalized lease		2			—		2		100.0	%
Other		(1	)		3		(4	)	(133.3	)%

Total Interest Expense	$	25		$	27	$	(2	)	(7.4	)%

Interest on long-term debt remained consistent in the period-to-period comparison.

Capitalized lease interest expense relates to an agreement that was entered into in March 2006. The agreement was for the acquisition of longwall equipment that was required to be treated as a capital lease under Statement of Financial Accounting Standards No. 13, “Accounting for Leases.” Capitalized lease interest expense also increased due to the Jewell Ridge lateral pipeline coming on line in October 2006. The firm transportation agreement related to the use of this pipeline was also treated as a capital lease.

Other interest expense decreased due to higher amounts of interest capitalized in the 2006 period compared to the 2005 period. Higher capitalized interest was attributable to the higher level of capital projects funded from operating cash flow in the 2006 period, primarily due to the slope, overland belt and preparation plant projects at the Robinson Run Mine.

Taxes other than income increased primarily due to the following items:


	2006		2005		Dollar Variance		Percentage Change
Production taxes:
Coal	$	157	$	145	$	12	8.3	%
Gas		12		10		2	20.0	%

Total Production Taxes		169		155		14	9.0	%
Other taxes:
Coal		71		62		9	14.5	%
Gas		4		4		—	—
Other		9		8		1	12.5	%

Other		84		74		10	13.5	%

Total Taxes Other Than Income	$	253	$	229	$	24	10.5	%

Increased coal production taxes are primarily due to higher severance taxes and higher black lung excise taxes attributable to higher average sales price. Severance taxes have also increased due to an additional tax imposed by the State of West Virginia. Under the new West Virginia severance tax rules, an additional $0.56 per ton of coal produced is due to the State.

Increased gas production taxes are primarily due to higher severance taxes attributable to higher average sales price for gas and higher sales volumes.

Other coal taxes increased due to higher property taxes. Property tax increases are primarily attributable to higher assessments in various counties where our coal holdings are located. Other coal taxes also increased due to capital stock and franchise taxes. Additional capital stock and franchise taxes are attributable to the higher earnings achieved in the year ended December 31, 2005.

Other gas taxes remained consistent in the period-to-period comparison.

Other miscellaneous taxes increased due to capital stock and franchise taxes. Additional capital stock and franchise taxes are attributable to the higher earnings achieved in the year ended December 31, 2005.


	2006			2005			Variance			Percentage Change
Earnings Before Income Taxes and Minority Interest	$	551		$	655		$	(104	)	(15.9	)%
Tax Expense		112			64			48		75.0	%
Effective Income Tax Rate		20.3	%		9.8	%		10.5	%

CONSOL Energy’s effective tax rate is sensitive to changes to the relationship between pre-tax earnings and percentage depletion, as well as increases and decreases in valuation allowances. See Note 7 in Item 8 of the Notes to the Audited Consolidated Financial Statements in this Form 10-K. CONSOL Energy’s effective tax rate for the year ended December 31, 2005 was impacted by the gain of $327 million resulting from the sale of 18.5% of CNX Gas stock, as previously discussed. In accordance with Statement of Financial Accounting Standards Board Statement No. 109, “Accounting for Income Taxes,” no deferred tax has been provided on this transaction as current tax law provides a means by which the excess of the reported amount of this investment over its tax basis can be recovered tax-free. Also, management has no current intention of entering into a transaction that would cause CNX Gas to leave the consolidated tax group.

Minority Interest

Minority interest represents 18.5% of CNX Gas net income which CONSOL Energy does not own.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities in the consolidated financial statements and at the date of the financial statements. Note 1 of the Notes to the Audited Consolidated Financial Statements in this Annual Report on Form 10-K describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements. On an on-going basis, we evaluate our estimates. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates upon subsequent resolution of identified matters. Management believes that the estimates utilized are reasonable. The following critical accounting policies are materially impacted by judgments, assumptions and estimates used in the preparation of the Consolidated Financial Statements.

Other Post Employment Benefits

CONSOL Energy has historically provided retiree health benefits to employees that retire with at least ten years of service and have attained age 55. Effective August 1, 2003, the eligibility requirement for salaried employees was changed to either twenty years of service and age 55, or fifteen years of service and age 62. Additionally, any salaried or non-represented hourly employees that are hired or rehired effective January 1, 2007 or later will not become eligible for retiree health benefits. In lieu of traditional retiree health coverage, if certain eligibility requirements are met, these employees may be eligible to receive a retiree medical spending allowance of $2,250 per year of service at retirement. Eligibility requirements for represented hourly employees hired before January 1, 2007 have not changed from CONSOL Energy’s historical requirements. Newly employed inexperienced employees represented by the UMWA, hired after January 1, 2007 will not be eligible to receive retiree benefits. In lieu of these benefits, these employees will receive a defined contribution benefit of $1 per each hour worked. At December 31, 2007, the retiree health plan provided benefits to approximately 24,500 of our former employees and their eligible dependents. The medical plan which covers eligible salaried employees and retirees also includes a cost sharing structure where essentially all participants contribute 20% of plan costs. Annual cost increases for the salary plan in excess of 6% are paid entirely by the salaried participants.

After our review, various actuarial assumptions, including discount rate, expected trend in health care costs, average remaining service period, average remaining life expectancy, per capita costs and participation level in each future year are used by our independent actuary to estimate the cost and benefit obligations for our retiree health plans. Most assumptions used in 2007 have not differed materially from the prior year actual experience. Expected trend in health care cost assumptions have been changed since the prior year. Separate trend assumptions have been established for medical, drug, pre-65 and post-65 costs as opposed to one trend

assumption for all costs in prior years. The initial expected trend in health care costs at this year’s measurement date (currently September 30) was 8.0% compared to a prior year expected 2008 trend in health care cost of 8.5%. A 1.0% decrease in the health care trend rate would decrease interest and service cost for 2007 by approximately $17.0 million. The discount rate is also determined each year at the measurement date. The discount rate is estimated by utilizing a hypothetical bond portfolio which approximates the future cash flow necessary to service our other postretirement liability. The hypothetical bond portfolio looks to rates of return on high-quality, fixed-income investments that receive one of the two highest ratings given by a recognized ratings agency. For the years ended December 31, 2007 and 2006, the discount rate used to calculate the period end liability and the following year’s expense was 6.63% and 6.00%, respectively. A 0.25% increase in the discount rate would have decreased 2007 net periodic postretirement benefit costs by approximately $4.1 million. A 0.25% decrease in the discount rate would have increased 2007 net periodic postretirement benefit costs by approximately $4.4 million. Deferred gains and losses are primarily due to historical changes in the discount rate and medical cost inflation differing from expectations in prior years. Changes to interest rates for the rates of returns on instruments that could be used to settle the actuarially determined plan obligations introduce substantial volatility to our costs. Accumulated actuarial gains or losses in excess of a pre-established corridor are amortized on a straight-line basis over the expected future service of active salary employees to their assumed retirement age. The average remaining service period for our salaried plans is approximately 11 years at December 31, 2007. Accumulated actuarial gains or losses in excess of a pre-established corridor are amortized on a straight-line basis over the expected remaining life of our retired United Mine Workers of America (UMWA) population. The average remaining service period of this population is not used for amortization purposes because the majority of the UMWA population of our plan is retired. The average remaining life expectancy of our retired UMWA population used to calculate the following year’s expense is approximately 13 years at December 31, 2007.

Per capita costs on a per annum basis for Other Postretirement Benefits were assumed to be $6,072 at December 31, 2007. This was approximately a 6.5% increase, after adjusting for plan design changes and demographic shifts from the per capita cost on a per annum basis at December 31, 2006. The increase was due to healthcare cost trends and was within the range expected by our assumptions. If the actual increase in per capita cost of medical services or other postretirement benefits are significantly greater or less than the projected trend rates, the per capita cost assumption would need to be adjusted, which could have a significant effect on the costs and liabilities recognized in the financial statements.

Significant increases in health and prescription drug costs for represented hourly retirees could have a material adverse effect on CONSOL Energy’s operating cash flow. The effect on CONSOL Energy’s cash flow from operations for salaried and non-represented hourly employees has been limited to approximately 6% of the previous year’s medical cost for salaried employees due to the cost sharing provision in the benefit plan.

On September 29, 2006, Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (SFAS 158) was issued. SFAS 158 required, among other things, the recognition of the funded status of each defined pension benefit plan and other postretirement benefit plans on the balance sheet. Each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability. The subsequent change in the funded status of the plans is recognized as a component of accumulated comprehensive income in stockholders’ equity. Additionally, SFAS 158 requires an employer to measure the funded status of its plans as of the date of its year-end statement of financial position. This provision becomes effective for CONSOL Energy for its December 31, 2008 year-end. Currently, CONSOL Energy uses a September 30 measurement date for its other postretirement benefit plans.

The estimated liability recognized in the December 31, 2007 financial statements was $2.5 billion. For the year ended December 31, 2007, we paid approximately $137.5 million for Other Postretirement Benefits, all of which were paid from operating cash flow. Our obligations with respect to these liabilities are unfunded at December 31, 2007. CONSOL Energy does not expect to contribute to the other postretirement plan in 2008. We intend to pay benefit claims as they are due.

Salaried Pensions

CONSOL Energy has non-contributory defined benefit retirement plans covering substantially all employees not covered by multi—employer plans. The benefits for these plans are based primarily on years of service and employee’s pay near retirement. Effective January 1, 2006, employees hired between August 1, 2004 and December 31, 2005 that were not previously eligible to participate in the plans began accruing service. The CONSOL Energy salaried plan allows for lump-sum distributions of benefits earned up until December 31, 2005, at the employees’ election. As of January 1, 2006, lump sum benefits have been frozen, and the lump-sum option has been eliminated for benefits accrued prospectively.

Effective January 1, 2007, employees hired by CNX Gas, an 81.7 % owned subsidiary, will not be eligible to participate in CNX Gas’ non-contributory defined benefit retirement plan. In lieu of participation in the non-contributory defined benefit plan, these employees began receiving an additional 3% company contribution into their defined contribution plan. CNX Gas employees who were hired prior to December 31, 2005 or who were employees of CONSOL Energy prior to this date were given a one-time opportunity to elect to remain in the defined benefit plan or opt to freeze their service accruals and participate in the additional 3% company contribution into their defined contribution plan. All employees hired on or after January 1, 2006, but on or before December 31, 2006 had their current non-contributory defined benefit frozen and began receiving the additional 3% company contribution into their defined contribution plan, effective January 1, 2007. CNX Gas intends to freeze all defined benefit accruals as of December 31, 2016 for CNX Gas employees that elected to remain in the defined benefit plan.

Our independent actuaries calculate the actuarial present value of the estimated retirement obligation based on assumptions including rates of compensation, mortality rates, retirement age and interest rates. Several of these assumptions have been updated from the prior year to reflect anticipated future experience. For the year ended December 31, 2007, compensation increases are assumed to range from 3% to 8% depending on age and job classification. Retirement rate assumptions were also increased and begin at 1% for employees at age 50 and increase to 100% for employees at age 65. The discount rate is also determined each year at the measurement date. The discount rate is estimated by utilizing a hypothetical bond portfolio which approximates the future cash flow necessary to service our other postretirement liability. The hypothetical bond portfolio looks to rates of return on high-quality, fixed-income investments that receive one of the two highest ratings given by a recognized ratings agency. For the years ended December 31, 2007 and 2006, the discount rate used to calculate the period end liability and the following year’s expense was 6.57% and 6.00%, respectively. A 0.25% increase in the discount rate would have decreased the 2007 net periodic pension cost by $1.3 million. A 0.25% decrease in the discount rate would have increased the 2006 net periodic pension cost by $1.3 million. Deferred gains and losses are primarily due to historical changes in the discount rate and earnings on assets differing from expectations in prior years. The average remaining service period is approximately 10 years at December 31, 2007. Changes to any of these assumptions introduce substantial volatility to our costs.

The market related asset value is derived by taking the cost value of assets as of September 30, 2007 and multiplying it by the average 36-month ratio of the market value of assets to the cost value of assets. CONSOL Energy’s pension plan weighted average asset allocations at September 30, 2007 consisted of 60% equity securities and 40% debt securities.

The CONSOL Energy Employee Retirement and the Restoration Plan allow for lump-sum distributions earned up until December 31, 2005 and December 31, 2006, respectively. As of January 1, 2006, lump-sum benefits have been frozen and prospectively the lump-sum option has been eliminated for the Employee Retirement Plan. As of January 1, 2007, the Restoration Plan has been frozen. According to Statement of Financial Accounting Standards No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” if the lump-sum distributions made for the plan year, which is currently October 1 to September 30, exceed the total of the service cost and interest cost for the plan year, settlement accounting is required. Lump-sum payments exceeded this threshold in the Restoration Plan during 2007. CONSOL Energy recognized expense of $2.7 million in the current year’s results of operations. The adjustment equaled the previously unrecognized actuarial loss resulting from each individual who received a lump sum in that year. CONSOL regularly monitors this situation. If this settlement accounting is triggered again in the future, the adjustment could materially impact operating results.

Workers’ Compensation and Coal Workers’ Pneumoconiosis

Workers’ compensation is a system by which individuals who sustain employment related physical injuries or some type of occupational diseases are compensated for their disabilities, medical costs, and on some occasions, for the costs of their rehabilitation. Workers’ compensation will also compensate the survivors of workers who suffer employment related deaths. The workers’ compensation laws are administered by state agencies with each state having its own set of rules and regulations regarding compensation that is owed to an employee that is injured in the course of employment. CONSOL Energy records an actuarially calculated liability, which is determined using various assumptions, including discount rate, future healthcare cost trends, benefit duration and recurrence of injuries. The discount rate is determined each year at the measurement date (currently September 30). The discount rate is estimated by utilizing a hypothetical bond portfolio which approximates the future cash flow necessary to service our workers’ compensation liability. The hypothetical bond portfolio looks to rates of return on high-quality, fixed-income investments that receive one of the two highest ratings given by a recognized ratings agency. For the years ended December 31, 2007 and 2006, the discount rate used to calculate the period end liability and the following year’s expense was 5.94% and 6.00%, respectively. A 0.25% increase or decrease in the discount rate would not have materially decreased or increased the 2007 workers’ compensation expense. Deferred gains and losses are primarily due to historical changes in the discount rates, several years of favorable claims experience, various favorable claims experience, various favorable state legislation changes and an over all lower incident rate than our assumptions. Accumulated actuarial gains or losses are amortized on a straight-line basis over the expected future benefit duration of current claimants. The average expected benefit duration for this group is approximately 9 years at December 31, 2007. The estimated liability recognized in the financial statements at December 31, 2007 was approximately $162.1 million. CONSOL Energy’s policy has been to provide for workers’ compensation benefits from operating cash flow. No funding has been provided to cover these benefits. For the year ended December 31, 2007, we made payments for workers’ compensation benefits of approximately $45.5 million, all of which was paid from operating cash flow.

CONSOL Energy is responsible under the Federal Coal Mine Health and Safety Act of 1969, as amended, for medical and disability benefits to employees and their dependents resulting from occurrences of coal workers’ pneumoconiosis disease. CONSOL Energy is also responsible under various state statutes for pneumoconiosis benefits. After our review, our independent actuaries calculate the actuarial present value of the estimated pneumoconiosis obligation based on assumptions regarding disability incidence, medical costs, mortality, death benefits, dependents and discount rates. The discount rate is determined each year at the measurement date (currently September 30). The discount rate is estimated by utilizing a hypothetical bond portfolio which approximates the future cash flow necessary to service our coal workers’ pneumoconiosis liability. The hypothetical bond portfolio looks to rates of return on high-quality, fixed-income investments that receive one of the two highest ratings given by a recognized ratings agency. For the years ended December 31, 2007 and 2006, the discount rate used to calculate the period end liability and the following year’s expense was 6.62% and 6.00%, respectively. A 0.25% increase or decrease in the discount rate would not have materially

decreased or increased the 2007 coal workers’ pneumoconiosis expense. Actuarial gains associated with coal workers’ pneumoconiosis have resulted from numerous legislative changes over many years which have resulted in lower approval rates for filed claims than our assumptions originally reflected. Actuarial gains have also resulted from lower incident rates and lower severity of claims filed than our assumption originally reflected. The estimated liability recognized in the financial statements at December 31, 2007 was approximately $182.9 million. For the year ended December 31, 2007, we paid coal workers’ pneumoconiosis benefits of approximately $10.4 million. Our obligations with respect to these liabilities are unfunded at December 31, 2007.

On September 29, 2006, Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (SFAS 158) was issued. SFAS 158 required, among other things, the recognition of the funded status of each defined pension benefit plan and other postretirement benefit plan on the balance sheet. Each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability. The subsequent change in the funded status of the plans is recognized as a component of accumulated comprehensive income in stockholders’ equity. Additionally, SFAS 158 requires an employer to measure the funded status of its plans as of the date of its year-end statement of financial position. This provision becomes effective for CONSOL Energy for its December 31, 2008 year-end. Currently, CONSOL Energy uses a September 30 measurement date for its workers’ compensation and coal workers’ pneumoconiosis plans.

Reclamation and Mine Closure Obligations

The Surface Mining Control and Reclamation Act establishes operational, reclamation and closure standards for all aspects of surface mining as well as most aspects of deep mining. CONSOL Energy accrues for the costs of current mine disturbance and final mine and gas well closure, including the cost of treating mine water discharge where necessary. Estimates of our total reclamation and mine-closing liabilities, which are based upon permit requirements and CONSOL Energy engineering expertise related to these requirements, including the current portion, were approximately $482.3 million at December 31, 2007. This liability is reviewed annually by CONSOL Energy management and engineers. The estimated liability can significantly change if actual costs vary from assumptions or if governmental regulations change significantly.

Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations” (SFAS No. 143) requires that the fair value of an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The present value of the estimated asset retirement costs is capitalized as part of the carrying amount of the long-lived asset. Asset retirement obligations primarily relate to the closure of mines and gas wells and the reclamation of land upon exhaustion of coal and gas reserves. Changes in the variables used to calculate the liabilities can have a significant effect on the mine closing, reclamation and gas well closing liabilities. The amounts of assets and liabilities recorded are dependent upon a number of variables, including the estimated future retirement costs, estimated proven reserves, assumptions involving profit margins, inflation rates, and the assumed credit-adjusted risk-free interest rate.

SFAS No. 143 requires depreciation of the capitalized asset retirement cost and accretion of the asset retirement obligation over time. The depreciation will generally be determined on a units-of-production basis, whereas the accretion to be recognized will escalate over the life of the producing assets, typically as production declines.

Income Taxes

CONSOL Energy accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (SFAS No. 109) which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. SFAS No. 109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion of the deferred tax asset will not be realized. All available evidence, both positive and negative, must be considered in determining the need for a valuation

allowance. At December 31, 2007, CONSOL Energy has deferred tax assets in excess of deferred tax liabilities of approximately $505.6 million. The deferred tax assets are evaluated periodically to determine if a valuation allowance is necessary. There were no significant changes in the deferred tax valuation allowances in the year ended December 31, 2007.

For 2007, CONSOL Energy continues to report a deferred tax asset of approximately $36.2 million relating to CONSOL Energy’s state net operating loss carry-forwards with a full valuation allowance. A review of the positive and negative evidence regarding these benefits, primarily the history of book and tax losses on a separate company basis, concluded that a valuation allowance was warranted. A valuation allowance of $23.1 million has also been recorded against the deferred state tax asset attributable to future deductible differences for certain subsidiaries with histories of book and tax losses. These net operating losses expire at various times from 2008 to 2027. Management will continue to assess the realization of deferred tax assets based upon updated income forecast data and the feasibility of future tax planning strategies, and may record adjustments to valuation allowances against deferred tax assets in future periods as appropriate that could materially impact net income.

CONSOL Energy adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement 109” (FIN 48) on January 1, 2007. CONSOL Energy evaluates all tax positions taken on the state and federal tax filings to determine if the position is more likely than not to be sustained upon examination. For positions that meet the more likely than not to be sustained criteria, an evaluation to determine the largest amount of benefit, determined on a cumulative probability basis that is more likely than not to be realized upon ultimate settlement is determined. A previously recognized tax position is derecognized when it is subsequently determined that a tax position no longer meets the more likely than not threshold to be sustained. The evaluation of the sustainability of a tax position and the probable amount that is more likely than not is based on judgment, historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of these estimates, that are not readily apparent from other sources, form the basis for recognizing a FIN 48 liability. Actual results could differ from those estimates upon subsequent resolution of identified matters. Estimates of our uncertain tax liabilities, including the current portion, were approximately $63.4 million at December 31, 2007.

Stock Based Compensation

On January 1, 2006, we adopted the provisions of Statement of Financial Accounting Standards No. 123R, “Share-Based Payments” (SFAS No. 123R) using the modified prospective transition method. SFAS No. 123R eliminates the option of using the intrinsic value method of accounting previously available under APB No. 25, and requires companies to recognize in the financial statements the cost of employee services received in exchange for awards of equity instruments based on the grant date fair value of those awards. CONSOL Energy recorded $24.2 million of expense for the year ended December 31, 2007. The Black-Scholes option pricing model is used to determine fair value of stock options at the grant date. Various inputs are utilized in the Black-Scholes pricing model, such as:

•

stock price on measurement date,

•

exercise price defined in the award,

•

expected dividend yield based on historical trend of dividend payouts,

•

risk-free interest rate based on a zero-coupon treasury bond rate,

•

expected term based on historical grant and exercise behavior, and

•

expected volatility based on historic and implied stock price volatility of CONSOL Energy stock and public peer group stock.

These factors can significantly impact the value of stock options expense recognized over the requisite service period of option holders. As of December 31, 2007, $15.6 million of total unrecognized compensation

cost related to unvested awards is expected to be recognized over a weighted-average period of 2.15 years. See Note 19 in the Notes to the Audited Consolidated Financial Statements in Item 8 in this Form 10-K for more information.

Contingencies

CONSOL Energy is currently involved in certain legal proceedings. We have accrued our estimate of the probable costs for the resolution of these claims. This estimate has been developed in consultation with legal counsel involved in the defense of these matters and is based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. Future results of operations for any particular quarterly or annual period could be materially affected by changes in our assumptions or the outcome of these proceedings.

Successful Efforts Accounting

We use the “successful efforts” method to account for our exploration and production activities. Under this method, costs are accumulated on a field by field basis with certain exploratory expenditures and exploratory dry holes being expensed as incurred. Costs of productive wells and development dry holes are capitalized and amortized on the unit-of-production method. We use this accounting policy instead of the “full cost” method because it provides a more timely accounting of the success or failure of our exploration and production activities.

Coal and Gas Reserve Values

There are numerous uncertainties inherent in estimating quantities and values of economically recoverable coal and gas reserves, including many factors beyond our control. As a result, estimates of economically recoverable coal and gas reserves are by their nature uncertain. Information about our reserves consists of estimates based on engineering, economic and geological data assembled and analyzed by our staff. Our gas reserves have been reviewed by independent experts. Approximately 95% of the amounts included in our 2007 coal reserves have been reviewed and confirmed by an independent third-party consultant. Some of the factors and assumptions which impact economically recoverable reserve estimates include:

•

geological conditions;

•

historical production from the area compared with production from other producing areas;

•

the assumed effects of regulations and taxes by governmental agencies;

•

assumptions governing future prices; and

•

future operating costs.

Each of these factors may in fact vary considerably from the assumptions used in estimating reserves. For these reasons, estimates of the economically recoverable quantities of coal and gas attributable to a particular group of properties, and classifications of these reserves based on risk of recovery and estimates of future net cash flows, may vary substantially. Actual production, revenues and expenditures with respect to our reserves will likely vary from estimates, and these variances may be material. See “Risk Factors” in Item 1A of this report for a discussion of the uncertainties in estimating our reserves.

Liquidity and Capital Resources

CONSOL Energy generally has satisfied our working capital requirements and funded our capital expenditures and debt service obligations with cash generated from operations and proceeds from borrowings. On June 27, 2007, CONSOL Energy entered into an Amended and Restated five-year $1 billion senior secured credit facility, which replaced the $750 million credit facility. The facility is secured by substantially all of the assets of CONSOL Energy and certain of its subsidiaries and collateral is shared equally and ratably with the

holders of CONSOL Energy Inc. 7.875% bonds maturing in 2012. The agreement provides for the release of collateral upon the achievement of certain credit ratings. Fees and interest rate spreads are based on a ratio of financial covenant debt to twelve-month trailing earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), measured quarterly. The facility includes a minimum interest coverage ratio of no less than 4.50 to 1.00, measured quarterly. The interest coverage ratio was 13.10 to 1.00 at December 31, 2007. The facility also includes a maximum leverage ratio of not more than 3.25 to 1.00, measured quarterly. The leverage ratio was 1.50 to 1.00 at December 31, 2007. Affirmative and negative covenants in the facility limit our ability to dispose of assets, make investments, purchase or redeem CONSOL Energy common stock, pay dividends and merge with another corporation. At December 31, 2007, the facility had approximately $248 million drawn and $259 million of letters of credit outstanding, leaving $493 million of unused capacity.

In April and November 2007, CONSOL Energy and certain of our U.S. subsidiaries amended their existing trade accounts receivable facility with financial institutions for the sale on a continuous basis of eligible trade accounts receivable. The amended facility allows CONSOL Energy to receive, on a revolving basis, up to $165 million, a $40 million increase over the 2006 facility. The amended facility also allows for the issuance of letters of credit against the $165 million capacity. At December 31, 2007, eligible accounts receivable totaled approximately $116 million. There was no subordinated retained interest at December 31, 2007. Accounts receivable totaling $125 million were removed from the consolidated balance sheet at December 31, 2007. There were no letters of credit outstanding against the facility at December 31, 2007. In accordance with the facility agreement, CONSOL Energy is able to receive proceeds based upon total eligible accounts receivable at the previous month-end. Proceeds at December 31, 2007, determined by eligible accounts receivable at November 30, 2007, exceeded the eligible accounts receivable at December 31, 2007. The $10 million not supported by accounts receivable at December 31, 2007 is included in the $125 million of accounts receivable which were removed from the consolidated balance sheet at December 31, 2007.

CONSOL Energy’s letters of credit issued under the revolving credit facility have decreased by approximately $134 million at December 31, 2007 compared to December 31, 2006. This decrease was primarily due to a reduction of $118 million to the financial security required by the 1992 Fund. The reduction of security was due to the legislative change included in The Surface Mining Control and Reclamation Act Amendments of 2006. The new legislation requires certain annual transfers to be made from the Abandoned Mine Land (AML) program to the Combined Fund, 1992 Fund and the 1993 Fund. The current law was amended so that after a phase-in period, the new legislation removes the annual cap on the amount of interest to be transferred and requires annual transfers of AML Fund interest to the Combined Fund, 1992 Fund and 1993 Fund to pay the health care benefits of retirees whose employers have gone out of business. Previous to the legislative change, benefits of retirees whose employers have gone out of business have been paid by the surviving companies participating in the funds. Because this funding requirement will be eliminated after the phase-in period, security required by the funds has been reduced.

In October 2005, CNX Gas, an 81.7% controlled and consolidated subsidiary of CONSOL Energy, entered into a credit agreement with a group of commercial lenders. The credit agreement provides for a revolving credit facility providing an initial aggregate outstanding principal amount of up to $200 million, including borrowings and letters of credit. CNX Gas also has the ability to request an increase in aggregate outstanding principal amount to $300 million, including borrowings and letters of credit. The agreement contains a negative pledge provision, whereas CNX Gas assets cannot be used to secure other obligations. Fees and interest rate spreads are based on the percentage of facility utilization, measured quarterly. Covenants in the facility limit CNX Gas’ ability to dispose of assets, make investments, purchase or redeem CNX Gas stock, pay dividends and merge with another corporation. This facility includes a leverage ratio covenant of not more than 3.00 to 1.00, measured quarterly. This ratio was 0.17 to 1.00 at December 31, 2007. The facility also includes an interest coverage ratio covenant of no less than 3.00 to 1.00, measured quarterly. This ratio was 51.19 to 1.00 at December 31, 2007. At December 31, 2007, this facility had approximately $15 million of letters of credit issued and had no outstanding borrowings, leaving approximately $185 million of unused capacity. As a result of entering into the credit agreement, CNX Gas and their subsidiaries executed a Supplemental Indenture and as of October 21, 2005, and are also guarantors of CONSOL Energy’s 7.875% bonds.

CONSOL Energy believes that cash generated from operations and our borrowing capacity will be sufficient to meet our working capital requirements, anticipated capital expenditures (other than major acquisitions), scheduled debt payments, anticipated dividend payments and to provide required letters of credit. Nevertheless, the ability of CONSOL Energy to satisfy our working capital requirements, debt service obligations, to fund planned capital expenditures or pay dividends will depend upon future operating performance, which will be affected by prevailing economic conditions in the coal and gas industries and other financial and business factors, some of which are beyond CONSOL Energy’s control.

In order to manage the market risk exposure of volatile natural gas prices in the future, CONSOL Energy enters into various physical gas supply transactions with both gas marketers and end users for terms varying in length. CONSOL Energy has also entered into various gas swap transactions that qualify as financial cash flow hedges, which exist parallel to the underlying physical transactions. The fair value of these contracts was a net asset of $9.6 million at December 31, 2007. The ineffective portion of the changes in the fair value of these contracts was insignificant to earnings in the years ended December 31, 2007, 2006 and 2005.

CONSOL Energy frequently evaluates potential acquisitions. CONSOL Energy has funded acquisitions primarily with cash generated from operations and a variety of other sources, depending on the size of the transaction, including debt financing. There can be no assurance that additional capital resources, including debt financing, will be available to CONSOL Energy on terms which CONSOL Energy finds acceptable, or at all.

Cash Flows (in millions)


	2007			2006			Change
Cash flows from operating activities	$	684		$	665		$	19
Cash used in investing activities	$	(972	)	$	(662	)	$	(310	)
Cash provided by (used in) financing activities	$	106		$	(120	)	$	226

Cash flows from operating activities have increased primarily due to the following items:

•

Operating cash flows increased by approximately $125 million due to proceeds received in the 2007 period from the accounts receivable securitization program. The accounts receivable program had no activity during the 2006 period.

•

Operating cash flows increased by approximately $21 million due to coal inventories. Coal inventories were 1.3 million tons at December 31, 2007, 1.5 million tons at December 31, 2006 and 1.7 million tons at December 31, 2005.

•

Operating cash flows decreased due to lower net income in the year-to-year comparison.

•

Operating cash flows also fluctuated due to various changes in operating assets, operating liabilities, other assets and other liabilities which occurred throughout both periods.

Net cash used in investing activities changed primarily due to the following items:

•

Capital expenditures were $743 million in 2007 compared to $691 million in 2006. Capital expenditures were higher in 2007 primarily due to the acquisition of certain coalbed methane and gas rights from Peabody Energy for $16 million plus various other acquisition costs, our enhanced gas well drilling program and various other projects being completed. Capital expenditures also include $17 million related to the August 2007 acquisition of Piping & Equipment Inc. These increases were offset, in part, by a $25 million cash payment in 2006 related to the January 2006 acquisition of Mon River Towing and J.A.R. Barge Lines, LLC, from The Guttman Group. See Note 2 in Item 8, Notes to the Audited Consolidated Financial Statements in this Form 10-K. Increased capital expenditures were also due to additional capital expenditures in the gas segment due to the on-going drilling program. These increases were offset, in part, by lower expenditures related to the coal and other segments.

•

Cash used in investing activities includes $297 million related to the July 2007 acquisition of AMVEST. See Note 2 in Item 8, Notes to the Audited Consolidated Financial Statements in this Form 10-K.

•

In the 2007 period, CONSOL Energy purchased 372,000 shares of CNX Gas, a majority-owned subsidiary, on the open market at an average price of $26.87, or $10 million.

•

Proceeds from the sale of assets were $85 million in 2007 compared to $60 million in 2006. Proceeds in 2007 were primarily related to $53 million of proceeds from the sale of certain western Kentucky coal reserves to Alliance Resource Partners, L.P. Proceeds in 2006 were primarily due to the sale and subsequent lease-back of longwall mining equipment. The lease has been reported as a capital lease, and accordingly a liability for the present value of the lease payments has been recognized.

Net cash provided by (used in) financing activities changed primarily due to the following items:

•

In 2007, CONSOL Energy received proceeds of $248 million from our revolving credit facility. There was no activity under the revolving credit facility in 2006.

•

In 2007, CONSOL Energy paid $45 million to redeem its medium-term notes that were due in June 2007. There was no long-term debt repayment in 2006.

•

In 2007, $24 million of cash was retained compared to $39 million in 2006, as a result of the tax deductibility of increases in the value of equity instruments issued under share-based payment arrangements.

•

In 2007, approximately $80 million of CONSOL Energy stock was repurchased under the share repurchase program that was approved in December 2005. In 2006, approximately $116 million of CONSOL Energy stock was repurchased.

•

$19 million of stock was issued in 2007 compared to $13 million of treasury stock and $1 million of common stock issued in 2006. Stock issuances in both periods were a result of stock option exercises.

•

Dividends of $56 million were paid in 2007 compared to $51 million in 2006.

The following is a summary of our significant contractual obligations at December 31, 2007 (in thousands):

Payments due by Year


	Less Than 1 Year		1–3 Years		3-5 Years		More Than 5 Years		Total
Short-Term Notes Payable	$	247,500	$	—	$	—	$	—	$	247,500
Gas Firm Transportation Obligation		7,870		14,379		9,948		17,095		49,292
Purchase Order Firm Commitments		4,561		—		—		—		4,561
Long-Term Debt		8,374		46,493		330,865		21,614		407,346
Capital Lease Obligations		16,178		32,356		19,159		65,135		132,828
Operating Lease Obligations		39,792		61,536		31,400		131,017		263,745
Other Long-Term Liabilities(a)		379,586		588,079		483,993		2,125,675		3,577,333

Total Contractual Obligations(b)	$	703,861	$	742,843	$	875,365	$	2,360,536	$	4,682,605

(a)	Long-term liabilities include other postemployment benefits, work-related injuries and illnesses, defined benefit pension plans, mine reclamation and closure, and other long-term liability costs.

(b)	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.

Debt

At December 31, 2007, CONSOL Energy had total long-term debt of $507 million outstanding, including current portion of long-term debt of $18 million. This long-term debt consisted of:

•

An aggregate principal amount of $249 million of 7.875% notes ($250 million due in 2012, net of $1 million unamortized debt discount). The notes were issued at 99.174% of the principal amount. Interest on the notes is payable March 1 and September 1 of each year. Payment of the principal and premium, if any, and interest on the notes are guaranteed by most of CONSOL Energy’s subsidiaries. The notes are senior secured obligations and rank equally with all other secured indebtedness of the guarantors;

•

An aggregate principal amount of $103 million of two series of industrial revenue bonds which were issued to finance the Baltimore port facility and bear interest at 6.50% per annum and mature in 2010 and 2011;

•

$33 million in advance royalty commitments with an average interest rate of 6.66% per annum;

•

An aggregate principal amount of $11 million on a variable rate note that bears interest at the prime rate, or 7.25% at December 31, 2007. This note was incurred by a variable interest entity that is fully consolidated in which CONSOL Energy holds a 49% ownership interest;

•

An aggregate principal amount of $9 million on various rate notes with a weighted average interest rate of 8.11% at December 31, 2007. These note were incurred by a variable interest entity that is fully consolidated in which CONSOL Energy holds no ownership interest;

•

An aggregate principal amount of $101 million of capital leases with a weighted average interest rate of 7.11% per annum.

•

An aggregate principal amount of $1 million of variable rate notes with a weighted average interest rate of 6.42% due at various dates ranging from 2008 through 2031.

At December 31, 2007, CONSOL Energy had $248 million of borrowings and approximately $259 million of letters of credit outstanding under the revolving credit facility.

At December 31, 2007, CNX Gas, an 81.7 % subsidiary, had no aggregate principal amounts of borrowings and approximately $15 million of letters of credit outstanding under its revolving credit facility.

Stockholders’ Equity and Dividends

CONSOL Energy had stockholders’ equity of $1,214 million at December 31, 2007 and $1,066 million at December 31, 2006. The increase was primarily attributable to net income for the year ended December 31, 2007, the tax benefit from stock-based compensation and the issuance of treasury stock. This increase was partially offset by repurchases under the CONSOL Energy share repurchase program, payment of dividends during the year, changes to the actuarial long-term liability gains and losses, and the cumulative effect of adopting FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement 109” (FIN 48). See Consolidated Statements of Stockholders’ Equity in the Audited Consolidated Financial Statements in Item 8 of this Form 10-K.

In December 2005, CONSOL Energy announced a share repurchase program of up to $300 million of the company’s common stock during a 24-month period beginning January 1, 2006 and ending December 31, 2007. In 2007, CONSOL Energy repurchased 2,087,800 shares at an average price of $38.14. As of December 31, 2007, we have repurchased a total of 5,602,600 shares at an average price of $34.98 under this program. The program has not been renewed.

In August 2007, CONSOL Energy’s Board of Directors amended the company’s dividend policy, allowing the company to increase its dividend from $0.28 per share to $0.40 per share on an annualized basis, an increase of 43 percent.

Dividend information for the current year to date is as follows:


Declaration Date	Amount Per Share	Record Date	Payment Date
January 30, 2008	$0.10	February 7, 2008	February 22, 2008
October 26, 2007	$0.10	November 7, 2007	November 23, 2007
July 27, 2007	$0.07	August 9, 2007	August 27, 2007
April 27, 2007	$0.07	May 8, 2007	May 29, 2007
January 26, 2007	$0.07	February 8, 2007	February 23, 2007

The declaration and payment of dividends by CONSOL Energy is subject to the discretion of CONSOL Energy’s Board of Directors, and no assurance can be given that CONSOL Energy will pay dividends in the future. CONSOL Energy’s Board of Directors determines whether dividends will be paid quarterly. The determination to pay dividends will depend upon, among other things, general business conditions, CONSOL Energy’s financial results, contractual and legal restrictions regarding the payment of dividends by CONSOL Energy, planned investments by CONSOL Energy and such other factors as the Board of Directors deems relevant. Our credit facility limits our ability to pay dividends when our leverage ratio covenant is 2.50 to 1.00 or more and our availability is less than $100 million. The leverage ratio was 1.50 to 1.00 and our availability was approximately $494 million at December 31, 2007. The credit facility does not permit dividend payments in the event of default. There were no defaults in the year ended December 31, 2007.

Off-Balance Sheet Transactions

CONSOL Energy does not maintain any off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that are reasonably likely to have a material current or future effect on CONSOL Energy’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources which are not disclosed in the Notes to the Audited Consolidated Financial Statements.

Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141(R), “Business Combinations” (SFAS 141R), and Statement of Financial Accounting Standards No. 160, “Accounting and Reporting of Noncontrolling Interest in Consolidated Financial Statements, an amendment of ARB No. 51” (SFAS 160). SFAS 141R and SFAS 160 will significantly change the accounting for and reporting of business combination transactions and noncontrolling (minority) interests in consolidated financial statements. SFAS 141R retains the fundamental requirements in Statement 141 “Business Combinations” while providing additional definitions, such as the definition of the acquirer in a purchase and improvements in the application of how the acquisition method is applied. SFAS 160 will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests, and classified as a component of equity. These Statements become simultaneously effective January 1, 2009. Early adoption is not permitted. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157, “Fair Value Measurements.” We do not expect this guidance to have a significant impact on CONSOL Energy; however, management is currently assessing the impact of adopting SFAS No. 159.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS 157), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and requires additional disclosures about fair value measurements. SFAS 157 aims to improve the consistency and comparability of fair value measurements by creating a single definition of fair value. The Statement emphasizes that fair value is not entity-specific, but instead is a market-based measurement of an asset or liability. SFAS 157 upholds the requirements of previously issued pronouncements concerning fair value measurements and expands the required disclosures. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007; however, earlier application is permitted provided the reporting entity has not yet issued financial statements for that fiscal year. The FASB deferred the effective date of SFAS 157 for one year for non financial assets and non financial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. We do not expect this guidance to have a significant impact on CONSOL Energy; however, management is currently assessing the impact of adopting SFAS No. 157.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (SFAS 158), which requires the recognition of the funded status of defined benefit postretirement plans and related disclosures. SFAS 158 was issued to address concerns that prior standards on employers’ accounting for defined benefit postretirement plans failed to communicate the funded status of those plans in a complete and understandable way and to require an employer to recognize completely in earnings or other comprehensive income the financial impact of certain events affecting the plan’s funded status when those events occurred. This Statement was effective for financial statements issued for fiscal years ending after December 15, 2006. Additionally, SFAS 158 requires an employer to measure the funded status of each of its plans as of the date of its year-end statement of financial position. This provision becomes effective for CONSOL Energy for its December 31, 2008 year-end. The funded status of CONSOL Energy’s pension and other postretirement benefit plans are currently measured as of September 30. See Note 16, Note 17 and Note 18 to the Consolidated Financial Statements for additional discussion of SFAS 158.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk.

In addition to the risks inherent in operations, CONSOL Energy is exposed to financial, market, political and economic risks. The following discussion provides additional detail regarding CONSOL Energy’s exposure to the risks of changing natural gas prices, interest rates and foreign exchange rates.

CONSOL Energy is exposed to market price risk in the normal course of selling natural gas production and to a lesser extent in the sale of coal. CONSOL sells coal under both short-term and long-term contracts with fixed price and/or indexed price contracts that reflect market value. CONSOL Energy uses fixed price contracts and derivative commodity instruments that qualify as cash flow hedges under Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” to minimize exposure to market price volatility in the sale of natural gas. Our risk management policy strictly prohibits the use of derivatives for speculative purposes.

CONSOL Energy has established risk management policies and procedures to strengthen the internal control environment of the marketing of commodities produced from our asset base. All of the derivative instruments are held for purposes other than trading. They are used primarily to mitigate uncertainty and volatility and cover

underlying exposures. CONSOL Energy’s market risk strategy incorporates fundamental risk management tools to assess market price risk and establish a framework in which management can maintain a portfolio of transactions within pre-defined risk parameters.

CONSOL Energy believes that the use of derivative instruments along with the risk assessment procedures and internal controls does not expose CONSOL Energy to material risk. The use of derivative instruments could materially affect CONSOL Energy’s results of operations depending on market prices. However, we believe that use of these instruments will not have a material adverse effect on our financial position or liquidity.

For a summary of accounting policies related to derivative instruments, see Note 1 to the Audited Consolidated Financial Statements.

Sensitivity analyses of the incremental effects on pre-tax earnings for the year ended December 31, 2007 of a hypothetical 10% and 25% change in natural gas prices for open derivative instruments as of December 31, 2007 are provided in the following table:

CONSOL Energy remains at risk for possible changes in the market value of these derivative instruments; however, such risk should be mitigated by price changes in the underlying hedged item. The effect of this offset is not reflected in the sensitivity analyses. CONSOL Energy entered into derivative instruments to convert the market prices related to portions of the 2008 through 2009 anticipated sales of natural gas to fixed prices. The sensitivity analysis reflects an inverse relationship between increases in commodity prices and a benefit to earnings. When commodity prices increase, pretax income decreases. The fair value of these contracts was a net gain of $5.9 million (net of $3.7 million deferred tax). We continually evaluate the portfolio of derivative commodity instruments and adjust the strategy to anticipated market conditions and risks accordingly.

CONSOL Energy is exposed to credit risk in the event of nonperformance by counterparties. The credit worthiness of counterparties is subject to continuing review.

CONSOL Energy’s interest expense is sensitive to changes in the general level of interest rates in the United States. At December 31, 2007, CONSOL Energy had outstanding $496 million aggregate principal amount of debt under fixed-rate instruments and $11 million aggregate principal amount of debt under variable-rate instruments. CONSOL Energy’s primary exposure to market risk for changes in interest rates relates to our revolving credit facility, under which there was $248 million of borrowings outstanding at December 31, 2007. During the year ended December 31, 2007, a 100 basis-point increase in the average rate for CONSOL Energy’s revolving credit facility would have decreased net income by approximately $0.8 million. The fair value of CONSOL Energy’s financial instruments is set forth in Note 24 and Note 25 of the Notes to the Audited Consolidated Financial Statements.

Almost all of CONSOL Energy’s transactions are denominated in U.S. dollars, and, as a result, we do not have material exposure to currency exchange-rate risks.

Item 8.

Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


		Page
Report of Independent Registered Public Accounting Firm		96
Consolidated Statements of Income for the Years Ended December 31, 2007, 2006 and 2005		97
Consolidated Balance Sheets at December 31, 2007 and 2006		98
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2007, 2006 and 2005		99
Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005		100
Notes to Audited Consolidated Financial Statements		101

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of CONSOL Energy Inc.,

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, stockholders’ equity and cash flows present fairly, in all material respects, the financial position of CONSOL Energy Inc. and its subsidiaries (CONSOL Energy) at December 31, 2007 and December 31, 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule included in Item 15(a)(2), presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, CONSOL Energy maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). CONSOL Energy’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9a. Our responsibility is to express opinions on these financial statements, on the financial statement schedule and on CONSOL Energy’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 1 to the consolidated financial statements, CONSOL Energy changed the manner in which it accounts for stock-based compensation; defined benefit pension, other postretirement benefit plans, and other employee benefits; and purchases and sales of gas with the same counterparty in 2006.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Pittsburgh, Pennsylvania

February 18, 2008

CONSOL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)


	For the Years Ended December 31,
	2007			2006			2005
Sales—Outside	$	3,324,346		$	3,286,522		$	2,930,933
Sales—Purchased Gas		7,628			43,973			275,148
Sales—Gas Royalty Interests		46,586			51,054			45,351
Sales—Related Party (Note 3)		—			—			4,749
Freight—Outside		186,909			162,761			119,343
Freight—Related Party (Note 3)		—			—			468
Other Income (Note 4)		196,728			170,861			107,131
Gain on Sale of 18.5% Interest in CNX Gas		—			—			327,326

Total Revenue and Other Income		3,762,197			3,715,171			3,810,449
Costs of Goods Sold and Other Operating Charges (exclusive of depreciation, depletion and amortization shown below)		2,351,507			2,249,776			2,122,259
Purchased Gas Costs		7,162			44,843			278,720
Gas Royalty Interests Costs		39,921			41,879			36,501
Freight Expense		186,909			162,761			119,811
Selling, General and Administrative Expenses		108,664			91,150			80,700
Depreciation, Depletion and Amortization		324,715			296,237			261,851
Interest Expense (Note 5)		30,851			25,066			27,317
Taxes Other Than Income (Note 6)		283,511			252,539			228,606

Total Costs		3,333,240			3,164,251			3,155,765
Earnings Before Income Taxes and Minority Interest		428,957			550,920			654,684
Income Taxes (Note 7)		136,137			112,430			64,339

Earnings Before Minority Interest		292,820			438,490			590,345
Minority Interest		(25,038	)		(29,608	)		(9,484	)

Net Income	$	267,782		$	408,882		$	580,861

Earnings Per Share (Note 1):
Basic	$	1.47		$	2.23		$	3.17

Dilutive	$	1.45		$	2.20		$	3.13

Weighted Average Number of Common Shares Outstanding (Note 1):
Basic		182,050,627			183,354,732			183,489,908

Dilutive		184,149,751			185,638,106			185,534,980

Dividends per Share	$	0.31		$	0.28		$	0.28

The accompanying notes are an integral part of these consolidated financial statements.

CONSOL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)


	December 31, 2007			December 31, 2006
ASSETS
Current Assets:
Cash and Cash Equivalents	$	41,651		$	223,883
Accounts and Notes Receivable:
Trade		180,545			303,175
Other Receivables		69,771			51,890
Inventories (Note 9)		163,193			149,307
Recoverable Income Taxes		19,090			1,278
Deferred Income Taxes (Note 7)		130,820			117,231
Prepaid Expenses		78,085			67,732

Total Current Assets		683,155			914,496
Property, Plant and Equipment (Note 11):
Property, Plant and Equipment		8,945,312			7,849,936
Less—Accumulated Depreciation, Depletion and Amortization		3,980,270			3,809,649

Total Property, Plant and Equipment—Net		4,965,042			4,040,287
Other Assets:
Deferred Income Taxes (Note 7)		374,811			507,996
Investment in Affiliates		94,866			84,219
Other		90,216			116,334

Total Other Assets		559,893			708,549

TOTAL ASSETS	$	6,208,090		$	5,663,332

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	238,312		$	225,060
Short-Term Notes Payable (Note 12)		247,500			—
Current Portion of Long-Term Debt (Note 14 and Note 15)		18,283			59,518
Other Accrued Liabilities (Note 13)		512,302			455,546

Total Current Liabilities		1,016,397			740,124
Long-Term Debt:
Long-Term Debt (Note 14)		398,077			391,983
Capital Lease Obligations (Note 15)		90,848			100,762

Total Long Term Debt		488,925			492,745
Deferred Credits and Other Liabilities:
Postretirement Benefits Other Than Pensions (Note 16)		2,336,809			2,252,115
Pneumoconiosis Benefits (Note 17)		171,896			184,424
Mine Closing		399,633			389,896
Workers’ Compensation (Note 17)		118,356			121,337
Deferred Revenue		3,162			13,106
Salary Retirement (Note 16)		67,392			113,944
Reclamation		34,317			26,461
Other		193,666			127,370

Total Deferred Credits and Other Liabilities		3,325,231			3,228,653
Minority Interest		163,118			135,659

Total Liabilities and Minority Interest		4,993,671			4,597,181

Stockholders’ Equity:
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 185,126,526 Issued and 182,291,623 Outstanding at December 31, 2007; 185,126,526 Issued and 182,654,629 Outstanding at December 31, 2006		1,851			1,851
Capital in Excess of Par Value		966,544			921,881
Preferred Stock, 15,000,000 Shares Authorized; None Issued and Outstanding		—			—
Retained Earnings		766,536			600,541
Accumulated Other Comprehensive Loss (Note 20)		(419,284	)		(375,717	)
Common Stock in Treasury, at Cost—2,834,903 shares at December 31, 2007 and 2,471,897 Shares at December 31, 2006		(101,228	)		(82,405	)

Total Stockholders’ Equity		1,214,419			1,066,151

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6,208,090		$	5,663,332

The accompanying notes are an integral part of these consolidated financial statements.

CONSOL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Dollars in thousands, except per share data)


	Common Stock		Capital in Excess of Par Value			Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Unearned Compensation on Restricted Stock Units			Common Stock in Treasury			Total Stockholders’ Equity
Balance at December 31, 2004	$	1,838	$	845,719		$	(277,406	)	$	(89,193	)	$	(4,883	)	$	(7,054	)	$	469,021
Net Income		—		—			580,861			—			—			—			580,861
Minimum Pension Liability (Net of $4,301 tax)		—		—			—			6,754			—			—			6,754
Treasury Rate Lock (Net of $53 tax)		—		—			—			(80	)		—			—			(80	)
Minority Interest in Gas		—		—			—			6,432			—			—			6,432
Gas Cash Flow Hedge (Net of $18,664 tax)		—		—			—			(29,075	)		—			—			(29,075	)

Comprehensive Income (Loss)		—		—			580,861			(15,969	)		—			—			564,892
Stock Options Exercised		12		32,084			—			—			—			7,054			39,150
Issuance of Restricted Stock under the Equity Incentive Plan		—		4,270			—			—			(4,270	)		—			—
Dividends ($0.28 per Share)		—		25			(51,346	)		—			—			—			(51,321	)
Stock-Based Compensation from Accelerated Vesting		—		735			—			—			—			—			735
Common Stock Issued		—		225			—			—			—			—			225
Dividend Equivalents on Restricted Stock Units		—		276			—			—			(276	)		—			—
Amortization of Restricted Stock Unit Grants		—		(18	)		—			—			2,672			—			2,654

Balance at December 31, 2005		1,850		883,316			252,109			(105,162	)		(6,757	)		—			1,025,356
Net Income		—		—			408,882			—			—			—			408,882
Minimum Pension Liability (Net of $6,614 tax)		—		—			—			10,390			—			—			10,390
Treasury Rate Lock (Net of $53 Tax)		—		—			—			(81	)		—			—			(81	)
Minority Interest in Other Comprehensive Income and Stock-Based Compensation of Gas		—		(1,996	)		—			(6,877	)		—			—			(8,873	)
Gas Cash Flow Hedge (Net of ($23,860) tax)		—		—			—			36,382			—			—			36,382

Comprehensive Income (Loss)		—		(1,996	)		408,882			39,814			—			—			446,700
Adjustment to Apply SFAS 158, (Net of $156,100 tax), to Defined Benefit Postretirement Plans		—		—			—			(310,369	)		—			—			(310,369	)
Stock Options Exercised		1		1,361			—			—			—			—			1,362
Issuance of Treasury Stock		—		(11,703	)		(9,034	)		—			—			34,045			13,308
Dividends ($0.28 per Share)		—		—			(51,416	)		—			—			—			(51,416	)
Tax Benefit from Stock-Based Compensation		—		38,545			—			—			—			—			38,545
Purchases of Treasury Stock		—		—			—			—			—			(116,450	)		(116,450	)
Amortization of Stock-Based Compensation Awards		—		19,115			—			—			—			—			19,115
Elimination of Unearned Compensation on Restricted Stock Units		—		(6,757	)		—			—			6,757			—			—

Balance at December 31, 2006		1,851		921,881			600,541			(375,717	)		—			(82,405	)		1,066,151
Net Income		—		—			267,782						—			—			267,782
Treasury Rate Lock (Net of $52 Tax)		—		—			—			(81	)		—			—			(81	)
Minority Interest in Other Comprehensive Income and Stock-Based Compensation of Gas		—		—			—			(691	)		—			—			(691	)
Gas Cash Flow Hedge (Net of ($2,146) tax)		—		—			—			4,214			—			—			4,214
FAS 158 Long-Term Liability Adjustments		—		—			—			(47,009	)		—			—			(47,009	)

Comprehensive Income (Loss)		—		—			267,782			(43,567	)		—			—			224,215
Cumulative Effect of FASB Interpretation No. 48 Adoption		—		—			(3,202	)		—			—			—			(3,202	)
Issuance of Treasury Stock		—		—			(42,110	)		—			—			61,334			19,224
Purchases of Treasury Stock		—		—			—			—			—			(80,157	)		(80,157	)
Tax Benefit from Stock-Based Compensation		—		23,682			—			—			—			—			23,682
Amortization of Stock-Based Compensation Awards		—		20,981			—			—			—			—			20,981
Dividends ($0.31 per share)		—		—			(56,475	)		—			—			—			(56,475	)

Balance at December 31, 2007	$	1,851	$	966,544		$	766,536		$	(419,284	)	$	—		$	(101,228	)	$	1,214,419

The accompanying notes are an integral part of these consolidated financial statements.

CONSOL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands, except per share data)


	For the Years Ended December 31,
	2007			2006			2005
Cash Flows from Operating Activities:
Net Income	$	267,782		$	408,882		$	580,861
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:
Depreciation, Depletion and Amortization		324,715			296,237			261,851
Stock-based Compensation		24,243			22,841			3,596
Gain on Sale of Assets		(112,389	)		(10,417	)		(15,095	)
Gain on Sale of 18.5% Interest in Gas Segment		—			—			(327,326	)
Change in Minority Interest		25,038			29,608			9,484
Amortization of Mineral Leases		4,519			3,773			4,483
Deferred Income Taxes		59,555			19,041			(4,644	)
Equity in Earnings of Affiliates		(6,551	)		(1,201	)		(2,850	)
Changes in Operating Assets:
Accounts Receivable Securitization		125,400			—			(125,000	)
Accounts and Notes Receivable		14,074			(52,898	)		(31,900	)
Inventories		13,448			(7,427	)		(13,361	)
Prepaid Expenses		(9,145	)		(9,011	)		(16,890	)
Changes in Other Assets		40,164			19,020			(6,525	)
Changes in Operating Liabilities:
Accounts Payable		(2,435	)		(4,769	)		22,725
Other Operating Liabilities		(30,978	)		(115,967	)		60,586
Changes in Other Liabilities		(54,924	)		59,604			4,567
Other		1,517			7,231			4,524

Net Cash Provided by Operating Activities		684,033			664,547			409,086

Cash Flows from Investing Activities:
Capital Expenditures		(743,114	)		(690,546	)		(532,796	)
Acquisition of AMVEST		(296,724	)		—			—
Proceeds from Sale of Assets		84,791			59,963			34,220
Proceeds from Sale of 18.5% Interest in Gas Segment		—			—			420,167
Purchase of Stock in Subsidiary		(10,000	)		—			—
Net Investment in Equity Affiliates		(7,057	)		(30,963	)		3,996

Net Cash Used in Investing Activities		(972,104	)		(661,546	)		(74,413	)

Cash Flows from Financing Activities:
Payments on Long-Term Debt		(45,000	)		—			—
Proceeds (Payments) on Short-Term Debt		247,500			—			(1,700	)
Payments on Miscellaneous Borrowings		(2,935	)		(5,107	)		(584	)
Proceeds from Long-Term Debt		—			—			14,000
Tax Benefit from Stock-Based Compensation		23,682			38,545			—
Dividends Paid		(56,475	)		(51,416	)		(51,321	)
Issuance of Treasury Stock		19,224			13,308			—
Purchases of Treasury Stock		(80,157	)		(116,450	)		—
Stock Options Exercised		—			1,362			39,150

Net Cash Provided by (Used In) Financing Activities		105,839			(119,758	)		(455	)
Net (Decrease) Increase in Cash and Cash Equivalents		(182,232	)		(116,757	)		334,218
Cash and Cash Equivalents at Beginning of Period		223,883			340,640			6,422

Cash and Cash Equivalents at End of Period	$	41,651		$	223,883		$	340,640

The accompanying notes are an integral part of these consolidated financial statements.

See Note 22—Supplemental Cash Flow Information

100

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Note 1—Significant Accounting Policies:

A summary of the significant accounting policies of CONSOL Energy Inc. and subsidiaries (CONSOL Energy) is presented below. These, together with the other notes that follow, are an integral part of the consolidated financial statements.

Basis of Presentation:

On May 4, 2006, CONSOL Energy’s Board of Directors declared a two-for-one stock split of the common stock payable on or about May 31, 2006 to shareholders of record on May 15, 2006. The stock split was effected in the form of a stock dividend. This stock split resulted in the issuance of approximately 92.5 million additional shares of common stock and was accounted for by the transfer of approximately $925 from capital in excess of par value to common stock. The stock split resulted in additional shares available for awards under the CONSOL Energy Inc. Equity Incentive Plan. Earnings per share and dividends paid per share amounts on the face of the Consolidated Statements of Income are reflected on a post-split basis. Common stock, capital in excess of par and dividends per share on the Consolidated Statement of Stockholders’ Equity are reflected on a post-split basis. Weighted average number of common shares, earning per share and dividends per share on the Consolidated Statements of Income are also reflected on a post-split basis.

Basis of Consolidation:

The consolidated financial statements include the accounts of majority-owned and controlled subsidiaries. The accounts of variable interest entities (VIEs) as defined by the Financial Accounting Standards Board’s (FASB) Interpretation No. 46 (FIN 46) and related interpretations, where CONSOL Energy is the primary beneficiary, are included in the consolidated financial statements. Investments in business entities in which CONSOL Energy does not have control, but has the ability to exercise significant influence over the operating and financial policies, are accounted for under the equity method. All significant intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and various disclosures. Actual results could differ from those estimates. The most significant estimates included in the preparation of the financial statements are related to other postretirement benefits, coal workers’ pneumoconiosis, workers’ compensation, salary retirement benefits, stock-based compensation, reclamation and mine closure liabilities, deferred income tax assets and liabilities, contingencies and coal and gas reserve values.

Cash and Cash Equivalents:

Cash and cash equivalents include cash on hand and in banks as well as all highly liquid short-term securities with original maturities of three months or less.

Trade Accounts Receivable:

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. CONSOL Energy reserves for specific accounts receivable when it is probable that all or a part of an outstanding balance will not be collected, such as customer bankruptcies. CONSOL Energy regularly reviews collectibility and establishes or

101

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

adjusts the allowance as necessary using the specific identification method. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Reserves for uncollectible amounts were not material in the periods presented.

Inventories:

Inventories are stated at the lower of cost or market. The cost of coal inventories is determined by the first-in, first-out (FIFO) method. Coal inventory costs include labor, supplies, equipment costs, operating overhead and other related costs. The cost of merchandise for resale is determined by the last-in, first-out (LIFO) method and includes industrial maintenance, repair and operating supplies for sale to third parties.

The cost of supplies inventory is determined by the average cost method and includes operating and maintenance supplies to be used in our mining operations.

Property, Plant and Equipment:

Property, plant and equipment is carried at cost. Expenditures which extend the useful lives of existing plant and equipment are capitalized. Interest costs applicable to major asset additions are capitalized during the construction period. Costs of additional mine facilities required to maintain production after a mine reaches the production stage, generally referred to as “receding face costs,” are expensed as incurred; however, the costs of additional airshafts and new portals are capitalized. Planned major maintenance costs which do not extend the useful lives of existing plant and equipment is expensed as incurred.

Coal exploration costs are expensed as incurred. Coal exploration costs include those incurred to ascertain existence, location, extent or quality of ore or minerals before beginning the development stage of the mine.

Costs of developing new underground mines and certain underground expansion projects are capitalized. Underground development costs, which are costs incurred to make the mineral physically accessible, include costs to prepare property for shafts, driving main entries for ventilation, haulage, personnel, construction of airshafts, roof protection and other facilities. Costs of developing the first pit within a permitted area of a surface mine are capitalized. A surface mine is defined as the permitted mining area which includes various adjacent pits that share common infrastructure, processing equipment and a common ore body. Surface mine development costs include construction costs for entry roads, drilling, blasting and removal of overburden in developing the first cut for mountain stripping or box cuts for surface stripping. Stripping costs incurred during the production phase of a mine are expensed as incurred.

Advance mining royalties are advance payments made to lessors under terms of mineral lease agreements that are recoupable against future production using the units-of-production method. Depletion of leased coal interests is computed using the units-of-production method over proven and probable coal reserves. Advance mining royalties and leased coal interests are evaluated periodically for impairment issues or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

When properties are retired or otherwise disposed, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposition is recognized in other income.

Gas well activity is accounted for under the successful efforts method of accounting. Costs of property acquisitions, successful exploratory wells, development wells and related support equipment and facilities are capitalized. Costs of unsuccessful exploratory wells are expensed when such wells are determined to be

102

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

non-productive, or if the determination cannot be made after finding sufficient quantities of reserves to continue evaluating the viability of the project. The costs of producing properties and mineral interests are amortized using the ratio of current production to the estimated aggregate proved gas reserves. Wells and related equipment and intangible drilling costs are amortized on a units-of-production method using the ratio of current production to the estimated aggregate proved developed gas reserves. Units-of-production amortization rates are revised whenever there is an indication of the need for revision, but at least once a year; those revisions are accounted for prospectively as changes in accounting estimates.

Depreciation of plant and equipment is calculated on the straight-line method over their estimated useful lives or lease terms generally as follows:


		Years
Building and improvements		10 to 45
Machinery and equipment		3 to 25
Leasehold improvements		Life of Lease

Coal reserves are amortized using the units-of-production method over all estimated proven and probable reserve tons assigned to the mine. Proven and probable coal reserves exclude non-recoverable coal reserves and anticipated processing losses. Rates are updated when revisions to coal reserve estimates are made. Coal reserve estimates are reviewed when events and circumstances indicate a reserve change is needed, or at a minimum once a year. Amortization of coal interests begins when the coal reserve is produced. At an underground mine, a ton is considered produced once it reaches the surface area of the mine. Any material income effect from changes in estimates is disclosed in the period the change occurs.

Airshafts and capitalized mine development associated with a coal reserve are amortized on a units-of-production basis as the coal is produced so that each ton of coal is assigned a portion of the unamortized costs. We employ this method to match costs with the related revenues realized in a particular period. Rates are updated when revisions to coal reserve estimates are made. Coal reserve estimates are reviewed when information becomes available that indicates a reserve change is needed, or at a minimum once a year. Any material income effect from changes in estimates is disclosed in the period the change occurs. Amortization of development cost begins when the development phase is complete and the production phase begins. At an underground mine, the end of the development phase and the beginning of the production phase takes place when construction of the mine for economic extraction is substantially complete. Coal extracted during the development phase is incidental to the mine’s production capacity and is not considered to shift the mine into the production phase.

Costs for purchased and internally developed software are expensed until it has been determined that the software will result in probable future economic benefits and management has committed to funding the project. Thereafter, all direct costs of materials and services incurred in developing or obtaining software, including certain payroll and benefit costs of employees associated with the project, are capitalized and amortized using the straight-line method over the estimated useful life which does not exceed 7 years.

Impairment of Long-lived Assets:

Impairment of long-lived assets is recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying value. The carrying value of the assets is then reduced to their estimated fair value which is usually measured based on an estimate of future discounted cash flows. Impairment of equity investments is recorded when indicators of impairment are

103

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

present and the estimated fair value of the investment is less than the assets’ carrying value. There were no impairment losses during the periods presented in the Consolidated Financial Statements.

Income Taxes:

The asset and liability method is used to account for income taxes. Under this approach, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been recognized in CONSOL Energy’s financial statements or tax returns. The provision for income taxes represents income taxes paid or payable for the current year and the change in deferred taxes, excluding the effects of acquisitions during the year. Deferred taxes result from differences between the financial and tax bases of CONSOL Energy’s assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a deferred tax benefit will not be realized.

CONSOL Energy adopted the provisions of FASB Interpretation No. 48 (FIN 48),”Accounting for Uncertainty in Income Taxes,” on January 1, 2007. CONSOL Energy evaluates all tax positions taken on the state and federal tax filings to determine if the position is more likely than not to be sustained upon examination. For positions that meet the more likely than not to be sustained criteria, an evaluation to determine the largest amount of benefit, determined on a cumulative probability basis that is more likely than not to be realized upon ultimate settlement, is determined. A previously recognized tax position is derecognized when it is subsequently determined that a tax position no longer meets the more likely than not threshold to be sustained. The evaluation of the sustainability of a tax position and the probable amount that is more likely that not is based on judgment, historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of these estimates, that are not readily apparent from other sources, form the basis for recognizing a FIN 48 liability. Actual results could differ from those estimates upon subsequent resolution of identified matters.

Postretirement Benefits Other Than Pensions:

Postretirement benefits other than pensions, except for those established pursuant to the Coal Industry Retiree Health Benefit Act of 1992 (the Health Benefit Act), are accounted for in accordance with Statement of Financial Accounting Standards (SFAS) No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions,” and SFAS No. 112, “Employers’ Accounting for Postemployment Benefits” as amended by SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Post Retirement Plans an amendment of FASB Statements No. 87, 88, 106, and 132 (R),” which requires employers to accrue the cost of such retirement benefits for the employees’ active service periods. Such liabilities are determined on an actuarial basis and CONSOL Energy is primarily self-insured for these benefits. Postretirement benefit obligations established by the Health Benefit Act are treated as a multi-employer plan which requires expense to be recorded for the associated obligations as payments are made. This treatment is in accordance with Emerging Issues Task Force (EITF) No. 92-13, “Accounting for Estimated Payments in Connection with the Coal Industry Retiree Health Benefit Act of 1992.”

Pneumoconiosis Benefits and Workers’ Compensation:

CONSOL Energy is required by federal and state statutes to provide benefits to certain current and former totally disabled employees or their dependents for awards related to coal workers’ pneumoconiosis. CONSOL Energy is also required by various state statutes to provide workers’ compensation benefits for employees who sustain employment related physical injuries or some types of occupational disease. Workers’ compensation

104

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

benefits include compensation for their disability, medical costs, and on some occasions, the cost of rehabilitation. CONSOL Energy is primarily self-insured for these benefits. Provisions for estimated benefits are determined on an actuarial basis.

Mine Closing, Reclamation and Gas Well Closing Costs:

CONSOL Energy accrues for mine closing costs, perpetual care costs and dismantling and removing costs of gas related facilities using the accounting treatment prescribed by Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations” (SFAS No. 143). This statement requires the fair value of an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The present value of the estimated asset retirement costs is capitalized as part of the carrying amount of the long-lived asset. Depreciation of the capitalized asset retirement cost is generally determined on a units-of-production basis. Accretion of the asset retirement obligation is recognized over time and generally will escalate over the life of the producing asset, typically as production declines. Asset retirement obligations primarily relate to the closure of mines and gas wells, and the reclamation of land upon exhaustion of coal and gas reserves.

Accrued mine closing costs, perpetual care costs, reclamation and costs of dismantling and removing gas related facilities are regularly reviewed by management and are revised for changes in future estimated costs and regulatory requirements.

Deferred Revenue:

Deferred revenues represent funding received upon the negotiation of long-term contracts. The deferred revenues will be recognized as sales revenues in future periods by amortization on a rate per ton shipped over the life of the respective contract. The rates are revised whenever there is an indication of significant changes, but at least once a year. The revisions are accounted for prospectively as changes in accounting estimates.

Retirement Plans:

CONSOL Energy has non-contributory defined benefit retirement plans covering substantially all employees not covered by multi-employer retirement plans. Effective January 1, 2006, employees hired between August 1, 2004 and December 31, 2005 that were not previously eligible to participate in the plans began accruing service. Also, as of January 1, 2006, an amendment was made to the salaried pension plan related to lump sum distributions. As of this date, lump sum benefits have been frozen and prospectively the lump sum option has been eliminated. CONSOL Energy’s policy is to annually fund the defined benefit pension plans at or above the minimum required by law.

Effective January 1, 2007, employees hired by CNX Gas, an 81.7% owned subsidiary, will not be eligible to participate in CNX Gas’ non-contributory defined benefit retirement plan. In lieu of participation in the non-contributory defined benefit plan, these employees began receiving an additional 3% company contribution into their defined contribution plan. CNX Gas employees who were hired prior to December 31, 2005, or who were employees of CONSOL Energy prior to this date, were given a one time opportunity to elect to remain in the defined benefit plan or opt to freeze their service accruals and participate in the additional 3% company contribution into their defined contribution plan. All employees hired on or after January 1, 2006, but on or before December 31, 2006, had their current non-contributory defined benefit frozen and began receiving the additional 3% company contribution into their defined contribution plan effective January 1, 2007. CNX Gas intends to freeze all defined benefit accruals as of December 31, 2016 for CNX Gas employees that elected to remain in the defined benefit plan.

105

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Revenue Recognition:

Revenues are recognized when title passes to the customers. For domestic coal sales, this generally occurs when coal is loaded at mine or offsite storage locations. For export coal sales, this generally occurs when coal is loaded onto marine vessels at terminal locations. For gas sales, this occurs at the contractual point of delivery. For industrial supplies and equipment sales, this generally occurs when the products are delivered. For terminal, river and dock, land, research and development, and coal waste disposal services, revenue is recognized generally as the service is provided to the customer.

CNX Gas has an operational gas-balancing agreement with Columbia interstate pipeline. The imbalance agreement is managed internally using the sales method of accounting. The sales method recognizes revenue when the gas is taken and paid for by the purchaser.

CNX Gas sells gas to accommodate the delivery points of its customers. In general this gas is purchased at market price and re-sold on the same day at market price less a small transaction fee. Matching buy/sell gas transactions settled in cash which do not meet the requirements for netting under EITF No. 04-13, “Accounting for Purchases and Sales of Inventory with the Same Counter-party,” are recorded in both revenues and costs of revenues as separate sales and purchase transactions. CNX Gas also provides gathering services to third parties by way of buy/sell transactions. These revenues and expenses are recorded gross and recognized immediately in earnings.

CONSOL Energy also has royalty interests which is the portion of the mineral interest retained by the lessor. This interest entitles the royalty interest owner to a fractional amount of the production from the property, in kind or in value, less the applicable severance taxes.

Freight Revenue and Expenses:

Shipping and handling costs invoiced to coal customers and paid to third-party carriers are recorded as Freight Revenue and Freight Expense, respectively.

Royalty Recognition:

Royalty expenses for coal rights are included in Cost of Goods Sold and Other Operating Charges when the related revenue for the coal sale is recognized. Royalty expenses for gas rights are included in Gas Royalty Interest Costs when the related revenue for the gas sale is recognized. These royalty expenses are paid in cash in accordance with the terms of each agreement. Revenues for coal and gas sold related to production under royalty contracts, versus owned by CONSOL Energy, are recorded gross. The recognized revenues for these transactions are not net of related royalty fees.

Contingencies:

CONSOL Energy or our subsidiaries from time to time are subject to various lawsuits and claims with respect to such matters as personal injury, wrongful death, damage to property, exposure to hazardous substances, governmental regulations including environmental remediation, employment and contract disputes, and other claims and actions, arising out of the normal course of business. Liabilities are recorded when it is probable that obligations have been incurred and the amounts can be reasonably estimated. Estimates are developed through consultation with legal counsel involved in the defense and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. Environmental liabilities are not discounted or reduced by possible recoveries from third parties. Legal fees associated with defending these various lawsuits and claims are expensed when incurred.

106

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Treasury Stock:

On December 21, 2005, CONSOL Energy’s Board of Directors announced a share repurchase program of up to $300,000 of the company’s common stock during a 24-month period beginning January 1, 2006 and ending December 31, 2007. Shares of common stock repurchased by us are recorded at cost as treasury stock and result in a reduction of stockholders’ equity in our Consolidated Balance Sheets. From time to time, treasury shares may be reissued as part of our stock-based compensation programs. When shares are reissued, we use the weighted average cost method for determining cost. The difference between the cost of the shares and the issuance price is added to or deducted from Capital in Excess of Par Value.

For the years ended December 31, 2007 and 2006, we had cash expenditures under our repurchase program of $80,157 and $116,450, respectively, funded primarily by cash generated from operations. The total common shares repurchased for the years ended December 31, 2007 and 2006, were 2,087,800 and 3,514,800 at an average cost of $38.14 and $33.11 per share, respectively.

Stock-Based Compensation:

Effective January 1, 2006, CONSOL Energy adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment” (SFAS 123R), using the modified prospective transition method and therefore has not restated results for prior periods. Under this transition method, stock-based compensation expense for the year ended December 31, 2007 and 2006 includes compensation expense for all stock-based compensation awards granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, “Accounting for Stock-Based Compensation”(SFAS 123). Stock-based compensation expense for all stock-based compensation awards granted after January 1, 2006 is based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. CONSOL Energy recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is generally the option vesting term. Prior to the adoption of SFAS 123R, CONSOL Energy recognized stock-based compensation expense in accordance with Accounting Principles Board Opinion No. 25. “Accounting for Stock Issued to Employees,” (APB 25). In March 2005, the Securities and Exchange Commission (the SEC) issued Staff Accounting Bulletin No. 107 (SAB 107) regarding the SEC’s interpretation of SFAS 123R and the valuation of share-based payments for public companies. CONSOL Energy has applied the provisions of SAB 107 in its adoption of SFAS 123R. See Note 19 to the Audited Consolidated Financial Statements for a further discussion on stock-based compensation.

107

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Earnings per Share:

Basic earnings per share are computed by dividing net earnings by the weighted average shares outstanding during the reporting period. Dilutive earnings per share are computed similar to basic earnings per share except that the weighted average shares outstanding are increased to include additional shares from the assumed exercise of stock options, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options were exercised and that the proceeds from such exercises were used to acquire shares of common stock at the average market price during the reporting period. Upon the adoption of SFAS 123R, CONSOL Energy included the impact of the proforma deferred tax assets in determining potential windfalls and shortfalls for purposes of calculating assumed proceeds under the treasury stock method. Options to purchase 133,343 shares, 714,453 shares and 6,486 shares of common stock were outstanding at December 31, 2007, 2006 and 2005, respectively, but were not included in the computation of dilutive earnings per share because the options’ exercise prices were greater than the average market price of the common shares and, therefore, the effect would be anti-dilutive.


	For the Years Ended December 31,
	2007		2006		2005
Net income	$	267,782	$	408,882	$	580,861

Average shares of common stock outstanding:
Basic		182,050,627		183,354,732		183,489,908
Effect of stock-based compensation awards		2,099,124		2,283,374		2,045,072

Dilutive		184,149,751		185,638,106		185,534,980

Earnings per share:
Basic	$	1.47	$	2.23	$	3.17

Dilutive	$	1.45	$	2.20	$	3.13

Accounting for Derivative Instruments:

CONSOL Energy accounts for derivative instruments in accordance with Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” (SFAS No. 133) and its corresponding amendments under SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities an amendment of FASB Statement No. 133” (SFAS No. 133). SFAS No. 133 requires CONSOL Energy to measure every derivative instrument (including certain derivative instruments embedded in other contracts) at fair value and record them in the balance sheet as either an asset or liability. Changes in fair value of derivatives are recorded currently in earnings unless special hedge accounting criteria are met. For derivatives designated as cash flow hedges, the effective portions of changes in fair value of the derivative are reported in other comprehensive income. The ineffective portions of hedges are recognized in earnings in the current period.

CONSOL Energy formally assesses both at inception of the hedge and on an ongoing basis, whether each derivative is highly effective in offsetting changes in fair values or cash flows of the hedged item. If it is determined that a derivative is not highly effective as a hedge or if a derivative ceases to be a highly effective hedge, CONSOL Energy will discontinue hedge accounting prospectively.

108

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Recent Accounting Pronouncements:

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of SFAS 115”(SFAS 159). This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157, “Fair Value Measurements.” We do not expect this guidance to have a significant impact on CONSOL Energy; however management is currently assessing the impact of adopting SFAS 159.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS 157), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and requires additional disclosures about fair value measurements. SFAS 157 aims to improve the consistency and comparability of fair value measurements by creating a single definition of fair value. The Statement emphasizes that fair value is not entity-specific, but instead is a market-based measurement of an asset or liability. SFAS 157 upholds the requirements of previously issued pronouncements concerning fair value measurements and expands the required disclosures. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, however earlier application is permitted provided the reporting entity has not yet issued financial statements for that fiscal year. The FASB deferred the effective date of SFAS 157 for one year for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. We do not expect this guidance to have a significant impact on CONSOL Energy; however management is currently assessing the impact of adopting SFAS 157.

109

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

to measure the funded status of each of its plans as of the date of its year-end statement of financial position. This provision becomes effective for CONSOL Energy for its December 31, 2008 year-end. The funded status of CONSOL Energy’s pension and other postretirement benefit plans are currently measured as of September 30.

Reclassifications:

Certain amounts in prior periods have been reclassified to conform with the report classifications of the year ended December 31, 2007 with no effect on previously reported net income or stockholders’ equity.

Note 2—Acquisitions and Dispositions:

In December 2007, CONSOL Energy, through a subsidiary, completed a sale/lease-back of 35 river barges. Cash proceeds from the sale were $16,895, with our basis in the equipment being $16,951. Accordingly, a loss of $56 was recorded on the transaction. The lease has been accounted for as an operating lease. The lease term is fourteen years.

In October 2007, CONSOL Energy, through a subsidiary, acquired 100% of the outstanding shares in an oil and gas company for a cash payment of $12,385 which was principally allocated to property, plant and equipment. The acquired company is in the business of owning, operating and producing oil and gas wells and related pipelines. The acquired assets consisted of gas wells, equipment and connecting pipelines utilized in well operations. The acquisition was accounted for under the guidance of Statement of Financial Accounting Standards No. 141 (SFAS 141), “Business Combinations”.

On July 31, 2007, CONSOL Energy acquired 100% of the voting interest of AMVEST Corporation and certain subsidiaries and affiliates (AMVEST) for a cash payment, net of cash acquired, of $296,724 in a transaction accounted for under SFAS 141. The coal reserves acquired consist of approximately 160 million tons of high quality, low sulfur steam and high-volatile metallurgical coal. Also included in the acquisition were four coal preparation plants, several fleets of modern mining equipment and a common short-line railroad that connects the coal preparation plants to the CSX and Norfolk and Southern rail interchanges. The results of operations of the acquired entities are included in CONSOL Energy’s Consolidated Statements of Income as of August 1, 2007.

The AMVEST acquisition, when combined with CONSOL Energy’s adjacent coal reserves, creates a large contiguous block of coal reserves in the Central Appalachian region. Also, included in the acquisition was a highly-skilled workforce proficient in Central Appalachian surface mining. This workforce combined with CONSOL Energy’s underground mining expertise will allow us to build and transfer knowledge among operations to focus the best skill sets to development requirements of the various parts of this reserve block.

110

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The application of purchase accounting under SFAS 141 requires that the total purchase price be allocated to the fair value of assets acquired and liabilities assumed based on the fair values of assets and liabilities at acquisition date. The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition:


Assets
Current Assets:
Cash and Cash Equivalents	$	7,028
Accounts and Notes Receivable:
Trade		21,343
Other Receivables		5,149
Inventories		18,459
Prepaid Expenses		937

Total Current Assets		52,916
Property, Plant and Equipment:		480,147
Other Assets:
Other		310

Total Other Assets		310

Total Assets	$	533,373

Liabilities
Current Liabilities:
Accounts Payable	$	12,595
Accrued Income Taxes		43,060
Other Accrued Liabilities		22,841

Total Current Liabilities		78,496
Deferred Credits and Other Liabilities:
Deferred Income Taxes		120,442
Postretirement Benefits Other Than Pensions		2,130
Pneumoconiosis Benefits		8,055
Mine Closing		9,345
Workers’ Compensation		1,744
Reclamation		3,911
Other		5,485

Total Deferred Credits and Other Liabilities		151,112

Total Liabilities		229,608

Net Assets Acquired	$	303,765

111

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The unaudited pro forma results, assuming the acquisition had occurred at the beginning of each period present below are estimated to be:


	For the Year Ended December 31,
	2007		2006
Revenue	$	3,902,186	$	3,982,175

Earnings Before Taxes	$	444,409	$	583,102

Net Income	$	279,074	$	432,188

Basic Earnings Per Share	$	1.53	$	2.36

Dilutive Earnings Per Share	$	1.52	$	2.33

The pro forma results are not necessarily indicative of what actually would have occurred if the acquisition had been completed as of the beginning of each fiscal period presented, nor are they necessarily indicative of future consolidated results.

In July 2007, CONSOL Energy, through a subsidiary, completed the acquisition of Piping & Equipment, Inc. for a cash payment, net of cash acquired, of $16,914. This amount is included in capital expenditures in cash used in investing activities on the Consolidated Statements of Cash Flows. Piping & Equipment, Inc. is a pipe, valve and fittings supplier with eight locations in Florida, Alabama, Louisiana and Texas. The fair value of merchandise for resale acquired in this acquisition is $8,481 and is included in inventory on the Consolidated Balance Sheets. The pro forma results for this acquisition are not significant to CONSOL Energy’s financial results.

During the year ended December 31, 2007, CONSOL Energy purchased $10,000 of CNX Gas stock on the open market at an average price of $26.87 per share. The purchase of these 372,000 shares changed CONSOL Energy’s ownership percentage in CNX Gas from 81.5% to 81.7%.

In June 2007, CONSOL Energy, through a subsidiary, exchanged certain coal assets in Northern Appalachia with Peabody Energy for coalbed methane and gas rights. This transaction was accounted for as a non-monetary exchange under Statement of Financial Accounting Standards No. 153, “Exchanges of Non-Monetary Assets,” resulting in a pre-tax gain of $50,060.

In June 2007, CONSOL Energy, through a subsidiary, acquired certain coalbed methane and gas rights from Peabody Energy for a cash payment of $15,000 plus approximately $1,650 of various other acquisition costs.

In June 2007, CONSOL Energy, through a subsidiary, sold the rights to certain western Kentucky coal in the Illinois Basin to Alliance Resource Partners, L.P. for $53,309. This transaction resulted in a pre-tax gain of $49,868.

In December 2006, CONSOL Energy, through a subsidiary, completed a sale/lease-back transaction for its future headquarters property. Cash proceeds were $9,548 which did not result in a gain or loss on the sale. The initial lease term is twenty years and includes an option to renew the lease term for an additional five-year period and a subsequent four-and-one-half year lease term. The lease is accounted for as a capital lease during the construction period, in accordance with the guidance provided by the Emerging Issues Task Force (“EITF”) on Issue No. 97-10, “The Effect of Lessee Involvement in Asset Construction.” After construction, the lease will be

112

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

accounted for as an operating lease. Estimated monthly rental payments of $462 will be made for the period August 1, 2008 through July 31, 2010; $552 for the period August 1, 2010 through July 31, 2018; and $581 for the period August 1, 2018 through July 31, 2028.

In November 2006, CONSOL Energy, through a subsidiary, acquired a 50% interest in a specialty contracting company for a cash payment of $29,500. The specialty contracting company provides drilling services to the government, commercial, mining and public utility industries. The acquisition was accounted for under the equity method of accounting.

In March 2006, CONSOL Energy, through a subsidiary, completed a sale/lease-back of longwall equipment. Cash proceeds from the sale were $36,363 which was equal to our basis in the equipment. Accordingly, no gain or loss was recorded on the transaction. The lease has been accounted for as a capital lease. The lease term is five years.

In January 2006, CONSOL Energy, through a subsidiary, completed the acquisition of Mon River Towing and J.A.R. Barge Lines, LLC, from The Guttman Group for a cash payment of $24,750. The acquisition included 13 towboats and more than 350 barges with the capacity to transport 13 million tons of coal annually. Mon River Towing transports petroleum products, coal, limestone and other bulk commodities to various locations along the navigable rivers of Pennsylvania, Ohio, West Virginia and Kentucky. J.A.R. Barge Lines, LLC charters motor vessels and barges to other river transportation firms along the inland waterways.

On June 21, 2005, the Board of Directors of CONSOL Energy authorized the incorporation of CNX Gas Corporation (CNX Gas). On June 30, 2005 CNX Gas was incorporated and issued 100 shares of its $0.01 par value common stock to Consolidation Coal Company, a wholly-owned subsidiary of CONSOL Energy. CNX Gas was incorporated to conduct CONSOL Energy’s gas exploration and production activities. In August 2005, CONSOL Energy contributed or leased substantially all of the assets of its gas business, including all of CONSOL Energy’s rights to coalbed methane associated with 4.5 billion tons of coal reserves owned or controlled by CONSOL Energy as well as all of CONSOL Energy’s rights to conventional gas. In exchange for CONSOL Energy’s contribution of assets, CONSOL Energy received approximately 122.9 million shares of CNX Gas common stock. CNX Gas entered into various agreements with CONSOL Energy that define various operating and service relationships between the two companies. In August 2005, CNX Gas entered into an agreement to sell approximately 24.3 million shares in a private transaction and granted a 30-day option to purchase an additional 3.6 million shares. In August 2005, CNX Gas closed on the sale of all 27.9 million shares. The shares were sold to qualified institutional, foreign and accredited investors in a private transaction exempt from registration under Rule 144A, Regulation S and Regulation D. In August 2005, a Registration Statement on Form S-1 was filed with the SEC with respect to those shares. The registration statement was declared effective on January 18, 2006. The proceeds (approximately $420,167 including proceeds from the sale of the additional 3.6 million shares) were used to pay a special dividend to CONSOL Energy. The gain recognized on this transaction was $327,326.

In June 2005, CONSOL Energy completed a sale/lease-back transaction for its headquarters building and certain surrounding land located in Upper Saint Clair, Pennsylvania. Cash proceeds from the sale were $14,000 and resulted in a pretax gain of $8,304, which has been deferred and will be recognized over the initial lease term of 13 years. The lease agreement includes an option to extend the lease term for two five-year periods. The lease will be accounted for as an operating lease. Annual rental payments are $1,176 and are payable in equal quarterly installments of $294. The agreement provides for a possible Consumer Price Index adjustment to the annual rental payments at the beginning of the fourth lease year and every four years thereafter.

113

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

In March 2005, CONSOL Energy through its subsidiary, CONSOL of West Virginia, LLC, acquired a 49% interest in Southern West Virginia Energy, LLC for a cash payment of $6,200. In addition, CONSOL Energy agreed to assume the perpetual care liability after certain bond release work is completed by Southern West Virginia Energy, LLC. The discounted liability assumed by CONSOL Energy was estimated to be $10,579. Southern West Virginia Energy, LLC through its subsidiary mines low sulfur bituminous coal. The acquisition was accounted for under the equity method of accounting through August 2005. As of September 1, 2005, after all agreements were substantially completed, the acquisition has been fully consolidated in accordance with Financial Accounting Standards Board Interpretation No. 46, “Consolidation of Variable Interest Entities.”

Note 3—Transactions with Related Parties:

In 2005, CONSOL Energy sold coal to a joint venture, in which CONSOL Energy held a 49% ownership interest, at a price reflecting the market value of the coal. Such Related Party sales were as follows:


	For the Years Ended December 31,
	2007		2006		2005
Coal sales	$	—	$	—	$	4,749
Freight		—		—		468

Total Sales and Freight Revenue—Related Party	$	—	$	—	$	5,217

Note 4—Other Income:


	For the Years Ended December 31,
	2007		2006		2005
Gain on disposition of assets	$	112,389	$	10,417	$	15,095
Royalty income		14,205		27,915		25,696
Interest income		12,792		15,369		8,066
Service income		12,623		13,345		11,660
Buchanan roof collapse business interruption insurance proceeds		10,000		—		—
Equity in earnings (loss) of affiliates		6,551		1,201		2,850
Buchanan skip hoist damage and business interruption insurance proceeds		—		40,792		—
Buchanan fire business interruption insurance proceeds		—		38,415		17,825
Harmar trust settlement		—		—		6,483
Other		28,168		23,407		19,456

Total Other Income	$	196,728	$	170,861	$	107,131

114

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Note 5—Interest Expense:


	For the Years Ended December 31,
	2007			2006			2005
Interest on debt	$	40,766		$	33,605		$	31,266
Interest on other payables		4,648			2,213			637
Interest capitalized		(14,563	)		(10,752	)		(4,586	)

Total Interest Expense	$	30,851		$	25,066		$	27,317

Note 6—Taxes Other Than Income:


	For the Years Ended December 31,
	2007			2006			2005
Production taxes	$	187,931		$	169,163		$	154,538
Payroll taxes		43,828			42,035			43,078
Property taxes		41,586			34,991			25,653
Capital Stock & Franchise Tax		7,475			7,293			6,956
VA Employment Enhancement Tax Credit		(3,159	)		(5,003	)		(4,072	)
Other		5,850			4,060			2,453

Total Taxes Other Than Income	$	283,511		$	252,539		$	228,606

Note 7—Income Taxes:

Income taxes (benefits) provided on earnings consisted of:


	For the Years Ended December 31,
	2007		2006			2005
Current:
U.S. Federal	$	62,704	$	72,839		$	43,936
U.S. State		11,284		12,247			22,916
Non-U.S.		2,594		770			2,131

		76,582		85,856			68,983
Deferred:
U.S. Federal		40,278		46,332			(2,354	)
U.S. State		19,277		(19,758	)		(2,290	)

		59,555		26,574			(4,644	)

Total Income Taxes	$	136,137	$	112,430		$	64,339

115

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The components of the net deferred tax assets are as follows:


	December 31, 2007			December 31, 2006
Deferred Tax Assets:
Postretirement benefits other than pensions	$	997,930		$	923,419
Alternative minimum tax		197,009			180,061
Mine closing		139,742			134,924
Net operating loss		63,866			66,424
Pneumoconiosis benefits		59,506			75,714
Workers’ compensation		57,055			63,148
Capital lease		41,415			44,878
Salary retirement		38,839			46,932
Reclamation		13,277			12,852
Gas hedge		—			2,589
Other		81,702			77,858

Deferred Tax Assets		1,690,341			1,628,799
Valuation Allowance		(59,908	)*		(66,084	)**
Total Deferred Tax Assets		1,630,433			1,562,715
Deferred Tax Liabilities:
Property, plant and equipment		(1,058,596	)		(874,989	)
Advance mining royalties		(23,493	)		(22,913	)
Gas hedge		(3,738	)		—
Other		(38,975	)		(39,586	)

Total Deferred Tax Liabilities		(1,124,802	)		(937,488	)

Net Deferred Tax Assets	$	505,631		$	625,227

*	Valuation allowance of ($2,476) and ($57,432) allocated between current and noncurrent deferred tax assets respectively.

**	Valuation allowance of ($2,571) and ($63,513) allocated between current and noncurrent deferred tax assets respectively.

According to Statement of Financial Accounting Standards Board Statement 109, “Accounting for Income Taxes,” a deferred tax asset should be reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. All available evidence, both positive and negative, must be considered in determining the need for a valuation allowance. For the year ended December 31, 2007, positive evidence considered included future income projections based on existing fixed price contracts and forecasted expenses, reversals of book to tax temporary differences, and the implementation of and/or ability to employ various tax planning strategies. Negative evidence included book and tax losses generated in prior periods, and the inability to achieve forecasted results for those periods.

During 2006, CONSOL Energy concluded that a valuation allowance was no longer warranted against a portion of its state net operating loss carry forwards in certain tax jurisdictions. In 2007, CONSOL Energy implemented a prudent and feasible tax strategy that insured the realization of Pennsylvania loss carry forward tax benefits. The value of CONSOL Energy’s net operating loss carry forwards increased significantly in 2006 as a result of a change in the Pennsylvania Statute which increased the annual limitation on the deduction for net

116

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

operating losses to be applied against future taxable income from $2,000 to the greater of $3,000 or 12.5% of taxable income for tax years beginning after 2006. CONSOL Energy’s valuation allowance attributable to its operating loss carry forwards in West Virginia was also released during 2006. CONSOL Energy reported a cumulative tax loss for West Virginia tax purposes for the three-year period that includes December 31, 2004 through December 31, 2006 due to non-recurring tax return adjustments in 2004 and 2005 relating to adoption of SFAS No. 143, “Accounting for Asset Retirement Obligations,” non-taxable OPEB subsidy accruals, and the refund of reclamation proceeds. Absent the non-recurring tax adjustments, CONSOL Energy would have reported cumulative taxable income on its West Virginia tax returns for the three-year period. CONSOL utilized $38,700 of its West Virginia operating loss carry forwards in 2006, and will report an additional net operating loss to the state for 2007 of $13,900. Based on the analysis of prior years’ tax filings and projections of West Virginia taxable income for 2008 and future years, management believes that the benefits of the state operating loss carry forwards will be realized. As a result of the reduction of the valuation allowance relating to Pennsylvania and West Virginia operating loss carry forwards, CONSOL Energy reported a state income tax benefit in 2006 of $28,747 on an after Federal tax adjusted basis.

For 2007, CONSOL Energy continues to report a deferred tax asset of $27,881 on an after Federal tax adjusted basis relating to the remainder of CONSOL Energy’s state operating loss carry forwards after valuation allowance. A review of the positive and negative evidence regarding these tax benefits, primarily the history of book and tax losses on a separate company basis, concluded that a valuation allowance was warranted. A valuation allowance of $23,123 on an after Federal tax adjusted basis has also been recorded against the deferred state tax asset attributable to future deductible temporary differences for certain CONSOL Energy subsidiaries with histories of book and tax losses. The net operating losses expire at various times between 2008 and 2027. Management will continue to assess the realization of deferred tax assets based upon updated income forecast data and the feasibility of future tax planning strategies, and may record adjustments to valuation allowances against deferred tax assets in future periods as appropriate that could materially impact net income. Included in the valuation allowance against the deferred state tax asset attributable to future deductible temporary differences is a $7,687 valuation allowance for deferred tax assets related to Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Post retirement Plans” in state jurisdictions which are subject to a full valuation allowance.

In August 2005, CNX Gas Corporation, a subsidiary of CONSOL Energy, sold 27.9 million shares in a private transaction. The shares were sold to qualified institutional, foreign, and accredited investors in a private transaction exempt from registration under Rule 144A, Regulation S and Regulation D. CNX Gas received proceeds of $420,167, which it used to pay a special dividend to CONSOL Energy. The financial statement gain reported on this transaction was $327,326. In accordance with SFAS 109, no Federal deferred tax has been provided on this sale as current tax law provides a means by which the excess of the reported amount of this investment over its tax basis can be recovered tax-free provided that CNX Gas remains a member of the CONSOL Energy consolidated group.

We estimate that CONSOL Energy will pay Federal alternative minimum tax of $14,800 for the year ended December 31, 2007, thereby creating additional deferred tax asset associated with the prior years’ minimum tax credits.

For the year ended December 31, 2006, CONSOL Energy reported taxable income of $264,554 and utilized $18,818 of alternative minimum tax credits carried forward from prior years.

For the year ended December 31, 2005, CONSOL Energy reported taxable income, as amended and before utilization of prior years’ net operating loss carry forwards, of $78,482. The remaining Federal operating loss carry forwards of $64,151 were utilized in 2005.

117

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The following is a reconciliation stated as a percentage of pretax income, of the United States statutory federal income tax rate to CONSOL Energy’s effective tax rate:


	For the Years Ended December 31,
	2007					2006					2005
	Amount			Percent		Amount			Percent		Amount			Percent
Statutory U.S. federal income tax rate	$	150,135		35.0	%	$	192,822		35.0	%	$	229,139		35.0	%
Effect of gain on sale of 18.5% Interest in CNX Gas		—		—			—		—			(114,564	)	(17.5	)
Excess tax depletion		(43,502	)	(10.1	)		(55,229	)	(10.0	)		(53,069	)	(8.1	)
Effect of medicare prescription drug, improvement and modernization act of 2003		1,796		0.4			1,796		0.3			(9,621	)	(1.5	)
Effect of domestic production activities		(915	)	(0.2	)		(2,538	)	(0.4	)		(1,006	)	(0.2	)
Release of valuation allowances net of federal tax		(6,176	)	(1.4	)		(28,747	)	(5.2	)		—		—
Net effect of state tax		26,262		6.1			13,198		2.4			13,567		2.1
Net effect of foreign tax		787		0.2			770		0.1			2,130		0.3
Other		7,750		1.7			(9,642	)	(1.8	)		(2,237	)	(0.3	)

Income Tax Expense (Benefit)/Effective Rate	$	136,137		31.7	%	$	112,430		20.4	%	$	64,339		9.8	%

CONSOL Energy adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes an interpretation of FASB No. 109” on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized an increase of $3,202 in the liability for unrecognized tax benefits upon adoption, which was accounted for as a reduction to the January 1, 2007 balance of retained earnings. Also, uncertain tax positions relating to taxable temporary differences were identified, and federal and state income tax liabilities were recorded. A corresponding deferred tax asset of $54,021 has been recorded representing the future tax benefit of the deductible temporary differences resulting from the adoption of the FIN 48 liabilities. During the year ending December 31, 2007 the Company recognized an increase of $13,317 in the liability for unrecognized tax benefits as a result of tax positions taken during the current period, and uncertain tax positions identified upon the acquisition of AMVEST Corporation. Of the total increase in the liability for unrecognized tax benefits, $10,497 was accounted for as a reclassification from deferred federal and state income taxes and $2,520 is attributable to uncertain tax positions recognized as a result of the acquisition of AMVEST Corporation. The increase in unrecognized tax benefits during 2007 resulted in a reduction in net income of $300.

The total amount of unrecognized tax benefits as of January 1, 2007 and December 31, 2007 were $50,100 and $63,417 respectively. If these unrecognized tax benefits were recognized, $10,051 and $12,871 would impact CONSOL Energy’s effective income tax rate at January 1, 2007 and for the year ended December 31, 2007, respectively.

CONSOL Energy Inc. and its subsidiaries file income tax returns in the U. S. federal, various states and Canadian jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2002. The Internal Revenue Service (IRS) commenced its examination of CONSOL Energy’s U.S. 2004 and 2005 income tax returns in 2006. As of December 31, 2007, the IRS has not proposed any significant adjustments relating to CONSOL Energy’s tax

118

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

positions. The IRS is expected to issue its examination report in the second quarter of 2008. Depending upon whether or not CONSOL Energy agrees to the IRS’ findings, the examination may not be finalized until 2009.

The IRS’ examination of the CONSOL Energy’s 2002 and 2003 tax returns has been substantially completed with one issue currently under review by the Appeals Division. Management is currently evaluating the merits of its position regarding the issue in dispute, and does not anticipate that the adjustment would result in material change to its financial statements. However, we anticipate that it is reasonably possible that an additional payment of approximately $1,536 of interest related to the issue (on the total deficiency proposed for the two-year period) will be made in the second quarter of 2008.

CONSOL Energy recognizes interest accrued related to unrecognized tax benefits in its interest expense. As of January 1, 2007 and December 31, 2007, we had an accrued liability of $5,077 and $8,503 respectively for interest related to uncertain tax positions. The accrued interest liability includes $3,426 that was recorded in the statement of income for 2007.

CONSOL Energy recognizes penalties accrued related to unrecognized tax benefits in its income tax expense. As of the date of adoption of FIN 48 and December 31, 2007, CONSOL had an accrued liability of approximately $1,200 for tax penalties.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


Balance of unrecognized tax benefits at January 1, 2007	$	50,100
Increase/(decrease) in unrecognized tax benefits resulting from tax positions taken during current period		13,317
Increase/(decrease) in unrecognized tax benefits resulting from tax positions taken during prior period		—
Reduction to unrecognized tax benefits as a result of the lapse of the applicable statute of limitations		—
Reduction to unrecognized tax benefits as a result of a settlement with taxing authorities		—

Balance of unrecognized tax benefits at December 31, 2007	$	63,417

Note 8—Mine Closing, Reclamation & Gas Well Closing Costs:

CONSOL Energy accrues for mine closing, perpetual water care costs, dismantling and removing costs for gas related facilities using the accounting treatment prescribed by Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations” (SFAS No. 143). CONSOL Energy recognizes capitalized asset retirement costs by increasing the carrying amount of related long-lived assets, net of the associated accumulated depreciation. The obligation for asset retirements is included in Mine Closing, Reclamation, Other Accrued Liabilities and Other Liabilities in the Consolidated Balance Sheet.

119

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The reconciliation of changes in the asset retirement obligations at December 31, 2007 and 2006 is as follows:


	As of December 31,
	2007			2006
Balance at beginning of period	$	492,308		$	474,432
Accretion Expense		32,469			32,088
Payments		(28,427	)		(33,709	)
Revisions in Estimated Cash Flows		2,901			29,092
Other		31,646			(9,595	)

Balance at end of period	$	530,897		$	492,308

For the year ended December 31, 2007, Other includes obligations for reclamation, mine closing, and perpetual care of $18,974 related to the acquisition of AMVEST in July 2007. In addition, $14,907 is included in Other for gas well closing obligations related to gas wells acquired with an acquisition of outstanding shares in an oil and gas company in October 2007. The remaining ($2,235) included in Other relates to various other insignificant items. For the year ended December 31, 2006, Other includes ($9,595) for asset dispositions and various other insignificant items.

Note 9—Inventories:


	December 31,
	2007		2006
Coal	$	45,614	$	51,238
Merchandise for resale		25,418		18,298
Supplies		92,161		79,771

Total Inventories	$	163,193	$	149,307

Merchandise for resale is valued using the LIFO cost method. The excess of replacement cost of merchandise for resale inventories over carrying LIFO value was $14,389 and $13,025 at December 31, 2007 and 2006, respectively.

Note 10—Accounts Receivable Securitization:

CONSOL Energy formed CNX Funding Corporation, a wholly owned, special purpose, bankruptcy-remote subsidiary for the sole purpose of buying and selling eligible trade receivables generated by certain subsidiaries of CONSOL Energy. Under the receivables facility, CONSOL Energy and certain subsidiaries, irrevocably and without recourse, sell all of their eligible trade accounts receivable to financial institutions and their affiliates, while maintaining a subordinated interest in a portion of the pool of trade receivables. This retained interest,

120

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

which is included in Accounts and Notes Receivable Trade in the consolidated balance sheets, is recorded at fair value. Due to a short average collection cycle for such receivables, our collection experience history and the composition of the designated pool of trade accounts receivable that are part of this program, the fair value of our retained interest approximates the total amount of the designated pool of accounts receivable reduced by the amount of accounts receivables sold to the third-party financial institutions under the program. CONSOL Energy will continue to service the sold trade receivables for the financial institutions for a fee based upon market rates for similar services.

The cost of funds under this facility is based upon commercial paper rates, plus a charge for administrative services paid to the financial institutions. Costs associated with the receivables facility totaled $3,440 and $376 for the year ended December 31, 2007 and 2006, respectively. These costs have been recorded as financing fees, which are included in Cost of Goods Sold and Other Operating Charges in the Consolidated Statements of Income. No servicing asset or liability has been recorded. The receivables facility expires in April 2012.

At December 31, 2007 and 2006, eligible accounts receivable totaled approximately $115,500 and $120,500, respectively. There was no subordinated retained interest at December 31, 2007. The subordinated retained interest approximated $120,500 at December 31, 2006. Accounts receivables totaling $125,400 were removed from the Consolidated Balance Sheet at December 31, 2007. At December 31, 2006, no accounts receivable were removed from the Consolidated Balance Sheet because CNX Funding retained the total eligible accounts receivable. In accordance with the facility agreement, the company is able to receive proceeds based upon total eligible accounts receivable at the previous month-end. Proceeds at December 31, 2007, determined by eligible accounts receivable at November 30, 2007, exceeded the eligible accounts receivable at December 31, 2007. The $9,900 not supported by accounts receivable at December 31, 2007 is included in the $125,400 of accounts receivable, which was removed from the consolidated balance sheet at December 31, 2007. CONSOL Energy’s $125,400 reduction in accounts receivable securitization program for the year ended December 31, 2007 is reflected in cash flows from operating activities in the Consolidated Statement of Cash Flows.

121

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Note 11—Property, Plant and Equipment


	December 31,
	2007		2006
Plant and equipment	$	5,183,750	$	4,548,030
Coal properties and surface lands		1,518,221		1,118,083
Airshafts		928,423		885,103
Mine development		490,876		488,808
Leased coal lands		458,216		451,585
Advanced mining royalties		365,826		358,327

Total Property, Plant and Equipment		8,945,312		7,849,936

Less—Accumulated depreciation, depletion and amortization		3,980,270		3,809,649

Net Property, Plant and Equipment	$	4,965,042	$	4,040,287

Coal reserves are controlled either through fee ownership or by lease. The duration of the leases vary greatly; however, the lease terms generally are extended automatically to the exhaustion of economically recoverable reserves, as long as active mining continues. Coal interests held by lease provide the same rights as fee ownership for mineral extraction, and are legally considered real property interests. We also make advance payments (advanced mining royalties) to lessors under certain lease agreements that are recoupable against future production, and we make payments that are generally based upon a specified rate per ton or a percentage of gross realization from the sale of the coal. We evaluate our properties periodically for impairment issues or whenever events or circumstances indicate that the carrying amount may not be recoverable.

Coal reserves are amortized using the units-of-production method over all estimated proven and probable reserve tons assigned to the mine. Rates are updated when revisions to coal reserve estimates are made. Coal reserve estimates are reviewed when events and circumstances indicate a reserve change is needed, or at a minimum once a year. Amortization of coal interests begins when the coal reserve is placed into production. At an underground mine, a ton is considered produced once it reaches the surface area of the mine. Any material income effect from changes in estimates is disclosed in the period the change occurs.

Amortization of capitalized mine development costs associated with a coal reserve is computed on a units-of-production basis as the coal is produced so that each ton of coal is assigned a portion of the unamortized costs. We employ this method to match costs with the related revenues realized in a particular period. Rates are updated when revisions to coal reserve estimates are made. Coal reserve estimates are reviewed when information becomes available that indicates a reserve change is needed, or at a minimum once a year. Any material income effect from changes in estimates is disclosed in the period the change occurs. Amortization of development costs begins when the development phase is complete and the production phase begins. At an underground mine, the end of the development phase and the beginning of the production phase takes place when construction of the mine for economic extraction is substantially complete. Coal extracted during the development phase is incidental to the mine’s production capacity and is not considered to shift the mine into the production phase.

122

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The following assets are amortized using the units-of-production method. Amounts reflect properties where mining operations have not yet commenced and therefore are not yet being amortized for the years ended December 31, 2007 and 2006, respectively.


	December 31,
	2007		2006
Coal properties and surface land	$	468,699	$	473,550
Airshafts	$	75,337	$	73,417
Mine development	$	67,328	$	113,084
Leased coal lands	$	243,177	$	244,484
Advance mining royalties	$	40,750	$	35,249

As of December 31, 2007 and 2006, plant and equipment includes gross assets under capital lease of $113,645 and $113,671, respectively. For the years ended December 31, 2007 and 2006, the Northern Appalachian coal segment maintains a $37,018 capital lease for longwall shields at Mine 84. In addition, for the years ended December 31, 2007 and 2006, the Gas segment maintains a capital lease for the Jewell Ridge Pipeline of $66,919 and All Other segment maintains a capital lease for the construction of a new corporate office building of $9,708 and $9,734, respectively. Accumulated amortization for capital leases was $18,533 and $6,333 at December 31, 2007 and 2006, respectively. See Note 15 – Leases for additional capital lease details.

Note 12—Short-Term Notes Payable:

On June 27, 2007, CONSOL Energy and certain of its subsidiaries entered into an Amended and Restated five-year $1,000,000 senior secured credit facility, which replaces the $750,000 credit facility entered into on April 1, 2005. The facility is secured by substantially all of the assets of CONSOL Energy and certain of its subsidiaries and collateral is shared equally and ratably with the holders of CONSOL Energy Inc. 7.875% bonds maturing in 2012. The Agreement provides for the release of collateral upon the achievement of certain credit ratings. Fees and interest rate spreads are based on a ratio of financial covenant debt to twelve month trailing earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), measured quarterly. The facility includes a minimum interest coverage ratio of no less than 4.50 to 1.00, measured quarterly. The interest coverage ratio was 13.10 to 1.00 at December 31, 2007. The facility also includes a maximum leverage ratio of not more than 3.25 to 1.00, measured quarterly. The leverage ratio was 1.50 to 1.00 at December 31, 2007. Affirmative and negative covenants in the facility limit our ability to dispose of assets, make investments, purchase or redeem CONSOL Energy common stock, pay dividends and merge with another corporation. At December 31, 2007, the $1,000,000 facility had $247,500 of borrowings outstanding at a weighted average interest rate of 5.90% and $258,729 of letters of credit outstanding, leaving $493,771 of capacity available for borrowings and the issuance of letters of credit.

In October 2005, CNX Gas entered into a five-year $200,000 unsecured credit agreement. The agreement contains a negative pledge provision, whereas CNX Gas assets cannot be used to secure other obligations. Fees and interest rate spreads are based on the percentage of facility utilization, measured quarterly. Covenants in the facility limit CNX Gas’ ability to dispose of assets, make investments, purchase or redeem CNX Gas stock, pay dividends and merge with another corporation. The facility includes a maximum leverage ratio covenant of not more than 3.00 to 1.00, measured quarterly. The leverage ratio was 0.17 to 1.00 at December 31, 2007. The facility also includes a minimum interest coverage ratio of no less than 3.00 to 1.00, measured quarterly. This ratio was 51.19 to 1.00 at December 31, 2007. At December 31, 2007, the CNX Gas credit agreement had no borrowings outstanding and $14,933 of letters of credit outstanding, leaving $185,067 of capacity available for borrowings and the issuance of letters of credit.

123

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Note 13—Other Accrued Liabilities:


	December 31,
	2007		2006
Accrued payroll and benefits	$	52,850	$	47,552
Subsidence		46,590		38,998
Accrued other taxes		31,898		25,964
Short-term incentive compensation		23,309		17,837
Other		84,491		73,742
Current portion of long-term liabilities:
Postretirement benefits other than pensions		148,020		134,601
Workers’ compensation		45,000		44,000
Mine closing		42,828		31,594
Pneumoconiosis benefits		10,976		11,185
Reclamation		5,545		6,566
Salary retirement		1,623		3,244
Other		19,172		20,263

Total Other Accrued Liabilities	$	512,302	$	455,546

Note 14—Long-Term Debt:


	December 31,
	2007		2006
Debt:
Secured notes due 2012 at 7.875% (par value of $250,000 less unamortized discount of $861 at December 31, 2007)	$	249,139	$	248,933
Baltimore Port Facility revenue bonds in series due 2010 and 2011 at 6.50%		102,865		102,865
Advance royalty commitments		33,901		32,119
Notes due through 2013 at prime		10,985		12,985
Notes due through 2010 at 8.16%		7,648		—
Secured notes due 2007 at 8.25% (par value of $45,000 December 31, 2006 less unamortized discount of $16 at December 31, 2006)		—		44,984
Other long-term notes maturing at various dates through 2031 (total value of $1,938 less unamortized discount of $34 at December 31, 2007)		1,913		346

		406,451		442,232
Less amounts due in one year		8,374		50,249

Total Long-Term Debt	$	398,077	$	391,983

124

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Advance royalty commitments and the other long-term variable rate notes had an average interest rate of approximately 6.8% at December 31, 2007 and 7.5% at December 31, 2006. The bonds and notes are carried net of debt discount, which is being amortized by the interest method over the life of the issue.

Annual undiscounted maturities on long-term debt during the next five years are as follows:


Year Ended December 31,	Amount
2008	$	8,374
2009		8,403
2010		37,267
2011		76,535
2012		254,330
Thereafter		22,437

Total Long-Term Debt Maturities	$	407,346

Note 15—Leases:

CONSOL Energy uses various leased facilities and equipment in our operations. Future minimum lease payments under capital and operating leases, together with the present value of the net minimum capital lease payments, at December 31, 2007, are as follows:


Year Ended December 31,	Capital Leases		Operating Leases
2008	$	16,178	$	39,792
2009		16,178		38,638
2010		16,178		22,898
2011		11,779		18,754
2012		7,380		12,646
Thereafter		65,135		131,017

Total minimum lease payments	$	132,828	$	263,745

Less amount representing interest (6.53%-7.36%)		41,779

Present value of minimum lease payments		91,049
Less amount due in one year		9,909
Add construction costs classified as capital lease obligation under EITF 97-10		9,708

Total Long-Term Capital Lease Obligation	$	90,848

Rental expense under operating leases was $47,765, $43,611 and $33,228 for the years ended December 31, 2007, 2006 and 2005, respectively.

The total minimum lease payments related to the new company headquarters project are included in the operating lease portion of the above schedule and are expected to amount to $133,869 over the lease term.

125

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Note 16—Pension and Other Postretirement Benefit Plans:

CONSOL Energy has non-contributory defined benefit retirement plans covering substantially all employees not covered by multi-employer plans. The benefits for these plans are based primarily on years of service and employee’s pay near retirement. Effective January 1, 2006, employees hired between August 1, 2004 and December 31, 2005 that were not previously eligible to participate in the plans began accruing service. The CONSOL Energy salaried plan allows for lump-sum distributions of benefits earned up until December 31, 2005 at the employees’ election.

As of January 1, 2006, lump sum benefits have been frozen and prospectively the lump sum option has been eliminated. According to Statement of Financial Accounting Standards No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” if the lump sum distributions made for the plan year, which for CONSOL Energy is October 1 to September 30, exceed the total of the service cost and interest cost for the plan year, settlement accounting is required. Lump sum payments exceeded this threshold during 2007 and 2006. Accordingly, CONSOL Energy recognized expense of $2,734 and $17,756 for the year ended December 31, 2007 and 2006, respectively, in the results of operations. The adjustment equaled the unrecognized actuarial loss resulting from each individual who received a lump sum in that year. CONSOL Energy regularly monitors this situation. Lump sum payments did not exceed the threshold during 2005.

Effective January 1, 2007, employees hired by CNX Gas, an 81.7% owned subsidiary, will not be eligible to participate in CNX Gas’ non-contributory defined benefit retirement plan. In lieu of participation in the non-contributory defined benefit plan, these employees began receiving an additional 3% company contribution into their defined contribution plan. CNX Gas employees who were hired prior to December 31, 2005 or who were employees of CONSOL Energy prior to this date were given a one time opportunity to elect to remain in the defined benefit plan or opt to freeze their services accruals and participate in the additional 3% company contribution into their defined contribution plan. All employees hired on or after January 1, 2006, but on or before December 31, 2006, had their current non-contributory defined benefit frozen and began receiving the additional 3% company contribution into their defined contribution plan, effective January 1, 2007. CNX Gas intends to freeze all defined benefit accruals as of December 31, 2016 for CNX Gas employees that elected to remain in the defined benefit plan.

Certain subsidiaries of CONSOL Energy provide medical and life insurance benefits to retired employees not covered by the Coal Industry Retiree Health Benefit Act of 1992. The medical plans contain certain cost sharing and containment features, such as deductibles, coinsurance, health care networks and coordination with Medicare. Prior to August 1, 2003, substantially all employees became eligible for these benefits if they had ten years of company service and attained age 55. Effective August 1, 2003, the base eligibility was changed to age 55 with 20 years of service. In addition, effective January 1, 2004, a medical plan cost sharing arrangement with all salaried employees and retirees was adopted. These participants will now contribute a minimum of 20% of medical plan operating costs. Contributions may be higher, dependent on either years of service, or a combination of age and years of service at retirement. Prospective annual cost increases of up to 6% will be shared 80% by CONSOL Energy and 20% by the participants. Annual cost increases in excess of 6% will be the sole responsibility of the participant. Also, any salaried or non-represented hourly employees that were hired or rehired effective January 1, 2007 or later will not become eligible for retiree health benefits. In lieu of traditional retiree health coverage, if certain eligibility requirements are met, these employees may be eligible to receive a retiree medical spending allowance of $2,250 per year of service at retirement. Newly employed inexperienced employees represented by the UMWA, hired after January 1, 2007 will not be eligible to receive retiree benefits. In lieu of these benefits, these employees will receive a defined contribution benefit of $1 per each hour worked.

126

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

On September 29, 2006, Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (SFAS 158) was issued. SFAS 158 required, among other things, the recognition of the funded status of each defined pension benefit plan and other postretirement benefit plans on the balance sheet. Each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability. The initial impact of the standard, as well as subsequent changes in the funded status of the plans are recognized as a component of accumulated comprehensive income in stockholders’ equity. Additional minimum pension liabilities and related intangible assets are no longer recognized upon adoption of the new standard. Additionally, SFAS 158 requires an employer to measure the funded status of its plans as of the date of its year end statement of financial position. This provision becomes effective for CONSOL Energy for the year ending December 31, 2008. Currently, CONSOL Energy uses a September 30 measurement date for its pension and other postretirement benefit plans.

127

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The reconciliation of changes in the benefit obligation, plan assets and funded status of these plans at December 31, 2007 and 2006, is as follows:


	Pension Benefits at December 31,						Other Benefits at December 31,
	2007			2006			2007			2006
Change in benefit obligation:
Benefit obligation at beginning of period	$	486,695		$	497,717		$	2,386,716		$	2,313,446
AMVEST acquisition		5,900			—			2,130			—
Service cost		11,015			15,807			10,988			10,093
Interest cost		28,710			28,248			139,221			129,665
Actuarial (gain) loss		40,271			(1,137	)		66,000			19,252
Plan amendments		—			—			17,267			37,194
Participant contributions		—			—			4,487			5,047
Benefits paid		(49,210	)		(53,940	)		(141,980	)		(127,981	)

Benefit obligation at end of period	$	523,381		$	486,695		$	2,484,829		$	2,386,716

Change in plan assets:
Fair value of plan assets at beginning of period	$	369,847		$	329,217		$	—		$	—
AMVEST acquisition		4,800
Actual return on plan assets		43,806			25,869			—			—
Company contributions		84,729			71,258			137,493			122,934
Participant contributions		—			—			4,487			5,047
Benefits and other payments		(49,979	)		(56,497	)		(141,980	)		(127,981	)

Fair value of plan assets at end of period	$	453,203		$	369,847		$	—		$	—

Funded status:
Noncurrent assets	$	458		$	340		$	—		$	—
Current liabilities		(1,623	)		(3,244	)		(148,020	)		(134,601	)
Noncurrent liabilities		(69,013	)		(113,944	)		(2,336,809	)		(2,252,115	)

Net obligation recognized	$	(70,178	)	$	(116,848	)	$	(2,484,829	)	$	(2,386,716	)

Amounts recognized in accumulated other comprehensive income consist of:
Net actuarial loss	$	200,577		$	187,909		$	1,023,754		$	1,018,984
Prior service credit		(9,061	)		(10,176	)		(298,213	)		(366,481	)

Net amount recognized (before tax effect)	$	191,516		$	177,733		$	725,541		$	652,503

128

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The components of net periodic benefit costs are as follows:


	Pension Benefits									Other Benefits
	For the Years Ended December 31,									For the Years Ended December 31,
	2007			2006			2005			2007			2006			2005
Components of net periodic benefit cost:
Service cost	$	11,015		$	15,807		$	22,157		$	10,988		$	10,093		$	12,702
Interest cost		28,710			28,248			29,020			139,221			129,665			139,418
Expected return on plan assets		(30,656	)		(26,125	)		(20,456	)		—			—			—
Settlement		2,734			17,756			—			—			—			—
Amortization of prior service cost (credit)		(1,114	)		(1,085	)		217			(51,001	)		(56,619	)		(7,370	)
Recognized net actuarial loss		12,487			16,686			19,402			61,230			64,302			46,407

Benefit cost	$	23,176		$	51,287		$	50,340		$	160,438		$	147,441		$	191,157

Amounts included in accumulated other comprehensive income, expected to be recognized in 2008 net periodic benefit costs:


	Pension Benefits			Postretirement Benefits
Prior service cost (benefit) recognition	$	(1,113	)	$	(48,625	)
Actuarial loss recognition	$	16,727		$	61,503

The following table provides information related to pension plans with an accumulated benefit obligation in excess of plan assets:


	As of December 31,
	2007		2006
Projected benefit obligation	$	522,201	$	485,430
Accumulated benefit obligation	$	467,710	$	417,526
Fair value of plan assets	$	451,564	$	368,241

129

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Assumptions:

The weighted-average assumptions used to determine benefit obligations are as follows:


	Pension Benefits at December 31,						Other Benefits at December 31,
	2007		2006		2005		2007		2006		2005
Discount rate	6.57	%	6.00	%	5.75	%	6.63	%	6.00	%	5.75	%
Rate of compensation increase	4.01	%	3.65	%	4.11	%	—		—		—

The weighted-average assumptions used to determine net periodic benefit costs are as follows:


	Pension Benefits at December 31,						Other Benefits at December 31,
	2007		2006		2005		2007		2006		2005
Discount rate	6.00	%	5.75	%	6.00	%	6.00	%	5.75	%	6.00	%
Expected long-term return on plan assets	8.00	%	8.00	%	8.00	%	—		—		—
Rate of compensation increase	3.65	%	4.11	%	4.31	%	—		—		—

The long-term rate of return is the sum of the portion of total assets in each asset class held multiplied by the expected return for that class, adjusted for expected expenses to be paid from the assets. The expected return for each class is determined using the plan asset allocation at the measurement date and a distribution of compound average returns over a 20-year time horizon. The model uses asset class returns, variances and correlation assumptions to produce the expected return for each portfolio. The return assumptions used forward-looking gross returns influenced by the current Treasury yield curve. These returns recognize current bond yields, corporate bond spreads and equity risk premiums based on current market conditions. In general, the long-term rate of return is the sum of the portion of total assets in each asset class multiplied by the expected return for that class, adjusted for expected expenses to be paid from the assets.

The assumed health care cost trend rates are as follows:


	December 31,
	2007		2006		2005
Health care cost trend rate for next year	8.00	%	8.50	%	9.25	%
Rate to which the cost trend rate is assumed to decline (ultimate trend rate)	5.00	%	5.00	%	4.75	%
Year that the rate reaches ultimate trend rate	2013		2011		2011

Assumed health care cost trend rates have a significant effect on the amounts reported for the medical plans. A one-percentage point change in assumed health care cost trend rates would have the following effects:


	1-Percentage Point Increase		1-Percentage Point Decrease
Effect on total of service and interest costs components	$	19,982	$	(16,560	)
Effect on accumulated postretirement benefit obligation	$	284,573	$	(239,754	)

130

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Assumed discount rates also have a significant effect on the amounts reported for both pension and other benefit costs. A one-quarter percentage point change in assumed discount rate would have the following effect on benefit costs:


	0.25 Percentage Point Increase			0.25 Percentage Point Decrease
Pension benefit costs (decrease) increase	$	(1,301	)	$	1,306
Other postemployment benefits costs (decrease) increase	$	(4,117	)	$	4,387

Plan Assets:

There are no assets in the other postretirement benefit plans at September 30, 2007 or 2006. CONSOL Energy’s pension benefit plans weighted average asset allocations at September 30, 2007 and 2006 are as follows:


	Pension Plan Assets at September 30,
	2007		2006
Asset Category:
Equity Securities	60	%	60	%
Debt Securities	40	%	40	%

Total	100	%	100	%

The weighted-average target asset allocations for the Employee Retirement Plans of CONSOL Energy Inc. are as follows: U.S. Equities 45%, International Equities 15% and Debt Securities 40% (U.S. and International). The aggregate amount of International Equity and International Fixed Income shall not exceed 50% of total account assets. The allowable asset allocation ranges are as follows: U.S. Equities 20-60%, International Equities 10-40% and Debt Securities 10-50%. The investment policy performance objective is to exceed a benchmark portfolio by at least 100 basis points over a three-year period. The benchmark portfolio consists of the following indices: S&P 500 (Large Cap), S&P 400 (Mid Cap), Russell 2000 (Small Cap), MSCI EAFE (International), Lehman Aggregate and Salomon World Government (Bonds).

There are no investments in CONSOL Energy stock held by these plans at September 30, 2007 or 2006.

131

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Cash Flows:

CONSOL Energy expects to contribute $28,400 to our pension plan trust in 2008. Pension benefit payments are primarily funded from the trust. CONSOL Energy does not expect to contribute to the other postemployment plan in 2008. We intend to pay benefit claims as they are due.

The following benefit payments, reflecting expected future service, are expected to be paid:


	Pension Benefits		Other Benefits
2008	$	41,039	$	148,020
2009	$	32,704	$	158,364
2010	$	30,434	$	166,522
2011	$	29,650	$	174,336
2012	$	34,394	$	178,963
Year 2013-2017	$	212,096	$	930,493

Note 17—Coal Workers’ Pneumoconiosis (CWP) and Workers’ Compensation:

CONSOL Energy is responsible under the Federal Coal Mine Health and Safety Act of 1969, as amended, for medical and disability benefits to employees and their dependents resulting from occurrences of coal workers’ pneumoconiosis disease. CONSOL Energy is also responsible under various state statutes for pneumoconiosis benefits. CONSOL Energy primarily provides for these claims through a self-insurance program. The calculation of the actuarial present value of the estimated pneumoconiosis obligation is based on an annual actuarial study by independent actuaries. The calculation is based on assumptions regarding disability incidence, medical costs, indemnity levels, mortality, death benefits, dependents and interest rates. These assumptions are derived from actual company experience and outside sources. Actuarial gains associated with CWP have resulted from numerous legislative changes over many years which have resulted in lower approval rates for filed claims than our assumptions originally reflected. Actuarial gains have also resulted from lower incident rates and lower severity of claims filed than our assumption originally reflected.

132

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

CONSOL Energy is also responsible to compensate individuals who sustain employment related physical injuries or some types of occupational diseases, and on some occasions, for costs of their rehabilitation. Workers’ compensation laws will also compensate survivors of workers who suffer employment related deaths. Workers’ compensation laws are administered by state agencies with each state having its own set of rules and regulations regarding compensation that is owed to an employee that is injured in the course of employment. CONSOL Energy primarily provides for these claims through a self-insurance program. CONSOL Energy recognizes an actuarial present value of the estimated workers’ compensation obligation calculated by independent actuaries. The calculation is based on claims filed and an estimate of claims incurred but not yet reported as well as various assumptions. The assumptions include discount rate, future health care trend rate, benefit duration, and recurrence of injuries. Actuarial gains associated with workers’ compensation have resulted from discount rate changes, several years of favorable claims experience, various favorable state legislation changes and overall lower incident rates than our assumptions.


	CWP December 31,						Workers’ Compensation December 31,
	2007			2006			2007			2006
Change in benefit obligation:
Benefit obligation at beginning of period	$	195,609		$	216,037		$	166,668		$	173,383
AMVEST acquisition		8,055			—			1,744			—
Service cost		5,856			5,962			29,659			30,295
Interest cost		11,401			12,068			8,356			8,368
Actuarial (gain) loss		(30,303	)		(30,408	)		(11,422	)		(12,222	)
Benefits paid and other costs		(7,746	)		(8,050	)		(32,945	)		(33,156	)

Benefit obligation at end of period	$	182,872		$	195,609		$	162,060		$	166,668

Current liabilities	$	(10,976	)	$	(11,185	)	$	(45,000	)	$	(44,000	)
Noncurrent liabilities		(171,896	)		(184,424	)		(117,060	)		(122,668	)

Net obligation recognized	$	(182,872	)	$	(195,609	)	$	(162,060	)	$	(166,668	)

Amounts recognized in accumulated other comprehensive income consist of:
Net actuarial gain	$	(219,563	)	$	(211,631	)	$	(43,952	)	$	(35,180	)
Prior service credit		(3,489	)		(4,217	)		—			—

Net amount recognized (before tax effect)	$	(223,052	)	$	(215,848	)	$	(43,952	)	$	(35,180	)

133

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The components of the net periodic cost (credit) are as follows:


	CWP For the Years Ended December 31,									Workers’ Compensation For the Years Ended December 31,
	2007			2006			2005			2007			2006			2005
Components of Net Periodic Cost (Credit):
Service cost	$	5,856		$	5,962		$	3,793		$	29,659		$	30,295		$	28,648
Interest cost		11,401			12,068			11,963			8,356			8,368			8,436
Legal and administrative costs		2,700			2,700			2,700			3,259			3,487			3,874
Amortization of prior service cost		(728	)		(728	)		(728	)		—			—			—
Legal and administrative costs		(22,371	)		(21,121	)		(21,881	)		(3,953	)		(2,767	)		(3,487	)
State administrative fees and insurance bond premiums		—			—			—			10,591			7,603			19,215

Net periodic cost (credit)	$	(3,142	)	$	(1,119	)	$	(4,153	)	$	47,912		$	46,986		$	56,686

Amounts included in accumulated other comprehensive income, expected to be recognized in 2008 net periodic benefit costs:


	CWP Benefits			Workers’ Compensation Benefits
Prior service benefit recognition	$	(728	)	$	—
Actuarial gain recognition	$	(23,383	)	$	(4,938	)

Assumptions:

The weighted-average discount rate used to determine benefit obligations and net periodic (benefit) cost are as follows:


	CWP For years Ended December 31,						Workers’ Compensation For years Ended December 31,
	2007		2006		2005		2007		2006		2005
Benefit obligations	6.62	%	6.00	%	5.75	%	5.94	%	6.00	%	5.75	%
Net Periodic (benefit) costs	6.00	%	5.75	%	6.00	%	6.00	%	5.75	%	6.00	%

Assumed discount rates have a significant effect on the amounts reported for both CWP benefits and Workers’ Compensation costs. A one-quarter percentage point change in assumed discount rate would have the following effect on benefit costs:


	0.25 Percentage Point Increase			0.25 Percentage Point Decrease
CWP benefit (decrease) increase	$	655		$	(643	)
Workers’ Compensation costs (decrease) increase	$	(54	)	$	59

134

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Cash Flows:

CONSOL Energy does not intend to make contributions to the CWP or Workers’ Compensation plans in 2008. We intend to pay benefit claims as they become due.

The following benefit payments, which reflect expected future claims as appropriate, are expected to be paid:


			Workers’ Compensation
	CWP Benefits		Total Benefits		Actuarial Benefits		Other Benefits
2008	$	10,976	$	45,000	$	34,563	$	10,437
2009	$	11,273	$	47,145	$	36,291	$	10,854
2010	$	11,598	$	49,394	$	38,105	$	11,289
2011	$	11,949	$	51,751	$	40,011	$	11,740
2012	$	12,319	$	54,221	$	42,011	$	12,210
Year 2013-2017	$	66,813	$	312,523	$	243,745	$	68,778

Note 18—Other Employee Benefit Plans:

UMWA Pension and Benefit Trusts:

Certain subsidiaries of CONSOL Energy were required under prior National Bituminous Coal Wage Agreements (NBCWA) with the United Mine Workers of America (UMWA) to pay amounts to the UMWA Pension Trusts based principally on hours worked by UMWA represented employees. These multi-employer pension trusts provide benefits to eligible retirees through a defined benefit plan. A five-year labor agreement was reached in December 2006 and is effective from January 1, 2007 through December 31, 2011. The 2007 agreement requires contributions to be paid to the UMWA 1974 Pension Trust based on a rate per hour worked by UMWA employees. The contribution per hour is as follows: $2.00 per hour worked in 2007, $3.50 per hour worked in 2008, $4.25 per hour worked in 2009, $5.00 per hour worked in 2010, $5.50 per hour worked in 2011. Total contributions for a year may differ from total expenses for the year due to the timing of actual contributions compared to the date of assessment. Total contributions to the UMWA 1974 Pension Trust were $11,354 for the year ended December 31, 2007. Total expenses related to the UMWA 1974 Pension Trust were $12,292 for the year ended December 31, 2007. There were no expenses or contributions related to the UMWA 1974 Pension Trust in the years ended December 31, 2006 or 2005. The Employee Retirement Income Security Act of 1974 (ERISA), as amended in 1980, imposes certain liabilities on contributors to multi-employer pension plans in the event of a contributor’s withdrawal from the plan. The withdrawal liability would be calculated based on the contributor’s proportionate share of the plan’s unfunded vested liabilities.

The Coal Industry Retiree Health Benefit Act of 1992 (the Act) created two multi-employer benefit plans: (1) the United Mine Workers of America Combined Benefit Fund (the Combined Fund) into which the former UMWA Benefit Trusts were merged, and (2) the 1992 Benefit Fund. CONSOL Energy subsidiaries account for required contributions to these multi-employer trusts as expense when incurred.

The Combined Fund provides medical and death benefits for all beneficiaries of the former UMWA Benefit Trusts who were actually receiving benefits as of July 20, 1992. The 1992 Benefit Fund provides medical and death benefits to orphan UMWA-represented members eligible for retirement on February 1, 1993, and who actually retired between July 20, 1992 and September 30, 1994. The Act provides for the assignment of beneficiaries to former employers and the allocation of unassigned beneficiaries (referred to as orphans) to

135

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

companies using a formula set forth in the Act. The Act requires that responsibility for funding the benefits to be paid to beneficiaries be assigned to their former signatory employers or related companies. This cost is recognized when contributions are assessed. Total contributions may be different than total costs in a given year due to the timing of actual contributions compared to the date of assessment. Total contributions under the Act were $32,916, $38,147 and $19,409 for the years ended December 31, 2007, 2006 and 2005, respectively. Total costs under the Act were $2,523, $26,777 and $30,424 for the years ended December 31, 2007, 2006 and 2005, respectively. Costs were reduced in 2007 by $30,389 due to the March 2007 settlement agreement with the Combined Fund that resolved all previous issues relating to the calculation of payments to the Combined Fund. See Note 26—Commitments and Contingent in Notes to Audited Financial Statements for additional details on the settlement agreement. Based on available information at December 31, 2007, CONSOL Energy’s obligation for the Act is estimated at approximately $233,000.

The UMWA 1993 Benefit Plan is a defined contribution plan that was created as the result of negotiations for the NBCWA of 1993. This plan provides health care benefits to orphan UMWA retirees who are not eligible to participate in the Combined Fund, the 1992 Benefit Fund, or whose last employer signed the 1993 or a later NBCWA and who subsequently goes out of business. Contributions to the trust under the 2007 agreement are $2.00 per hour worked by UMWA represented employees for the 2007 period, comprised of a $0.50 per hour worked under the labor agreement and $1.50 per hour worked by UMWA represented employees under the Tax Relief and Health Care Act of 2006 (the 2006 Act). The contribution rate will decrease in the 2008 period to $1.77 per hour worked by UMWA represented employees, comprised of $0.50 per hour worked under the labor agreement and $1.27 per hour worked under the 2006 Act. Total contributions may be different than total costs in a given year due to the timing of actual contributions compared to the date the liability is incurred. Total contributions were $11,627, $3,356 and $3,642 for the years ended December 31, 2007, 2006 and 2005, respectively. Total costs were $10,945, $3,319 and $3,681 for the years ended December 31, 2007, 2006 and 2005, respectively.

Pursuant to the provisions of the 2006 Act and the 1992 Plan, CONSOL Energy is required to provide security in an amount based on the annual cost of providing health care benefits for all individuals receiving benefits from the 1992 Plan who are attributable to CONSOL Energy, plus all individuals receiving benefits from an individual employer plan maintained by CONSOL Energy who are entitled to receive such benefits. In accordance with the 2006 Act and the 1992 Plan, the outstanding letters of credit to secure our obligation were $62,464 and $180,273 for December 31, 2007 and 2006, respectively. The 2006 security amount was based on three times the annual cost of providing health care benefits. The calculation was changed in 2007 to equal the annual cost of providing health care benefits and included a reduction in the number of eligible employees.

At December 31, 2007, approximately 36% of CONSOL Energy’s workforce was represented by the UMWA.

Equity Incentive Plans:

CONSOL Energy has an equity incentive plan that provides grants of stock-based awards to key employees and to non-employee directors. See Note 19 for a further discussion of CONSOL Energy’s stock-based compensation.

CNX has adopted the CNX Gas Equity Incentive Plan on June 30, 2005, and amended the plan on August 1, 2005. The plan was further amended on October 11, 2006 when CNX Gas adopted a Long-Term Incentive Program. The equity incentive plan consists of the following components: stock options, stock appreciation

136

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

rights, restricted stock units, performance awards, performance share units, cash awards and other stock-based awards. The total number of shares of CNX Gas common stock with respect to which awards may be granted under CNX Gas’ plan is 2,500,000. CNX Gas stock-based compensation expense resulted in pre-tax expense of $3,260, $3,733 and $205 to CONSOL Energy for the years ended December 31, 2007, 2006 and 2005, respectively.

Effective October 11, 2006, CNX Gas adopted a long-term incentive program. This program allows for the award of performance share units (PSU’s). A PSU represents a contingent right to receive a cash payment, determined by reference to the value of one share of the company’s common stock. The total number of units earned, if any, by a participant will be based on the company’s total stockholder return relative to the stockholder return of a pre-determined peer group of companies. The performance period is from October 11, 2006 to December 31, 2009. CNX Gas will recognize compensation costs on a straight-line basis over the requisite service period. The basis of the compensation costs will be re-valued quarterly. As of December 31, 2007, there were 218,012 PSU’s issued with a fair value of approximately $7,803. CNX Gas recognized approximately $2,231 in compensation costs in the year ended December 31, 2007.

Investment Plan:

CONSOL Energy has an investment plan available to all domestic, non-represented employees. For employees hired prior to August 1, 2004, CONSOL Energy matches employee contributions for an amount up to 6% of the employee’s base pay (for Fairmont Supply Company the employer match is 50% of the first 12% of base pay). For employees hired or rehired effective August 1, 2004 or later, CONSOL Energy matches employee contributions for an amount up to 9% of the employee’s base pay excluding Fairmont Supply Company employees whose company match remains unchanged. Effective January 1, 2006, the company match was changed to 6% of base pay for all non-represented employees except for those employees of Fairmont Supply Company whose match remains at 50% of the first 12% of base pay. In addition, effective January 1, 2007, the definition of eligible compensation for employee deferrals and company match was amended to include overtime for all non-represented employees except for those employees of Fairmont Supply Company whose definition of eligible compensation will remain unchanged. Total payments and costs were $17,896, $14,527 and $12,392 for the years ended December 31, 2007, 2006 and 2005, respectively.

Long-Term Disability:

CONSOL Energy has a Long-Term Disability Plan available to all full-time salaried employees. The benefits for this plan are based on a percentage of monthly earnings, offset by all other income benefits available to the disabled.


	For The Years Ended December 31,
	2007			2006			2005
Benefit Costs	$	3,050		$	4,260		$	4,170
Discount rate assumption used to determine net periodic benefit obligations		5.99	%		6.00	%		5.75	%

Liabilities included in Deferred Credits and Other Liabilities—Other and Other Accrued Liabilities amounted to $27,659, and $25,395 at December 31, 2007 and 2006, respectively.

137

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Note 19—Stock-Based Compensation:

CONSOL Energy adopted the CONSOL Energy Inc. Equity Incentive Plan on April 7, 1999. The plan provides for grants of stock-based awards to key employees and to non-employee directors. Amendments to the plan have been approved by the Board of Directors since the commencement of the plan, and the total number of shares of common stock that can be covered by grants at December 31, 2007 is 18,200,000 of which 2,600,000 are available for issuance of awards other than stock options. No award of stock options may be exercised under the plan after the tenth anniversary of the effective date of the award.

The total stock-based compensation expense recognized was $20,983, $19,113 and $3,609 for the years ended December 31, 2007, 2006 and 2005, respectively. The related deferred tax benefit totaled $7,938, $7,339 and $1,404, for the years ended December 31, 2007, 2006 and 2005, respectively. Prior to January 1, 2006, CONSOL Energy accounted for stock-based compensation under the recognition and measurement provisions of Accounting Principles Board Opinion (APB) No. 25, “Accounting for Stock Issued to Employees,” as amended. Generally, no stock-based employee compensation cost for stock options is reflected in net income, as all options granted under the plans had an exercise price equal to the market value of the underlying common stock on the date of the grant. Prior to January 1, 2006, CONSOL Energy provided pro forma disclosure amounts in accordance with Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation Transition and Disclosure—an Amendment of SFAS No. 123” (SFAS 148), as if the fair value method defined by Statement of Financial Accounting Standard No. 123, “Accounting for Stock-Based Compensation” (SFAS 123) had been applied to its stock-based compensation.

Effective January 1, 2006, CONSOL Energy adopted the fair value recognition provisions of SFAS 123R, “Share-Based Payment” (SFAS 123R) using the modified prospective transition method and therefore has not restated prior periods’ results. Under this transition method, stock-based compensation expense for the years ended December 31, 2007 and 2006 included compensation expense for all stock-based compensation awards granted prior to, but not yet vested as of, January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123. Stock-based compensation expense for all share-based payment awards granted after January 1, 2006 is based on the grant date fair value estimated in accordance with the provisions of SFAS 123R. CONSOL Energy recognizes these compensation costs net of an estimated forfeiture rate and recognizes the compensation costs for only those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the option vesting term, or to an employee’s eligible retirement date, if earlier and applicable.

138

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The pro forma table below reflects net earnings and basic and diluted net earnings per share for the year ended December 31, 2005 had CONSOL Energy applied the fair value recognition provisions of SFAS 123, as follows:


	December 31,
	2005
Net income as reported	$	580,861
Add: Stock-based compensation due to change in vesting period (A)		955
Add: Stock-based compensation expense for restricted stock units (A)		2,654
Deduct: Total stock-based employee compensation expense determined under Black-Scholes option pricing model and stock-based compensation expense for restricted stock units, net of tax		(9,137	)

Pro forma net income	$	575,333

Earnings per share:
Basic – as reported	$	3.17

Basic – pro forma	$	3.14

Dilutive – as reported	$	3.13

Dilutive – pro forma	$	3.10

(A)	The tax benefit related to stock-based compensation expense was $1,404 for the year ended December 31, 2005.

As a result of SFAS 123R, CONSOL Energy reevaluated its assumptions used in estimating the fair value of employee options granted. As part of this assessment, management determined that a combination of historical and implied volatility is a better indicator of expected volatility and future stock price trends than solely historical volatility. Therefore, expected volatility for the years ended December 31, 2007 and 2006 was based on a combination of historical and market-based implied volatility. The change in estimating the fair value of employee options was not significant in regards to earnings before income taxes, net income and earnings per share.

139

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

As part of its SFAS 123R adoption, CONSOL Energy also examined its historical pattern of option exercises in an effort to determine if there were any discernable activity patterns based on certain employee populations. From this analysis, CONSOL Energy identified two distinct employee populations. CONSOL Energy used the Black-Scholes option pricing model to value the options for each of the employee populations. The table below presents the weighted average expected term in years of the two employee populations. The expected term computation is based upon historical exercise patterns and post-vesting termination behavior of the populations. The risk-free interest rate was determined for each vesting tranche of an award based upon the calculated yield on U.S. Treasury obligations for the expected term of the award. The expected forfeiture rate is based upon historical forfeiture activity. The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values:


	December 31,
	2007			2006			2005
Weighted average fair value of grants	$	11.93		$	15.46		$	5.96
Risk-free interest rate		4.7	%		5.0	%		3.6	%
Expected dividend yield		0.8	%		0.6	%		1.5	%
Expected forfeiture rate		2.0	%		2.0	%		—	%
Expected volatility		38.2	%		38.5	%		45.6	%
Expected term in years		4.07 years			4.17 years			2.48 years

A summary of the status of stock options granted is presented below:


	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2006	6,189,843		$	17.35	6.81
Granted	830,656		$	34.92
Exercised	(1,581,583	)	$	12.16
Forfeited	(37,416	)	$	28.86

Balance at December 31, 2007	5,401,500		$	21.50	6.58	$	270,209

Vested and expected to vest at December 31, 2007	5,386,598		$	21.45	6.53	$	269,727

Exercisable at December 31, 2007	3,328,446		$	14.78	5.49	$	188,870

These stock options will terminate ten years after the date on which they were granted. The employee stock options, covered by the Equity Incentive Plan adopted April 7, 1999, vest 25% per year, beginning one year after the grant date for awards granted prior to 2007. Employee stock options awarded after December 31, 2006 vest 33% per year, beginning one year after the grant date. There are 4,672,669 stock options outstanding under the Equity Incentive plan. Additionally, there are 594,653 employee stock options outstanding which are fully vested under vesting terms ranging from six months to one year. Non-employee director stock options vest 33% per year, beginning one year after the grant date. There are 134,178 stock options outstanding under these grants. The vesting of the options will accelerate in the event of death, disability or retirement and may accelerate upon a change of control of CONSOL Energy.

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between CONSOL Energy’s closing stock price on the last trading day of the year ended December 31, 2007, and

140

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

the option’s exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2007. This amount varies based on the fair market value of CONSOL Energy’s stock. Total intrinsic value of options exercised for the year ended December 31, 2007, 2006 and 2005 was $65,294, $23,677 and $61,181, respectively.

Cash received from option exercises for the years ended December 31, 2007, 2006 and 2005 was $19,224, $14,670 and $39,150, respectively. The excess tax benefit realized for the tax deduction from option exercises totaled $23,682 and $38,545 for the year ended December 31, 2007 and 2006, respectively. This excess tax benefit is included in cash flows from financing activities in the Consolidated Statement of Cash Flows.

Under the Equity Incentive Plan, CONSOL Energy granted certain employees and non-employee directors restricted stock unit awards. These awards entitle the holder to receive shares of common stock as the award vests. Compensation expense will be recognized over the vesting period of the units. The total fair value of shares vested during the years ended December 31, 2007, 2006 and 2005 was $3,641, $2,492 and $1,747, respectively. The following represents the unvested restricted stock units and corresponding fair value (based upon the closing share price) at the date of grant:


	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested at December 31, 2006	495,257		$	26.69
Granted	176,937		$	36.02
Vested	(173,235	)	$	21.02
Forfeited	(6,397	)	$	29.17

Nonvested at December 31, 2007	492,562		$	31.75

Under the Equity Incentive Plan, CONSOL Energy granted certain employees performance share unit awards. These awards entitle the holder to receive shares of common stock subject to the achievement of certain market and performance goals. Compensation expense will be recognized over the performance measurement period of the units in accordance with the provisions of SFAS 123R for awards with market and performance vesting conditions. At December 31, 2007, achievement of the market and performance goals is believed to be probable. The following represents the unvested performance share unit awards and their corresponding fair value (based upon the closing share price) at the date of grant:


	Number of Shares	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2006	—	$	—
Granted	76,007	$	42.59

Nonvested at December 31, 2007	76,007	$	42.59

As of December 31, 2007, $15,640 of total unrecognized compensation cost related to unvested awards is expected to be recognized over a weighted-average period of 2.15 years. When employee stock options are exercised and restricted stock unit awards become vested, the issuances are made from CONSOL Energy’s treasury stock shares which have been acquired as part of CONSOL Energy’s share repurchase program as previously discussed in Note 1.

Prior to the adoption of SFAS 123R on January 1, 2006, CONSOL Energy followed the nominal vesting period approach under APB No. 25 for awards with retirement eligible provisions. Upon adoption of SFAS

141

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

123R, CONSOL Energy changed to the non-substantive vesting period approach for awards with retirement eligible provisions. If CONSOL Energy would have followed the non-substantive vesting period approach for awards with retirement eligible provisions, we would have recorded $1,186 of additional expense, net of tax, for restricted stock units for the year ended December 31, 2005. Additionally, we would have disclosed $1,706 of additional expense, net of tax, for stock options for the year ended December 31, 2005.

142

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Note 20—Accumulated Other Comprehensive Loss:

Components of accumulated other comprehensive loss consist of the following:


	Treasury Rate Lock			Change in Fair Value of Cash Flow Hedges			Minimum Pension Liability			Adjustments for FASB Statement No. 158			Accumulated Other Comprehensive Loss
Balance at December 31, 2004	$	582		$	(5,657	)	$	(84,118	)	$	—		$	(89,193	)
Current period change		(80	)		(29,075	)		6,754			—			(22,401	)
Minority Interest in change		—			6,432			—			—			6,432

Balance at December 31, 2005		502			(28,300	)		(77,364	)		—			(105,162	)
Current period change		(81	)		36,382			77,364			(377,343	)		(263,678	)
Minority Interest in change		—			(6,736	)		—			(141	)		(6,877	)

Balance at December 31, 2006		421			1,346			—			(377,484	)		(375,717	)
Current period change		(81	)		4,214			—			(47,009	)		(42,876	)
Minority Interest in change		—			(769	)		—			78			(691	)

Balance at December 31, 2007	$	340		$	4,791		$	—		$	(424,415	)	$	(419,284	)

The cash flow hedges that CONSOL Energy holds are disclosed in Note 25. The adjustments for FASB Statement No. 158 are disclosed in Note 16 and Note 17.

Note 21—Research and Development Costs:

CONSOL Energy operates a research and development facility devoted to providing technical support to coal, gas and other functions. Costs related to research and development are expensed as incurred. These costs were $3,876, $2,884 and $2,170 for the years ended December 31, 2007, 2006 and 2005, respectively.

143

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Note 22—Supplemental Cash Flow Information:


	For the Years Ended December 31,
	2007			2006			2005
Cash paid during the year for:
Interest (net of amounts capitalized)	$	40,978		$	34,097		$	30,553
Income taxes	$	103,194		$	80,272		$	41,441
Non-cash investing and financing activities:
Variable Interest Entity acquired
Fair value of assets acquired	$	—		$	—		$	(62,421	)
Liabilities assumed	$	—		$	—		$	(62,421	)
Adoption of FIN 48
Change in Assets	$	(39,207	)	$	—		$	—
Change in Liabilities	$	(39,207	)	$	—		$	—
Businesses acquired (Note 2)
Fair value of assets acquired	$	(132,694	)	$	(2,776	)	$	—
Liabilities assumed	$	(132,694	)	$	(2,776	)	$	—
Note received from property sales	$	(200	)	$	—		$	9
Note given on purchase of property	$	—		$	—		$	(235	)
Capital Lease Obligation
Change in Assets	$	(1,083	)	$	(113,671	)	$	—
Change in Liabilities	$	(1,083	)	$	(113,671	)	$	—
Purchase Obligation for Real Estate
Change in Assets	$	—		$	(811	)	$	—
Change in Liabilities	$	—		$	(811	)	$	—
Purchase of Property, Plant and Equipment
Change in Assets	$	3,219		$	(31,136	)	$	—
Change in Liabilities	$	3,219		$	(31,136	)	$	—
Stock dividends issued	$	—		$	—		$	25
Accounting for Mine Closing, Reclamation and Gas Well Closing Costs
Change in Assets	$	3,403		$	(18,647	)	$	(46,906	)
Change in Liabilities	$	3,403		$	(18,647	)	$	(46,906	)

Note 23—Concentration of Credit Risk and Major Customers:

CONSOL Energy markets steam coal, principally to electric utilities in the United States, Canada and Western Europe, and metallurgical coal to steel and coke producers worldwide. As of December 31, 2007 and 2006, accounts receivable from utilities were $174,536 and $180,603, respectively, and from steel and coke producers were $23,214 and $29,240, respectively. Credit is extended based on an evaluation of the customer’s financial condition, and generally collateral is not required. Credit losses consistently have been minimal.

For the years ended December 31, 2007 and 2006, no customer comprised over 10% of our revenues. In 2005, sales to our then largest customer, Allegheny Energy, comprised over 10% of our revenues. Coal (including spot sales) and gas sales to Allegheny Energy were $354,012 for the year ended December 31, 2005.

144

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Note 24—Fair Values of Financial Instruments:

The following methods and assumptions were used to estimate the fair values of financial instruments:

Cash and cash equivalents: The carrying amount reported in the balance sheets for cash and cash equivalents approximates its fair value due to the short maturity of these instruments.

Short-term notes payable: The carrying amount reported in the balance sheets for short-term notes payable approximates its fair value due to the short-term maturity of these instruments.

Long-term debt: The fair values of long-term debt are estimated using discounted cash flow analyses, based on CONSOL Energy’s current incremental borrowing rates for similar types of borrowing arrangements.

Capital Leases: The carrying amount reported in the balance sheets for capital leases approximates its fair value due to recording the liability at the present value of minimum lease payments.

The carrying amounts and fair values of financial instruments, excluding derivative financial instruments disclosed in Note 25, are as follows:


	December 31, 2007						December 31, 2006
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Cash and cash equivalents	$	41,651		$	41,651		$	223,883		$	223,883
Short-term notes payable	$	(247,500	)	$	(247,500	)	$	—		$	—
Long-term debt	$	(406,451	)	$	(420,203	)	$	(442,232	)	$	(456,242	)
Capital leases	$	(100,757	)	$	(100,757	)	$	(110,031	)	$	(110,031	)

Note 25—Derivative Instruments:

CONSOL Energy holds or purchases derivative financial instruments for purposes other than trading to convert the market prices related to these anticipated sales of natural gas to fixed prices. These instruments are designated as cash flow hedges and extend through 2010. The net fair values of the outstanding instruments are an asset of $9,619 and $4,083 at December 31, 2007 and 2006, respectively.

CONSOL Energy entered into cash flow hedges for natural gas in 2007, 2006 and 2005. Gains or losses related to these derivative instruments were recognized when the sale of the natural gas affected earnings. The ineffective portion of the changes in the fair value of these contracts was insignificant in 2007, 2006 and 2005.

For these cash flow hedge strategies, the fair values of the derivatives are recorded on the balance sheet. The effective portions of the changes in fair values of the derivatives are recorded in other comprehensive income or loss and are reclassified to sales in the period in which earnings are impacted by the hedged items or in the period that the transaction no longer qualifies as a cash flow hedge. There were no transactions that ceased to qualify as a cash flow hedge in 2007, 2006 or 2005. CONSOL Energy’s Consolidated Balance Sheets is reflected on a net asset/liability basis for each counterparty.

Assuming market rates remain constant with rates at December 31, 2007, $4,173 of the $5,863 net gain included in accumulated other comprehensive income is expected to be recognized in earnings over the next 12 months. The remaining net gain is expected to be recognized through 2010.

145

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

CONSOL Energy did not have any derivatives designated as fair value hedges in 2007, 2006 or 2005.

On February 19, 2002, CONSOL Energy entered into an interest rate lock agreement with a notional amount of $250,000 to manage the interest rate volatility prior to March 7, 2002, the pricing date of CONSOL Energy’s bond offering. This agreement essentially fixed the underlying treasury rate of the bonds at 4.928% and resulted in a net payment of $1,332 to CONSOL Energy. This receipt resulted in other comprehensive income of $814 (net of $518 deferred tax), which will be amortized to interest income over the life of the notes using the straight-line method. For the years ended December 31, 2007, 2006 and 2005, $81, $81, and $80 was amortized to interest income, respectively.

Note 26—Commitments and Contingent Liabilities:

CONSOL Energy and its subsidiaries are subject to various lawsuits and claims with respect to such matters as personal injury, wrongful death, damage to property, exposure to hazardous substances, governmental regulations including environmental remediation, employment and contract disputes, and other claims and actions arising out of the normal course of business. Our current estimates related to these pending claims, individually and in the aggregate, are immaterial to the financial position, results of operations or cash flows of CONSOL Energy. However, it is reasonably possible that the ultimate liabilities in the future with respect to these lawsuits and claims may be material to the financial position, results of operations or cash flows of CONSOL Energy.

The Pennsylvania Department of Conservation and Natural Resources filed on January 30, 2008 a six-count Complaint asserting claims in both tort and contract against the Company for alleged damage to park property owned by the Commonwealth allegedly due to the Company’s underground mining activities. The matter was the subject of a mediation process with an independent, neutral mediator prior to the filing of the Complaint. That process terminated with no resolution and the Commonwealth then filed its Complaint. The Commonwealth claims that the Company’s underground longwall mining activities in the Summer of 2005 in Green County, Pennsylvania, caused cracks and seepage damage to the nearby Ryerson Park Dam. The Commonwealth demolished the Ryerson Dam’s spillway allegedly under its role of Parens Patrie to protect persons and property, thereby eliminating the Ryerson Park lake. The Commonwealth claims that the Company is liable for dam reconstruction costs, lake restoration costs, and natural resources damages totaling $58,000. The theories of liability include general allegations of negligence, breach of contract, strict liability, nuisance, an administrative remedy claim under the Bituminous Mine Subsidence Act and a claim of fraud, the last claim seeking punitive damages.

The Company has not yet filed its response to the Complaint, including any preliminary motions regarding the propriety of the claims filed by the Commonwealth. The Company believes it was not responsible for the damage to the dam, that there exist numerous grounds upon which to attack the propriety of the claims, and it will vigorously defend the case.

146

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

the availability of such indemnity or contribution is unclear at this time and, in recent years, some of the manufacturers named as defendants in these actions have sought protection from these claims under bankruptcy laws. Fairmont has no insurance coverage with respect to these asbestos cases. For the year ended December 31, 2007, payments by Fairmont with respect to asbestos cases have not been material. Our current estimates related to these asbestos claims, individually and in the aggregate, are immaterial to the financial position, results of operations and cash flows of CONSOL Energy. However, it is reasonably possible that payments in the future with respect to pending or future asbestos cases may be material to the financial position, results of operations or cash flows of CONSOL Energy.

In October 2005, CDX Gas, LLC (CDX) alleged that certain of CNX Gas’ vertical-to-horizontal coalbed methane (CBM) drilling methods infringe several patents which they own. CDX demanded that CNX Gas enter into a business arrangement with them to use its patented technology. Alternatively, CDX informally demanded a royalty of nine to ten percent of the gross production from the wells CNX Gas drilled utilizing the technology allegedly covered by their patents. A number of our wells, particularly in Northern Appalachia, could be covered by their claim. CNX Gas denies all of these allegations and we are vigorously contesting them. On November 14, 2005, CNX Gas filed a complaint for declaratory judgment in the U.S. District Court for the Western District of Pennsylvania, seeking a judicial determination that we do not infringe any claim of any valid and enforceable CDX patent. CDX filed an answer and counterclaim denying our allegations of invalidity and alleging that CNX Gas infringe certain claims of their patents. A hearing was held before a Court-appointed Special Master with regard to the scope of the asserted CDX patents and the Special Master’s report and recommendations was adopted by order of the Court on October 13, 2006. As a result of that order and subject to appellate review, certain of CNX Gas wells may be found to infringe certain of the CDX claims of the patents in suit, if those patents are ultimately determined to be valid and enforceable. The report of CDX’s damages expert suggests that CDX will seek (i) reasonable royalty damages on production from allegedly infringing wells at a royalty rate of 10%, or approximately $1,900 based on projected production through June 2007, and (ii) “lost profits” damages of approximately $23,600 for allegedly infringing wells drilled through August 2006, which assumes that CNX Gas would have no choice but to have entered into a joint operating arrangement with CDX. CNX Gas believes that there is no valid basis in the law as applied to the facts of this case for this “lost profits” theory. Further, if infringement were to be found of a valid, enforceable claim of a CDX patent, the report of CNX Gas’ damages expert indicates that any potential damages award would be based on a royalty of 5%, or approximately $400. An updated damages report was recently provided by CDX to CNX to account for additional accused wells that have been drilled by CNX, the details of which are currently being reviewed by CNX Gas’ damages expert. Cross-motion for summary judgment as to infringement, invalidity and unenforceability have been filed and briefed by CNX Gas and CDX and were before a Special Master for decision in the form of a report and recommendation to the District Court. The Special Master issued his report and recommended on November 19, 2007, denying both the CNX Gas and CDX motions for summary judgment in view of what he identified as genuine issues of material fact. The Special Master did, however, find that CNX had “produced sufficient evidence to call into serious question the validity and enforceability” of the CDX patents-in-suit. Both CNX Gas and CDX subsequently filed objections to the report and recommendation, which are presently pending for decision by the Court. CNX Gas continues to believe that it did not infringe any properly construed claim of any valid, enforceable patent. However, it is reasonably possible that the ultimate liabilities in the future with respect to these lawsuits and claims may be material to the financial position, results of operations or cash flows of CONSOL Energy.

CONSOL Energy was notified in November 2004 by the United States Environmental Protection Agency (EPA) that it is a potentially responsible party (PRP) under Superfund legislation with respect to the Ward Transformer site in Wake County, North Carolina. At that time, the EPA also identified 38 other PRPs for the

Ward Transformer site. On September 16, 2005, the EPA, CONSOL Energy and two other PRPs entered into an

147

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

administrative Settlement Agreement and Order of Consent, requiring those PRPs to undertake and complete a PCB soil removal action, at and in the vicinity of the Ward Transformer property. In December 2005, the EPA approved the PRPs’ work plan, and field work began the first week of January 2006. On March 12, 2007, another party joined the participating PRPs and reduced CONSOL Energy’s interim allocation from 46% to 32%. Accordingly, CONSOL Energy recognized a reduction in the previously recognized liability related to this matter. The current estimated cost of remedial action including payment of the EPA’s past and future cost is approximately $30,000. There was $1,780, $4,820 and $3,000 of expense recognized in Cost of Goods Sold and Other Charges for the years ended December 31, 2007, 2006 and 2005 respectively. CONSOL Energy funded $1,256 in the year ended December 31, 2007 to an independent trust established for this remediation. CONSOL Energy has funded $3,759 since inception of the independent trust established for this remediation. The remaining liability of $5,842 is included in Other Accrued Liabilities at December 31, 2007. CONSOL Energy and the other participating PRPs are investigating contribution claims against other, non-participating PRPs, and such claims will be brought to recover a share of the costs incurred. To date, CONSOL Energy’s portion of probable recoveries are estimated to be $3,420, of which $16 has been collected to date. Accordingly, an asset has been included in Other Assets for these claims. The net cost of the liability and the asset has been included in Cost of Goods Sold and Other Charges. CONSOL Energy expects the majority of payments related to this liability to be made over the next twelve months. In addition, the EPA has advised the PRPs that it has completed its investigation of additional areas of potential contamination allegedly related to the Ward Transformer site and published the proposed remedial action plan for public comment. Special notice letters to PRPs have not yet been completed. We are currently working with the EPA in an effort to have special notice letters sent to a large group of PRPs, of which it is probable we will be named. There was $1,000 of expense recognized in the year ended December 31, 2007 related to the additional areas of Ward Transformer. The related liability is included in Other Accrued Liabilities at December 31, 2007. Until the remediation determination is completed, a specific range of potential exposure is not possible to estimate. There may be some delay in negotiating settlements with other PRPs who may want settlement of all Ward-related claims.

As part of conducting mining activities at the Buchanan Mine, our subsidiary, Consolidation Coal Company (“CCC”), has to remove water from the mine. Several actions have arisen with respect to the removal of naturally accumulating water from the Buchanan Mine:

Yukon Pocahontas Coal Company, Buchanan Coal Company, and Sayers-Pocahontas Coal Company filed an action on March 22, 2004 against CCC which is presently pending in the Circuit Court of Buchanan County, Virginia (the “Yukon Action”). The action is related to untreated water in connection with mining activities at CCC’s Buchanan Mine being deposited in the void spaces of nearby mines of one of our other subsidiaries, Island Creek Coal Company (“ICCC”). The plaintiffs are seeking to stop CCC from depositing any additional water in these areas, to require CCC to remove the water that is stored there along with any remaining impurities, to recover $300,000 of compensatory and trebled damages and to recover punitive damages. Plaintiffs have amended the original complaint to assert additional damage claims of up to $3,252,000, and punitive damages in the amount of $350,000, plus interest, costs, and attorneys’ fees, against CCC and have added CONSOL Energy, CNX Gas Company, LLC and ICCC as additional defendants asserting additional damage claims of $150,000 against those defendants. The plaintiffs in the Yukon Action have moved to amend their Complaint again, and the amendment likely will be permitted by the Court. The amendment seeks primarily to correct defects in the current version of their Complaint and to add a count seeking a declaratory judgment that certain agreements between ICCC and CCC are void. With respect to this action, we believe we had, and continue to have, the right to store water in these areas. The named defendants deny liability and intend to vigorously defend this action; consequently, we have not recognized any liability related to these claims. However, it is reasonably possible that payments in the future, or the issuance of an injunction, with respect to the pending claims may be material to the financial position, results of operations or cash flows of CONSOL Energy.

148

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Levisa Coal Company filed an action on July 10, 2006 against CCC in the Circuit Court of Buchanan County, Virginia (the “Levisa Action”). The action is for injunctive relief and declaratory judgment and sought a court order prohibiting CCC from depositing water from its Buchanan Mine into the void spaces of ICCC’s VP3 mine, part of which is under lease from Levisa Coal Company. The plaintiff claimed the water would adversely affect its remaining coal reserves and coalbed methane production, thereby impacting the plaintiff’s future royalties. In mid-November 2006, Levisa Coal Company petitioned the Court for a temporary restraining order prohibiting the further depositing of water into the void spaces which, after a two-day hearing, the Court denied. Subsequently, the court entered an order declaring the parties’ rights under lease, deciding that CCC has the right to store water in the VP3 mine void and dismissed the action. The Virginia Supreme Court has allowed an appeal of that order. We believe that CCC has the right to deposit the water in that void area. CCC intends to vigorously defend any appeal of this action; consequently, we have not recognized any liability related to this action. However, if an injunction were to be issued, the result may be material to the financial position, results of operations or cash flows of CONSOL Energy.

CCC has obtained revisions to its environmental permit from the Division of Mined Land Reclamation (“DMLR”) of the Virginia Department of Mines, Minerals and Energy (“DMME”) to deposit water from its Buchanan Mine into void spaces of VP3, and to permit it in the future to discharge mine water into the nearby Levisa River under controlled conditions. Plaintiffs in the Yukon Action and the Levisa Action along with the Town of Grundy, Virginia, Buchanan County, and others have requested the DMME to reconsider the permit revision issued by DMLR. Requests for temporary relief to prevent CCC from constructing and operating pursuant to the permit revisions pending a final hearing before the DMME have been rejected by the Director of DMME. The hearing to be conducted by the Director of the DMME through a Hearing Officer appointed by the Supreme Court of Virginia has not yet been scheduled. In addition, the Virginia Marine Resources Commission (the “VMRC”) conducted a public hearing and issued a permit authorizing CCC to install a “diffuser” buried on the bottom of the Levisa River, which was the last permit required before the discharge could commence, consistent with the conditions of CCC’s DMLR permit revisions. The diffuser and related project elements have been constructed and no appeal was taken from the decision of the VMRC. The plaintiffs in the Yukon Action on June 13, 2006 also filed an action against the DMME in the Circuit Court of Buchanan County, Virginia seeking to enjoin DMLR and DMME from issuing the permit revisions, which were ultimately issued in September 2006 and are the subject of the administrative appeal to the Director of DMME described above. The Levisa Action plaintiff filed a nearly identical action. In addition, both the Levisa and Yukon Plaintiffs filed suits against DMME and CCC after the DMLR permit revisions were issued in September 2006. After motions to dismiss were filed, the Plaintiffs’ actions were subsequently nonsuited. However, by letter of December 31, 2006 the plaintiffs in the Yukon action notified DMME that they may file a similar action challenging DMME’s issuance of the revised permit and the VP3 permit. To date, no action has been filed; however, should one be filed, CONSOL Energy will likely seek to intervene in any such action unless it is also named as a defendant. In addition, Buchanan County, Virginia on August 31, 2006 commenced an action against CCC in the Circuit Court of Buchanan County, Virginia seeking to enjoin any discharge by CCC of mine water into the Levisa River notwithstanding the permit issued to CCC by DMME. That action was removed to the United States District Court for the Western District of Virginia and was subsequently dismissed without prejudice and has not been refiled.

We believe that CCC had and continues to have the right to deposit mine water from Buchanan Mine into void spaces at nearby mines, including VP3. We also believe DMME properly issued environmental permits to CCC authorizing it to deposit naturally accumulating water from the Buchanan Mine into VP3 as well as discharging water into the Levisa River under the controlled conditions established by the permits. CCC and the other CONSOL Energy defendants deny all liability and intend to vigorously defend the actions filed against them. CCC also intends to vigorously defend the environmental permits issued to it. Consequently, we have not

149

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

recognized any liability related to these actions. However, if a temporary restraining order or an injunction were to be issued against CCC, if the environmental permits were temporarily suspended or revoked, or if damages were awarded to plaintiffs, the result may be material to the financial position, results of operations or cash flows of CONSOL Energy.

On October 24, 2006, CONSOL Energy and CCC were served with a summons in the name of the Commonwealth of Virginia with the Circuit Court of Buchanan County, Virginia regarding a special grand jury presentment in response to citizens’ complaints that noise resulting from the ventilation fan at the Buchanan Mine constitutes a public nuisance. CONSOL Energy and CCC deny that the operation of the ventilation fan is a public nuisance and intend to vigorously defend this proceeding. However, if the operation of the ventilation fan is ordered to be stopped, the result may be material to the financial position, results of operations or cash flows of CONSOL Energy.

CNX Gas Company LLC is a party to a case captioned Geomet Operating Company, Inc. and Pocahontas Mining Limited Liability Company v. CNX Gas Company LLC in the Circuit Court for Buchanan County, Virginia. CNX Gas has a coal seam gas lease with Pocahontas Mining in southwest Virginia and southern West Virginia. With the agreement of Pocahontas Mining, GeoMet constructed a pipeline on the property. CNX Gas sought a judicial determination that under the terms of the lease, CNX Gas has the exclusive right to construct and operate pipelines on the property. On May 23, 2007, the Circuit Court entered an Order granting CNX Gas’ motion for summary judgment against GeoMet and Pocahontas Mining. The Order provided that CNX Gas has exclusive rights to construct and operate pipelines on the property and prohibited GeoMet from owning, operating, or maintaining its pipeline on the property. The Court stayed the portion of its Order that required GeoMet to remove its pipeline, pending GeoMet’s appeal of the decision to the Virginia Supreme Court. GeoMet filed an emergency appeal to the Virginia Supreme Court, which on June 20, 2007, overturned the provision of the Circuit Court’s Order requiring GeoMet to remove its pipeline, as well as the related stay and the conditions thereof. The remaining portions of the May 23, 2007 order have been certified for interlocutory appeal to the Virginia Supreme Court. Pocahontas Mining has amended its complaint to seek rescission or reformation of the lease. We cannot predict the ultimate outcome of this litigation; however, payments in the future with respect to this lawsuit may be material to the financial position, results of operations or cash flows of CONSOL Energy.

On February 14, 2007, GeoMet, Inc. and certain of its affiliates filed a lawsuit against CNX Gas Company LLC and Island Creek Coal Company, subsidiaries of CONSOL Energy, in the Circuit Court for the County of Tazewell, Virginia. The lawsuit alleges that CNX Gas conspired with Island Creek and has violated the Virginia Antitrust Act and has tortiously interfered with GeoMet’s contractual relations, prospective contracts and business expectancies. GeoMet seeks injunctive relief, actual damages of $561,000, treble damages and punitive damages in the amount of $350. CNX Gas and Island Creek have filed motions to dismiss all counts of the complaint. On December 19, 2007, the court granted CNX Gas’ and Island Creek’s motions to dismiss all counts, with leave for GeoMet to file an amended complaint. GeoMet has not filed an amended complaint at this time, but they have indicated their intention to do so. CONSOL Energy believes this lawsuit to be without merit and intends to vigorously defend it. However, it is reasonably possible that payments in the future with respect to this lawsuit may be material to the financial position, results of operations or cash flows of CONSOL Energy.

We expensed and paid approximately $28,000 to the Combined Fund for the plan year beginning October 1, 2003 as a result of the higher per beneficiary premium rate calculated by the Commissioner of Social Security and retroactively imposed by the Combined Fund for beneficiaries assigned to CONSOL Energy and its subsidiaries. Additionally, CONSOL Energy expensed approximately $2,000 related to the higher per beneficiary premium rate for the plan year beginning October 1, 2004. The higher per beneficiary premium rate was imposed as a result of court decisions issued prior to June 10, 2003 arising from litigation over the formula used in the

150

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

calculation of the annual per beneficiary premium rate owed by assigned operators, including subsidiaries of CONSOL Energy, to the Combined Fund. In August 2005, after additional litigation cases had been filed concerning the calculation and imposition of the higher per beneficiary premium rate, the United States District Court for the District of Maryland ruled that the calculation by the Commissioner of Social Security was improper, arbitrary and capricious. Subsequently, on December 31, 2006, the United States Court of Appeals for the Fourth Circuit affirmed the decision of the District Court.

On March 28, 2007, the assigned operators, including the subsidiaries of CONSOL Energy, and the Combined Fund entered into a settlement agreement that resolved all issues relating to the calculation and imposition of the higher per beneficiary premium rate. The settlement agreement provides for full reimbursement of the higher per beneficiary premium rate calculated and imposed on the subsidiaries of CONSOL Energy and for the payment of interest on all amounts to be reimbursed. CONSOL Energy received reimbursement of approximately $33,400, which includes the reduction of $2,255 related to the unassigned beneficiary premium liability previously accrued. The reimbursement was reflected as a reduction to cost of goods sold and other changes in the year ended December 31, 2007.

In July 2007, production at the Buchanan Mine was suspended after several roof falls in previously mined areas damaged some of the ventilation controls inside the mine, requiring a general evacuation of the mine by employees. The mine atmosphere was continually monitored to determine the impact of the roof falls on the mine’s ventilation system and the overall mine atmosphere. Two mine atmosphere monitoring stations showed levels of carbon monoxide above ambient levels for several months after the roof falls damaged the ventilation controls. Efforts to eliminate carbon monoxide in the mine were narrowed to an underground area about 400 feet in diameter into which the company pumped inert gas through a number of bore holes that had been drilled. The underground area of the Buchanan Mine encompasses about five square miles. In compliance with safety agency requirements, the mine was temporarily sealed in late November as a final step before reentry into the mine. On January 20, 2008, the restart of the fans was approved by the Commonwealth of Virginia Department of Mines, Minerals and Energy, and by the federal Mine Safety and Health Administration. The temporary mine seals were removed and the ventilation fans were restarted. Specially trained mine rescue teams re-entered the mine on January 28, 2008 and are in the process of evaluating the extent of damage to the mine’s ventilation system and making temporary repairs. This incident is covered under our property and business interruption insurance policy, subject to certain deductibles. Insurance recoveries under our property insurance coverage of $15,000 were recognized as a reduction of Cost of Goods Sold and Other Charges in the year ended December 31, 2007. Business interruption recoveries of $10,000 were recognized as Other Income in the year ended December 31, 2007. The total insurance recoveries of $25,000 were reflected in Other Receivables at December 31, 2007. The majority of this receivable was collected in January 2008. The maximum amount recoverable for this incident under our insurance policy is $75,000. CONSOL Energy is pursuing additional reimbursement from the insurance carriers. There can be no assurance that we will obtain any additional recovery from our insurance carriers.

In January 2003, Mine 84, near Washington, Pennsylvania experienced a fire along several hundred feet of the conveyor belt servicing the longwall section of the mine. The fire was extinguished approximately two weeks later. Recognized insurance recovery for damages of approximately $1,034 was reflected in Other Receivables at December 31, 2007 and 2006. CONSOL Energy received $1,785 of insurance proceeds related to this incident in the year ended December 31, 2005. CONSOL Energy has filed suit against one of the underwriter insurance carriers for insurance proceeds and bad faith settlement practices.

Certain excise taxes paid on export sales of coal during 1991 through 1999 were determined to be unconstitutional. CONSOL Energy subsidiaries filed with the Internal Revenue Service (IRS) claims seeking

151

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

refunds of these excise taxes that were paid during 1994 through 1999 and accordingly recognized receivables for these claims in 2001. The refunds for the 1994 through 1999 claims, which included interest, were received in 2003 and 2002. CONSOL Energy subsidiaries also filed suit to recover excise taxes paid during the period 1991-1993, which came to be known as the “Tucker Act period.” In a test case addressing Tucker Act period claims of certain coal producers, the United States Court of Appeals for the Federal Circuit upheld the producer’s entitlement to sue in court for damages in the amount of the taxes paid during the Tucker Act period, even though a timely administrative claim had not been filed with the IRS for refund of these taxes. The United States Supreme Court denied the Government’s petition for review of the Federal Circuit’s decision. CONSOL Energy recorded a receivable of $26,006, which excluded an interest component, for this portion of the claim classified in Other Assets at December 31, 2006. CONSOL Energy also recorded a payable of $1,914 related to this claim classified in Other Liabilities at December 31, 2006. In 2004, a judgment in favor of certain unrelated coal producers was entered which provided for refund of the principal amount of coal excise taxes paid during the Tucker Act period relevant to those coal producers, but without interest. On January 22, 2007, a three-judge panel of the U.S. Court of Appeals for the Federal Circuit affirmed the judgment as it awarded a refund of principal and reversed the judgment which withheld interest. On March 7, 2007, the Government filed a petition for rehearing before the entire U.S. Court of Appeals. The petition for rehearing was denied on April 30, 2007, thereby confirming the decision of its three-judge panel that the excise taxes and applicable interest were owing to claimants. The Government appealed the tax and interest issues by filing a Petition for Certiorari with the U.S. Supreme Court. On December 3, 2007 the United States Supreme Court granted the Government’s new petition to hear the case. The Supreme Court’s granting of the petition makes collection of the refund by CONSOL Energy no longer highly probable because of rulings on similar Tucker Act cases during 2007. Accordingly, CONSOL Energy reversed the $26,006 export excise tax receivable (which had been reflected in Other Assets) and the $1,914 related liabilities (which had been reflected in Other Liabilities) until the Supreme Court decides the appeal. We intend to vigorously pursue this action, although there is no assurance that CONSOL Energy will receive any tax refund.

At December 31, 2007, CONSOL Energy and certain subsidiaries have provided the following financial guarantees and unconditional purchase obligations. We believe that these guarantees will expire without being funded, and therefore the commitments will not have a material adverse effect on financial condition. The fair value of all liabilities associated with these guarantees have been properly recorded and reported in the financial statements.


	Amount and Duration of Commitments
	Total Amounts Committed		Less Than 1 Year		1-3 Years		3-5 Years		Beyond 5 Years
Letters of Credit:
Employee-Related	$	174,784	$	152,320	$	22,464	$	—	$	—
Environmental		74,343		33,994		40,349		—		—
Gas		14,933		14,913		20		—		—
Other		9,602		9,602		—		—		—

Total Letters of Credit		273,662		210,829		62,833		—		—

Surety Bonds:
Employee-Related		204,308		204,308		—		—		—
Environmental		294,816		291,438		3,375		3		—
Gas		2,981		2,921		60		—		—
Other		8,981		8,652		329		—		—

Total Surety Bonds		511,086		507,319		3,764		3		—

152

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)


	Amount and Duration of Commitments
	Total Amounts Committed		Less Than 1 Year		1-3 Years		3-5 Years		Beyond 5 Years
Guarantees and unconditional purchase obligations:
Coal		97,008		27,457		46,223		20,231		3,097
Gas		29,370		26,270		—		—		3,100
Gas—Firm Transportation		49,292		7,870		14,379		9,948		17,095
Other		203,529		21,606		41,433		21,166		119,324

Total Guarantees		379,199		83,203		102,035		51,345		142,616

Total Commitments	$	1,163,947	$	801,351	$	168,632	$	51,348	$	142,616

Employee-related financial guarantees have primarily been provided to support the United Mine Workers’ of America’s 1992 Benefit Plan and various state workers’ compensation self-insurance programs. Environmental financial guarantees have primarily been provided to support various performance bonds related to reclamation and other environmental issues. Gas financial guarantees have primarily been provided to support various performance bonds related to land usage and restorative issues. Other contingent liabilities have been extended to support insurance policies, legal matters and various other items necessary in the normal course of business.

CONSOL Energy and certain of our subsidiaries have unconditional purchase obligations related to securing pipeline capacity to transport gas to primary delivery points. Other guarantees have also been provided to promise the full and timely payments to lessors of mining equipment and support various other items necessary in the normal course of business.

Note 27—Segment Information:

CONSOL Energy has two principal business units: Coal and Gas. The principal activities of the Coal unit are mining, preparation and marketing of steam coal, sold primarily to power generators, and metallurgical coal, sold to metal and coke producers. The Coal unit includes four reportable segments. These reportable segments are Northern Appalachian, Central Appalachian, Metallurgical and Other Coal. Each of these reportable segments includes a number of operating segments (mines). For the year ended December 31, 2007, the Northern Appalachian aggregated segment includes the following mines: Blacksville #2, Robinson Run, McElroy, Loveridge, Bailey, Enlow Fork, Mine 84 and Mahoning Valley. For the year ended December 31, 2007, the Central Appalachian aggregated segment includes the following mines: Jones Fork, Mill Creek, Wiley-Mill Creek. It also includes the following mines acquired with the AMVEST acquisition: Fola Complex and Terry Eagle Complex. For the year ended December 31, 2007, the Metallurgical aggregated segment includes the following mines: Buchanan and Amonate. The Other Coal segment includes our purchased coal activities, idled mine cost, coal segment business units not meeting aggregation criteria, as well as various other activities assigned to the coal segment but not allocated to each individual mines. The principal activity of the Gas unit is to produce pipeline-quality methane gas for sale primarily to gas wholesalers. CONSOL Energy’s All Other segment includes terminal services, river and dock services, industrial supply services and other business activities, including rentals of buildings and flight operations. Intersegment sales have been recorded at amounts approximating market. Operating profit for each segment is based on sales less identifiable operating and non-operating expenses. Certain reclassifications of 2006 and 2005 segment information have been made to conform to the 2007 presentation.

153

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Segment results for the year ended December 31, 2007:


	Northern Appalachian		Central Appalachian		Metallurgical		Other Coal			Total Coal		Gas		All Other		Corporate Adjustments & Eliminations			Consolidated
Sales—Outside	$	1,988,526	$	272,131	$	237,266	$	180,758		$	2,678,681	$	410,211	$	235,454	$	—		$	3,324,346	(A)
Sales—Purchased Gas		—		—		—		—			—		7,628		—		—			7,628
Sales—Gas Royalty Interests		—		—		—		—			—		46,586		—		—			46,586
Freight—Outside		—		—		—		186,909			186,909		—		—		—			186,909
Intersegment Transfers		—		—		—		—			—		6,242		129,648		(135,890	)		—

Total Sales and Freight	$	1,988,526	$	272,131	$	237,266	$	367,667		$	2,865,590	$	470,667	$	365,102	$	(135,890	)	$	3,565,469

Earnings (Loss) Before Income Taxes	$	353,255	$	25,428	$	65,080	$	(166,256	)	$	277,507	$	214,874	$	15,152	$	(78,576	)	$	428,957	(B)

Segment assets										$	4,039,513	$	1,378,709	$	253,792	$	536,076		$	6,208,090	(C)

Depreciation, depletion and amortization										$	257,349	$	48,961	$	18,405	$	—		$	324,715

Capital Expenditures										$	681,408	$	304,088	$	54,342	$	—		$	1,039,838

(A)	There were no sales to customers aggregating over 10% in 2007.

(B)	Includes equity in earnings of unconsolidated affiliates of $1,027, $2,174 and $3,350 for Other Coal, Gas and All Other, respectively.

(C)	Includes investments in unconsolidated equity affiliates of $3,101 and $56,865 and $34,900 for Other Coal, Gas and All Other, respectively.

154

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Segment results for the year ended December 31, 2006:


	Northern Appalachian		Central Appalachian		Metallurgical		Other Coal			Total Coal		Gas		All Other		Corporate Adjustments & Eliminations			Consolidated
Sales—Outside	$	1,861,388	$	230,781	$	357,103	$	245,173		$	2,694,445	$	389,174	$	202,903	$	—		$	3,286,522	(D)
Sales—Purchased Gas		—		—		—		—			—		43,973		—		—			43,973
Sales—Gas Royalty Interests		—		—		—		—			—		51,054		—		—			51,054
Freight—Outside		—		—		—		162,761			162,761		—		—		—			162,761
Intersegment Transfers		—		—		—		—			—		4,372		128,824		(133,196	)		—

Total Sales and Freight	$	1,861,388	$	230,781	$	357,103	$	407,934		$	2,857,206	$	488,573	$	331,727	$	(133,196	)	$	3,544,310

Earnings (Loss) Before Income Taxes	$	261,702	$	7,911	$	152,490	$	(81,511	)	$	340,592	$	252,250	$	20,396	$	(62,318	)	$	550,920	(E)

Segment assets										$	3,540,276	$	1,152,256	$	224,477	$	746,323		$	5,663,332	(F)

Depreciation, depletion and amortization										$	240,582	$	37,999	$	17,656	$	—		$	296,237

Capital Expenditures										$	488,876	$	154,243	$	47,427	$	—		$	690,546

(D)	There were no sales to customers aggregating over 10% in 2006.

(E)	Includes equity in earnings (losses) of unconsolidated affiliates of $977 and $224 for Gas and All Other, respectively.

(F)	Includes investments in unconsolidated equity affiliates of $52,283 and $31,936 for Gas and All Other, respectively. Also, included in the Coal segment is $26,006 of receivables related to the Export Sales Excise Tax Resolution.

155

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Segment results for the year ended December 31, 2005:


	Northern Appalachian		Central Appalachian			Metallurgical		Other Coal			Total Coal		Gas		All Other			Corporate Adjustments & Eliminations			Consolidated
Sales—Outside	$	1,878,267	$	233,444		$	211,272	$	199,165		$	2,522,148	$	281,455	$	127,330		$	—		$	2,930,933	(G)
Sales—Purchased Gas		—		—			—		—			—		275,148		—			—			275,148
Sales—Gas Royalty Interests		—		—			—		—			—		45,351		—			—			45,351
Sales—Related parties		—		—			—		4,749			4,749		—		—			—			4,749
Freight—Outside		—		—			—		119,343			119,343		—		—			—			119,343
Freight—Related parties		—		—			—		468			468		—		—			—			468
Intersegment Transfers		—		—			—		—			—		1,628		108,209			(109,837	)		—

Total Sales and Freight	$	1,878,267	$	233,444		$	211,272	$	323,725		$	2,646,708	$	603,582	$	235,539		$	(109,837	)	$	3,375,992

Earnings (Loss) Before Income Taxes	$	327,769	$	(358	)	$	21,789	$	(97,847	)	$	251,353	$	165,225	$	(17,722	)	$	255,828		$	654,684	(H)

Segment assets											$	3,239,674	$	849,100	$	139,584		$	843,605		$	5,071,963	(I)

Depreciation, depletion and amortization											$	213,271	$	35,039	$	13,541		$	—		$	261,851

Capital Expenditures											$	415,423	$	110,752	$	6,621		$	—		$	532,796

(G)	Included in the Coal and Gas segment are sales of $349,537 and $4,475, respectively, to Allegheny Energy.

(H)	Includes equity in earnings (losses) of unconsolidated affiliates of $(1,758), $444 and $4,164 for Other Coal, Gas and All Other, respectively.

(I)	Includes investments in unconsolidated equity affiliates of $49,528 and $2,733 for Gas and All Other, respectively. Also, included in the Coal segment is $26,006 of receivables related to the Export Sales Excise Tax Resolution.

156

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Reconciliation of Segment Information to Consolidated Amounts:

Revenue and Other Income:


	For the Years Ended December 31,
	2007			2006			2005
Total segment sales and freight from external customers	$	3,565,469		$	3,544,310		$	3,375,992
Other income not allocated to segments (Note 4)		196,728			170,861			107,131
Gain on Sale of 18.5% interest in CNX Gas		—			—			327,326

Total Consolidated Revenue and Other Income	$	3,762,197		$	3,715,171		$	3,810,449

Earnings Before Income Taxes:
Segment Earnings Before Income Taxes for total reportable business segments	$	492,381		$	592,842		$	416,578
Segment Earnings (Loss) Before Income Taxes for all other businesses		15,152			20,396			(17,722	)
Incentive Compensation(J)		(26,770	)		(19,181	)		(32,739	)
Compensation from restricted stock unit grants, stock option expense and performance share unit expense(J)		(20,983	)		(19,113	)		(3,609	)
Gain on Sale of 18.5% of CNX Gas		—			—			327,326
Interest income (expense), net and other non-operating activity(J)		(30,823	)		(24,024	)		(35,150	)

Earnings Before Income Taxes	$	428,957		$	550,920		$	654,684


	December 31,
	2007		2006		2005
Total Assets:
Segment assets for total reportable business segments	$	5,418,222	$	4,692,532	$	4,088,774
Segment assets for all other businesses		253,792		224,477		139,584
Items excluded from segments assets:
Cash and other investments(J)		9,978		118,085		321,543
Deferred tax assets		505,631		625,227		519,958
Recoverable income taxes		19,090		1,278		—
Bond issuance costs		1,377		1,733		2,104

Total Consolidated Assets	$	6,208,090	$	5,663,332	$	5,071,963

(J)	Excludes amounts specifically related to gas segment.

157

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Enterprise-Wide Disclosures:

CONSOL Energy’s Revenues by geographical location:


	For the Years Ended December 31,
	2007		2006		2005
United States	$	3,077,573	$	3,218,779	$	3,104,847
Europe		332,280		199,532		188,271
Canada		115,361		95,850		59,672
South America		40,255		30,149		22,052
Other		—		—		1,150

Total Revenues and Freight from External Customers(K)	$	3,565,469	$	3,544,310	$	3,375,992

(K)	CONSOL Energy attributes revenue to individual countries based on the location of the customer.

CONSOL Energy’s Property, Plant and Equipment by geographical location are:


	December 31,
	2007		2006
United States	$	4,930,339	$	4,005,720
Canada		34,565		34,425
Belgium		138		142

Total Property, Plant and Equipment	$	4,965,042	$	4,040,287

Note 28—Guarantor Subsidiaries Financial Information:

The payment obligations under the $250,000, 7.875 percent per annum notes due March 1, 2012 issued by CONSOL Energy are jointly and severally, and also fully and unconditionally guaranteed by several subsidiaries of CONSOL Energy. In accordance with positions established by the Securities and Exchange Commission (“SEC”), the following financial information sets forth separate financial information with respect to the parent, CNX Gas, an 81.7% owned guarantor subsidiary, the remaining guarantor subsidiaries and the non-guarantor subsidiaries. CNX Gas is presented in a separate column in accordance with SEC Regulation S-X Rule 3-10. CNX Gas Corporation is a reporting company under Section 12(b) of the Securities Exchange Act of 1933, and as such, CNX Gas Corporation files its own financial statements with the Securities and Exchange Commission and those financial statements, when filed, are publicly available on Edgar. The principal elimination entries include investments in subsidiaries and certain intercompany balances and transactions. CONSOL Energy, the parent, and a guarantor subsidiary manage several assets and liabilities of all other 100% owned subsidiaries. These include, for example, deferred tax assets, cash and other post-employment liabilities. These assets and liabilities are reflected as parent company or guarantor company amounts for purposes of this presentation.

158

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Income Statement for the Year Ended December 31, 2007


	Parent			CNX Gas Guarantor		Other Subsidiary Guarantors			Non-Guarantors		Elimination			Consolidated
Sales—Outside	$	—		$	416,453	$	2,718,493		$	201,018	$	(11,618	)	$	3,324,346
Sales—Purchased gas		—			7,628		—			—		—			7,628
Sales—Gas Royalty Interest		—			46,586		—			—		—			46,586
Freight—Outside		—			—		186,909			—		—			186,909
Other Income (including equity earnings)		333,581			8,815		141,735			40,093		(327,496	)		196,728

Total Revenue and Other Income		333,581			479,482		3,047,137			241,111		(339,114	)		3,762,197
Cost of Goods Sold and Other Operating Charges		63,899			102,278		1,915,666			61,864		207,800			2,351,507
Purchased Gas Costs		—			7,162		—			—		—			7,162
Gas Royalty Interest		—			40,011		—			—		(90	)		39,921
Related Party Activity		(4,601	)		—		87,459			134,213		(217,071	)		—
Freight Expense		—			—		186,909			—		—			186,909
Selling, General and Administrative Expense		—			54,825		51,029			2,810		—			108,664
Depreciation, Depletion and Amortization		7,666			48,961		259,825			10,343		(2,080	)		324,715
Interest Expense		24,932			5,606		(250	)		563		—			30,851
Taxes Other Than Income		5,790			—		270,762			6,959		—			283,511

Total Costs		97,686			258,843		2,771,400			216,752		(11,441	)		3,333,240

Earnings (Loss) Before Income Taxes		235,895			220,639		275,737			24,359		(327,673	)		428,957
Income Taxes (Benefit)		(31,887	)		84,961		73,848			9,215		—			136,137

Earnings (Loss) Before Minority Interest		267,782			135,678		201,889			15,144		(327,673	)		292,820
Minority Interest		—			—		—			—		(25,038	)		(25,038	)

Net Income (Loss)	$	267,782		$	135,678	$	201,889		$	15,144	$	(352,711	)	$	267,782

159

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Balance Sheet for December 31, 2007:


	Parent		CNX Gas Guarantor			Other Subsidiary Guarantors			Non-Guarantors		Elimination			Consolidated
Assets:
Current Assets:
Cash and Cash Equivalents	$	6,519	$	32,048		$	—		$	3,084	$	—		$	41,651
Accounts and Notes Receivable:
Trade		—		38,680			—			141,865		—			180,545
Other		840		2,428			34,619			31,884		—			69,771
Inventories		—		—			135,132			28,061		—			163,193
Deferred Income Taxes		132,089		(1,269	)		—			—		—			130,820
Recoverable Income Taxes		18,118		972			—			—		—			19,090
Prepaid Expenses		18,130		13,859			40,985			5,111		—			78,085

Total Current Assets		175,696		86,718			210,736			210,005		—			683,155
Property, Plant and Equipment:
Property, Plant and Equipment		103,223		1,480,446			7,274,197			87,446		—			8,945,312
Less-Accumulated Depreciation, Depletion and Amortization		52,103		251,367			3,638,286			38,514		—			3,980,270

Property, Plant and Equipment—Net		51,120		1,229,079			3,635,911			48,932		—			4,965,042
Other Assets:
Deferred Income Taxes		563,226		(188,415	)		—			—		—			374,811
Investment in Affiliates		2,817,974		56,865			1,305,043					(4,085,016	)		94,866
Other		30,242		6,772			35,600			17,602		—			90,216

Total Other Assets		3,411,442		(124,778	)		1,340,643			17,602		(4,085,016	)		559,893

Total Assets	$	3,638,258	$	1,191,019		$	5,187,290		$	276,539	$	(4,085,016	)	$	6,208,090

Liabilities and Stockholders’ Equity:
Current Liabilities:
Accounts Payable	$	71,558	$	30,263		$	110,370		$	26,121	$	—		$	238,312
Accounts Payable (Recoverable)-Related Parties		1,592,539		—			(1,714,595	)		122,056		—			—
Short-Term Notes Payable		247,500		—			—			—		—			247,500
Current Portion of Long-Term Debt		—		5,819			10,464			2,000		—			18,283
Other Accrued Liabilities		99,169		25,333			378,788			9,012		—			512,302

Total Current Liabilities		2,010,766		61,415			(1,214,973	)		159,189		—			1,016,397
Long-Term Debt		258,848		66,949			154,143			8,985		—			488,925
Deferred Credits and Other Liabilities:
Postretirement Benefits Other Than Pensions		—		2,700			2,334,109			—		—			2,336,809
Pneumoconiosis		—		—			171,896			—		—			171,896
Mine Closing		—		—			388,710			10,923		—			399,633
Workers’ Compensation		—		—			118,356			—		—			118,356
Deferred Revenue		—		—			3,162			—		—			3,162
Salary Retirement		67,065		327			—			—		—			67,392
Reclamation		—		—			14,497			19,820		—			34,317
Other		87,160		36,391			52,958			17,157		—			193,666

Total Deferred Credits and Other Liabilities		154,225		39,418			3,083,688			47,900		—			3,325,231
Minority Interest		—		—			—			—		163,118			163,118
Stockholders’ Equity		1,214,419		1,023,237			3,164,432			60,465		(4,248,134	)		1,214,419

Total Liabilities and Stockholders’ Equity	$	3,638,258	$	1,191,019		$	5,187,290		$	276,539	$	(4,085,016	)	$	6,208,090

160

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Condensed Statement of Cash Flows

For the Year Ended December 31, 2007:


	Parent			CNX Gas Guarantor			Other Subsidiary Guarantors			Non-Guarantors			Elimination		Consolidated
Net Cash Provided by Operating Activities	$	(258,800	)	$	272,448		$	649,136		$	21,249		$	—	$	684,033

Cash Flows from Investing Activities:
Capital Expenditures	$	—		$	(348,631	)	$	(372,424	)	$	(22,059	)	$	—	$	(743,114	)
Acquisition of AMVEST		—			—			(296,724	)		—			—		(296,724	)
Investment in Equity Affiliates		—			(5,783	)		(1,274	)		—			—		(7,057	)
Purchase of Stock in Subsidiary		—			—			(10,000	)		—			—		(10,000	)
Proceeds from Sale of Assets		—			187			83,754			850			—		84,791

Net Cash Used in Investing Activities	$	—		$	(354,227	)	$	(596,668	)	$	(21,209	)	$	—	$	(972,104	)

Cash Flows from Financial Activities:
Dividends Paid	$	(56,475	)	$	—		$	—		$	—		$	—	$	(56,475	)
Proceeds from Revolver		247,500			—			—			—			—		247,500
Purchase of Treasury Stock		(80,157	)		—			—			—			—		(80,157	)
Payments on Long Term Notes		—			—			(45,000	)		—			—		(45,000	)
Other Financing Activities		42,906			6,654			(7,589	)		(2,000	)		—		39,971

Net Cash Used in Financing Activities	$	153,774		$	6,654		$	(52,589	)	$	(2,000	)	$	—	$	105,839

161

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Income Statement for the Year Ended December 31, 2006:


	Parent			CNX Gas Guarantors		Other Subsidiary Guarantors			Non-Guarantors		Elimination			Consolidated
Sales—Outside	$	—		$	393,546	$	2,707,277		$	196,322	$	(10,623	)	$	3,286,522
Sales—Purchased Gas		—			43,973		—			—		—			43,973
Sales—Gas Royalty Interest		—			51,054		—			—		—			51,054
Freight—Outside		—			—		162,761			—		—			162,761
Freight—Related Parties		—			—		—			—		—			—
Other Income (including equity earnings)		459,550			26,264		98,852			35,521		(449,326	)		170,861

Total Revenue and Other Income		459,550			514,837		2,968,890			231,843		(459,949	)		3,715,171
Cost of Goods Sold and Other Operating Charges		45,285			93,519		1,895,786			43,857		171,329			2,249,776
Purchased Gas Costs		—			—		44,843			—		—			44,843
Gas Royalty Interest		—			41,998		(119	)		—		—			41,879
Related Party Activity		(4,821	)		44,843		(128	)		137,341		(177,235	)		—
Freight Expense		—			—		162,761			—		—			162,761
Selling, General and Administrative Expense		—			39,168		47,775			4,207		—			91,150
Depreciation, Depletion and Amortization		6,959			37,999		243,869			9,784		(2,374	)		296,237
Interest Expense		20,189			870		3,427			580		—			25,066
Taxes Other Than Income		4,339			—		239,673			8,527		—			252,539

Total Costs		71,951			258,397		2,637,887			204,296		(8,280	)		3,164,251

Earnings (Loss) Before Income Taxes		387,599			256,440		331,003			27,547		(451,669	)		550,920
Income Taxes (Benefit)		(21,283	)		96,573		26,752			10,388		—			112,430

Earnings Before Minority Interest		408,882			159,867		304,251			17,159		(451,669	)		438,490
Minority Interest		—			—		—			—		(29,608	)		(29,608	)

Net Income (Loss)	$	408,882		$	159,867	$	304,251		$	17,159	$	(481,277	)	$	408,882

162

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Balance Sheet for December 31, 2006:


	Parent		CNX Gas Guarantor			Other Subsidiary Guarantors			Non-Guarantors		Elimination			Consolidated
Assets:
Current Assets:
Cash and Cash Equivalents	$	111,545	$	107,173		$	121		$	5,044	$	—		$	223,883
Accounts and Notes Receivable:
Trade		—		46,062			10,073			247,040		—			303,175
Other		3,552		5,036			14,858			28,444		—			51,890
Inventories		—		—			127,218			22,089		—			149,307
Deferred Income Taxes		120,322		(3,091	)		—			—		—			117,231
Recoverable Income Taxes		3,469		(2,191	)		—			—		—			1,278
Prepaid Expenses		18,038		14,465			30,539			4,690		—			67,732

Total Current Assets		256,926		167,454			182,809			307,307		—			914,496
Property, Plant and Equipment:
Property, Plant and Equipment		89,688		1,123,774			6,553,908			82,566		—			7,849,936
Less-Accumulated Depreciation, Depletion and Amortization		44,563		203,121			3,531,594			30,371		—			3,809,649

Property, Plant and Equipment—Net		45,125		920,653			3,022,314			52,195		—			4,040,287
Other Assets:
Deferred Income Taxes		628,004		(120,008	)		—			—		—			507,996
Investment in Affiliates		2,134,962		52,283			1,170,725			—		(3,273,751	)		84,219
Other		32,177		9,329			63,238			11,590		—			116,334

Total Other Assets		2,795,143		(58,396	)		1,233,963			11,590		(3,273,751	)		708,549

Total Assets	$	3,097,194	$	1,029,711		$	4,439,086		$	371,092	$	(3,273,751	)	$	5,663,332

Liabilities and Stockholders’ Equity:
Current Liabilities:
Accounts Payable	$	179,208	$	27,872		$	(503	)	$	18,483	$	—		$	225,060
Accounts Payable (Recoverable)-Related Parties		1,365,579		—			(1,627,180	)		261,601		—			—
Current Portion of Long-Term Debt		—		2,573			54,945			2,000		—			59,518
Accrued Income Taxes		—		—			—			—		—			—
Other Accrued Liabilities		80,839		21,185			343,529			9,993		—			455,546

Total Current Liabilities		1,625,626		51,630			(1,229,209	)		292,077		—			740,124
Long-Term Debt		258,666		63,897			159,197			10,985		—			492,745
Deferred Credits and Other Liabilities:
Postretirement Benefits Other Than Pensions		—		2,313			2,249,802			—		—			2,252,115
Pneumoconiosis		—		—			184,424			—		—			184,424
Mine Closing		—		—			379,153			10,743		—			389,896
Workers’ Compensation		—		—			121,337			—		—			121,337
Deferred Revenue		—		—			13,106			—		—			13,106
Salary Retirement		113,755		189			—			—		—			113,944
Reclamation		—		—			8,728			17,733		—			26,461
Other		32,996		31,467			43,890			19,017		—			127,370

Total Deferred Credits and Other Liabilities		146,751		33,969			3,000,440			47,493		—			3,228,653
Minority Interest		—		—			—			—		135,659			135,659
Stockholders’ Equity		1,066,151		880,215			2,508,658			20,537		(3,409,410	)		1,066,151

Total Liabilities and Stockholders’ Equity	$	3,097,194	$	1,029,711		$	4,439,086		$	371,092	$	(3,273,751	)	$	5,663,332

163

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Condensed Statement of Cash Flows

For the Year Ended December 31, 2006:


	Parent			CNX Gas Guarantor			Other Subsidiary Guarantors			Non-Guarantors			Elimination			Consolidated
Net Cash Provided by Operating Activities	$	(71,616	)	$	243,569		$	491,590		$	1,004		$	—		$	664,547

Cash Flows from Investing Activities:
Capital Expenditures	$	(10,752	)	$	(154,243	)	$	(518,792	)	$	(6,759	)	$	—		$	(690,546	)
Investment in Equity Affiliates		—			(1,777	)		(29,186	)		—			—			(30,963	)
Proceeds from Sale of Assets		—			—			59,830			133			—			59,963

Net Cash Used in Investing Activities	$	(10,752	)	$	(156,020	)	$	(488,148	)	$	(6,626	)	$	—		$	(661,546	)

Cash Flows from Financial Activities:
Dividends Paid	$	(51,416	)	$	—		$	—		$	—		$	—		$	(51,416	)
Purchase of Treasury Stock		(116,450	)		—			—			—			—			(116,450	)
Other Financing Activities		53,173			(449	)		(3,601	)		(1,015	)		—			48,108

Net Cash Used in Financing Activities	$	(114,693	)	$	(449	)	$	(3,601	)	$	(1,015	)	$	—		$	(119,758	)

Income Statement for the Year Ended December 31, 2005:
	Parent			CNX Gas Guarantor			Other Subsidiary Guarantors			Non-Guarantors			Elimination			Consolidated
Sales—Outside	$	—		$	277,031		$	2,522,900		$	131,293		$	(291	)	$	2,930,933
Sales—Purchased gas		—			275,148			—			—			—			275,148
Sales—Royalty Interest		—			45,351			—			—			—			45,351
Sales—Related party		—			6,052			1,965			—			(3,268	)		4,749
Freight—Outside		—			—			118,972			—			371			119,343
Freight—Related party		—			—			839			—			(371	)		468
Gain on CNX Gas Sale		—			—			327,326			—			—			327,326
Other Income (including equity earnings)		646,086			10,304			(5,379	)		23,358			(567,238	)		107,131

Total Revenue and Other Income		646,086			613,886			2,966,623			154,651			(570,797	)		3,810,449
Cost of Goods Sold and Other Operating Charges		49,774			77,625			1,837,522			37,398			119,940			2,122,259
Purchased Gas Costs		—			278,720			—			—			—			278,720
Gas Royalty Interest		—			36,641			—			—			(140	)		36,501
Related Party Activity		5,137			—			(416,640	)		107,781			303,722			—
Freight Expense		1,854			—			119,811			—			(1,854	)		119,811
Selling, General and Administrative Expense		—			19,129			60,068			1,503			—			80,700
Depreciation, Depletion and Amortization		6,681			35,039			218,552			4,076			(2,497	)		261,851
Interest Expense		20,354			14			6,946			3			—			27,317
Taxes Other Than Income		5,247			—			219,209			4,150			—			228,606

Total Costs		89,047			447,168			2,045,468			154,911			419,171			3,155,765

Earnings (Loss) Before Income Taxes		557,039			166,718			921,155			(260	)		(989,968	)		654,684
Income Taxes (Benefit)		(23,822	)		64,550			23,705			(94	)		—			64,339

Earnings Before Minority Interest		580,861			102,168			897,450			(166	)		(989,968	)		590,345
Minority Interest		—			—			—			—			(9,484	)		(9,484	)

Net Income (Loss)	$	580,861		$	102,168		$	897,450		$	(166	)	$	(999,452	)	$	580,861

164

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Condensed Statement of Cash Flows

For the Year Ended December 31, 2005:


	Parent			CNX Gas Guarantor			Other Subsidiary Guarantors			Non-Guarantors			Elimination			Consolidated
Net Cash Provided by Operating Activities	$	307,594		$	144,997		$	(48,396	)	$	4,891		$	—		$	409,086

Cash Flows from Investing Activities:
Capital Expenditures	$	(5,297	)	$	(110,752	)	$	(395,281	)	$	(12,137	)	$	—		$	(523,467	)
Investment in Equity Affiliates		—			2,465			986			545			—			3,996
Proceeds From Sale of 18.5% Interest in Gas Segment		—			—			420,167			—			—			420,167
Other Investing Activities		18,488			—			6,403			—			—			24,891

Net Cash Provided by (Used in) Investing Activities	$	13,191		$	(108,287	)	$	32,275		$	(11,592	)	$	—		$	(74,413	)

Cash Flows from Financial Activities:
Payments on Short-Term Debt	$	(1,700	)	$	—		$	—		$	—		$	—		$	(1,700	)
Proceeds from Long-Term Notes		—			—			—			14,000			—			14,000
Issuance of Common Stock		—			420,167			—			—			(420,167	)		—
Dividends Paid		(51,321	)		(420,167	)		—			—			420,167			(51,321	)
Other Financing Activities		39,150			(16,640	)		(584	)		—			16,640			38,566

Net Cash (Used in) Provided by Financing Activities	$	(13,871	)	$	(16,640	)	$	(584	)	$	14,000		$	16,640		$	(455	)

Note 29 – Subsequent Event:

On January 29, 2008 CONSOL Energy announced intentions to offer to acquire all of the outstanding shares of CNX Gas Corporation that it does not currently own in a stock-for-stock transaction. CONSOL Energy currently owns approximately 81.7% of the approximately 151 million shares of CNX Gas common stock outstanding and the acquisition of the remaining outstanding shares of CNX Gas supports CONSOL Energy’s strategy of energy asset diversification.

CONSOL Energy intends to offer CNX Gas stockholders 0.4425 shares of CONSOL Energy common stock for each outstanding share of CNX Gas Common stock that CONSOL Energy does not own, the equivalent of $33.70 per share for CNX Gas common stock, or a 12% premium based upon the closing stock prices of CONSOL Energy and CNX Gas on January 28, 2008. The transaction is valued at approximately $932 million. CONSOL Energy currently expects to complete the transaction in the first half of 2008.

In accordance with the purchase method of accounting, the acquired outstanding minority interest of CNX Gas will be accounted for at fair value as of the date of the acquisition.

165

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Supplemental Coal Data (unaudited):


	Millions of Tons For the Year Ended December 31,
	2007		2006		2005		2004		2003
Proved and probable reserves at beginning of period	4,272		4,546		4,509		4,148		4,234
Purchased reserves	177		3		56		15		1
Reserves sold in place	(33	)	(2	)	(2	)	(11	)	(32	)
Production	(65	)	(67	)	(69	)	(68	)	(60	)
Revisions and other changes	175		(208	)	52		425		5

Consolidated proved and probable reserves at end of period*	4,526		4,272		4,546		4,509		4,148

Proportionate share of proved and probable reserves of unconsolidated equity affiliates*	179		—		—		—		10

*	Proved and probable coal reserves are the equivalent of “demonstrated reserves” under the coal resource classification system of the U.S. Geological Survey. Generally, these reserves would be commercially mineable at year-end prices and cost levels, using current technology and mining practices.

CONSOL Energy’s coal reserves are located in nearly every major coal-producing region in North America. At December 31, 2007, 999 million tons were assigned to mines either in production or under development. The proved and probable reserves at December 31, 2007 include 4,017 million tons of steam coal reserves, of which approximately 7 percent has a sulfur content equivalent to less than 1.2 pounds sulfur dioxide per million British thermal unit (Btu), and an additional 16 percent has a sulfur content equivalent to between 1.2 and 2.5 pounds sulfur dioxide per million Btu. The reserves also include 509 million tons of metallurgical coal in consolidated reserves, of which approximately 61 percent has a sulfur content equivalent to less than 1.2 pounds sulfur dioxide per million Btu, and the remaining 39 percent has a sulfur content equivalent to between 1.2 and 2.5 pounds sulfur dioxide per million Btu. A significant portion of this metallurgical coal can also serve the steam coal market.

Supplemental Gas Data (unaudited):

(Dollars in thousands)

The following information was prepared in accordance with Statement of Financial Accounting Standards No. 69, “Disclosures About Oil and Gas Producing Activities” and related accounting rules. The data presented is 100% of CNX Gas’ basis; it excludes the 18% minority interest reduction.

Capitalized Costs:


	As of December 31,
	2007			2006
Proved Properties	$	125,118		$	91,913
Unproved Properties		81,078			765
Wells and Related Equipment		599,382			402,200
Gathering Assets		595,137			520,906
Uncompleted Wells and Related Equipment		72,858			93,414

Total Property, Plant and Equipment		1,473,573			1,109,198
Accumulated Depreciation, Depletion and Amortization		(251,367	)		(200,755	)

Net Capitalized Costs	$	1,222,206		$	908,443

Proportionate Share of Gas Producing Net Property, Plant and Equipment of Unconsolidated Equity Affiliates	$	30,364		$	22,139

166

CONSOL ENERGY INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Costs incurred for Property Acquisition, Exploration and Development(*)


	For the Year Ended December 31,
	2007				2006				2005
	Consolidated Operations		Equity Affiliates		Consolidated Operations		Equity Affiliates		Consolidated Operations		Equity Affiliates
Property Acquisitions Proved Properties	$	33,205	$	—	$	8,797	$	—	$	7,666	$	20
Unproved Properties		80,313		—		765		—		667		—
Development		257,935		—		151,774		—		86,273		—
Exploration		16,503		—		832		2,334		19,370		412

Total	$	387,956	$	—	$	162,168	$	2,334	$	113,976	$	432

(*)	Includes costs incurred whether capitalized or expensed.

Results of Operations for Producing Activities:


	Years Ended December 31,
	2007				2006				2005
	Consolidated Operations		Equity Affiliates		Consolidated Operations		Equity Affiliates		Consolidated Operations		Equity Affiliates
Production Revenue	$	416,452	$	2,755	$	393,649	$	1,913	$	283,137	$	2,406
Royalty Interest Gas Revenue		46,586		294		51,054		446		45,351		408
Purchased Gas Revenue		7,628		201		43,973		356		275,148		2,561

Total Revenue		470,666		3,250		488,676		2,715		603,636		5,375

Lifting Costs		38,721		679		33,357		480		30,399		623
Gathering Costs		61,798		630		58,102		359		43,903		168
Royalty Expense		40,011		294		41,998		446		36,641		408
Other Production Costs		19,772		646		12,876		541		10,339		915
Purchased Gas Costs		7,162		165		44,843		299		278,720		2,434
Depreciation, Depletion & Amortization		48,961		294		37,999		512		35,039		870

Total Costs		216,425		2,708		229,175		2,637		435,041		5,418

Earnings Before Income Tax		254,241		542		259,501		78		168,595		(43	)
Income Taxes		98,595		210		97,728		29		65,280		(17	)

Results of Operations for Producing Activities excluding Corporate and Interest Costs	$	155,646	$	332	$	161,773	$	49	$	103,315	$	(26	)

167


	Years Ended December 31,
	2007				2006				2005
	Consolidated Operations		Equity Affiliates		Consolidated Operations		Equity Affiliates		Consolidated Operations		Equity Affiliates
Net Reserve Quantity (Million Cubic Feet equivalent)
Beginning Reserves(a)	1,263,293		2,200		1,127,724		2,672		1,042,403		2,385
Revisions(b)	(25,036	)	221		109,116		(584	)	57,575		521
Extensions and Discoveries	145,834		1,484		82,363		337		77,917		—
Production	(57,928	)	(321	)	(55,910	)	(225	)	(50,171	)	(234	)
Purchase of Reserves In-Place	13,746		—		—		—		—		—
Sales of Reserves In-Place	—		—		—		—		—		—

Ending Reserves	1,339,909		3,584		1,263,293		2,200		1,127,724		2,672

Proved Developed Reserves:
Beginning of Period	609,700		2,200		549,574		2,672		395,152		2,385

End of Period	667,726		3,584		609,700		2,200		549,574		2,672

(a)

Proved developed and undeveloped gas reserves are defined by the Securities and Exchange Commission Rule 4.10(a) of Regulation S-X. Generally, these reserves would be commercially recovered under current economic conditions, operating methods and government regulations. CONSOL Energy cautions that there are many inherent uncertainties in estimating provided reserve quantities, projecting future production rates, and timing of development expenditures. Accordingly, these estimates are likely to change as future information becomes available. Proved oil and gas reserves are estimated quantities of natural gas and CBM gas which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are those reserves expected to be recovered through existing wells, with existing equipment and operating methods.

(b)	2007 revisions are based upon our review of production curves of over 6,000 wells. Revisions were both upward and downward and no well was individually material. Production optimization is an ongoing effort.

CONSOL Energy’s proved gas reserves are located in the states of Virginia (97%), West Virginia (1%) and Pennsylvania (2%). CONSOL Energy’s proportionate interest in equity affiliates’ proved gas reserves is located in Tennessee (100%).

CONSOL Energy cautions that there are many inherent uncertainties in estimating proved reserve quantities, projecting future production rates, and timing of development expenditures. Accordingly, these estimates are likely to change as future information becomes available. Proved gas reserves are estimated quantities of natural gas and coalbed methane gas which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are those reserves expected to be recovered through existing wells, with existing equipment and operating methods.

Standardized Measure of Discounted Future Net Cash Flows:

The following information has been prepared in accordance with the provisions of Statement of Financial Accounting Standards No. 69, “Disclosures about Oil and Gas Producing Activities” (SFAS No. 69). SFAS No. 69 requires the standardized measure of discounted future net cash flows to be based on year-end sales prices, costs and statutory income tax rates and a 10 percent annual discount rate. Because prices used in the calculation are as of the end of the period, the standardized measure could vary significantly from year to year based on the market conditions at that specific date.

168

The projections should not be viewed as realistic estimates of future cash flows, nor should the “standardized measure” be interpreted as representing current value to CONSOL Energy. Material revisions to estimates of proved reserves may occur in the future; development and production of the reserves may not occur in the periods assumed; actual prices realized are expected to vary significantly from those used; and actual costs may vary. CONSOL Energy’s investment and operating decisions are not based on the information presented, but on a wide range of reserve estimates that include probable as well as proved reserves, and on different price and cost assumptions.

The standardized measure is intended to provide a better means for comparing the value of CONSOL Energy’s proved reserves at a given time with those of other gas producing companies than is provided by a comparison of raw proved reserve quantities.


	December 31,
	2007			2006			2005
Future Cash Flows:
Revenues	$	9,509,665		$	7,105,265		$	11,675,551
Production costs		(3,004,619	)		(2,568,731	)		(2,852,033	)
Development costs		(636,436	)		(552,114	)		(422,315	)
Income tax expense		(2,259,415	)		(1,500,533	)		(3,251,265	)

Future Net Cash Flows		3,609,195			2,483,887			5,149,938
Discounted to present value at a 10% annual rate		(2,219,655	)		(1,548,996	)		(3,279,144	)

Total standardized measure of discounted net cash flows	$	1,389,540		$	934,891		$	1,870,794

The following are the principal sources of change in the standardized measure of discounted future net cash flows during:


	December 31,
	2007			2006			2005
Balance at Beginning of Period	$	934,891		$	1,870,794		$	1,029,538
Net changes in sales prices and production costs		1,688,906			(5,341,525	)		3,539,448
Sales—net of production costs		(208,810	)		(438,174	)		(234,526	)
Net change due to revisions in quantity estimates		485,577			1,492,654			632,547
Net change due to acquisition		2,840			—			—
Development costs incurred, previously estimated		295,422			169,169			110,916
Changes in estimated future development costs		(379,744	)		(298,968	)		(267,691	)
Net change in future income taxes		(758,882	)		1,750,732			(1,505,484	)
Accretion of discount and other		(670,660	)		1,730,209			(1,433,954	)

Total Discounted Cash Flow at End of Period	$	1,389,540		$	934,891		$	1,870,794

169

Supplemental Quarterly Information (unaudited):

(Dollars in thousands)


	Three Months Ended
	December 31, 2007		September 30, 2007			June 30, 2007		March 31, 2007
Sales	$	834,014	$	802,977		$	895,128	$	846,441

Freight Revenue	$	54,902	$	44,707		$	43,667	$	43,633

Costs of Goods Sold and Other Operating Charges (including Gas Royalty Interests’ Costs and Purchased Gas Costs)	$	618,681	$	643,873		$	605,130	$	530,906

Freight Expense	$	54,902	$	44,707		$	43,667	$	43,633

Earnings Before Minority Interest	$	12,265	$	381		$	160,801	$	119,373

Net Income	$	6,787	$	(5,384	)	$	153,117	$	113,262

Total Earnings Per Share:

Basic	$	0.04	$	(0.03	)	$	0.84	$	0.62

Dilutive	$	0.04	$	(0.03	)	$	0.83	$	0.61

Weighted Average Shares Outstanding:

Basic		181,835,472		181,866,727			182,195,390		182,371,296

Dilutive		184,417,123		181,866,727			185,000,122		184,815,136


	Three Months Ended
	December 31, 2006		September 30, 2006		June 30, 2006		March 31, 2006
Sales	$	857,480	$	770,195	$	846,698	$	907,176

Freight Revenue	$	49,754	$	38,239	$	37,689	$	37,079

Costs of Goods Sold and Other Operating Charges (including Gas Royalty Interests’ Costs and Purchased Gas Costs)	$	631,860	$	575,943	$	557,614	$	571,081

Freight Expense	$	49,754	$	38,239	$	37,689	$	37,079

Earnings Before Minority Interest	$	122,432	$	55,246	$	117,560	$	143,252

Net Income	$	115,348	$	48,284	$	110,494	$	134,756

Total Earnings Per Share:
Basic	$	0.63	$	0.26	$	0.60	$	0.73

Dilutive	$	0.62	$	0.26	$	0.59	$	0.72

Weighted Average Shares Outstanding:
Basic		182,635,480		183,246,777		183,286,425		184,269,386

Dilutive		184,973,417		185,555,687		185,820,234		186,673,274

170

In September 2006, the FASB issued Financial Accounting Standards Board Staff Position No. AUG AIR-1, “Accounting for Planned Major Maintenance Activities” (FSP AUG AIR-1). This pronouncement rescinded the accrue-in-advance method of accounting for planned major maintenance activities as it results in the recognition of liabilities that do not meet the definition of a liability in FASB Concepts Statement No. 6, Elements of Financial Statements, because it causes the recognition of a liability in a period prior to the occurrence of the transaction. Retrospective adjustments for the three month periods ending March 31, 2006, June 30, 2006 and September 30, 2006 have previously been disclosed within CONSOL Energy’s Form 10-Q for the comparable 2007 periods. The following represents the changes that were made from the previously reported financial information for the three month period ended December 31, 2006.


	Three Months Ended December 31, 2006
	As Previously Reported		Adjustment			Restated Amounts
Sales	$	857,480	$	—		$	857,480

Freight Revenue	$	49,754	$	—		$	49,754

Costs of Goods Sold and Other Operating Charges (including Gas Royalty Interests’ Costs and Purchased Gas Costs)	$	614,356	$	17,504		$	631,860

Freight Expense	$	49,754	$	—		$	49,754

Earnings Before Minority Interest	$	135,000	$	(12,568	)	$	122,432

Net Income (Loss)	$	127,916	$	(12,568	)	$	115,348

Total Earnings Per Share:
Basic	$	0.70	$	(0.07	)	$	0.63

Dilutive	$	0.69	$	(0.07	)	$	0.62

Weighted Average Shares Outstanding:
Basic		182,635,480		—			182,635,480

Dilutive		184,973,417		—			184,973,417

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.

None.

Item 9a.

Controls and Procedures.

Disclosure controls and procedures. CONSOL Energy, under the supervision and with the participation of its management, including CONSOL Energy’s principal executive officer and principal financial officer, evaluated the effectiveness of its “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this annual report on Form 10-K. Based on that evaluation, CONSOL Energy’s principal executive officer and principal financial officer have concluded that its disclosure controls and procedures are effective to ensure that information required to be disclosed by CONSOL Energy in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by CONSOL Energy in such reports is accumulated and communicated to CONSOL Energy’s management, including CONSOL Energy’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

171

Management’s Annual Report on Internal Control Over Financial Reporting.

CONSOL Energy’s management is responsible for establishing and maintaining adequate internal control over financial reporting. CONSOL Energy’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

CONSOL Energy’s internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of CONSOL Energy; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of CONSOL Energy’s assets that could have a material effect on our financial statements.

Management assessed the effectiveness of CONSOL Energy’s internal control over financial reporting as of December 31, 2007. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment and those criteria, management has concluded that CONSOL Energy maintained effective internal control over financial reporting as of December 31, 2007.

The effectiveness of CONSOL Energy’s internal control over financial reporting as of December 31, 2007 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report set forth in the Report of Independent Registered Public Accounting Firm in Part II, Item 8 of this annual report on Form 10-K.

Changes in internal controls over financial reporting.

There were no changes that occurred during the fourth quarter of the fiscal year covered by this Annual Report on Form 10-K that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9b.

Other Information.

None.

172

PART III

Item 10.

Directors and Executive Officers and Corporate Governance.

The information required by this Item is incorporated herein by reference to the information under the captions “Proposal No.1—for Election of Directors,” “Board of Directors and Compensation Information – The Board of Directors and Its Committees—The Board of Directors,” “Board of Directors and Compensation Information—The Board of Directors and Its Committees—Membership and Meetings of the Board of Directors and Its Committees” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement for the annual meeting of shareholders to be held on April 29, 2008 (the “Proxy Statement”).

Executive Officers of CONSOL Energy

The following is a list of CONSOL Energy’s executive officers, their ages as of February 15, 2008 and their positions and offices held with CONSOL Energy.


Name	Age	Position
J. Brett Harvey	57	President and Chief Executive Officer and Director
Nicholas J. DeIuliis	39	President and Chief Executive Officer—CNX Gas Corporation
Jack A. Holt	59	Senior Vice President—Safety
Bart J. Hyita	49	Chief Operating Officer—Coal
Peter B. Lilly	59	President—Coal Group
William J. Lyons	59	Chief Financial Officer
P. Jerome Richey	58	General Counsel and Secretary
Robert P. King	55	Senior Vice President—Administration

J. Brett Harvey has been President and Chief Executive Officer and a Director of CONSOL Energy since January 1998.

Nicholas J. DeIuliis has been the President and Chief Executive Officer of CNX Gas since June 30, 2005, the date of its formation. Prior to that time, he held the following positions at CONSOL Energy: Senior Vice President—Strategic Planning from November 1, 2004 to August 2005; Vice President—Strategic Planning from April 1, 2002 until November 1, 2004; Director—Corporate Strategy from October 1, 2001 to April 1, 2002; Manager—Strategic Planning from January 1, 2001 to October 1, 2001; and Supervisor—Process Engineering from April 1, 1999 to January 1, 2001. Mr. DeIuliis served as a director of Fairmont Supply Company, a wholly-owned subsidiary of CONSOL Energy, until July 2005. Mr. DeIuliis is also a member of the Board of Directors of the Independent Petroleum Association of America and the Carnegie Science Center. Mr. DeIuliis is a registered engineer in the Commonwealth of Pennsylvania, and a member of the Pennsylvania Bar.

Jack A. Holt has been Senior Vice President—Safety since November 2004. Prior to that time, Mr. Holt served as Vice President—Safety, Human Resources and Organizational Development from November 2001 until November 2004 and Vice President—Safety from June 2000 until November 2001. Mr. Holt joined CONSOL Energy in 1972.

Bart J. Hyita has been Chief Operating Officer—Coal since February 2, 2007. Prior to that Mr. Hyita served as Senior Vice President—Planning and Administration from November 2005 until February 2, 2007, Senior Vice President—Coal Operations from August 2005 until November 2005, Vice President—Operations Support and Planning from August 2004 until August 2005, Vice President—Coal Operations Support and Planning from March 2002 until August 2004 and Vice President—Mining Operations Support from September 2001 until March 2002.

Peter B. Lilly has been President—Coal Group since February 1, 2007. Prior to that, Mr. Lilly was Chief Operating Officer of CONSOL Energy from October 2002 until February 1, 2007. Prior to joining CONSOL Energy, Mr. Lilly served as President and Chief Executive Officer of Triton Coal Company LLC and Vulcan Coal Holdings LLC from 1998 until 2002.

173

William J. Lyons has been Chief Financial Officer of CONSOL Energy since February 2001. From January 1995 until February 2001, Mr. Lyons held the position of Vice President—Controller for CONSOL Energy. Mr. Lyons joined CONSOL Energy in 1976.

P. Jerome Richey has been General Counsel and Secretary since March 2005. Prior to joining CONSOL Energy, Mr. Richey, for more than five years, was a shareholder in the Pittsburgh office for the law firm of Buchanan Ingersoll & Rooney PC.

Robert P. King has been Senior Vice President—Administration since February 2, 2007. Prior to that time, he served as Vice President—Land since August 2006. Prior to joining CONSOL Energy, Mr. King was Vice President of Interwest Mining Company (a subsidiary of PacifiCorp). Mr. King joined PacifiCorp in November 1990.

CONSOL Energy has a written Code of Business Conduct that applies to CONSOL Energy’s Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial Officer) and others. The Code of Business Conduct is available on CONSOL Energy’s website at www.consolenergy.com. The code is filed as Exhibit 14 to this Annual Report on Form 10-K.

Item 11.

Executive Compensation.

The information required by this Item is incorporated by reference to the information under the captions “Board of Directors and Compensation Information—Director Compensation Table-2007—Compensation of Directors,” “Board of Directors and Compensation Information—the Board of Directors and Its Committees—Compensation Committee Interlocks and Insider Participation,” “Executive Compensation and Stock Option Information,” and “Potential Payments Upon Termination or Change in Control Agreements” in the Proxy Statement.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Item is incorporated by reference to the information under the caption “Beneficial Ownership of Securities” and “ Securities Authorized for Issuance under CONSOL Energy Compensation Plan” in the Proxy Statement.

Item 13.

Certain Relationships and Related Transactions and Director Independence.

The information requested by this Item is incorporated by reference to the information under the caption “Certain Relationships and Related Party Transactions” and “Determination of Director Independence” in the Proxy Statement.

Item 14.

Principal Accounting Fees and Services.

The information required by this Item is incorporated by reference to the information under the captions “Accountants and Audit Committee—Independent Registered Public Accounting Firm, “including subsections entitled—Audit Fees,” udit Related Fees,” “Accountants and Audit Committee—Tax Fees,” “Accountants and Audit Committee—All Other Fees” and “Accountants and Audit Committee—Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services” in the Proxy Statement.

174

PART IV

Item 15.

Exhibits and Financial Statement Schedules.

Exhibit Index


(A) (1)		Financial Statements Contained in Item 8 hereof.

(A)(2)		Financial Statement Schedule—Schedule II Valuation and qualifying accounts.

3.1		Restated Certificate of Incorporation of CONSOL Energy Inc. incorporated by reference to Exhibit 3.1 to Form 8-K filed on May 8, 2006.

3.2		Third Amended and Restated Bylaws dated as of May 1, 2007 incorporated by reference to Exhibit 3.2 to Form 8-K filed on May 7, 2007.

4.1		Indenture, dated March 7, 2002, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc. and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 4.1 to Form 10-K for the transition period of July 31, 2001 to December 31, 2001 (file no. 001-14901), filed on March 29, 2002 (“Form 10-K”).

4.2		Supplemental Indenture No. 1, dated March 7, 2002, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc., and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 4.2 to Form 10-K for the transition period of July 31, 2001 to December 31, 2001 (file no. 001-14901), filed on March 29, 2002.

4.3		Rights Agreement, dated as of December 22, 2003, between CONSOL Energy Inc., and Equiserve Trust Company, N.A., as Rights Agent, incorporated by reference to Exhibit 4 to Form 8-K filed on December 22, 2003.

4.4		Supplemental Indenture No. 2, dated as of September 30, 2003, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc., and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 4.2 to Form 10-Q for the quarter ended November 30, 2003, filed on November 19, 2003.

4.5		Supplemental Indenture No. 3 dated as of April 15, 2005, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc. and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 4.4 to Form 10-Q for the quarter ended June 30, 2005, filed on August 3, 2005.

4.6		Supplemental Indenture No. 4 dated as of August 8, 2005, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 10.78 to Form 8-K filed on August 12, 2005.

4.7		Supplemental Indenture No. 5 dated as of October 21, 2005, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc. and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 10.21 to Amendment No. 2 to the Form S-1 for CNX Gas Corporation, filed on October 27, 2005.

4.8		Supplemental Indenture No. 6 dated as of August 2, 2006, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc., and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 4.8 to Form 10-Q for the quarter ended September 30, 2006, filed on November 2, 2006.

4.9		Supplemental Indenture No. 7 dated as of March 12, 2007, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc., and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 4.9 to Form 10-Q for the quarter ended September 31, 2007, filed on April 30, 2007.

175


4.10		Supplemental Indenture No. 8 dated as of May 7, 2007, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc., and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 4.10 to Form 10-Q for the quarter ended June 30, 2007, filed on August 1, 2007.

4.11		Supplemental Indenture No. 9 dated as of September 6, 2007, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc. and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 10.1 to Form 8-K filed on August 24, 2007.

4.12		Supplemental Indenture No. 10 dated as of November 12, 2007, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc. and The Bank of Nova Scotia Trust Company of New York, as trustee.

10.1		Purchase and Sale Agreement, dated as of April 30, 2003, by and among CONSOL Energy Inc., CONSOL Sales Company, CONSOL of Kentucky Inc., CONSOL Pennsylvania Coal Company, Consolidation Coal Company, Island Creek Coal Company, Windsor Coal Company, McElroy Coal Company, Keystone Coal Mining Corporation, Eighty-Four Mining Company, CNX Gas Company LLC, CNX Marine Terminals Inc. and CNX Funding Corporation, incorporated by reference to Exhibit 10.30 to Form 10-Q for the quarter ended June 30, 2003, filed on August 13, 2003.

10.2		Form of Director Indemnification Agreement for all existing members of the Board of Directors (and which Agreement will also be used for any future members of the Board of Directors), incorporated by reference to Exhibit 10.40 to Form 10-Q for the quarter ended September 30, 2003, filed on November 19, 2003.

10.3		Change in Control Severance Agreement, dated July 21, 2003, by and between CONSOL Energy Inc. and J. Brett Harvey, incorporated by reference to Exhibit 10.42 to Form 10-Q for the quarter ended September 30, 2003, filed on November 19, 2003.

10.4		Form of Amendment to Change in Control Severance Agreement, dated as of July 21, 2003, by and between CONSOL Energy Inc. and each of William J. Lyons, Peter B. Lilly and Ronald E. Smith, incorporated by reference to Exhibit 10.44 to Form 10-Q for the quarter ended September 30, 2003, filed on November 19, 2003.

10.5		Change in Control Severance Agreement, dated July 21, 2003, by and between CONSOL Energy Inc., and Peter B. Lilly, incorporated by reference to Exhibit 10.47 to Form 10-K for the year ended December 31, 2003 (file no. 001-14901), filed on March 12, 2004.

10.6		Change in Control Severance Agreement, dated July 21, 2003, by and between CONSOL Energy Inc., and William J. Lyons, incorporated by reference to Exhibit 10.48 to Form 10-K for the year ended December 31, 2003 (file no. 001-14901), filed on March 12, 2004.

10.7		Amendment No. 1 to Registration Rights Agreement, dated February 20, 2004, by and among, CONSOL Energy Inc., and Friedman, Billings, Ramsey & Co., Inc , incorporated by reference to Exhibit 10.52 to Form S-1 (file no. 333-113775), filed on March 19, 2004.

10.8		Chairman’s Agreement, dated as of April 27, 2004, between CONSOL Energy Inc., and John Whitmire, incorporated by reference to Exhibit 10.52 to Form 10-Q for the quarter ended March 31, 2004, filed on May 7, 2004.

10.9		Form of CONSOL Energy Inc. Equity Incentive Plan Deferred Stock Unit Grant Agreement, incorporated by reference to Exhibit 10.54 to Form 10-Q for the quarter ended June 30, 2004, filed on August 5, 2004.

10.10		Agreement, dated ^‘ February 14, 2005, between CONSOL Energy Inc., and P. Jerome Richey incorporated by reference to Exhibit 10.58 to Form 8-K filed on March 4, 2005.

10.11		Amended and Restated CONSOL Energy Inc. Equity Incentive Plan, incorporated by reference to Appendix A to Schedule 14A filed on March 30, 2007.

176


10.12		Employment Agreement, dated June 3, 2005, between CONSOL Energy Inc. and J. Brett Harvey incorporated by reference to Exhibit 10.65 to Form 8-K filed on June 9, 2005.

10.13		Master Separation Agreement, by and among CONSOL Energy Inc., CNX Gas Corporation and each of their respective subsidiaries, dated as of August 1, 2005, incorporated by reference to Exhibit 10.69 to the Form 8-K filed on August 12, 2005.

10.14		Master Cooperation and Safety Agreement, by and among CONSOL Energy Inc., CNX Gas Corporation and each of their respective subsidiaries, dated as of August 1, 2005, incorporated by reference to Exhibit 10.70 to the Form 8-K filed on August 12, 2005.

10.15		Services Agreement, by and among CONSOL Energy Inc., CNX Gas Corporation, and the subsidiaries of CNX Gas Corporation, dated as of August 1, 2005, incorporated by reference to Exhibit 10.71 to the Form 8-K filed on August 12, 2005.

10.16		Tax Sharing Agreement, by and between CONSOL Energy Inc. and CNX Gas Corporation, dated as of August 1, 2005, incorporated by reference to Exhibit 10.72 to the Form 8-K filed on August 12, 2005.

10.17		Intercompany Revolving Credit Agreement, by and between CONSOL Energy Inc. and CNX Gas Corporation, dated as of August 1, 2005, incorporated by reference to Exhibit 10.73 to the Form 8-K filed on August 12, 2005.

10.18		Master Lease dated August 1, 2005 by and between CONSOL Energy Inc. and certain of its subsidiaries and CNX Gas Company LLC, incorporated by reference to Exhibit 10.74 to the Form 8-K filed on August 12, 2005.

10.19		Originator Release by and among CONSOL Energy Inc., certain of its subsidiaries and certain banking parties dated as of August 8, 2005, incorporated by reference to Exhibit 10.77 to the Form 8-K filed on August 12, 2005.

10.20		Change in Control Agreement of P. Jerome Richey, dated as of August 12, 2005, incorporated by reference to Exhibit 10.79 to the Form 8-K filed on August 18, 2005.

10.21		Summary of Employment Terms of Nicholas J. DeIuliis, incorporated by reference to Exhibit 10.80 to the Form 8-K filed on August 19, 2005.

10.22		Credit Agreement, by and among CNX Gas Corporation, the lender parties thereto, and PNC Bank National Association and Citibank, N.A., as agents, dated as of October 7, 2005, incorporated by reference to Exhibit 10.82 to the Form 8-K filed on October 13, 2005.

10.23		Non-Employee Director Option Grant Notice, as amended, incorporated by reference to Exhibit 10.84 to the Form 8-K filed on October 24, 2005.

10.24		Agreement, dated October 2, 2002 between CONSOL Energy Inc. and Peter B. Lilly, incorporated by reference to Exhibit 10.89 to Form 10-K for the year ended December 31, 2005 (file no. 001-14901). filed on March 15, 2006.

10.25		Form of Non-Qualified Stock Option Award Agreement for Employees, incorporated by reference to Exhibit 10.91 to the Form 8-K filed on February 24, 2006.

10.26		Form of Restricted Stock Unit Award Agreement for Employees, incorporated by reference to Exhibit 10.92 to the Form 8-K filed on February 24, 2006.

10.27		Form of Restricted Stock Unit Award Agreement for Directors, incorporated by reference to Exhibit 10.93 to the Form 8-K filed on February 24, 2006.

10.28		Form of Change in Control Agreement for Nicholas J. DeIuliis, incorporated by reference to Exhibit 10.61 to Amendment No. 1 to the Registration Statement on Form S-1 (file no. 333-127483) filed on September 29, 2005 by CNX Gas Corporation.

10.29		Form of Director Deferred Stock Unit Grant Agreement, incorporated by reference to Exhibit 10.95 to the Form 8-K filed on May 8, 2006.

177


10.30		Amended and Restated Retirement Restoration Plan of CONSOL Energy Inc., incorporated by reference to Exhibit 10.102 to Form 10-K for the year ended December 31, 2006 (file no. 001-14901), filed on February 20, 2007.

10.31		First Amendment to Purchase and Sale Agreement dated as of April 30, 2007, entered into among CONSOL Energy Inc., CONSOL Energy Sales Company, CONSOL of Kentucky Inc., CONSOL Pennsylvania Coal Company, Consolidation Coal Company, Island Creek Coal Company, Windsor Coal Company, McElroy Coal Company, Keystone Coal Mining Corporation, Eighty-Four Mining Company and CNX Marine Terminals Inc., each an “Originator” and CNX Funding Corporation.

10.32		Second Amendment to Purchase and Sale Agreement dated as of November 16, 2007, entered into among CONSOL Energy Inc. (“ CONSOL Energy ”), CONSOL Energy Sales Company, CONSOL of Kentucky Inc., Consol Pennsylvania Coal Company LLC, Consolidation Coal Company, Island Creek Coal Company, McElroy Coal Company, Keystone Coal Mining Corporation, Eighty-Four Mining Company and CNX Marine Terminals Inc. (each an “ Existing Originator ”) and collectively the “ Existing Originators ”), Fola Coal Company, LLC., Little Eagle Coal Company, LLC., Mon River Towing, Inc., Terry Eagle Coal Company, LLC., Tri-River Fleeting Harbor Service, Inc., and Twin Rivers Towing Company (each, a “ New Originator ” and collectively the “ New Originators ”; the Existing Originators and the New Originators, each an “ Originator ” and collectively, the “ Originators ”), Windsor Coal Company (the “ Released Originator ”) and CNX Funding Corporation.

10.33		Amended and Restated Receivable Purchase Agreement, dated as of April 30, 2007, by and among CNX Funding Corporation, CONSOL Energy Inc., CONSOL Energy Sales Company, CONSOL of Kentucky Inc., CONSOL Pennsylvania Coal Company, Consolidation Coal Company, Island Creek Coal Company, Windsor Coal Company, McElroy Coal Company, Keystone Coal Mining Corporation, Eighty-Four Mining Company, CNX Marine Terminals Inc., Market Street Funding LLC, Liberty Street Funding LLC, PNC Bank, National Association, and the Bank of Nova Scotia.

10.34		First Amendment to Amended and Restated Receivables Purchase Agreement (this “ Amendment ”), dated as of May 9, 2007, entered into among CNX Funding Corporation, CONSOL Energy Inc., as the initial Servicer, the Conduit Purchasers listed on the signature pages of the Amendment, the Purchaser Agents listed on the signature pages of the Amendment, the LC Participants listed on the signature pages of the Amendment and PNC Bank, National Association, as Administrator and as LC Bank.

10.35		Second Amendment to Amended and Restated Receivables Purchase Agreement (this “ Amendment ”), dated as of July 27, 2007, entered into among CNX Funding Corporation, CONSOL Energy Inc., as the initial Servicer (in such capacity, the “ Servicer ”), the Conduit Purchasers listed on the signature pages of the Amendment, the Purchaser Agents listed on the signature pages of the Amendment, the LC Participants listed on the signature pages of the Amendment and PNC Bank, National Association, as Administrator and as LC Bank.

10.36		Third Amendment to Amended and Restated Receivables Purchase Agreement (this “ Amendment ”), dated as of November 16, 2007, entered into among CNX Funding Corporation, CONSOL Energy Inc., as the initial Servicer, the various new sub-servicers listed on the signature pages of the Amendment, the Conduit Purchasers listed on the signature pages of the Amendment, the Purchaser Agents listed on the signature pages of the Amendment, the LC Participants listed on the signature pages hereto and PNC Bank, National Association, as Administrator and as LC Bank.

10.37		Amended and Restated Credit Agreement, dated as of June 27, 2007 by and among CONSOL Energy Inc., the Guarantors (as defined therein), the Lenders (as defined therein), The Bank of Nova Scotia, Bank of America, N.A., and Union Bank of California, N.A., each in its capacity as a co-syndication agent, and PNC Bank, National Association and Citicorp North America, Inc., in their capacity as co- administrative agents for the Lenders under the Agreement, incorporated by reference to Exhibit 10.1 to Form 8-K filed on July 3, 2007.

178


10.38		Amended and Restated Collateral Trust Agreement (“Agreement”) dated as of June 27, 2007, by and among CONSOL Energy Inc., (the “ Borrower ” ) , certain subsidiaries of the Borrower which have joined the Agreement, Wilmington Trust Company, not in its individual capacity but solely as corporate trustee, and David A. Vanaskey, not in his individual capacity but solely as individual trustee, as trustees for the Secured Parties.

10.39		Continuing Agreement of Guaranty and Suretyship (“ Guaranty ”), dated as of June 30, 2004, jointly and severally given by each of the undersigned thereto and each of the other Persons which become Guarantors thereunder from time to time (each a “ Guarantor ” and collectively the “ Guarantors ”) in favor of PNC Bank, National Association, as paying agent for the Lenders (the “ Paying Agent ”), in connection with that certain Credit Agreement as defined therein.

10.40		Amended and Restated Pledge Agreement, dated as of June 27, 2007 made and entered into by each of the pledgors listed on the signature pages thereto and each of the other persons and entities that become bound thereby from time to time by joinder, assumption, or otherwise, and Wilmington Trust Company, not in its individual capacity but solely as collateral trustee for the equal and ratable benefit of the Secured Parties (as defined therein) pursuant to the Collateral Trust Agreement.

10.41		Amended and Restated Security Agreement dated as of June 27, 2007, entered into by and between CONSOL Energy Inc., and each of the other parties listed on the signature pages thereto and each of the other persons and entities that become bound thereby from time to time by joinder, assumption or otherwise, and Wilmington Trust Company, not in its individual capacity but solely as the collateral trustee for the equal and ratable benefit of the Secured Parties pursuant to the Collateral Trust Agreement.

10.42		Short-Term Incentive Compensation Plan, as amended and restated, incorporated by reference to Exhibit 10.106 to Form 10-Q for the quarter ended June 30, 2007 filed on August 1, 2007.

10.43		Amended and Restated Long-Term Incentive Program (2007-09).

10.44		Time Sharing Agreement, dated as of May 1, 2007, by and between CONSOL Energy Inc. and J. Brett Harvey, incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 7, 2007.

10.45		Letter Agreement, effective as of July 25, 2007, by and between CONSOL Energy Inc. and Ronald E. Smith, incorporated by reference to Exhibit 10.1 to Form 8-K filed on July 31, 2007.

10.46		Letter Agreement, dated August 24, 2007, by and between CONSOL Energy Inc. and Nicholas J. DeIuliis, incorporated by reference to Exhibit 10.1 to Form 8-K filed on August 24, 2007.

10.47		Agreement, dated September 12, 2007, by and between CONSOL Energy Inc. and Bart Hyita, regarding CONSOL Energy Inc. Supplemental Retirement Plan, incorporated by reference to Exhibit 10.112 of Form 10-Q for the quarter ended September 30, 2007, filed on November 1, 2007.

10.48		Summary of Non-Employee Director Compensation, incorporated by reference to Exhibit 10.111 of Form 10-Q for the quarter ended September 30, 2007, filed on November 1, 2007.

10.49		Amended and Restated 2004 CONSOL Energy Inc. Directors’ Deferred Fee Plan.

10.50		Hypothetical Investment Election Form Relating to Directors’ Deferred Fee Plan.

10.51		CONSOL Energy Inc. 1999 Directors Deferred Compensation Plan incorporated by reference to Exhibit 10.67 to Form 8-K filed on August 1, 2005.

10.52		June 2005 Amendment to 1999 CONSOL Energy Inc. Directors Deferred Compensation Plan incorporated by reference to Exhibit 10.68 to Form 8-K filed on August 1, 2005.

10.53		Hypothetical Investment Election Form Relating to Directors’ Deferred Compensation Plan.

10.54		Amended and Restated Supplemental Retirement Plan of CONSOL Energy Inc. effective January 1, 2007.

12		Computation of Ratio of Earnings to Fixed Charges.

14.1		Code of Employee Business Conduct and Ethics, as amended, incorporated by reference to Exhibit 10.86 to Form 8-K filed on October 24, 2005.

21		Subsidiaries of CONSOL Energy Inc.

179


23.1		Consent of PricewaterhouseCoopers LLP.

23.2		Consent of Ralph E. Davis Associates, Inc.

23.3		Consent of Schlumberger Data and Consulting Services

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

Supplemental Information

No annual report or proxy material has been sent to shareholders of CONSOL Energy at the time of filing of this Form 10-K. An annual report will be sent to shareholders subsequent to the filing of this Form 10-K. Said annual report will be forwarded to the commission when the same are sent to shareholders of CONSOL Energy.

180

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, as of the 19th day of February, 2008.


C ONSOL E NERGY I NC .

By:		/s/ J. B RETT H ARVEY
		J. Brett Harvey,
		President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed as of the 19th day of February, 2008, by the following persons on behalf of the registrant in the capacities indicated:


Signature		Title

/s/ J OHN L. W HITMIRE John L. Whitmire		Chairman of the Board

/s/ J. B RETT H ARVEY J. Brett Harvey		President and Chief Executive Officer and Director (Principal Executive Officer)

/s/ W ILLIAM J. L YONS William J. Lyons		Chief Financial Officer and Executive Vice President (Principal Financial and Accounting Officer)

/s/ P ATRICIA A. H AMMICK Patricia A. Hammick		Director

/s/ J AMES E. A LTMEYER , S R . James E. Altmeyer, Sr.		Director

/s/ W ILLIAM E. D AVIS William E. Davis		Director

/s/ W ILLIAM P. P OWELL William P. Powell		Director

/s/ J OSEPH T. W ILLIAMS Joseph T. Williams		Director

/s/ R AJ K. G UPTA Raj K. Gupta		Director

/s/ D AVID C. H ARDESTY David C. Hardesty		Director

/s/ J OHN T. M ILLS John T. Mills		Director

181

EXHIBIT INDEXES:


(A) (1)		Financial Statements Contained in Item 8 hereof.

(A) (2)		Financial Statement Schedule—Schedule II Valuation and qualifying accounts.

3.1		Restated Certificate of Incorporation of CONSOL Energy Inc. incorporated by reference to Exhibit 3.1 to Form 8-K filed on May 8, 2006.

3.2		Third Amended and Restated Bylaws dated as of May 1, 2007 incorporated by reference to Exhibit 3.2 to Form 8-K filed on May 7, 2007.

4.1		Indenture, dated March 7, 2002, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc. and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 4.1 to Form 10-K for the transition period of July 31, 2001 to December 31, 2001 (file no. 001-14901), filed on March 29, 2002 (“Form 10-K”).

4.2		Supplemental Indenture No. 1, dated March 7, 2002, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc., and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 4.2 to Form 10-K for the transition period of July 31, 2001 to December 31, 2001 (file no. 001-14901), filed on March 29, 2002.

4.3		Rights Agreement, dated as of December 22, 2003, between CONSOL Energy Inc., and Equiserve Trust Company, N.A., as Rights Agent, incorporated by reference to Exhibit 4 to Form 8-K filed on December 22, 2003.

4.4		Supplemental Indenture No. 2, dated as of September 30, 2003, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc., and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 4.2 to Form 10-Q for the quarter ended November 30, 2003, filed on November 19, 2003.

4.5		Supplemental Indenture No. 3 dated as of April 15, 2005, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc. and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 4.4 to Form 10-Q for the quarter ended June 30, 2005, filed on August 3, 2005.

4.6		Supplemental Indenture No. 4 dated as of August 8, 2005, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 10.78 to Form 8-K filed on August 12, 2005.

4.7		Supplemental Indenture No. 5 dated as of October 21, 2005, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc. and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 10.21 to Amendment No. 2 to the Form S-1 for CNX Gas Corporation, filed on October 27, 2005.

4.8		Supplemental Indenture No. 6 dated as of August 2, 2006, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc., and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 4.8 to Form 10-Q for the quarter ended September 30, 2006, filed on November 2, 2006.

4.9		Supplemental Indenture No. 7 dated as of March 12, 2007, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc., and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 4.9 to Form 10-Q for the quarter ended September 31, 2007, filed on April 30, 2007.

4.10		Supplemental Indenture No. 8 dated as of May 7, 2007, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc., and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 4.10 to Form 10-Q for the quarter ended June 30, 2007, filed on August 1, 2007.

182


4.11		Supplemental Indenture No. 9 dated as of September 6, 2007, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc. and The Bank of Nova Scotia Trust Company of New York, as trustee, incorporated by reference to Exhibit 10.1 to Form 8-K filed on August 24, 2007.

4.12		Supplemental Indenture No. 10 dated as of November 12, 2007, among CONSOL Energy Inc., certain subsidiaries of CONSOL Energy Inc. and The Bank of Nova Scotia Trust Company of New York, as trustee.

10.1		Purchase and Sale Agreement, dated as of April 30, 2003, by and among CONSOL Energy Inc., CONSOL Sales Company, CONSOL of Kentucky Inc., CONSOL Pennsylvania Coal Company, Consolidation Coal Company, Island Creek Coal Company, Windsor Coal Company, McElroy Coal Company, Keystone Coal Mining Corporation, Eighty-Four Mining Company, CNX Gas Company LLC, CNX Marine Terminals Inc. and CNX Funding Corporation, incorporated by reference to Exhibit 10.30 to Form 10-Q for the quarter ended June 30, 2003, filed on August 13, 2003.

10.2		Form of Director Indemnification Agreement for all existing members of the Board of Directors (and which Agreement will also be used for any future members of the Board of Directors), incorporated by reference to Exhibit 10.40 to Form 10-Q for the quarter ended September 30, 2003, filed on November 19, 2003.

10.3		Change in Control Severance Agreement, dated July 21, 2003, by and between CONSOL Energy Inc. and J. Brett Harvey, incorporated by reference to Exhibit 10.42 to Form 10-Q for the quarter ended September 30, 2003, filed on November 19, 2003.

10.4		Form of Amendment to Change in Control Severance Agreement, dated as of July 21, 2003, by and between CONSOL Energy Inc. and each of William J. Lyons, Peter B. Lilly and Ronald E. Smith, incorporated by reference to Exhibit 10.44 to Form 10-Q for the quarter ended September 30, 2003, filed on November 19, 2003.

10.5		Change in Control Severance Agreement, dated July 21, 2003, by and between CONSOL Energy Inc., and Peter B. Lilly, incorporated by reference to Exhibit 10.47 to Form 10-K for the year ended December 31, 2003 (file no. 001-14901), filed on March 12, 2004.

10.6		Change in Control Severance Agreement, dated July 21, 2003, by and between CONSOL Energy Inc., and William J. Lyons, incorporated by reference to Exhibit 10.48 to Form 10-K for the year ended December 31, 2003 (file no. 001-14901), filed on March 12, 2004.

10.7		Amendment No. 1 to Registration Rights Agreement, dated February 20, 2004, by and among, CONSOL Energy Inc., and Friedman, Billings, Ramsey & Co., Inc, incorporated by reference to Exhibit 10.52 to Form S-1 (file no. 333-113775), filed on March 19, 2004.

10.8		Chairman’s Agreement, dated as of April 27, 2004, between CONSOL Energy Inc., and John Whitmire, incorporated by reference to Exhibit 10.52 to Form 10-Q for the quarter ended March 31, 2004, filed on May 7, 2004.

10.9		Form of CONSOL Energy Inc. Equity Incentive Plan Deferred Stock Unit Grant Agreement, incorporated by reference to Exhibit 10.54 to Form 10-Q for the quarter ended June 30, 2004, filed on August 5, 2004.

10.10		Agreement, dated ^‘ February 14, 2005, between CONSOL Energy Inc., and P. Jerome Richey incorporated by reference to Exhibit 10.58 to Form 8-K filed on March 4, 2005.

10.11		Amended and Restated CONSOL Energy Inc. Equity Incentive Plan, incorporated by reference to Appendix A to Schedule 14A filed on March 30, 2007.

10.12		Employment Agreement, dated June 3, 2005, between CONSOL Energy Inc. and J. Brett Harvey incorporated by reference to Exhibit 10.65 to Form 8-K filed on June 9, 2005.

10.13		Master Separation Agreement, by and among CONSOL Energy Inc., CNX Gas Corporation and each of their respective subsidiaries, dated as of August 1, 2005, incorporated by reference to Exhibit 10.69 to the Form 8-K filed on August 12, 2005.

183


10.14		Master Cooperation and Safety Agreement, by and among CONSOL Energy Inc., CNX Gas Corporation and each of their respective subsidiaries, dated as of August 1, 2005, incorporated by reference to Exhibit 10.70 to the Form 8-K filed on August 12, 2005.

10.15		Services Agreement, by and among CONSOL Energy Inc., CNX Gas Corporation, and the subsidiaries of CNX Gas Corporation, dated as of August 1, 2005, incorporated by reference to Exhibit 10.71 to the Form 8-K filed on August 12, 2005.

10.16		Tax Sharing Agreement, by and between CONSOL Energy Inc. and CNX Gas Corporation, dated as of August 1, 2005, incorporated by reference to Exhibit 10.72 to the Form 8-K filed on August 12, 2005.

10.17		Intercompany Revolving Credit Agreement, by and between CONSOL Energy Inc. and CNX Gas Corporation, dated as of August 1, 2005, incorporated by reference to Exhibit 10.73 to the Form 8-K filed on August 12, 2005.

10.18		Master Lease dated August 1, 2005 by and between CONSOL Energy Inc. and certain of its subsidiaries and CNX Gas Company LLC, incorporated by reference to Exhibit 10.74 to the Form 8-K filed on August 12, 2005.

10.19		Originator Release by and among CONSOL Energy Inc., certain of its subsidiaries and certain banking parties dated as of August 8, 2005, incorporated by reference to Exhibit 10.77 to the Form 8-K filed on August 12, 2005.

10.20		Change in Control Agreement of P. Jerome Richey, dated as of August 12, 2005, incorporated by reference to Exhibit 10.79 to the Form 8-K filed on August 18, 2005.

10.21		Summary of Employment Terms of Nicholas J. DeIuliis, incorporated by reference to Exhibit 10.80 to the Form 8-K filed on August 19, 2005.

10.22		Credit Agreement, by and among CNX Gas Corporation, the lender parties thereto, and PNC Bank National Association and Citibank, N.A., as agents, dated as of October 7, 2005, incorporated by reference to Exhibit 10.82 to the Form 8-K filed on October 13, 2005.

10.23		Non-Employee Director Option Grant Notice, as amended, incorporated by reference to Exhibit 10.84 to the Form 8-K filed on October 24, 2005.

10.24		Agreement, dated October 2, 2002 between CONSOL Energy Inc. and Peter B. Lilly, incorporated by reference to Exhibit 10.89 to Form 10-K for the year ended December 31, 2005 (file no. 001-14901). filed on March 15, 2006.

10.25		Form of Non-Qualified Stock Option Award Agreement for Employees, incorporated by reference to Exhibit 10.91 to the Form 8-K filed on February 24, 2006.

10.26		Form of Restricted Stock Unit Award Agreement for Employees, incorporated by reference to Exhibit 10.92 to the Form 8-K filed on February 24, 2006.

10.27		Form of Restricted Stock Unit Award Agreement for Directors, incorporated by reference to Exhibit 10.93 to the Form 8-K filed on February 24, 2006.

10.28		Form of Change in Control Agreement for Nicholas J. DeIuliis, incorporated by reference to Exhibit 10.61 to Amendment No. 1 to the Registration Statement on Form S-1 (file no. 333-127483) filed on September 29, 2005 by CNX Gas Corporation.

10.29		Form of Director Deferred Stock Unit Grant Agreement, incorporated by reference to Exhibit 10.95 to the Form 8-K filed on May 8, 2006.

10.30		Amended and Restated Retirement Restoration Plan of CONSOL Energy Inc., incorporated by reference to Exhibit 10.102 to Form 10-K for the year ended December 31, 2006 (file no. 001-14901), filed on February 20, 2007.

184


10.31		First Amendment to Purchase and Sale Agreement dated as of April 30, 2007, entered into among CONSOL Energy Inc., CONSOL Energy Sales Company, CONSOL of Kentucky Inc., CONSOL Pennsylvania Coal Company, Consolidation Coal Company, Island Creek Coal Company, Windsor Coal Company, McElroy Coal Company, Keystone Coal Mining Corporation, Eighty-Four Mining Company and CNX Marine Terminals Inc., each an “Originator” and CNX Funding Corporation.

10.32		Second Amendment to Purchase and Sale Agreement dated as of November 16, 2007, entered into among CONSOL Energy Inc. (“ CONSOL Energy ”), CONSOL Energy Sales Company, CONSOL of Kentucky Inc., Consol Pennsylvania Coal Company LLC, Consolidation Coal Company, Island Creek Coal Company, McElroy Coal Company, Keystone Coal Mining Corporation, Eighty-Four Mining Company and CNX Marine Terminals Inc. (each an “ Existing Originator ”) and collectively the “ Existing Originators ”), Fola Coal Company, LLC., Little Eagle Coal Company, LLC., Mon River Towing, Inc., Terry Eagle Coal Company, LLC., Tri-River Fleeting Harbor Service, Inc., and Twin Rivers Towing Company (each, a “ New Originator ” and collectively the “ New Originators ”; the Existing Originators and the New Originators, each an “ Originator ” and collectively, the “ Originators ”), Windsor Coal Company (the “ Released Originator ”) and CNX Funding Corporation.

10.33		Amended and Restated Receivable Purchase Agreement, dated as of April 30, 2007, by and among CNX Funding Corporation, CONSOL Energy Inc., CONSOL Energy Sales Company, CONSOL of Kentucky Inc., CONSOL Pennsylvania Coal Company, Consolidation Coal Company, Island Creek Coal Company, Windsor Coal Company, McElroy Coal Company, Keystone Coal Mining Corporation, Eighty-Four Mining Company, CNX Marine Terminals Inc., Market Street Funding LLC, Liberty Street Funding LLC, PNC Bank, National Association, and the Bank of Nova Scotia.

10.34		First Amendment to Amended and Restated Receivables Purchase Agreement (this “ Amendment ”), dated as of May 9, 2007, entered into among CNX Funding Corporation, CONSOL Energy Inc., as the initial Servicer, the Conduit Purchasers listed on the signature pages of the Amendment, the Purchaser Agents listed on the signature pages of the Amendment, the LC Participants listed on the signature pages of the Amendment and PNC Bank, National Association, as Administrator and as LC Bank.

10.35		Second Amendment to Amended and Restated Receivables Purchase Agreement (this “ Amendment ”), dated as of July 27, 2007, entered into among CNX Funding Corporation, CONSOL Energy Inc., as the initial Servicer (in such capacity, the “ Servicer ”), the Conduit Purchasers listed on the signature pages of the Amendment, the Purchaser Agents listed on the signature pages of the Amendment, the LC Participants listed on the signature pages of the Amendment and PNC Bank, National Association, as Administrator and as LC Bank.

10.36		Third Amendment to Amended and Restated Receivables Purchase Agreement (this “ Amendment ”), dated as of November 16, 2007, entered into among CNX Funding Corporation, CONSOL Energy Inc., as the initial Servicer, the various new sub-servicers listed on the signature pages of the Amendment, the Conduit Purchasers listed on the signature pages of the Amendment, the Purchaser Agents listed on the signature pages of the Amendment, the LC Participants listed on the signature pages hereto and PNC Bank, National Association, as Administrator and as LC Bank.

10.37		Amended and Restated Credit Agreement, dated as of June 27, 2007 by and among CONSOL Energy Inc., the Guarantors (as defined therein), the Lenders (as defined therein), The Bank of Nova Scotia, Bank of America, N.A., and Union Bank of California, N.A., each in its capacity as a co-syndication agent, and PNC Bank, National Association and Citicorp North America, Inc., in their capacity as co- administrative agents for the Lenders under the Agreement, incorporated by reference to Exhibit 10.1 to Form 8-K filed on July 3, 2007.

10.38		Amended and Restated Collateral Trust Agreement (“Agreement”) dated as of June 27, 2007, by and among CONSOL Energy Inc., (the “ Borrower ” ) , certain subsidiaries of the Borrower which have joined the Agreement, Wilmington Trust Company, not in its individual capacity but solely as corporate trustee, and David A. Vanaskey, not in his individual capacity but solely as individual trustee, as trustees for the Secured Parties.

185


10.39		Continuing Agreement of Guaranty and Suretyship (“ Guaranty ”), dated as of June 30, 2004, jointly and severally given by each of the undersigned thereto and each of the other Persons which become Guarantors thereunder from time to time (each a “ Guarantor ” and collectively the “ Guarantors ”) in favor of PNC Bank, National Association, as paying agent for the Lenders (the “ Paying Agent ”), in connection with that certain Credit Agreement as defined therein.

10.40		Amended and Restated Pledge Agreement, dated as of June 27, 2007 made and entered into by each of the pledgors listed on the signature pages thereto and each of the other persons and entities that become bound thereby from time to time by joinder, assumption, or otherwise, and Wilmington Trust Company, not in its individual capacity but solely as collateral trustee for the equal and ratable benefit of the Secured Parties (as defined therein) pursuant to the Collateral Trust Agreement.

10.41		Amended and Restated Security Agreement dated as of June 27, 2007, entered into by and between CONSOL Energy Inc., and each of the other parties listed on the signature pages thereto and each of the other persons and entities that become bound thereby from time to time by joinder, assumption or otherwise, and Wilmington Trust Company, not in its individual capacity but solely as the collateral trustee for the equal and ratable benefit of the Secured Parties pursuant to the Collateral Trust Agreement.

10.42		Short-Term Incentive Compensation Plan, as amended and restated, incorporated by reference to Exhibit 10.106 to Form 10-Q for the quarter ended June 30, 2007 filed on August 1, 2007.

10.43		Amended and Restated Long-Term Incentive Program (2007-09).

10.44		Time Sharing Agreement, dated as of May 1, 2007, by and between CONSOL Energy Inc. and J. Brett Harvey, incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 7, 2007.

10.45		Letter Agreement, effective as of July 25, 2007, by and between CONSOL Energy Inc. and Ronald E. Smith, incorporated by reference to Exhibit 10.1 to Form 8-K filed on July 31, 2007.

10.46		Letter Agreement, dated August 24, 2007, by and between CONSOL Energy Inc. and Nicholas J. DeIuliis, incorporated by reference to Exhibit 10.1 to Form 8-K filed on August 24, 2007.

10.47		Agreement, dated September 12, 2007, by and between CONSOL Energy Inc. and Bart Hyita, regarding CONSOL Energy Inc. Supplemental Retirement Plan, incorporated by reference to Exhibit 10.112 of Form 10-Q for the quarter ended September 30, 2007, filed on November 1, 2007.

10.48		Summary of Non-Employee Director Compensation, incorporated by reference to Exhibit 10.111 of Form 10-Q for the quarter ended September 30, 2007, filed on November 1, 2007.

10.49		Amended and Restated 2004 CONSOL Energy Inc. Directors’ Deferred Fee Plan.

10.50		Hypothetical Investment Election Form Relating to Directors’ Deferred Fee Plan.

10.51		CONSOL Energy Inc. 1999 Directors Deferred Compensation Plan incorporated by reference to Exhibit 10.67 to Form 8-K filed on August 1, 2005.

10.52		June 2005 Amendment to 1999 CONSOL Energy Inc. Directors Deferred Compensation Plan incorporated by reference to Exhibit 10.68 to Form 8-K filed on August 1, 2005.

10.53		Hypothetical Investment Election Form Relating to Directors’ Deferred Compensation Plan.

10.54		Amended and Restated Supplemental Retirement Plan of CONSOL Energy Inc. effective January 1, 2007.

12		Computation of Ratio of Earnings to Fixed Charges.

14.1		Code of Employee Business Conduct and Ethics, as amended, incorporated by reference to Exhibit 10.86 to Form 8-K filed on October 24, 2005.

21		Subsidiaries of CONSOL Energy Inc.

23.1		Consent of PricewaterhouseCoopers LLP.

23.2		Consent of Ralph E. Davis Associates, Inc.

23.3		Consent of Schlumberger Data and Consulting Services

186


31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

187

SCHEDULE II

CONSOL ENERGY INC. AND SUBSIDIARIES

Valuation and Qualifying Accounts

(Dollars in thousands)


Description	Balance at Beginning of Period		Additions				Deductions			Balance at End of Period
Description	Balance at Beginning of Period		Charged to Expense		Charged to Deferred Tax Asset		Release of Valuation Allowance			Balance at End of Period
State operating loss carry-forwards	$	38,237	$	—	$	—	$	(1,452	)	$	36,785
Deferred deductible temporary differences		27,847		—		—		(4,724	)		23,123

	$	66,084	$	—	$	—	$	(6,176	)	$	59,908

188

Exhibit 4.12

CONSOL ENERGY INC.

SUPPLEMENTAL INDENTURE NO. 10

$250,000,000

7.875% Notes due 2012

THIS SUPPLEMENTAL INDENTURE NO. 10, dated as of November 12, 2007 (this “Supplemental Indenture No. 10”), by and among CONSOL ENERGY INC., a Delaware corporation (the “Company”), the Guarantors listed on Schedule I hereto and THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK, a New York trust company, as trustee under the Indenture referred to below (the “Trustee”).

RECITALS OF THE COMPANY

WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture dated as of March 7, 2002 (the “Indenture”), a Supplemental Indenture No. 1 dated as of March 7, 2002, a Supplemental Indenture No. 2 dated as of September 30, 2003, a Supplemental Indenture No. 3 dated as of April 15, 2005, a Supplemental Indenture No. 4 dated as of August 8, 2005, a Supplemental Indenture No. 5 dated as of October 21, 2005, a Supplemental Indenture No. 6 dated as of August 2, 2006, Supplemental Indenture No. 7 dated as of March 12, 2007, a Supplemental Indenture No. 8 dated as of May 7, 2007, and a Supplemental Indenture No. 9 dated as of September 6, 2007 (such Supplemental Indentures, collectively, the “Supplemental Indentures”) providing for the issuance of the 7.875% Notes due 2012 in the aggregate principal amount of $250,000,000;

WHEREAS, Article IX of the Indenture provides for various matters with respect to any series of Securities issued under the Indenture to be established in an indenture supplemental to the Indenture;

WHEREAS, on October 31, 2007, certain subsidiaries of the Company, being Tri-River Fleeting Harbor Services, Inc. and Tri-River Marine, Inc., each a Pennsylvania corporation, entered into a Guarantor Joinder and Assumption Agreement pursuant to the Amended and Restated Credit Agreement, dated as of June 27, 2007, by and among the Company and a group of commercial lenders (collectively the “Credit Agreement”) under which the Subsidiaries will guarantee Indebtedness (as defined in the Indenture);

WHEREAS, pursuant to Section 4.07 of the Indenture, upon the guarantee of indebtedness under the Credit Agreement, the Subsidiaries would become a Guarantor Subsidiaries within the meaning of that term in the Indenture and are required to deliver a Subsidiaries Guarantee;

WHEREAS, Section 9.01(a)(11) of the Indenture provides that the Company, the Guarantor Subsidiaries and the Trustee may enter into an indenture supplemental to the Indenture to allow any Guarantor Subsidiaries to execute a supplemental indenture in respect of a Subsidiaries Guarantee;

WHEREAS, all the conditions and requirements necessary to make this Supplemental Indenture No. 10, when duly executed and delivered, a valid and binding agreement in accordance with its terms and for the purposes herein expressed, have been performed and fulfilled.

NOW THEREFORE, THIS SUPPLEMENTAL INDENTURE NO. 10 WITNESSETH:

For and in consideration of the premises, the Company, the Guarantor Subsidiaries and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective Holders of the Securities of such series as follows:

ARTICLE ONE

RELATION TO INDENTURE; DEFINITIONS; RULES OF CONSTRUCTION

SECTION 1.1 Relation to Indenture . This Supplemental Indenture No. 10 constitutes an integral part of the Indenture.

SECTION 1.2 Rules of Construction . For all purposes of this Supplemental Indenture No. 10:

(a) capitalized terms used herein without definition shall have the meanings specified in the Indenture;

(b) all references herein to Articles and Sections, unless otherwise specified, refer to the corresponding Articles and Sections of this Supplemental Indenture No. 10;

(c) the terms “herein,” “hereof,” “hereunder” and other words of similar import refer to this Supplemental Indenture No. 10; and

(d) in the event of a conflict with the definition of terms in the Indenture, the definitions in this Supplemental Indenture No. 10 shall control.

ARTICLE TWO

GUARANTOR SUBSIDIARIES

SECTION 2.1 Subsidiaries Guarantees . Effective as of the date hereof, each of the Subsidiaries hereby fully and unconditionally Guarantee the Company’s Obligations under the Indenture and under any Securities of any Series issued under the Indenture in accordance with Article XI of the Indenture.

SECTION 2.2 Guarantor Subsidiaries and Guarantors . Effective as of the date hereof, (i) the Guarantor Subsidiaries listed on Schedule I of the Indenture shall be as set forth on Schedule I attached hereto and (ii) the “Guarantors” as defined in the Supplemental Indentures shall mean those subsidiaries of the Company listed on Schedule I attached hereto.

ARTICLE THREE

MISCELLANEOUS PROVISIONS

SECTION 3.1 Ratification . The Indenture, as supplemented and amended by the Supplemental Indentures and this Supplemental Indenture No. 10, is in all respects hereby adopted, ratified and confirmed.

SECTION 3.2 Trustee Not Liable for Recitals . The recitals contained herein are made by the Company and the Guarantors, and the Trustee assumes no liability for the correctness thereof. The Trustee makes no representations as to the validity or sufficiency of this Supplemental Indenture No. 10.

SECTION 3.3 Counterparts . This Supplemental Indenture No. 10 may be executed in any number of counterparts, each of which when so executed shall be deemed an original, and all such counterparts shall together constitute but one and the same instrument.

SECTION 3.4 Governing Law . THIS SUPPLEMENTAL INDENTURE NO. 10 SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE.

[remainder of page intentionally left blank]

[Supplemental Indenture No. 10 Signature Page - Page 1 of 7]

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture No. 10 to be duly executed as of the day and year first above written.


CONSOL ENERGY INC.

By:
		Name: John M. Reilly
		Title: Vice President and Treasurer

[Supplemental Indenture No. 10 Signature Page - Page 2 of 7]


GUARANTOR SUBSIDIARIES and GUARANTORS:

CNX LAND RESOURCES INC. CNX MARINE TERMINALS INC. CONRHEIN COAL COMPANY CONSOL ENERGY SALES COMPANY CONSOL OF CANADA INC. CONSOL OF CENTRAL PENNSYLVANIA LLC CONSOL OF KENTUCKY INC. CONSOL OF OHIO LLC CONSOL OF WV LLC CONSOL OF WYOMING LLC CONSOL PENNSYLVANIA COAL COMPANY LLC J.A.R. BARGE LINES, LCC LEATHERWOOD, INC. MON RIVER TOWING, INC. RESERVE COAL PROPERTIES COMPANY ROCHESTER & PITTSBURGH COAL COMPANY WOLFPEN KNOB DEVELOPMENT COMPANY AMVEST COAL & RAIL, L.L.C. AMVEST COAL SALES, INC. AMVEST CORPORATION AMVEST GAS RESOURCES, INC. AMVEST MINERAL SERVICES, INC. AMVEST MINERALS COMPANY, L.L.C. AMVEST OIL & GAS, INC. GLAMORGAN COAL COMPANY, L.L.C. PETERS CREEK MINERAL SERVICES, INC. TERRY EAGLE COAL COMPANY, L.L.C. TRI-RIVER FLEETING HARBOR SERVICES, INC. TRI-RIVER MARINE, INC. VAUGHAN RAILROAD COMPANY

By:
John M. Reilly, Treasurer of each Guarantor
Subsidiary listed above on behalf of each such Guarantor Subsidiary

[Supplemental Indenture No. 10 Signature Page - Page 3 of 7]


CENTRAL OHIO COAL COMPANY CONSOLIDATION COAL COMPANY EIGHTY-FOUR MINING COMPANY HELVETIA COAL COMPANY ISLAND CREEK COAL COMPANY KEYSTONE COAL MINING CORPORATION LAUREL RUN MINING COMPANY McELROY COAL COMPANY SOUTHERN OHIO COAL COMPANY TWIN RIVERS TOWING COMPANY WINDSOR COAL COMPANY

By:
Daniel S. Cangilla, Treasurer of each Guarantor Subsidiary listed above on behalf of each such Guarantor Subsidiary

[Supplemental Indenture No. 10 Signature Page - Page 4 of 7]


AMVEST WEST VIRGINIA COAL, L.L.C.

By:
Name:		J. Keith Bartley
Title:		Vice President – Administration, Secretary & Treasurer

BRAXTON-CLAY LAND & MINERAL, INC. LITTLE EAGLE COAL COMPANY, L.L.C. NICHOLAS-CLAY LAND & MINERAL, INC. TEAGLE COMPANY, L.L.C. TECPART CORPORATION

By:
Name:		J. Keith Bartley
Title:		Treasurer

FOLA COAL COMPANY, L.L.C.

By:
Name:		J. Keith Bartley
Title:		Treasurer

TERRY EAGLE LIMITED PARTNERSHIP

By:		TEAGLE Company and TECPART Corporation, as General Partners

By:
Name:		J. Keith Bartley
Title:		Treasurer

CONSOL DOCKS INC.

By:
Name:		James C. Grech
Title:		President

[Supplemental Indenture No. 10 Signature Page - Page 5 of 7]


CONSOL FINANCIAL INC.

By:
Name:		Lorraine L. Ritter
Title:		Vice President and Secretary

MTB INC.

By:
Name:		Lloyd C. Price
Title:		Vice President

TERRA FIRMA COMPANY

By:
Name:		Lloyd C. Price
Title:		Vice President

[Supplemental Indenture No. 10 Signature Page - Page 6 of 7]


CNX GAS CORPORATION

By:
Name:
Title:

CNX GAS COMPANY LLC

By:
Name:
Title:

CARDINAL STATES GATHERING COMPANY

By:		CNX Gas Company LLC, as Partnership Manager

		By:
		Name:
		Title:

[Supplemental Indenture No. 10 Signature Page - Page 7 of 7]


TRUSTEE:
THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK, as Trustee

By:
		Name: Warren Goshine
		Title: Vice President

SCHEDULE I

GUARANTOR SUBSIDIARIES AND GUARANTORS :

AMVEST Coal & Rail, L.L.C.

(Virginia limited liability company)

AMVEST Coal Sales, Inc.

(Virginia corporation)

AMVEST Corporation

(Virginia corporation)

AMVEST Gas Resources, Inc.

(Virginia corporation)

AMVEST Mineral Services, Inc.

(Virginia corporation)

AMVEST Minerals Company, L.L.C.

(Virginia limited liability company)

AMVEST Oil & Gas, Inc.

(Virginia corporation)

AMVEST West Virginia Coal, L.L.C.

(West Virginia limited liability company)

Braxton-Clay Land & Mineral, Inc.

(West Virginia corporation)

Cardinal States Gathering Company

(Virginia general partnership)

Central Ohio Coal Company

(Ohio corporation)

CNX Gas Corporation

(Delaware corporation)

CNX Gas Company LLC

(Virginia limited liability company)

CNX Land Resources Inc.

(Delaware corporation)

CNX Marine Terminals Inc.

(Delaware corporation)

Conrhein Coal Company

(Pennsylvania general partnership)

Consol Docks Inc.

(Delaware corporation)

CONSOL Financial Inc.

(Delaware corporation)

CONSOL of Canada Inc.

(Delaware corporation)

CONSOL of Central Pennsylvania LLC

(Pennsylvania limited liability company)

CONSOL of Kentucky Inc.

(Delaware corporation)

CONSOL of Ohio LLC

(Ohio limited liability company)

CONSOL of WV LLC

(West Virginia limited liability company)

CONSOL of Wyoming LLC

(Delaware limited liability company)

CONSOL Pennsylvania Coal Company LLC

(Delaware limited liability company)

CONSOL Energy Sales Company

(Delaware corporation)

Consolidation Coal Company

(Delaware corporation)

Eighty-Four Mining Company

(Pennsylvania corporation)

Fola Coal Company, L.L.C.

(West Virginia limited liability company)

Glamorgan Coal Company, L.L.C.

(Virginia limited liability company)

Helvetia Coal Company

(Pennsylvania corporation)

Island Creek Coal Company

(Delaware corporation)

J.A.R. Barge Lines, LLC

(Pennsylvania limited liability company)

Keystone Coal Mining Corporation

(Pennsylvania corporation)

Laurel Run Mining Company

(Virginia corporation)

Leatherwood, Inc.

(Pennsylvania corporation)

Little Eagle Coal Company, L.L.C.

(West Virginia limited liability company)

McELROY COAL COMPANY

(Delaware corporation)

Mon River Towing, Inc.

(Pennsylvania corporation)

MTB Inc.

(Delaware corporation)

Nicholas-Clay Land & Mineral, Inc.

(Virginia corporation)

Peters Creek Mineral Services, Inc.

(Virginia Corporation)

Reserve Coal Properties Company

(Delaware corporation)

Rochester & Pittsburgh Coal Company

(Pennsylvania corporation)

Southern Ohio Coal Company

(West Virginia corporation)

TEAGLE Company, L.L.C.

(Virginia limited liability company)

TECPART Corporation

(Virginia corporation)

Terra Firma Company

(West Virginia corporation)

Terry Eagle Coal Company, L.L.C.

(West Virginia limited liability company)

Terry Eagle Limited Partnership

(West Virginia limited partnership)

Tri-River Fleeting Harbor Services, Inc.

(Pennsylvania corporation)

Tri-River Marine, Inc.

(Pennsylvania corporation)

Twin Rivers Towing Company

(Delaware corporation)

Vaughan Railroad Company

(West Virginia corporation)

Windsor Coal Company

(West Virginia corporation)

Wolfpen Knob Development Company

(Virginia corporation)

Exhibit 10.31

EXECUTION COPY

FIRST AMENDMENT TO THE PURCHASE AND SALE AGREEMENT

THIS FIRST AMENDMENT TO THE PURCHASE AND SALE AGREEMENT (this “ Amendment ”) dated as of April 30, 2007, is entered into among CONSOL ENERGY INC. (“ CONSOL ENERGY ”), CONSOL ENERGY SALES COMPANY, CONSOL OF KENTUCKY INC., CONSOL PENNSYLVANIA COAL COMPANY, CONSOLIDATION COAL COMPANY, ISLAND CREEK COAL COMPANY, WINDSOR COAL COMPANY, MCELROY COAL COMPANY, KEYSTONE COAL MINING CORPORATION, EIGHTY-FOUR MINING COMPANY and CNX MARINE TERMINALS INC. (each an “ Originator ” and collectively the “ Originators ”) and CNX FUNDING CORPORATION (the “ Company ”).

RECITALS

1. Company and Originators are parties to the Purchase and Sale Agreement dated as of April 30, 2003 (as amended, supplemented or otherwise modified prior to the date hereof, the “ Purchase and Sale Agreement ”);

2. Each of the parties hereto desires to amend the Purchase and Sale Agreement as hereinafter set forth.

NOW THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Certain Defined Terms . Capitalized terms that are used herein without definition shall have the meanings set forth in the Purchase and Sale Agreement or in the Receivables Purchase Agreement (as defined in the Purchase and Sale Agreement).

2. Amendments to the Purchase and Sale Agreement .

(a) Each reference to “CONSOL Sales Company” in the Purchase and Sale Agreement shall be deemed a reference to “CONSOL Energy Sales Company”.

(b) The “Definitions” paragraph of the Purchase and Sale Agreement shall be hereby amended and restated in its entirety to read as follows:

“Unless otherwise indicated, certain terms that are capitalized and used throughout this Agreement are defined in Exhibit I to the Amended and Restated Receivables Purchase Agreement dated as of April 30, 2007 (as the same may be amended, supplemented or otherwise modified from time to time, the “ Receivables Purchase Agreement ”) by and among CONSOL Energy Inc., as Servicer, the Company, the Sub-Servicers party thereto, the Conduit Purchasers party thereto, the Purchaser Agents party thereto, the financial institutions from time to time party thereto, as LC Participants, and PNC Bank, National Association, as the Administrator (in such capacity, the “ Administrator ”) and LC

Bank (in such capacity, the “ LC Bank ”). All references herein to months are to calendar months unless otherwise expressly indicated.”

(c) The Purchase and Sale Agreement is hereby amended by inserting the following new Section 3.2A immediately after Section 3.2 and before Section 3.3 to read as follows:

“3.2A Letters of Credit .

(a) Upon the request of Consol Energy (acting as agent for the Originators as described in subsection (b) below), and subject to the terms and conditions for issuing Letters of Credit under the Receivables Purchase Agreement (including any limitations therein on the amount of any such issuance), the Company agrees to cause the LC Bank to issue, on the Purchase Dates specified by Consol Energy, Letters of Credit in favor of the beneficiaries specified by Consol Energy. The aggregate stated amount of the Letters of Credit being issued on any Purchase Date shall constitute a credit against the aggregate Purchase Price otherwise payable by the Company on such Purchase Date pursuant to Section 3.2 . To the extent that the aggregate stated amount of the Letters of Credit being issued on any Payment Date exceeds the aggregate Purchase Price payable by the Company on such Payment Date, such excess shall be deemed to be a reduction in the outstanding principal balance of (and, to the extent necessary, the accrued but unpaid interest on) the Company Notes specified by Consol Energy. The aggregate stated amount of Letters of Credit to be issued on any Payment Date cannot exceed the sum of the aggregate Purchase Price payable on such Payment Date plus the aggregate outstanding principal balance of and accrued but unpaid interest on the Company Notes on such Payment Date. In the event that any Letter of Credit issued pursuant to this Section 3.2A (i) expires or is cancelled or otherwise terminated with all or any portion of its stated amount undrawn, (ii) has its stated amount decreased (for a reason other than a drawing having been made thereunder) or (iii) the Company’s Reimbursement Obligation in respect thereof is reduced for any reason other than by virtue of a payment made in respect of a drawing thereunder, then an amount equal to such undrawn amount or such reduction, as the case may be, shall either be paid in cash to the relevant Originator(s) on the next Payment Date or, if the Company does not then have cash available therefor, shall be deemed to be added to the outstanding principal amount of the Company Note(s) issued to such Originator(s). Under no circumstances shall Consol Energy or any Originator have any reimbursement obligations in respect of any Letter of Credit.”

“(b) Each Originator appoints Consol Energy as its agent (on which appointment the Company, the Servicer, the Sub-Servicers, the Purchaser Agents, the Administrator, the LC Bank, the LC Participants and the Purchasers may rely until the relevant Originator provides contrary written notice to all of such Persons) to act on such Originator’s behalf to take all actions and to make all decisions in respect of the issuance, amendment and administration of the Letters of Credit, including requests for the issuance and extension of Letters of Credit and the allocation of the stated amounts of Letters of Credit against Purchase Price owed to particular Originators and against Company Notes issued to particular Originators. In the event that Consol Energy

requests a Letter of Credit hereunder, Consol Energy shall on a timely basis provide the Company with such information as is necessary for the Company to obtain such Letter of Credit from the LC Bank, and shall notify the relevant Originators, the Company and the Administrator of the allocations described in the preceding sentence. Such allocations shall be binding on the Company and each Originator.”

(d) Exhibit E of the Purchase and Sale Agreement is hereby amended and restated in its entirety as Exhibit E attached hereto.

(e) Exhibit F of the Purchase and Sale Agreement is hereby amended and restated in its entirety as Exhibit F attached hereto.

3. Representations and Warranties . Each of the Originators and the Company represents and warrants that:

(a) Representations and Warranties . Each representation and warranty made by it in the Purchase and Sale Agreement and in the other Transaction Documents are true and correct as of the date hereof.

(b) No Default . Both immediately before and immediately after giving effect to this Amendment and the transactions contemplated hereby, no Purchase and Sale Termination Event or Unmatured Purchase and Sale Termination Event exists or shall exist.

(c) Fair Market Value . The Purchase Price for the Receivables sold pursuant to the Purchase and Sale Agreement reflects the fair market value of such Receivables.

4. Effect of Amendment . All provisions of the Purchase and Sale Agreement, as expressly amended and modified by this Amendment, shall remain in full force and effect. After this Amendment becomes effective, all references in the Purchase and Sale Agreement (or in any other Transaction Document) to the “Purchase and Sale Agreement”, or to “hereof”, “herein” or words of similar effect referring to the Purchase and Sale Agreement, shall be deemed to be references to the Purchase and Sale Agreement as amended by this Amendment.

5. Effectiveness . This Amendment shall become effective upon satisfaction of each of the following conditions precedent on and as of the date hereof:

(a) Receipt by the parties hereto of counterparts of this Amendment (whether by facsimile or otherwise) executed by each of the other parties hereto; and

(b) Such other documents, instruments and opinions as the Administrator may reasonably request.

6. Counterparts . This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to

be an original and all of which when taken together shall constitute but one and the same instrument.

7. Governing Law . This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York (including for such purpose Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York).

8. Section Headings . The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Purchase and Sale Agreement, any other Transaction Document or any provision hereof or thereof.

9. Consents and Agreements . (a) By their consents and agreements to this Amendment set forth in the signature pages hereto, the Purchasers hereby agree that the Company Notes will be deemed to be modified to permit the increases and decreases of the amounts outstanding under the Company Notes as contemplated by Section 3.2A of the Purchase and Sale Agreement as amended by this Amendment.

(b) CONSOL Pennsylvania Coal Company (“ CONSOL Pennsylvania ”) hereby informs the Administrator and the Company of its intent to convert from a corporation to a limited liability company on or about June 1, 2007 (the “ Conversion ”). The Administrator and the Company hereby consent to the Conversion, provided that, within a reasonable time after the Conversion, (i) there shall be delivered to the Administrator copies of (1) the certificate of conversion to limited liability company for CONSOL Pennsylvania, certified by the Secretary of State of the State of Delaware and (2) any and all other documentation related to the conversion of CONSOL Pennsylvania to a limited liability company, as requested by the Administrator; (ii) there shall be delivered to the Administrator a true, correct and complete copy of the limited liability company agreement for CONSOL Pennsylvania; and (iii) CONSOL Energy shall cause all amendments to financing statements, or original financing statements, necessitated by the Conversion to have been filed in each jurisdiction in which the filing thereof is required or requested by the Administrator, and each such financing statement shall be in form and substance satisfactory to the Administrator.

[Signatures Follow]

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.

THE ORIGINATORS:


CONSOL ENERGY INC., as an Originator

By:
Name:
Title:

CONSOL ENERGY SALES COMPANY, as an Originator

By:
Name:
Title:

CONSOL OF KENTUCKY INC., as an Originator

By:
Name:
Title:

CONSOL PENNSYLVANIA COAL COMPANY, as an Originator

By:
Name:
Title:

S-1

First Amendment to

Purchase and Sale Agreement


CONSOLIDATION COAL COMPANY, as an Originator

By:
Name:
Title:

S-2

First Amendment to

Purchase and Sale Agreement


ISLAND CREEK COAL COMPANY, as an Originator

By:
Name:
Title:

WINDSOR COAL COMPANY, as an Originator

By:
Name:
Title:

MCELROY COAL COMPANY, as an Originator

By:
Name:
Title:

KEYSTONE COAL MINING CORPORATION, as an Originator

By:
Name:
Title:

S-3

First Amendment to

Purchase and Sale Agreement


EIGHTY-FOUR MINING COMPANY, as an Originator

By:
Name:
Title:

CNX MARINE TERMINALS INC., as an Originator

By:
Name:
Title:

S-4

First Amendment to

Purchase and Sale Agreement

COMPANY:


CNX FUNDING CORPORATION

By:
Name:
Title:

S-5

First Amendment to

Purchase and Sale Agreement

CONSENTED TO and AGREED:


PNC BANK, NATIONAL ASSOCIATION, as Administrator

By:
Name:
Title:


Address:		PNC Bank, National Association One PNC Plaza, 26th Floor 249 Fifth Avenue Pittsburgh, PA 15222-2707
Attention:		Bill Falcon
Telephone:		412-762-5442
Facsimile:		412-762-9184

S-6

First Amendment to

Purchase and Sale Agreement

CONSENTED TO and AGREED:


PNC BANK, NATIONAL ASSOCIATION, as the LC Bank and as an LC Participant

By:
Name:
Title:		Senior Vice President


Address:		PNC Bank, National Association 500 First Avenue Third Floor Pittsburgh, PA 15219
Attention:		Richard Munsick
Telephone:		412-762-4299
Facsimile:		412-762-9184


THE BANK OF NOVA SCOTIA, as LC Participant

By:
Name:
Title:


Address:		The Bank of Nova Scotia One Liberty Plaza New York, New York 10006
Attention:		Michael Eden
Telephone:		212-225-5007
Facsimile:		212-225-5274

S-7

First Amendment to

Purchase and Sale Agreement

CONSENTED TO and AGREED:


MARKET STREET FUNDING LLC, as a Conduit Purchaser

By:
		Name:
		Title:


Address:		Market Street Funding LLC c/o AMACAR Group, LLC 6525 Morrison Boulevard, Suite 318 Charlotte, North Carolina 28211
Attention:		Doug Johnson
Telephone:		704-365-0569
Facsimile:		704-365-1362


With a copy to:

PNC Bank, National Association One PNC Plaza, 26th floor 249 Fifth Avenue Pittsburgh, PA 15222
Attention:		Bill Falcon
Telephone:		412-762-5442
Facsimile:		412-762-9184

S-8

First Amendment to

Purchase and Sale Agreement


LIBERTY STREET FUNDING CORP., as a Conduit Purchaser

By:
		Name:
		Title:


Address:		Liberty Street Funding Corp. c/o Global Securitization Services, LLC 114 West 47 ^th Street New York, New York 10036
		Attention: Andrew L. Stidd
		Telephone No.: (212) 302-5151
		Facsimile No.: (212) 302-8767


With a copy to:

The Bank of Nova Scotia One Liberty Plaza New York, New York 10006
Attention:		Michael Eden
Telephone:		212-225-5007
Facsimile:		212-225-5274

S-9

First Amendment to

Purchase and Sale Agreement

Exhibit E

to Purchase and Sale Agreement

OFFICE LOCATIONS

Each Originator maintains books and records relating to Receivables at:

1800 Washington Road, Pittsburgh, PA 15241

The Principal Place of Business and Chief Executive Office of each Originator is:

1800 Washington Road, Pittsburgh, PA 15241

The state of formation of each Originator is:


CONSOL Energy Inc.		Delaware
Consol Energy Sales Company		Delaware
CONSOL of Kentucky Inc.		Delaware
Consol Pennsylvania Coal Company		Delaware
Consolidation Coal Company		Delaware
Island Creek Coal Company		Delaware
Windsor Coal Company		West Virginia
McELROY COAL COMPANY		Delaware
Keystone Coal Mining Corporation		Pennsylvania
Eighty-Four Mining Company		Pennsylvania
CNX Marine Terminals Inc.		Delaware

E-1

First Amendment to

Purchase and Sale Agreement

Exhibit F

to Purchase and Sale Agreement

TRADE NAMES

Legal Name/Trade Names/Fictitious Names of each Originator

CONSOL Energy Inc.

Consol Energy Sales Company

CONSOL of Kentucky Inc.

Consol Pennsylvania Coal Company

Consolidation Coal Company

Island Creek Coal Company

Windsor Coal Company

McELROY COAL COMPANY

Keystone Coal Mining Corporation

Eighty-Four Mining Company

CNX Marine Terminals Inc. f/k/a Consolidation Coal Sales Company

F-1

First Amendment to

Purchase and Sale Agreement

Exhibit 10.32

EXECUTION COPY

SECOND AMENDMENT TO THE PURCHASE AND SALE AGREEMENT

THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “ Amendment ”) dated as of November 16, 2007, is entered into among CONSOL ENERGY INC. (“ CONSOL Energy ”), CONSOL ENERGY SALES COMPANY, CONSOL OF KENTUCKY INC., CONSOL PENNSYLVANIA COAL COMPANY LLC, CONSOLIDATION COAL COMPANY, ISLAND CREEK COAL COMPANY, MCELROY COAL COMPANY, KEYSTONE COAL MINING CORPORATION, EIGHTY-FOUR MINING COMPANY and CNX MARINE TERMINALS INC. (each an “ Existing Originator ” and collectively the “ Existing Originators ”), FOLA COAL COMPANY, L.L.C., LITTLE EAGLE COAL COMPANY, L.L.C., MON RIVER TOWING, INC., TERRY EAGLE COAL COMPANY, L.L.C., TRI-RIVER FLEETING HARBOR SERVICE, INC., and TWIN RIVERS TOWING COMPANY (each, a “ New Originator ” and collectively the “ New Originators ”; the Existing Originators and the New Originators, each an “ Originator ” and collectively, the “ Originators ”), WINDSOR COAL COMPANY (“ Windsor ” or the “ Released Originator ”) and CNX FUNDING CORPORATION (the “ Company ”).

RECITALS

1. Company and the Existing Originators are parties to the Purchase and Sale Agreement dated as of April 30, 2003 (as amended, supplemented or otherwise modified prior to the date hereof, the “ Purchase and Sale Agreement ”);

2. CONSOL Energy is the guarantor (in such capacity, the “ Guarantor ”) under that certain Guaranty and Suretyship Agreement, dated as of April 30, 2003 (as amended, supplemented or otherwise modified prior to the date hereof, the “ CONSOL Guaranty ”) in favor the Company.

3. Each of the parties hereto desires to amend the Purchase and Sale Agreement as hereinafter set forth.

NOW THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Certain Defined Terms . Capitalized terms that are used herein without definition shall have the meanings set forth in the Purchase and Sale Agreement or, if not in the Purchase and Sale Agreement, in the Receivables Purchase Agreement (as defined in the Purchase and Sale Agreement).

2. Amendments to the Purchase and Sale Agreement .

(a) The preamble to the Purchase and Sale Agreement is hereby amended and restated in its entirety as follows:

THIS PURCHASE AND SALE AGREEMENT (this “ Agreement ”), dated as of April 30, 2003, is by and among the various entities from time to time party hereto, each as an originator (each, an “ Originator ” and collectively, the “ Originators ”), CONSOL ENERGY INC., a Delaware corporation (“ CONSOL Energy ” or “ Servicer ”), as the initial Servicer, and CNX FUNDING CORPORATION, a Delaware corporation (the “ Company ”).

(b) Clause (h) of Section 4.1 of the Purchase and Sale Agreement is hereby amended and restated in its entirety as follows:

(h) A favorable opinion of McGuireWoods LLP, counsel to the Originators, or other counsel to the Originators reasonably acceptable to the Servicer and the Administrator, in form and substance satisfactory to the Servicer and the Administrator

(c) The Purchase and Sale Agreement is hereby amended by inserting in the appropriate order the following new Article 11 :

ARTICLE XI

JOINDER OF ADDITIONAL ORIGINATORS

11.1 Addition of New Originators.

Additional Persons may be added as Originators hereunder, with the prior written consent of the Company and the Administrator, provided that the following conditions are satisfied on or before the date of such addition:

(a) The Servicer shall have given the Administrator and the Company at least sixty (60) days’ prior written notice of such proposed addition and the identity of each such proposed additional Originator and shall have provided such other information with respect to such proposed additional Originator as the Administrator may reasonably request;

(b) each such proposed additional Originator has executed and delivered to the Company and the Administrator an agreement substantially in the form attached hereto as Exhibit G (a “ Joinder Agreement ”);

(c) such proposed additional Originator has delivered to the Company and the Administrator each of the documents with respect to such Originator described in Sections 4.1 and 4.2 ; and

(d) the Purchase and Sale Termination Date and the Facility Termination Date shall not have occurred.

(d) Exhibit D to the Purchase and Sale Agreement is hereby amended and restated in its entirety as Exhibit D attached hereto.

(e) Exhibit E of the Purchase and Sale Agreement is hereby amended and restated in its entirety as Exhibit E attached hereto.

(f) Exhibit F of the Purchase and Sale Agreement is hereby amended and restated in its entirety as Exhibit F attached hereto.

(g) A new Exhibit G to the Purchase and Sale Agreement is hereby added to the Purchase and Sale Agreement in the appropriate order as Exhibit G attached hereto.

3. Release of Originator . Effective upon the Effective Date:

(a) Windsor shall no longer be party to the Purchase and Sale Agreement as an “Originator” and shall no longer have any obligations or rights in such capacity thereunder or under any other Transaction Document and is hereby released of any such obligations (other than such obligations which by their express terms survive termination of the Purchase and Sale Agreement or any other Transaction Document).

(b) All references to Windsor (in its capacity as an originator or in any other capacity, including, without limitation, in its individual capacity) in any Transaction Document or in any other agreement or document related to any of the foregoing shall be deemed to be read to take into effect the transactions contemplated by this Amendment.

(c) Each of Company and Administrator hereby authorizes Windsor to file (at its own expense) one or more UCC-3 amendments terminating the UCC-1 financing statements naming Windsor as debtor which have been filed solely in connection with the Transaction Documents, copies of which are attached hereto as Exhibit A .

4. Joinder of New Originators .

(a) Effective upon the Effective Date:

(i) Each New Originator shall become a party to the Purchase and Sale Agreement and hereby agrees to be bound by the terms, conditions and provisions of the Purchase and Sale Agreement and each of the other relevant Transaction Documents (each, as amended hereby) and shall have all the rights and obligations of an Originator thereunder (and under any other Transaction Document);

(ii) All references to (i) each “Originator” and (ii) the “Originators” in the Purchase and Sale Agreement and each other relevant Transaction Document shall be deemed to include each New Originator; and

(iii) With respect to the New Originators, any reference in the Purchase and Sale Agreement and each other relevant Transaction Document to (A) the “Cut-off

Date” shall be deemed a reference to October 31, 2007 and (B) the “Closing Date”, the “effective date”, the “initial purchase”, the “initial Purchase Report” or any similar term shall be deemed to be a reference to the date hereof.

(iv) For purposes of Section 10.2 of the Purchase and Sale Agreement, the address for notice for each New Originator for all purposes of the Purchase and Sale Agreement and the other Transaction Documents shall be as set forth below such New Originator’s signature hereto or at such other address or facsimile number as shall be designated by such party in a written notice to the other parties hereto:

(b) Each New Originator hereby acknowledges that it has received copies of the Purchase and Sale Agreement and the other Transaction Documents.

5. CONSOL Guaranty . The Guarantor hereby confirms and agrees that, at all times from and after the Effective Date, all of the terms, covenants, conditions, agreements, undertakings and obligations of each New Originator under the Purchase and Sale Agreement and each other Transaction Document to which it such New Originator is or becomes a party shall be, for all purposes of the CONSOL Guaranty and the other Transaction Documents, included in and made part of the Obligations described therein. The Guarantor hereby reaffirms its obligations under the CONSOL Guaranty and each other Transaction Document to which it is a party and confirms that its obligations under each of the foregoing continue in full force and effect.

6. Representations and Warranties . Each of the Originators and the Company represents and warrants that:

(a) Representations and Warranties . Each representation and warranty made by it in the Purchase and Sale Agreement, as amended by this Amendment, and in the other Transaction Documents are true and correct as of the date hereof.

(b) Enforceability . The execution and delivery by it of this Amendment, and the performance of its obligations under this Amendment and the Purchase and Sale Agreement (as amended hereby) are within its corporate or limited liability company powers and have been duly authorized by all necessary corporate or limited liability company action on its part. Each of this Amendment and the Purchase and Sale Agreement (as amended hereby) is its valid and legally binding obligations, enforceable in accordance with its respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(c) No Default . Both immediately before and immediately after giving effect to this Amendment and the transactions contemplated hereby, no Purchase and Sale Termination Event or Unmatured Purchase and Sale Termination Event exists or shall exist.

(d) Fair Market Value . The Purchase Price for the Receivables sold pursuant to the Purchase and Sale Agreement reflects the fair market value of such Receivables.

7. Effect of Amendment . All provisions of the Purchase and Sale Agreement, as expressly amended and modified by this Amendment, shall remain in full force and effect. After this Amendment becomes effective, all references in the Purchase and Sale Agreement (or in any other Transaction Document) to the “Purchase and Sale Agreement”, or to “hereof”, “herein” or words of similar effect referring to the Purchase and Sale Agreement, shall be deemed to be references to the Purchase and Sale Agreement as amended by this Amendment.

8. Effectiveness . This Amendment shall become effective as of the date hereof (the “ Effective Date ”) upon receipt by the Administrator of the following, in form and substance satisfactory to the Administrator:

(a) Counterparts of this Amendment (whether by facsimile or otherwise) duly completed, executed and delivered by each of the parties hereto;

(b) Counterparts of that certain Third Amendment to Amended and Restated Receivables Purchase Agreement, dated as of the date hereof, by and among the Company, the Servicer, the Sub-Servicers, the LC Participants, the LC Bank, the Conduit Purchasers, the Purchaser Agents and the Administrator (whether by facsimile or otherwise) duly completed, executed and delivered by each of the parties thereto;

(c) An Originator Assignment Certificate from each New Originator, duly completed, executed and delivered by such New Originator;

(d) A copy of the resolutions of the Board of Directors of each New Originator, Seller and Servicer approving this Amendment and the transactions contemplated hereby and thereby, certified by the Secretary or Assistant Secretary of such New Originator;

(e) Good standing certificates for each New Originator, Seller and Servicer issued by the Secretary of State of such party’s jurisdiction of organization and, with respect to each New Originator, each jurisdiction where it has material operations, each of which is listed below, issued as of a recent date acceptable to the Administrator;

(i) CNX Funding Corporation: Delaware

(ii) CONSOL Energy Inc.: Delaware

(iii) Fola Coal Company, L.L.C.: West Virginia

(iv) Little Eagle Coal Company, L.L.C.: West Virginia

(v) Mon River Towing, Inc.: Pennsylvania; West Virginia

(vi) Terry Eagle Coal Company, L.L.C.: West Virginia

(vii) Tri-River Fleeting Harbor Service, Inc.: Pennsylvania

(viii) TWIN RIVERS TOWING COMPANY: Delaware, Pennsylvania; West Virginia

(f) A certificate of the Secretary or Assistant Secretary of each New Originator, Seller and Servicer certifying the names and true signatures of the officers authorized on such Person’s behalf to sign the Amendment and any other documents to be delivered by such party thereunder or in connection with any other Transaction Document;

(g) The certificate of incorporation, certificate of formation or limited liability company agreement or other organizational document of each New Originator, Seller and Servicer, duly certified by the Secretary of State of the jurisdiction of such party’s organization as of a recent date acceptable to the Administrator, each duly certified by the Secretary or an Assistant Secretary of such party;

(h) Originals of the proper financing statements (Form UCC-1) that have been duly executed or otherwise authenticated and name each New Originator as the debtor/seller and the Company as the secured party/purchaser (and the Administrator (for the benefit of the Conduit Purchasers), as assignee of the Company) of the Receivables generated by such New Originator as may be necessary or, in the Servicer’s or the Administrator’s opinion, desirable under the UCC of all appropriate jurisdictions to perfect the Company’s ownership interest in all Receivables and such other rights, accounts, instruments and moneys (including, without limitation, Related Security) in which an ownership or security interest may be assigned to it hereunder;

(i) Pre-filing state and federal tax lien, judgment lien and UCC lien searches against each New Originator showing no evidence of such liens filed against such New Originator;

(j) Proper UCC termination statements, if any, necessary to release all security interests and other rights of any Person in the Receivables, Contracts or Related Security previously granted by such New Originator;

(k) Favorable opinions of counsel to the New Originators, Seller and Servicer, in form and substance satisfactory to the Administrator, regarding general corporate and enforceability matters, UCC creation, perfection and priority matters, and true sale and non-consolidation matters;

(l) A Company Note in favor of each New Originator, duly executed by the Company; and

(m) A certificate from an officer of each New Originator to the effect that the Servicer and such New Originator have placed on the most recent, and have taken all steps reasonably necessary to ensure that there shall be placed on each subsequent, data processing report that it generates which are of the type that a proposed purchaser or lender would use to evaluate the Receivables, the following legend (or the substantive equivalent thereof), which legend shall be placed on a separate “declaration page” and which indicates that: “THE RECEIVABLES ASSOCIATED WITH THE FOLLOWING COMPANY ACCOUNT NUMBERS (which company account numbers shall be listed on such “declaration page”) HAVE BEEN SOLD: TO CNX FUNDING CORPORATION PURSUANT TO A PURCHASE AND SALE AGREEMENT, DATED AS OF APRIL 30, 2003 AS AMENDED, BETWEEN THE ORIGINATORS AND CNX FUNDING CORPORATION; AND AN UNDIVIDED, FRACTIONAL OWNERSHIP INTEREST IN SUCH RECEIVABLES HAS BEEN SOLD TO THE CONDUIT PURCHASERS PURSUANT TO AN AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT, DATED AS OF APRIL 30, 2007, AS AMENDED, AMONG CONSOL ENERGY INC., AS THE SERVICER, CNX FUNDING CORPORATION, THE SUB-SERVICERS PARTY THERETO, THE CONDUIT PURCHASERS PARTY THERETO, THE PURCHASER AGENTS PARTY THERETO, THE LC PARTICIPANTS PARTY THERETO AND PNC BANK, NATIONAL ASSOCIATION, AS ADMINISTRATOR AND LC BANK.”;

(n) A power of attorney granted by each New Originator to the Administrator as assignee of the Company, duly executed by each New Originator; and

(o) Such other documents, instruments and opinions as the Administrator may reasonably request.

9. Counterparts . This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument.

10. Governing Law . This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York (including for such purpose Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York).

11. Section Headings . The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Purchase and Sale Agreement, any other Transaction Document or any provision hereof or thereof.

[Signatures Follow]

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.

THE EXISTING ORIGINATORS:


CONSOL ENERGY INC.,
as an Originator

By:
Name:				John M. Reilly
Title:				Vice President and Treasurer

CONSOL ENERGY SALES COMPANY,
as an Originator

By:
Name:				John M. Reilly
Title:				Treasurer

CONSOL OF KENTUCKY INC.,
as an Originator

By:
Name:				John M. Reilly
Title:				Treasurer

CONSOL PENNSYLVANIA COAL COMPANY LLC, as an Originator

By:
Name:				John M. Reilly
Title:				Treasurer

S-1

Second Amendment to

Purchase and Sale Agreement


CONSOLIDATION COAL COMPANY,
as an Originator

By:
Name:				Daniel S. Cangilla
Title:				Treasurer

ISLAND CREEK COAL COMPANY,
as an Originator

By:
Name:				Daniel S. Cangilla
Title:				Treasurer

MCELROY COAL COMPANY,
as an Originator

By:
Name:				Daniel S. Cangilla
Title:				Treasurer

KEYSTONE COAL MINING CORPORATION,
as an Originator

By:
Name:				Daniel S. Cangilla
Title:				Treasurer

S-2

Second Amendment to

Purchase and Sale Agreement


EIGHTY-FOUR MINING COMPANY,
as an Originator

By:
Name:				Daniel S. Cangilla
Title:				Treasurer

CNX MARINE TERMINALS INC.,
as an Originator

By:
Name:				John M. Reilly
Title:				Treasurer

S-3

Second Amendment to

Purchase and Sale Agreement

THE RELEASED ORIGINATOR:


WINDSOR COAL COMPANY,
as an Originator

By:
Name:				Daniel S. Cangilla
Title:				Treasurer

S-4

Second Amendment to

Purchase and Sale Agreement

THE NEW ORIGINATORS:


FOLA COAL COMPANY, L.L.C.,
as an Originator

By:
Name:				Kevin C. Perkins
Title:				Treasurer



Address:		1800 Washington Road
		Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(304) 587-4100 ext. 104
Facsimile:		(304) 587-2469



LITTLE EAGLE COAL COMPANY, L.L.C.,
as an Originator

By:
Name:				Gary Patterson
Title:				President



Address:		1800 Washington Road
		Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(304) 587-4100
Facsimile:		(304) 587-2469

S-5

Second Amendment to

Purchase and Sale Agreement


MON RIVER TOWING, INC.,
as an Originator

By:
Name:				John M. Reilly
Title:				Treasurer



Address:		1800 Washington Road
		Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4128
Facsimile:		(412) 831-6030



TERRY EAGLE COAL COMPANY, L.L.C.,
as an Originator

By:
Name:				John M. Reilly
Title:				Treasurer



Address:		1800 Washington Road
		Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4128
Facsimile:		(412) 831-6030

S-6

Second Amendment to

Purchase and Sale Agreement


TRI-RIVER FLEETING HARBOR SERVICE, INC.,
as an Originator

By:
Name:				John M. Reilly
Title:				Treasurer



Address:		1800 Washington Road
		Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4128
Facsimile:		(412) 831-6030



TWIN RIVERS TOWING COMPANY,
as an Originator

By:
Name:				Daniel S. Cangilla
Title:				Treasurer



Address:		1800 Washington Road
		Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4564
Facsimile:		(412) 831-6030

S-7

Second Amendment to

Purchase and Sale Agreement

COMPANY :


CNX FUNDING CORPORATION,
as Company

By:
Name:				Christopher C. Jones
Title:				Treasurer and Assistant Secretary

SERVICER AND GUARANTOR:


CONSOL ENERGY INC.,
as Servicer and as Guarantor

By:
Name:				John M. Reilly
Title:				Vice President and Treasurer

S-8

Second Amendment to

Purchase and Sale Agreement

CONSENTED TO and AGREED:


PNC BANK, NATIONAL ASSOCIATION,
as Administrator

By:
Name:
Title:



Address:		PNC Bank, National Association
		One PNC Plaza, 26th Floor
		249 Fifth Avenue
		Pittsburgh, PA 15222-2707
Attention:		Bill Falcon
Telephone:		412-762-5442
Facsimile:		412-762-9184

S-9

Second Amendment to

Purchase and Sale Agreement

CONSENTED TO and AGREED:


PNC BANK, NATIONAL ASSOCIATION,
as the LC Bank and as an LC Participant

By:
Name:
Title:		Senior Vice President



Address:		PNC Bank, National Association
		500 First Avenue
		Third Floor
		Pittsburgh, PA 15219
Attention:		Richard Munsick
Telephone:		412-762-4299
Facsimile:		412-762-9184



THE BANK OF NOVA SCOTIA,
as LC Participant

By:
Name:
Title:



Address:		The Bank of Nova Scotia
		One Liberty Plaza
		New York, New York 10006
Attention:		Michael Eden
Telephone:		212-225-5007
Facsimile:		212-225-5274

S-10

Second Amendment to

Purchase and Sale Agreement

CONSENTED TO and AGREED:


MARKET STREET FUNDING LLC,
as a Conduit Purchaser

By:
		Name:
		Title:



Address:		Market Street Funding LLC
		c/o AMACAR Group, LLC
		6525 Morrison Boulevard, Suite 318
		Charlotte, North Carolina 28211
Attention:		Doug Johnson
Telephone:		704-365-0569
Facsimile:		704-365-1362

With a copy to:



PNC Bank, National Association
One PNC Plaza, 26th floor
249 Fifth Avenue
Pittsburgh, PA 15222
Attention:		Bill Falcon
Telephone:		412-762-5442
Facsimile:		412-762-9184

S-11

Second Amendment to

Purchase and Sale Agreement


LIBERTY STREET FUNDING LLC,
as a Conduit Purchaser

By:
		Name:
		Title:



Address:		Liberty Street Funding LLC
		c/o Global Securitization Services, LLC
		114 West 47 ^th Street
		New York, New York 10036
		Attention: Andrew L. Stidd
		Telephone No.: (212) 302-5151
		Facsimile No.: (212) 302-8767

With a copy to:



The Bank of Nova Scotia
One Liberty Plaza
New York, New York 10006
Attention:		Michael Eden
Telephone:		212-225-5007
Facsimile:		212-225-5274

S-12

Second Amendment to

Purchase and Sale Agreement

Exhibit D

to Purchase and Sale Agreement

PROCEEDINGS

None.

D-1

Second Amendment to

Purchase and Sale Agreement

Exhibit E

to Purchase and Sale Agreement

OFFICE LOCATIONS

Each Originator maintains books and records relating to Receivables at:

1800 Washington Road, Pittsburgh, PA 15241

The Principal Place of Business and Chief Executive Office of each Originator is:

1800 Washington Road, Pittsburgh, PA 15241

The state of formation of each Originator is:



CNX Marine Terminals Inc.		Delaware

CONSOL Energy Inc.		Delaware

CONSOL Energy Sales Company		Delaware

CONSOL of Kentucky Inc.		Delaware

Consol Pennsylvania Coal Company LLC		Delaware

Consolidation Coal Company		Delaware

Eighty-Four Mining Company		Pennsylvania

Fola Coal Company, L.L.C.		West Virginia

ISLAND CREEK COAL COMPANY		Delaware

Keystone Coal Mining Corporation		Pennsylvania

Little Eagle Coal Company, L.L.C.		West Virginia

McELROY COAL COMPANY		Delaware

Mon River Towing, Inc.		Pennsylvania

Terry Eagle Coal Company, L.L.C.		West Virginia

Tri-River Fleeting Harbor Service, Inc.		Pennsylvania

TWIN RIVERS TOWING COMPANY		Delaware

E-1

Second Amendment to

Purchase and Sale Agreement

Exhibit F

to Purchase and Sale Agreement

TRADE NAMES

Legal Name/Trade Names/Fictitious Names of each Originator

CNX Marine Terminals Inc. f/k/a Consolidation Coal Sales Company

CONSOL Energy Inc.

CONSOL Energy Sales Company

CONSOL of Kentucky Inc.

Consol Pennsylvania Coal Company LLC

Consolidation Coal Company

Eighty-Four Mining Company

Fola Coal Company, L.L.C. d/b/a Powellton Coal Company and Powellton Coal Company, L.L.C.

ISLAND CREEK COAL COMPANY

Keystone Coal Mining Corporation

Little Eagle Coal Company, L.L.C.

McELROY COAL COMPANY

Mon River Towing, Inc.

Terry Eagle Coal Company, L.L.C.

Tri-River Fleeting Harbor Service, Inc. a/k/a Tri River Fleeting Harbor SVC, Inc.

TWIN RIVERS TOWING COMPANY

F-1

Second Amendment to

Purchase and Sale Agreement

Exhibit G

to Purchase and Sale Agreement

FORM OF JOINDER AGREEMENT

THIS JOINDER AGREEMENT (this “ Joinder Agreement ”) is executed and delivered by and among , a (“ New Originator ”) and CNX Funding Corporation, a Delaware corporation (“ CNX ”), CONSOL Energy Inc. (“ CONSOL Energy ”) and PNC Bank, National Association (“ PNC ”) with respect to (a) that certain Purchase and Sale Agreement, dated as of April 30, 2003, by and among the various Originators from time to time party thereto and CNX, as Company (as amended, restated, supplemented, joined, restated and/or otherwise modified from time to time, the “ Purchase and Sale Agreement ”) [and (b) that certain Amended and Restated Receivables Purchase Agreement, dated as of April 30, 2007, by and among CNX, as Seller, CONSOL Energy, as Servicer, the various Sub-Servicers, Conduit Purchasers, Purchaser Agents and LC Participants from time to time party thereto and PNC, as Administrator and as LC Bank (as amended, restated, supplemented, joined, restated and/or otherwise modified from time to time, the “ Receivables Purchase Agreement ”)]. Capitalized terms used and not otherwise defined are used with the meanings attributed thereto in the Purchase and Sale Agreement or, if not in the Purchase and Sale Agreement, in the Receivables Purchase Agreement.

Subject to receipt of counterparts hereof signed by the signatories below, by its signature below, New Originator hereby absolutely and unconditionally agrees to become a party to (a) the Purchase and Sale Agreement as an Originator thereunder and to be bound by the provisions thereof including, without limitation, the provisions of Article IX thereof [and (b) the Receivables Purchase Agreement as a Sub-Servicer thereunder and to be bound by the provisions thereof as they apply to Sub-Servicers]. [By its signature hereto, New Originator, in its capacity as Sub-Servicer under the Receivables Purchase Agreement, hereby consents in writing to perform the duties and obligations of the Servicer pursuant to the terms of the Receivables Purchase Agreement.]

Attached hereto are amended and restated versions of Exhibits D , E and F to the Purchase and Sale Agreement [and Schedule III to the Receivables Purchase Agreement]. After giving effect to the amendments and restatements embodied therein, each the representations and warranties contained in Article V of the Purchase and Sale Agreement, as amended by this Joinder Agreement, will be true and correct as to New Originator.

The provisions of Article X of the Purchase and Sale Agreement are incorporated in this Joinder Agreement by this reference with the same force and effect as if set forth in full herein except that references in such Article X to “this Agreement” shall be deemed to refer to “Purchase and Sale Agreement as modified by this Joinder Agreement.”

With respect to New Originator, [in its capacity as Originator and as Sub-Servicer], any reference in the Purchase and Sale Agreement[, the Receivables Purchase Agreement] and each other relevant Transaction Document to the “Closing Date”, the “date hereof”, the “effective date”, the “initial purchase”, the “initial Purchase Report”, the “Cut-Off Date” or any similar term shall be deemed to be a reference to [ ].

G - 1

Reference is made to that certain Guaranty and Suretyship Agreement, dated as of April 30, 2003 (as amended, supplemented or otherwise modified prior to the date hereof, the “ CONSOL Guaranty ”) executed by CONSOL Energy, as the guarantor (in such capacity, the “ Guarantor ”), in favor the Company. The Guarantor hereby confirms and agrees that, at all times from and after the Effective Date, all of the terms, covenants, conditions, agreements, undertakings and obligations of the New Originator under the Purchase and Sale Agreement and each other Transaction Document to which such New Originator is or becomes a party shall be, for all purposes of the CONSOL Guaranty and the other Transaction Documents, included in and made part of the Obligations described therein. The Guarantor hereby reaffirms its obligations under the CONSOL Guaranty and each other Transaction Document to which it is a party and confirms that its obligations under each of the foregoing continue in full force and effect.

This Joinder Agreement shall become effective upon the date hereof (the “ Effective Date ”) upon receipt by the Administrator of (a) counterparts of this Joinder Agreement, duly executed by each of the parties hereto, (b) each of the documents, certificates and opinions required to be delivered by New Originator pursuant to Articles IV and VII of the Purchase and Sale Agreement and (c) such other documents, instruments and opinions as the Administrator may request.

Please acknowledge your consent to New Originator’s joinder to the Purchase and Sale Agreement [as an Originator and to the Receivables Purchase Agreement as a Sub-Servicer] by signing the enclosed copy hereof in the appropriate space provided below.

[signature pages follow]

G - 2

IN WITNESS WHEREOF , New Originator has executed this Joinder Agreement as of the day of .


[NEW ORIGINATOR]

By:
Name:
Title:

G - 3

Each of the undersigned hereby consents to New Originator’s joinder to the Sale Agreement:


PNC BANK, NATIONAL ASSOCIATION,
as Administrator

By:
Name:
Title:

MARKET STREET FUNDING LLC, as a
Conduit Purchaser

By:
Name:
Title:

PNC BANK, NATIONAL ASSOCIATION,
as the LC Bank and as an LC Participant

By:
Name:
Title:

G - 4


LIBERTY STREET FUNDING LLC, as a
Conduit Purchaser

By:
Name:
Title:

THE BANK OF NOVA SCOTIA ,
as an LC Participant

By:
Name:
Title:

G - 5


CNX FUNDING CORPORATION

By:
Name:
Title:

CONSOL ENERGY INC. , as Servicer

By:
Name:
Title:

CONSOL ENERGY INC., as Guarantor

By:
Name:
Title:

G - 6

Exhibit 10.33

EXECUTION COPY

AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

DATED AS OF APRIL 30, 2007

BY AND AMONG

CNX FUNDING CORPORATION

as Seller

AND

CONSOL ENERGY INC.

as initial Servicer

AND

CONSOL ENERGY SALES COMPANY, CONSOL OF KENTUCKY INC.,

CONSOL PENNSYLVANIA COAL COMPANY, CONSOLIDATION

COAL COMPANY, ISLAND

CREEK COAL COMPANY, WINDSOR COAL COMPANY, MCELROY COAL

COMPANY, KEYSTONE COAL MINING CORPORATION, EIGHTY-FOUR MINING

COMPANY AND CNX MARINE TERMINALS INC.

as Sub-Servicers

AND

THE CONDUIT PURCHASERS PARTY HERETO

AND

THE PURCHASER AGENTS PARTY HERETO

AND

THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTIES HERETO,

as LC Participants

AND

PNC BANK, NATIONAL ASSOCIATION,

as Administrator and LC Bank

TABLE OF CONTENTS


		Page
ARTICLE I.	AMOUNTS AND TERMS OF THE PURCHASES	2

Section 1.1	Purchase Facility	2

Section 1.2	Making Purchases	3

Section 1.3	Purchased Interest Computation	4

Section 1.4	Settlement Procedures	5

Section 1.5	Fees	8

Section 1.6	Payments and Computations, Etc.	8

Section 1.7	Increased Costs and Yield Protection	9

Section 1.8	Requirements of Law; Funding Losses	10

Section 1.9	Inability to Determine Euro-Rate	12

Section 1.10	[Reserved]	12

Section 1.11	Letters of Credit	12

Section 1.12	Issuance of Letters of Credit	13

Section 1.13	Requirements For Issuance of Letters of Credit	13

Section 1.14	Disbursements, Reimbursement	13

Section 1.15	Repayment of Participation Advances	14

Section 1.16	Documentation	15

Section 1.17	Determination to Honor Drawing Request	15

Section 1.18	Nature of Participation and Reimbursement Obligations	15

Section 1.19	Indemnity	17

Section 1.20	Liability for Acts and Omissions	17

ARTICLE II.	REPRESENTATIONS AND WARRANTIES; COVENANTS; TERMINATION EVENTS	19

Section 2.1	Representations and Warranties; Covenants	19

Section 2.2	Termination Events	19

ARTICLE III.	INDEMNIFICATION	19

Section 3.1	Indemnities by the Seller	19

Section 3.2	Indemnities by the Servicer	21

Section 3.3	Notice of Claims	21

ARTICLE IV.	ADMINISTRATION AND COLLECTIONS	22

Section 4.1	Appointment of the Servicer	22

Section 4.2	Duties of the Servicer	23

TABLE OF CONTENTS


		Page

Section 4.3	Lock-Box Arrangements	24

Section 4.4	Enforcement Rights	24

Section 4.5	Responsibilities of the Seller	25

Section 4.6	Servicing Fee	26

ARTICLE V.	ADMINISTRATOR	26

Section 5.1	Appointment and Authorization	26

Section 5.2	Delegation of Duties	27

Section 5.3	Exculpatory Provisions	27

Section 5.4	Reliance by Administrator	28

Section 5.5	Notice of Termination Events	28

Section 5.6	Non-Reliance on Administrator	29

Section 5.7	Administrator, Purchasers, Purchaser Agents and Affiliates	29

Section 5.8	Indemnification	30

Section 5.9	Successor Administrator	30

Section 5.10	Certain Tax Matters	30

ARTICLE VI.	MISCELLANEOUS	31

Section 6.1	Amendments, Etc.	31

Section 6.2	Notices, Etc.	31

Section 6.3	Assignability	31

Section 6.4	Costs, Expenses and Taxes	34

Section 6.5	No Proceedings; Limitation on Payments	35

Section 6.6	Confidentiality	35

Section 6.7	GOVERNING LAW AND JURISDICTION	36

Section 6.8	Execution in Counterparts	36

Section 6.9	Survival of Termination	36

Section 6.10	WAIVER OF JURY TRIAL	36

Section 6.11	Entire Agreement	37

Section 6.12	Headings	37

Section 6.13	Purchasers’ and Purchaser Agents’ Liabilities	37

This AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (as amended, supplemented or otherwise modified from time to time, this “ Agreement ”) is entered into as of April 30, 2007, by and among CNX FUNDING CORPORATION, a Delaware corporation, as seller (the “ Seller ”), CONSOL ENERGY INC., a Delaware corporation (“ CONSOL Energy ”), as initial servicer (in such capacity, together with its successors and permitted assigns in such capacity, the “ Servicer ”), CONSOL ENERGY SALES COMPANY, a Delaware corporation, CONSOL OF KENTUCKY INC., a Delaware corporation, CONSOL PENNSYLVANIA COAL COMPANY, a Delaware corporation, CONSOLIDATION COAL COMPANY, a Delaware corporation, ISLAND CREEK COAL COMPANY, a Delaware corporation, WINDSOR COAL COMPANY, a West Virginia corporation, MCELROY COAL COMPANY, a Delaware corporation, KEYSTONE COAL MINING CORPORATION, a Pennsylvania corporation, EIGHTY-FOUR MINING COMPANY, a Pennsylvania corporation, and CNX MARINE TERMINALS INC., a Delaware corporation (each a “ Sub-Servicer ” and collectively, the “ Sub-Servicers ”), the CONDUIT PURCHASERS PARTY HERETO (each, a “ Conduit Purchaser ”), the PURCHASER AGENTS PARTY HERETO (each, a “ Purchaser Agent ”), THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTIES HERETO AS LC PARTICIPANTS (each together with their successors and permitted assigns in such capacity, an “ LC Participant ”), and PNC BANK, NATIONAL ASSOCIATION, a national banking association (“ PNC ”), as Purchaser Agent for Market Street, and as administrator for the Conduit Purchasers (in such capacity, together with its successors and assigns in such capacity, the “ Administrator ”) and as issuer of Letters of Credit (in such capacity, together with its successors and assigns in such capacity, the “ LC Bank ”) and each of the other members of each Purchaser Group party hereto or that become parties hereto by executing an Assumption Agreement or a Transfer Supplement.

PRELIMINARY STATEMENTS. Certain terms that are capitalized and used throughout this Agreement are used as defined in Exhibit I . References to the “Agreement” in the Exhibits hereto refer to this Agreement.

The Seller (i) desires to sell, transfer and assign an undivided variable percentage interest in a pool of receivables, and the Conduit Purchasers desire to acquire such undivided variable percentage interest, as such percentage interest shall be adjusted from time to time based upon, in part, reinvestment payments that are made by the Conduit Purchasers and (ii) may, subject to the terms and conditions hereof, request that the LC Bank issue or cause the issuance of one or more Letters of Credit.

This Agreement amends and restates in its entirety, as of the Restatement Date, the Receivables Purchase Agreement, dated as of April 30, 2003 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the “Original Agreement”), among the Seller, the Servicer, the Sub-Servicers, the Conduit Purchasers from time to time party thereto, the Purchaser Agents party thereto, and the Administrator. Notwithstanding the amendment and restatement of the Original Agreement by this Agreement, the Seller and Servicer shall continue to be liable to PNC, the Conduit Purchasers or any other Indemnified Party or Affected Person (as such terms are defined in the Original Agreement) for fees and expenses which are accrued and unpaid under the Original Agreement on the date hereof (collectively, the “Original Agreement Outstanding Amounts”) and all agreements to indemnify such parties in connection with events or conditions arising or existing prior to the effective date

of this Agreement. Upon the effectiveness of this Agreement, PNC as LC Bank and PNC and each other LC Participant noted on the signature pages hereto shall become a party to this Agreement and each reference to the Original Agreement in any other document, instrument or agreement shall mean and be a reference to this Agreement.

In consideration of the mutual agreements, provisions and covenants contained herein, the Original Agreement is hereby amended and restated to read in its entirety as follows:

ARTICLE I.

AMOUNTS AND TERMS OF THE PURCHASES

Section 1.1 Purchase Facility .

(a) On the terms and conditions hereinafter set forth, each Conduit Purchaser hereby agrees, ratably based on its respective Commitment, to purchase, and make reinvestments in, and the LC Bank hereby agrees (if so requested) to issue Letters of Credit in return for (and each LC Participant hereby severally agrees to make participation advances in connection with any draws under such Letters of Credit equal to such LC Participant’s Pro Rata Share of such draws), undivided percentage ownership interests with regard to the Purchased Interest from the Seller from time to time from the date hereof to the Facility Termination Date.

The Seller may, subject to the remainder of this paragraph (a) and the other requirements and conditions herein, use the proceeds of any purchase or reinvestment by the Conduit Purchasers hereunder to satisfy its Reimbursement Obligation to the LC Bank and the LC Participants (ratably, based on the outstanding amounts funded by the LC Bank and each such LC Participant) pursuant to Section 1.14 below.

In addition, in the event the Seller fails to reimburse the LC Bank for the full amount of any drawing under any Letter of Credit on the applicable Drawing Date (out of its own funds available therefor, or otherwise, at such time), pursuant to Section 1.14 below, then the Seller shall, automatically (and without the requirement of any further action on the part of any Person hereunder), be deemed to have requested a new purchase from the Conduit Purchasers on such date, pursuant to the terms hereof, in an amount equal to the amount of such Reimbursement Obligation at such time. Subject to the limitations on funding set forth in the remainder of this paragraph (a) below (and the other requirements and conditions herein), the Conduit Purchasers shall fund such deemed purchase request and deliver the proceeds thereof directly to the Administrator to be immediately distributed (ratably) to the LC Bank and the applicable LC Participants in satisfaction of the Seller’s Reimbursement Obligation pursuant to Section 1.14 below, to the extent of the amounts permitted to be funded by the Conduit Purchasers, at such time, hereunder.

Notwithstanding anything set forth in this paragraph (a) or otherwise herein to the contrary, under no circumstances shall any Purchaser make any such purchase or reinvestment (including, without limitation, any deemed purchases by the Conduit Purchasers pursuant to the immediately preceding paragraphs of this Section 1.1(a) ), or issue any Letter of Credit, as applicable, if, after giving effect to such purchase, reinvestment or issuance, the (i) aggregate outstanding amount of the Capital funded by such Purchaser shall exceed (A) its Purchaser

Group’s Group Commitment, as the same may be reduced from time to time pursuant to Section 1.1(b) , minus (B) in the case of any LC Participant, such LC Participant’s Pro Rata Share of the face amount of any outstanding Letters of Credit or (ii) the aggregate outstanding Capital plus the LC Participation Amount would exceed the Purchase Limit.

(b) The Seller may, upon at least 60 days’ written notice to the Administrator, terminate the purchase facility provided in this Section in whole or, upon at least 30 days’ written notice to the Administrator, from time to time, irrevocably reduce in part the unused portion of the Purchase Limit; provided, that each partial reduction shall be in the amount of at least $5,000,000, or an integral multiple of $1,000,000 in excess thereof, and that, unless terminated in whole, the Purchase Limit shall in no event be reduced below $50,000,000. Each reduction in the Commitments hereunder shall be made ratably among the Purchasers in accordance with their respective pro rata shares. The Administrator shall promptly advise the Purchaser Agents of any notice received by it pursuant to this Section 1.1(b) ; it being understood that (in addition to and without limiting any other requirements for termination, prepayment and/or the funding of the LC Collateral Account hereunder) no such termination or reduction shall be effective unless and until (i) in the case of a termination, the amount on deposit in the LC Collateral Account is at least equal to the then outstanding LC Participation Amount and (ii) in the case of a partial reduction, the amount on deposit in the LC Collateral Account is at least equal to the positive difference between the then outstanding LC Participation Amount and the Purchase Limit as so reduced by such partial reduction.

Section 1.2 Making Purchases .

(a) Each Funded Purchase (but not reinvestment) of undivided percentage ownership interests with regard to the Purchased Interest hereunder shall be made upon the Seller’s irrevocable written notice in the form of Annex B (the “ Purchase Notice ”) delivered to the Administrator and each Purchaser Agent in accordance with Section 5.2 (which notice must be received by the Administrator and each Purchaser Agent before 11:00 a.m., New York City time) at least two Business Days before the requested purchase date, which notice shall specify: (A) in the case of a Funded Purchase (other than one made pursuant to Section 1.14(b) ), the amount requested to be paid to the Seller with respect to each Conduit Purchaser (such amount, which shall not be less than $300,000 (or an integral multiple of $100,000 in excess thereof), or such lesser amount as is agreed to by the Administrator and each Purchaser Agent, with respect to each Purchaser Group, being the Capital relating to the undivided percentage ownership interest then being purchased by such Conduit Purchaser), (B) the date of such Funded Purchase (which shall be a Business Day), and (C) the pro forma calculation of the Purchased Interest after giving effect to the increase in Capital.

(b) On the date of each Funded Purchase (but not reinvestment or issuance of a Letter of Credit) of undivided percentage ownership interests with regard to the Purchased Interest hereunder, each Conduit Purchaser (or the related Purchaser Agent on its behalf) shall, upon satisfaction of the conditions set forth in Exhibit II , make available to the Seller in same day funds, at PNC Bank, National Association, account number 1017289343, ABA 043000096 or any other account designated by the Seller, an amount equal to its Capital relating to the undivided percentage ownership interest then being purchased.

(c) Effective on the date of each Funded Purchase pursuant to this Section and each reinvestment pursuant to Section 1.4 , the Seller hereby sells and assigns to the Administrator (for the benefit of the Purchasers (ratably based on the sum of the Capital plus the LC Participation Amount outstanding at such time,) an undivided percentage ownership interest in: (i) each Pool Receivable then existing, (ii) all Related Security with respect to such Pool Receivables, and (iii) all Collections with respect to, and other proceeds of, such Pool Receivables and Related Security.

(d) To secure all of the Seller’s obligations (monetary or otherwise) under this Agreement and the other Transaction Documents to which it is a party, whether now or hereafter existing or arising, due or to become due, direct or indirect, absolute or contingent, the Seller hereby grants to the Administrator for the benefit of the Purchasers a security interest in all of the Seller’s right, title and interest (including any undivided interest of the Seller) in, to and under all of the following, whether now or hereafter owned, existing or arising: (i) all Pool Receivables, (ii) all Related Security with respect to such Pool Receivables, (iii) all Collections with respect to such Pool Receivables, (iv) the Lock-Box Accounts and all amounts on deposit therein, and all certificates and instruments, if any, from time to time evidencing such Lock-Box Accounts and amounts on deposit therein, (v) all rights (but none of the obligations) of the Seller under the Sale Agreement and the CONSOL Guaranty, and (vi) all proceeds of, and all amounts received or receivable under any or all of, the foregoing (collectively, the “ Pool Assets ”). The Administrator, for the benefit of the Purchasers, shall have, with respect to the Pool Assets, and in addition to all the other rights and remedies available to the Administrator and the Purchasers, all the rights and remedies of a secured party under any applicable UCC.

(e) Whenever the LC Bank issues a Letter of Credit pursuant to Section 1.12 hereof, each LC Participant shall, automatically and without further action of any kind upon the effective date of issuance of such Letter of Credit, have irrevocably been deemed to make a Funded Purchase hereunder in the event that such Letter of Credit is subsequently drawn and such drawn amount shall not have been reimbursed pursuant to Section 1.14 upon such draw. All such Funded Purchases shall be made ratably by the LC Participants according to their Pro Rata Shares and shall accrue Discount from the date of such draw. In the event that any Letter of Credit expires or is surrendered without being drawn (in whole or in part) then, in such event, the foregoing commitment to make Funded Purchases shall expire with respect to such Letter of Credit and the LC Participation Amount shall automatically reduce by the amount of the Letter of Credit which is no longer outstanding.

Section 1.3 Purchased Interest Computation .

The Purchased Interest shall be initially computed on the date of the initial purchase hereunder. Thereafter, until the Facility Termination Date, the Purchased Interest shall be automatically recomputed (or deemed to be recomputed) on each Business Day other than a Termination Day. The Purchased Interest as computed (or deemed recomputed) as of the day before the Facility Termination Date shall thereafter remain constant. The Purchased Interest shall become zero when (a) the Capital thereof and Discount thereon shall have been paid in full, (b) an amount equal to 100% of the LC Participation Amount has been deposited in the LC Collateral Account, or all Letters of Credit have expired and (c) all the amounts owed by the Seller or the Servicer hereunder to each Purchaser, the Administrator and any other Indemnified

Party or Affected Person are paid in full, and the Servicer shall have received the accrued Servicing Fee thereon.

Section 1.4 Settlement Procedures .

(a) The collection of the Pool Receivables shall be administered by the Servicer in accordance with this Agreement. The Seller shall provide to the Servicer on a timely basis all information needed for such administration, including notice of the occurrence of any Termination Day and current computations of the Purchased Interest.

(b) The Servicer shall, on each day on which Collections of Pool Receivables are received (or deemed received) by the Seller or the Servicer:

(i) set aside and hold in trust (and shall, at the request of the Administrator, segregate in a separate account approved by the Administrator) for the Administrator (for the benefit of the Purchasers), out of the Purchasers’ Share of such Collections, first, an amount equal to the Purchasers’ aggregate amount of Discount accrued through such day for each Portion of Capital and not previously set aside, second, an amount equal to the fees set forth in the Fee Letters accrued and unpaid through such day, and third, to the extent funds are available therefor, an amount equal to the aggregate of each Purchaser Group’s Ratable Share of the Purchasers’ Share of the Servicing Fee accrued through such day and not previously set aside,

(ii) subject to Section 1.4(f) , if such day is not a Termination Day, remit to the Seller, ratably, on behalf of each Purchaser Group, the remainder of the Purchasers’ Share of such Collections. Such remainder shall, to the extent representing a return on the aggregate Capital, be automatically deemed to be reinvested in Pool Receivables, and in the Related Security, Collections and other proceeds with respect thereto ratably, according to each Purchaser’s Capital; provided, however, that if the Purchased Interest would exceed 100%, then the Servicer shall not reinvest, but shall set aside and hold in trust for Administrator (for the benefit of the Purchasers) (and shall, at the request of the Administrator, segregate in a separate account approved by the Administrator) a portion of such Collections that, together with the other Collections set aside pursuant to this paragraph, shall equal the amount necessary to reduce the Purchased Interest to 100%; provided , further , that in the case of any Purchaser that has provided notice (an “ Exiting Notice ”) to its Purchaser Agent of its refusal, to extend its Commitment hereunder (an “ Exiting Purchaser ”), then such Exiting Purchaser’s ratable share of such Collections based on its Capital shall not be reinvested (after the termination of its Commitment) and shall instead be held in trust for Administrator (for the benefit of such Exiting Purchaser) and applied in accordance with clause (iii) below,

(iii) if such day is a Termination Day (or any day following the provision of an Exiting Notice), set aside, segregate and hold in trust for the Administrator (for the benefit of the Purchasers) (and shall, at the request of the Administrator, segregate in a separate account approved by the Administrator) for the benefit of each Purchaser Group the entire remainder of the Purchasers’ Share of the Collections (or in the case of an Exiting Purchaser an amount equal to such Purchaser’s ratable share of such Collections based on its Capital; provided , that solely for the purpose of determining such Purchaser’s ratable share of such Collections, such Purchaser’s Capital shall be deemed to remain constant from the date of the provision of an

Exiting Notice until the date such Purchaser’s Capital has been paid in full; it being understood that if such day is also a Termination Day, such Exiting Purchaser’s Capital shall be recalculated taking into account amounts received by such Purchaser in respect of this parenthetical and thereafter Collections shall be set aside for such Purchaser ratably in respect of its Capital (as recalculated)); provided, that if amounts are set aside and held in trust on any Termination Day of the type described in clause (a) of the definition of “Termination Day” and, thereafter, the conditions set forth in Section 2 of Exhibit II are satisfied or waived by the appropriate Person or Persons, such previously set-aside amounts shall, to the extent representing a return on aggregate Capital (other than the Capital of any Exiting Purchaser) and ratably in accordance with each Purchaser’s (other than an Exiting Purchaser) Capital, be reinvested in accordance with clause (ii) on the day of such subsequent satisfaction or waiver of conditions, and

(iv) release to the Seller (subject to Section 1.4(f) ) for its own account any Collections in excess of: (x) amounts required to be reinvested in accordance with clause (ii) or the proviso to clause (iii) plus (y) the amounts that are required to be set aside pursuant to clause (i) , the proviso to clause (ii) and clause (iii) plus (z) the Seller’s Share of the Servicing Fee accrued and unpaid through such day plus (aa) all other amounts then due and payable by the Seller under this Agreement to any Purchasers, the Administrator, and any other Indemnified Party or Affected Person.

(c) The Servicer shall deposit into each Purchaser Agent’s account (as designated by such Purchaser Agent to Servicer on or prior to the date hereof, or such other account designated by such Purchaser to Servicer from time to time), on each Settlement Date, Collections held for the applicable Purchaser, pursuant to clause (b)(i) or (f) plus the amount of Collections then held for the Administrator (for the benefit of such Purchaser) pursuant to clauses (b)(ii) and (iii) of Section 1.4 ; provided, that if CONSOL Energy or an Affiliate thereof is the Servicer, such day is not a Termination Day and the Administrator has not notified CONSOL Energy (or such Affiliate) that such right is revoked, CONSOL Energy (or such Affiliate) may retain the portion of the Collections set aside pursuant to clause (b)(i) that represents the aggregate of each Purchaser Group’s Ratable Share of the Purchasers’ Share of the Servicing Fee. On the last day of each Settlement Period, each Purchaser or (its Purchaser Agent) will notify the Servicer by facsimile of the amount of Discount accrued with respect to each Portion of Capital during such Settlement Period or portion thereof.

(d) Upon receipt of funds deposited pursuant to clause (c) , each Purchaser Agent shall cause such funds to be distributed as follows:

(i) if such distribution occurs on a day that is not a Termination Day and the Purchased Interest does not exceed 100%, first to such Purchaser Agent ratably according to the Discount accrued during the applicable Settlement Period (for the benefit of the relevant Purchasers within such Purchaser Agent’s Purchaser Group) in payment in full of all accrued Discount and fees (other than Servicing Fees) with respect to each Portion of Capital maintained by such Purchasers; it being understood that each Purchaser Agent shall distribute such amounts to the Purchasers within its Purchaser Group ratably according to the Discount with respect to each Portion of Capital maintained by such Purchaser, and second, if the Servicer has set aside amounts in respect of the Servicing Fee pursuant to clause (b)(i) and has not retained such amounts pursuant to clause (c) , to the Servicer (payable in arrears on each Settlement Date) in

payment in full of the aggregate of each Purchaser Group’s Ratable Share of the Purchaser’s Share of accrued Servicing Fees so set aside, and

(ii) if such distribution occurs on a Termination Day or on a day when the Purchased Interest exceeds 100%, first to such Purchaser Agent ratably according to Discount (for the benefit of the relevant Purchasers within such Purchaser Agent’s Purchaser Group) in payment in full of all accrued Discount with respect to each Portion of Capital funded or maintained by the Purchasers within such Purchaser Agent’s Purchaser Group, second to such Purchaser Agent ratably according to the aggregate of the Capital of each Purchaser in each such Purchaser Agent’s Purchaser Group (for the benefit of the relevant Purchasers within such Purchaser Agent’s Purchaser Group) in payment in full of each Purchaser’s Capital (or, if such day is not a Termination Day, such Purchaser’s ratable share of the amount necessary to reduce the Purchased Interest to 100%), third, to the Servicer in payment in full of the aggregate of such Purchaser Group’s Ratable Share of all accrued Servicing Fees, fourth, to the LC Collateral Account for the benefit of the LC Bank and the LC Participants, the amount necessary to cash collateralized the LC Participation Amount until the amount of cash collateral held in such LC Collateral Account equals the aggregate outstanding amount of the LC Participation Amount and if the Capital and accrued Discount with respect to the Purchasers in its Purchaser Group’s percentage interest of Capital have been reduced to zero or if such day is not a Termination Day, the Purchased Interest is reduced to 100%, and all accrued Servicing Fees payable to the Servicer have been paid in full, to the Administrator for distribution to each Purchaser, each Purchaser Agent, the Administrator and any other Indemnified Party or Affected Person any other amounts then owed thereto by the Seller hereunder, ratably in accordance with the amounts due thereto.

After the Capital, Discount, fees payable pursuant to the Fee Letters and Servicing Fees with respect to the Purchased Interest, and any other amounts payable by the Seller and the Servicer to each Purchaser Group, the Administrator or any other Indemnified Party or Affected Person hereunder, have been paid in full, and (on and after a Termination Day) after an amount equal to 100% of the LC Participation Amount has been deposited in the LC Collateral Account, all additional Collections with respect to the Purchased Interest shall be paid to the Seller for its own account.

(e) For the purposes of this Section 1.4 :

(i) if on any day the Outstanding Balance of any Pool Receivable is reduced or adjusted as a result of any defective, rejected, returned, repossessed or foreclosed goods or services, or any revision, cancellation, allowance, rebate, discount or other adjustment made by the Seller or any Affiliate of the Seller, or any setoff or dispute between the Seller or any Affiliate of the Seller and an Obligor, the Seller shall be deemed to have received on such day a Collection of such Pool Receivable in the amount of such reduction or adjustment;

(ii) if on any day any of the representations or warranties in Section 1(g) or (n) of Exhibit III is not true with respect to any Pool Receivable, the Seller shall be deemed to have received on such day a Collection of such Pool Receivable in full;

(iii) except as provided in clause (i) or (ii) , or as otherwise required by applicable law or the relevant Contract, all Collections received from an Obligor of any

Receivable shall be applied to the Receivables of such Obligor in the order of the age of such Receivables, starting with the oldest such Receivable, unless such Obligor designates in writing its payment for application to specific Receivables; and

(iv) if and to the extent the Administrator or any Purchaser shall be required for any reason to pay over to an Obligor (or any trustee, receiver, custodian or similar official in any Insolvency Proceeding) any amount received by it hereunder, such amount shall be deemed not to have been so received by the Administrator or such Purchaser but rather to have been retained by the Seller and, accordingly, the Administrator or such Purchaser, as the case may be, shall have a claim against the Seller for such amount, payable when and to the extent that any distribution from or on behalf of such Obligor is made in respect thereof

(f) If at any time the Seller shall wish to cause the reduction of Capital (but not to commence the liquidation, or reduction to zero, of the entire Capital of the Purchased Interest), the Seller may do so as follows:

(i) the Seller shall give the Administrator, the Purchaser Agents and the Servicer written notice in the form of Annex C (the “ Paydown Notice ”) at least two Business Days prior to the date of such reduction;

(ii) On the proposed date of the commencement of such reduction and on each day thereafter, the Servicer shall cause Collections not to be reinvested until the amount thereof not so reinvested shall equal the desired amount of reduction; and

(iii) the Servicer shall hold such Collections in trust for the Purchasers ratably (based on their respective Portions of Capital funded thereby), for payment to the Purchaser Agents on the next Settlement Date immediately following the current Settlement Period or such other date approved by the Purchaser Agents, and Capital shall be deemed reduced in the amount to be paid to the Purchaser Agents only when in fact finally so paid.

Section 1.5 Fees .

The Seller shall pay to each Purchaser Agent for the benefit of the related Purchasers certain fees in the amounts and on the dates set forth in certain fee letters, among (i) CONSOL Energy, the Seller and the applicable Purchaser Agent dated the date hereof, and (ii) CONSOL Energy, the Seller, and each Purchaser Agent other than the Purchaser Group to which Market Street and Liberty Street Funding Corp. are members dated as of the date such Purchaser Group becomes party to this Agreement (as such letter agreements may be amended, supplemented or otherwise modified from time to time, the “ Fee Letters ”).

Section 1.6 Payments and Computations, Etc .

(a) All amounts to be paid or deposited by the Seller or the Servicer hereunder shall be made without reduction for offset or counterclaim and shall be paid or deposited no later than noon, New York City, New York time on the day when due in same day funds to each Purchaser Agent’s account. All amounts received after noon, New York City, New York time, will be deemed to have been received on the next Business Day.

(b) The Seller or the Servicer, as the case may be, shall, to the extent permitted by applicable law, pay interest on any amount not paid or deposited by the Seller or the Servicer, as the case may be, when due hereunder, at an interest rate equal to 2.0% per annum above the Base Rate, payable on demand.

(c) All computations of interest under clause (b) and all computations of Discount, fees and other amounts hereunder shall be made on the basis of a year of 360 (or 365 or 366, as applicable, with respect to Discount or other amounts calculated by reference to the Base Rate) days for the actual number of days elapsed. Whenever any payment or deposit to be made hereunder shall be due on a day other than a Business Day, such payment or deposit shall be made on the next Business Day and such extension of time shall be included in the computation of such payment or deposit.

Section 1.7 Increased Costs and Yield Protection .

(a) If the Administrator, any Liquidity Provider, any Purchaser Agent, any Purchaser, any other Program Support Provider or any of their respective Affiliates (each an “ Affected Person ”) reasonably determines that the existence of or compliance with: (i) FIN 46 and Subsequent Statements and Interpretations described in Section 1.7(c) below, (ii) any other law, regulation or generally accepted accounting principle or any change therein or in the interpretation or application thereof by a Governmental Authority or other applicable Person charged with or having the responsibility or authority to make such interpretations or applications, in each case adopted, issued or occurring after the date hereof, or (iii) any request, guideline or directive from any central bank or other Governmental Authority (whether or not having the force of law) issued or occurring after the date of this Agreement, affects or would affect the amount of capital required or expected to be maintained by such Affected Person, and such Affected Person reasonably determines that the amount of such capital is increased by or based upon the existence of any commitment to make purchases of (or otherwise to maintain the investment in) Pool Receivables or issue any Letter of Credit related to this Agreement or any related liquidity facility, credit enhancement facility and other commitments of the same type, then, upon demand by such Affected Person (with a copy to the Administrator and the Purchaser Agents), the Seller shall promptly pay to such Affected Person, from time to time as specified by such Affected Person, additional amounts sufficient to compensate such Affected Person for both increased costs and maintenance of bargained for yield in the light of such circumstances, to the extent that such Affected Person reasonably determines such increase in capital to be allocable to the existence of any of such commitments. A certificate as to such amounts submitted to the Seller, the Administrator and the Purchaser Agents by such Affected Person shall be conclusive and binding for all purposes, absent manifest error. The Affected Person shall use reasonable efforts to notify the Seller, orally or in writing, of any event described in clauses (ii) or (iii) above (Seller is aware of FIN 46 and Subsequent Statements and the Interpretations described in clause (i) above and in Section 1.7(c) below) that appears likely to result in a claim for compensation (for increased costs or maintenance of bargained for yield) under this Section promptly after the Affected Person learns of such an event and that it will have adverse implications upon such Affected Person, provided that any failure to give such notice shall not preclude such Affected Person from asserting such a claim for compensation at any time.

(b) If, due to either: (i) FIN 46 and Subsequent Statements and Interpretations, (ii) the introduction of or any change in or in the interpretation by a Governmental Authority or other applicable Person charged with or having the responsibility or authority to make such changes or interpretations after the date hereof of any other law, regulation or generally accepted accounting standard or (iii) compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to any Affected Person of agreeing to purchase or purchasing, or maintaining the ownership of, the Purchased Interest in respect of which Discount is computed by reference to the Euro-Rate, then, upon demand by such Affected Person (with a copy to the Administrator and the Purchaser Agents), the Seller shall promptly pay to such Affected Person, from time to time as specified by such Affected Person, additional amounts sufficient to compensate such Affected Person for both increased costs and maintenance of bargained for yield. A certificate as to such amounts submitted to the Seller, the Administrator and the Purchaser Agents by such Affected Person shall be conclusive and binding for all purposes, absent manifest error.

(c) For avoidance of doubt any increase in cost and/or reduction in yield caused by regulatory capital allocation adjustments due to Financial Accounting Standards Board’s Interpretation 46 (or any future statement or interpretation issued by the Financial Accounting Standards Board or any successor thereto) (collectively, the “ FIN 46 and Subsequent Statements and Interpretations ”) shall be covered by this Section 1.7 .

(d) If such increased costs affect the related Affected Person’s portfolio of financing transactions, such Affected Person shall use reasonable averaging and attribution methods to allocate such increased costs to the transactions contemplated by this Agreement.

(e) The Administrator and the Purchaser Agents will make reasonable efforts to cause the interest of any Affected Party (other than PNC (in its capacity as Administrator, a Purchaser Agent, a Purchaser, a Program Support Provider or otherwise), Market Street or any of their Affiliates) that makes a claim under this Section 1.7 to be transferred to a party that is not subject to increased costs under this Section 1.7 ; provided that neither PNC nor any of its Affiliates shall be required hereunder to itself accept such transferred interest.

(f) Notwithstanding any language in this Section 1.7 to the contrary, nothing in this Section 1.7 shall be construed as requiring the Seller to make any payments attributable to or in respect of any net income, gross receipts, franchise or similar taxes imposed upon any Affected Person or taxes required to be withheld or deducted from any payments to any Affected Person; provided, however, that the Seller shall be obligated to compensate an Affected Person for any additional taxes attributable directly to any increase in capital required or expected to be maintained as a result of an event described in any of clauses (i) through (iii) in subsection (a), and provided further that any increase in payments pursuant to this Section 1.7 shall be taken into account in determining any obligation of the Seller under Sections 1.8 and 3.1 .

Section 1.8 Requirements of Law; Funding Losses .

(a) If any Affected Person reasonably determines that the existence of or compliance with: (i) any law or regulation or any change therein or in the interpretation or application thereof, in each case adopted, issued or occurring after the date hereof, or (ii) any request,

guideline or directive from any central bank or other Governmental Authority (whether or not having the force of law) issued or occurring after the date of this Agreement:

(A) does or shall subject such Affected Person to any tax of any kind whatsoever with respect to this Agreement, any increase in the Purchased Interest or in the amount of Capital relating thereto, or does or shall change the basis of taxation of payments to such Affected Person on account of Collections, Discount or any other amounts payable hereunder (excluding (1) taxes imposed on the overall or branch pre-tax net income or gross receipts of such Affected Person, (2) backup withholding or other advance payments of the taxes described in (1), and (3) franchise taxes imposed on such Affected Person),

(B) does or shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, purchases, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Affected Person that are not otherwise included in the determination of the Euro-Rate or the Base Rate hereunder, or

and the result of any of the foregoing is: (1) to increase the cost to such Affected Person of acting as Administrator, or of agreeing to purchase or purchasing or maintaining the ownership of undivided percentage ownership interests with regard to, or issuing any Letter of Credit in respect of, the Purchased Interest (or interests therein) or any Portion of Capital, or (2) to reduce any amount receivable hereunder (whether directly or indirectly), then, in any such case, upon demand by such Affected Person (with a copy to the Administrator and the Purchaser Agents), and subject to Section 5.3(f) hereof, the Seller shall promptly pay to such Affected Person additional amounts necessary to compensate such Affected Person for such additional cost or reduced amount receivable. All such amounts shall be payable as incurred. A certificate from such Affected Person to the Seller, the Administrator and the Purchaser Agents certifying, in reasonably specific detail, the basis for, calculation of, and amount of such additional costs or reduced amount receivable shall be conclusive and binding for all purposes, absent manifest error.

(b) The Seller shall compensate each Affected Person, upon written request by such Person for all losses, expenses and liabilities (including any interest paid by such Affected Person to lenders of funds borrowed by it to fund or maintain any Portion of Capital hereunder at an interest rate determined by reference to the Euro-Rate and any loss sustained by such Person in connection with the re-employment of such funds), which such Affected Person may sustain with respect to funding or maintaining such Portion of Capital at the Euro-Rate if, for any reason, funding or maintaining such Portion of Capital at an interest rate determined by reference to the Euro-Rate does not occur on a date specified therefor; provided, however, that no Affected Person shall be required to disclose any confidential or tax planning information in any such certificate.

Section 1.9 Inability to Determine Euro-Rate .

(a) If the Administrator determines before the first day of any Settlement Period (which determination shall be final and conclusive) that, by reason of circumstances affecting the interbank eurodollar market generally, (i) deposits in dollars (in the relevant amounts for such Settlement Period) are not being offered to banks in the interbank eurodollar market for such Settlement Period, (ii) adequate means do not exist for ascertaining the Euro-Rate for such Settlement Period or (iii) the Euro Rate does not accurately reflect the cost to any Purchaser (as determined by such Purchaser) of maintaining any Portion of Capital during such Settlement Period, then the Administrator shall give notice thereof to the Seller. Thereafter, until the Administrator notifies the Seller that the circumstances giving rise to such suspension no longer exist, (i) no Portion of Capital shall be funded at the Alternate Rate determined by reference to the Euro-Rate and (ii) the Discount for any outstanding Portions of Capital then funded at the Alternate Rate determined by reference to the Euro-Rate shall, on the last day of the then current Settlement Period, be converted to the Alternate Rate determined by reference to the Base Rate.

(b) If, on or before the first day of any Settlement Period, the Administrator shall have been notified by any Affected Person that such Affected Person has determined (which determination shall be final and conclusive) that any enactment, promulgation or adoption of or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by a governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by such Affected Person with any guideline, request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for such Affected Person to fund or maintain any Portion of Capital at the Alternate Rate and based upon the Euro-Rate, the Administrator shall notify the Seller thereof. Upon receipt of such notice, until the Administrator notifies the Seller that the circumstances giving rise to such determination no longer apply, (i) no Portion of Capital shall be funded at the Alternate Rate determined by reference to the Euro-Rate and (ii) the Discount for any outstanding Portions of Capital then funded at the Alternate Rate determined by reference to the Euro-Rate shall be converted to the Alternate Rate determined by reference to the Base Rate either (A) on the last day of the then current Settlement Period if such Affected Person may lawfully continue to maintain such Portion of Capital at the Alternate Rate determined by reference to the Euro-Rate to such day, or (B) immediately, if such Affected Person may not lawfully continue to maintain such Portion of Capital at the Alternate Rate determined by reference to the Euro-Rate to such day.

Section 1.10 [Reserved].

Section 1.11 Letters of Credit .

Subject to the terms and conditions hereof, the LC Bank shall issue or cause the issuance of Letters of Credit (“Letters of Credit”) on behalf of Seller (and, if applicable, on behalf of, or for the account of, any Originator in favor of such beneficiaries as such Originator may elect); provided, however, that the LC Bank will not be required to issue or cause to be issued any Letters of Credit to the extent that the issuance of such Letters of Credit would then cause either (a) the sum of (i) the aggregate Capital plus (ii) the LC Participation Amount to exceed the Purchase Limit or (b) the Capital for Purchasers in the LC Bank’s Purchaser Group to exceed the

Group Commitment for such Purchaser Group. The LC Participation Amount shall not exceed in the aggregate, at any time, the aggregate of the Commitments of the LC Bank and the LC Participants. All amounts drawn upon Letters of Credit shall accrue Discount. Letters of Credit that have not been drawn upon shall not accrue Discount.

Section 1.12 Issuance of Letters of Credit .

(a) The Seller may request that the LC Bank, upon two (2) Business Days’ prior written notice submitted on or before 11:00 a.m., New York time, issue a Letter of Credit by delivering to the Administrator, the LC Bank’s form of Letter of Credit Application (the “Letter of Credit Application”), substantially in the form of Annex E attached hereto completed to the reasonable satisfaction of the Administrator and the LC Bank; and, such other certificates, documents and other papers and information as the Administrator may reasonably request. The Seller also has the right to give instructions and make agreements with respect to any Letter of Credit Application and the disposition of documents, and to agree with the Administrator upon any amendment, extension or renewal of any Letter of Credit.

(b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts or other written demands for payment when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than twelve (12) months after such Letter of Credit’s date of issuance provided that any such Letter of Credit may automatically renew if such Letter of Credit has an automatic renewal feature set forth in the terms thereof, unless the LC Bank or such LC Bank’s Affiliates give notice of termination of such Letter of Credit. Each Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, and any amendments or revisions thereof adhered to by the LC Bank (“UCP 500”) or the International Standby Practices (ISP98-International Chamber of Commerce Publication Number 590), and any amendments or revisions thereof adhered to by the LC Bank (the “ISP98 Rules”), as determined by the LC Bank.

(c) The Administrator shall promptly notify the LC Bank, at its address for notices hereunder, and each LC Participant of the request by the Seller for a Letter of Credit hereunder, and shall provide the LC Bank with the Letter of Credit Application delivered to the Administrator by the Seller pursuant to paragraph (a), above, by the close of business on the day received or if received on a day that is not a Business Day or on any Business Day after 11:00 a.m., New York time, on such day, on the next Business Day.

Section 1.13 Requirements For Issuance of Letters of Credit .

The Seller shall authorize and direct the LC Bank to name the Seller or any Originator as the “Applicant” or “Account Party” of each Letter of Credit.

Section 1.14 Disbursements, Reimbursement .

(a) Immediately upon the issuance of each Letter of Credit, each LC Participant shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the LC Bank a participation in such Letter of Credit and each drawing thereunder in an amount equal to such

LC Participant’s Pro Rata Share of the face amount of such Letter of Credit and the amount of such drawing, respectively.

(b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the LC Bank will promptly notify the Administrator and the Seller of such request. Provided that it shall have received such notice, the Seller shall reimburse (such obligation to reimburse the LC Bank shall sometimes be referred to as a “Reimbursement Obligation”) the LC Bank prior to 12:00 p.m., New York time, on each date that an amount is paid by the LC Bank under any Letter of Credit (each such date, a “Drawing Date”) in an amount equal to the amount so paid by the LC Bank. In the event the Seller fails to reimburse the LC Bank for the full amount of any drawing under any Letter of Credit by 12:00 p.m., New York time, on the Drawing Date, the LC Bank will promptly notify each LC Participant thereof, and the Seller shall be deemed to have requested that a Funded Purchase be made by Purchasers in the Purchaser Group for the LC Bank and the LC Participants to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilized portion of Group Commitment for such Purchaser Group.

(c) Each LC Participant shall, upon any notice pursuant to subclause (b) above, make available to the LC Bank an amount in immediately available funds equal to its Pro Rata Share of the amount of the drawing, whereupon the LC Participants shall each be deemed to have made a Funded Purchase in that amount. If any LC Participant so notified fails to make available to the LC Bank the amount of such LC Participant’s Pro Rata Share of such amount by no later than 2:00 p.m., New York time on the Drawing Date, then interest shall accrue on such LC Participant’s obligation to make such payment, from the Drawing Date to the date on which such LC Participant makes such payment (i) at a rate per annum equal to the Federal Funds Rate during the first three days following the Drawing Date and (ii) at a rate per annum equal to the Discount rate applicable to Capital on and after the fourth day following the Drawing Date. The LC Bank will promptly give notice of the occurrence of the Drawing Date, but failure of the LC Bank to give any such notice on the Drawing Date or in sufficient time to enable any LC Participant to effect such payment on such date shall not relieve such LC Participant from its obligation under this subclause (c), provided that such LC Participant shall not be obligated to pay interest as provided in subclauses (i) and (ii) above until and commencing from the date of receipt of notice from the LC Bank or the Administrator of a drawing. Each LC Participant’s Commitment shall continue until the last to occur of any of the following events: (A) the LC Bank ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (B) no Letter of Credit issued hereunder remains outstanding and uncancelled or (C) all Persons (other than the Seller) have been fully reimbursed for all payments made under or relating to Letters of Credit.

Section 1.15 Repayment of Participation Advances .

(a) Upon (and only upon) receipt by the LC Bank for its account of immediately available funds from or for the account of the Seller (i) in reimbursement of any payment made by the LC Bank under a Letter of Credit with respect to which any LC Participant has made a participation advance to the LC Bank, or (ii) in payment of Discount on the Funded Purchases made or deemed to have been made in connection with any such draw, the LC Bank will pay to each LC Participant, ratably (based on the outstanding drawn amounts funded by each such LC

Participant in respect of such Letter of Credit), in the same funds as those received by the LC Bank; it being understood, that the LC Bank shall retain a ratable amount of such funds that were not the subject of any payment in respect of such Letter of Credit by any LC Participant.

(b) If the LC Bank is required at any time to return to the Seller, or to a trustee, receiver, liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments made by the Seller to the LC Bank pursuant to this Agreement in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each LC Participant shall, on demand of the LC Bank, forthwith return to the LC Bank the amount of its Pro Rata Share of any amounts so returned by the LC Bank plus interest at the Federal Funds Rate.

Section 1.16 Documentation .

The Seller agrees to be bound by the terms of the Letter of Credit Application and by the LC Bank’s written regulations and customary practices relating to letters of credit, though the LC Bank’s interpretation of such regulations and practices may be different from the Seller’s own. In the event of a conflict between the Letter of Credit Application and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct by the LC Bank, the LC Bank shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following the Seller’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.

Section 1.17 Determination to Honor Drawing Request .

In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, the LC Bank shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit and that any other drawing condition appearing on the face of such Letter of Credit has been satisfied in the manner so set forth.

Section 1.18 Nature of Participation and Reimbursement Obligations .

Each LC Participant’s obligation in accordance with this Agreement to make participation advances as a result of a drawing under a Letter of Credit, and the obligations of the Seller to reimburse the LC Bank upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Article I under all circumstances, including the following circumstances:

(i) any set-off, counterclaim, recoupment, defense or other right which such LC Participant may have against the LC Bank, the Administrator, any Purchaser, the Seller or any other Person for any reason whatsoever;

(ii) the failure of the Seller or any other Person to comply with the conditions set forth in this Agreement for the making of a purchase, reinvestments, requests for Letters of Credit or otherwise, it being acknowledged that such conditions are not required for the making of participation advances hereunder;

(iii) any lack of validity or enforceability of any Letter of Credit;

(iv) any claim of breach of warranty that might be made by the Seller, the LC Bank or any LC Participant against the beneficiary of a Letter of Credit, or the existence of any claim, set-off, defense or other right which the Seller, the LC Bank or any LC Participant may have at any time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), the LC Bank, any LC Participant, any Purchaser or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between the Seller or any Subsidiaries of the Seller or any Affiliates of the Seller and the beneficiary for which any Letter of Credit was procured);

(v) the lack of power or authority of any signer of, or lack of validity, sufficiency, accuracy, enforceability or genuineness of, any draft, demand, instrument, certificate or other document presented under any Letter of Credit, or any such draft, demand, instrument, certificate or other document proving to be forged, fraudulent, invalid, defective or insufficient in any respect or any statement therein being untrue or inaccurate in any respect, even if the Administrator or the LC Bank has been notified thereof;

(vi) payment by the LC Bank under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit other than as a result of the gross negligence or willful misconduct of the LC Bank;

(vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;

(viii) any failure by the LC Bank or any of the LC Bank’s Affiliates to issue any Letter of Credit in the form requested by the Seller, unless the LC Bank has received written notice from the Seller of such failure within three Business Days after the LC Bank shall have furnished the Seller a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;

(ix) any Material Adverse Effect on the Seller, any Originator or any Affiliates thereof;

(x) any breach of this Agreement or any Transaction Document by any party thereto;

(xi) the occurrence or continuance of an Insolvency Proceeding with respect to the Seller, any Originator or any Affiliate thereof;

(xii) the fact that a Termination Event or an Unmatured Termination Event shall have occurred and be continuing;

(xiii) the fact that this Agreement or the obligations of Seller or Servicer hereunder shall have been terminated; and

(xiv) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

Section 1.19 Indemnity .

In addition to other amounts payable hereunder, the Seller hereby agrees to protect, indemnify, pay and save harmless the Administrator, the LC Bank, each LC Participant and any of the LC Bank’s Affiliates that have issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (including Attorney Costs) which the Administrator, the LC Bank, any LC Participant or any of their respective Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, except to the extent resulting from (a) the gross negligence or willful misconduct of the party to be indemnified as determined by a final judgment of a court of competent jurisdiction or (b) the wrongful dishonor by the LC Bank of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Authority (all such acts or omissions herein called “Governmental Acts”).

Section 1.20 Liability for Acts and Omissions .

As between the Seller, on the one hand, and the Administrator, the LC Bank, the LC Participants and the other Purchasers, on the other, the Seller assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the respective foregoing, none of the Administrator, the LC Bank or any other Purchaser shall be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if the LC Bank shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of the Seller against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among the Seller and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of the Administrator, the LC Bank, any LC Participant and any Conduit Purchaser,

including any Governmental Acts, and none of the above shall affect or impair, or prevent the vesting of, any of the LC Bank’s rights or powers hereunder. Nothing in the preceding sentence shall relieve the LC Bank from liability for its gross negligence or willful misconduct, as determined by a final non-appealable judgment of a court of competent jurisdiction, in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall the Administrator, the LC Bank, any LC Participant, any Conduit Purchaser or their respective Affiliates, be liable to the Seller or any other Person for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.

Without limiting the generality of the foregoing, the Administrator, the LC Bank, any LC Participant and any Conduit Purchaser and each of its Affiliates (i) may rely on any written communication believed in good faith by such Person to have been authorized or given by or on behalf of the applicant for a Letter of Credit; (ii) may honor any presentation if the documents presented appear on their face to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by the LC Bank or its Affiliates; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on the Administrator, the LC Bank, any LC Participant, any Conduit Purchaser or their respective Affiliates, in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “Order”) and may honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.

In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by the LC Bank under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith and without gross negligence or willful misconduct, as determined by a final non-appealable judgment of a court of competent jurisdiction, shall not put the LC Bank under any resulting liability to the Seller, any LC Participant or any other Person.

ARTICLE II.

REPRESENTATIONS AND WARRANTIES; COVENANTS; TERMINATION EVENTS

Section 2.1 Representations and Warranties; Covenants .

Each of the Seller, CONSOL Energy and the Servicer hereby makes the representations and warranties, and hereby agrees to perform and observe the covenants, applicable to it set forth in Exhibits III and IV , respectively.

Section 2.2 Termination Events .

If any of the Termination Events set forth in Exhibit V shall occur, the Administrator may, by notice to the Seller, declare the Facility Termination Date to have occurred (in which case the Facility Termination Date shall be deemed to have occurred); provided, that automatically upon the occurrence of any event (without any requirement for the passage of time or the giving of notice) described in paragraph (f) of Exhibit V , the Facility Termination Date shall occur. Upon any such declaration, occurrence or deemed occurrence of the Facility Termination Date, Purchasers and the Administrator shall have, in addition to the rights and remedies that they may have under this Agreement, all other rights and remedies provided after default under the New York UCC and under other applicable law, which rights and remedies shall be cumulative.

ARTICLE III.

INDEMNIFICATION

Section 3.1 Indemnities by the Seller .

Without limiting any other rights that the Administrator, the Liquidity Providers, the Purchasers, any Program Support Provider or any of their respective Affiliates, employees, officers, directors, agents, counsel, successors, transferees or assigns (each, an “ Indemnified Party ”) may have hereunder or under applicable law, the Seller hereby agrees to indemnify each Indemnified Party from and against any and all claims, damages, expenses, costs, losses and liabilities (including Attorney Costs) (all of the foregoing being collectively referred to as “ Indemnified Amounts ”) arising out of or resulting from this Agreement (whether directly or indirectly), the use of proceeds of purchases or reinvestments, the ownership of the Purchased Interest, or any interest therein, or in respect of any Receivable, Related Security or Contract, excluding, however: (a) Indemnified Amounts to the extent resulting from gross negligence or willful misconduct on the part of such Indemnified Party or its employees, officers, directors, agents or counsel, (b) any indemnification which has the effect of recourse for the non-payment of the Receivables to any indemnitor (except as otherwise specifically provided under Section 1.4(e) and this Section 3.1 ) for Receivables, or (c) any net income, gross receipts, franchise or similar taxes imposed on such Indemnified Party for taxes required to be withheld or deducted from any payments to an Indemnified Party or to any Person through which the Indemnified Party or an affiliate of an Indemnified Party holds a direct or indirect right to payment. Notwithstanding clause (c) above and clause (ii) of Section 6.3(h) hereof, payments under this Section 3.1 shall be reduced by tax benefits to the Indemnified Party and its affiliates resulting from the Indemnified Amounts and the indemnity payment to be made pursuant to this

Section3.1 and shall be increased to reflect increased tax liability arising from the indemnity payment to be made pursuant to this Section 3.1. Without limiting or being limited by the foregoing, and subject to the exclusions set forth in the preceding sentence, the Seller shall pay on demand (which demand shall be accompanied by documentation of the Indemnified Amounts, in reasonable detail) to each Indemnified Party any and all amounts necessary to indemnify such Indemnified Party from and against any and all Indemnified Amounts relating to or resulting from any of the following:

(i) the failure of any Receivable included in the calculation of the Net Receivables Pool Balance as an Eligible Receivable to be an Eligible Receivable, the failure of any information contained in an Information Package to be true and correct, or the failure of any other information provided to any Purchaser or the Administrator with respect to Receivables or this Agreement to be true and correct,

(ii) the failure of any representation or warranty made or deemed made by the Seller (or any of its officers) under this Agreement or any other Loan Documents to have been true and correct as of the date made in all respects when made,

(iii) the failure by the Seller to comply with any applicable law, rule or regulation with respect to any Pool Receivable or the related Contract, or the failure of any Pool Receivable or the related Contract to conform to any such applicable law, rule or regulation,

(iv) the failure to vest in the Administrator a valid and enforceable: (A) perfected undivided percentage ownership interest, to the extent of the Purchased Interest, in the Receivables in, or purporting to be in, the Receivables Pool and the other Pool Assets, or (B) first priority perfected security interest in the Pool Assets, in each case, free and clear of any Adverse Claim,

(v) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivables in, or purporting to be in, the Receivables Pool and the other Pool Assets, whether at the time of any purchase or reinvestment or at any subsequent time,

(vi) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable in, or purporting to be in, the Receivables Pool (including a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the goods or services related to such Receivable or the furnishing or failure to furnish such goods or services or relating to collection activities with respect to such Receivable (if such collection activities were performed by the Seller or any of its Affiliates acting as Servicer or by any agent or independent contractor retained by the Seller or any of its Affiliates),

(vii) any failure of the Seller (or any of its Affiliates acting as the Servicer) to perform its duties or obligations in accordance with the provisions hereof or under the Contracts,

(viii) any products liability or other claim, investigation, litigation or proceeding arising out of or in connection with merchandise, insurance or services that are the subject of any Contract,

(ix) the commingling of Collections at any time with other funds,

(x) the use of proceeds of purchases or reinvestments or the issuance of any Letter of Credit by the Seller or Servicer, or

(xi) any reduction in Capital as a result of the distribution of Collections pursuant to Section 1.4(d) , if all or a portion of such distributions shall thereafter be rescinded or otherwise must be returned for any reason.

Section 3.2 Indemnities by the Servicer .

Without limiting any other rights that the Administrator, any Purchasers, any Liquidity Provider, any Program Support Provider or any other Indemnified Party may have hereunder or under applicable law, the Servicer hereby agrees to indemnify each Indemnified Party from and against any and all Indemnified Amounts arising out of or resulting from (whether directly or indirectly): (a) the failure of any information contained in an Information Package to be true and correct, or the failure of any other information provided to any such Indemnified Party by, or on behalf of, the Servicer to be true and correct, (b) the failure of any representation, warranty or statement made by the Servicer (or any of its officers) under or in connection with this Agreement to have been true and correct as of the date made in all respects when made, (c) the failure by the Servicer to comply with any applicable law, rule or regulation with respect to any Pool Receivable or the related Contract, (d) any dispute, claim, offset or defense (other than as a result of discharge in bankruptcy with respect to the Obligor) of the Obligor to the payment of any Receivable in, or purporting to be in, the Receivables Pool resulting from or related to the collection activities with respect to such Receivable, or (e) any failure of the Servicer to perform its duties or obligations in accordance with the provisions hereof.

Section 3.3 Notice of Claims .

Promptly after the receipt by an Indemnified Party of a notice of the commencement of any action, suit, proceeding, investigation or claim against such Indemnified Party as to which it proposes to demand indemnification from the Seller or Servicer (each, as applicable, an “ Indemnifying Party ”) pursuant to Section 3.1 or 3.2, as applicable, such Indemnified Party shall notify the applicable Indemnifying Party in writing of the commencement thereof; provided that the failure so to notify such Indemnifying Party shall not relieve such Indemnifying Party from any liability which such Indemnifying Party may have to such Indemnified Party pursuant to Section 3.1 or 3.2 .

ARTICLE IV.

ADMINISTRATION AND COLLECTIONS

Section 4.1 Appointment of the Servicer .

(a) The servicing, administering and collection of the Pool Receivables shall be conducted by the Person so designated from time to time as the Servicer in accordance with this Section. Until and unless the Administrator gives notice to CONSOL Energy upon the occurrence of a Termination Event (in accordance with this Section) of the designation of a new Servicer, CONSOL Energy is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms hereof. Upon the occurrence of a Termination Event, the Administrator may designate as Servicer any Person (including itself) to succeed CONSOL Energy or any successor Servicer, on the condition in each case that any such Person so designated shall agree to perform the duties and obligations of the Servicer pursuant to the terms hereof and shall (i) covenant, for the benefit of the Seller and its affiliates, that it (and any Person other than the Seller or any of its affiliates) with whom it contracts for the performance of all or a portion of its duties as Servicer hereunder) shall comply with all tax withholding and information reporting obligations imposed in connection with any payments that it (or such Person) makes or controls the making of in connection with its activities as the Servicer and (ii) agree to indemnify Seller and its affiliates for any and all liabilities, obligations, losses, damages, penalties, judgments, settlements, costs, expenses and disbursements of any kind whatsoever arising as a result of a breach of such covenant; provided, however, that no obligation to indemnify shall arise hereunder for any failure to comply that is directly or indirectly attributable to any act or omission by the Seller or any affiliate thereof.

(b) Upon the designation of a successor Servicer as set forth in clause (a) , CONSOL Energy agrees that it will terminate its activities as Servicer hereunder in a manner that the Administrator determines will facilitate the transition of the performance of such activities to the new Servicer, and CONSOL Energy shall cooperate with and assist such new Servicer. Such cooperation shall include reasonable access to and transfer of related records and use by the new Servicer of all licenses or the obtaining of new licenses, hardware or software necessary or desirable to collect the Pool Receivables and the Related Security.

(c) CONSOL Energy acknowledges that, in making their decision to execute and deliver this Agreement, the Administrator and the Conduit Purchasers have relied on CONSOL Energy’s agreement to act as Servicer hereunder. Accordingly, CONSOL Energy agrees that it will not voluntarily resign as Servicer.

(d) The Servicer may and hereby does delegate its duties and obligations hereunder to each of the Originators (each a “Sub-Servicer ” and collectively, the “ Sub-Servicers ”); provided , that, in such delegation: (i) each such Sub-Servicer hereby agrees in writing to perform the duties and obligations of the Servicer pursuant to the terms hereof, (ii) the Servicer shall remain primarily liable for the performance of the duties and obligations so delegated, (iii) the Seller, the Administrator and the Conduit Purchasers shall have the right to look solely to the Servicer for performance, and (iv) the terms of any agreement with any Sub-Servicer shall provide that the Administrator may terminate such agreement upon the termination of the Servicer hereunder by giving notice of its desire to terminate such agreement to the Servicer (and the Servicer shall

provide appropriate notice to each such Sub-Servicer); provided , however , that if any such delegation is to any Person other than any Originator, the Administrator shall have consented in writing in advance to such delegation.

Section 4.2 Duties of the Servicer .

(a) The Servicer shall take or cause to be taken all such action as may be reasonably necessary or advisable to administer and collect each Pool Receivable from time to time, all in accordance with this Agreement and all applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policy. The Servicer shall set aside, for the accounts of the Seller and each Purchaser, the amount of the Collections to which each is entitled in accordance with Article I . The Servicer may, in accordance with the applicable Credit and Collection Policy, extend the maturity of any Pool Receivable and extend the maturity or adjust the Outstanding Balance of any Defaulted Receivable as the Servicer may determine to be appropriate to maximize Collections or reflect adjustments required under applicable laws, rules or regulations or the applicable contract thereof; provided , however , that: for the purposes of this Agreement, (i) such extension shall not change the number of days such Pool Receivable has remained unpaid from the date of the invoice date related to such Pool Receivable, (ii) such extension or adjustment shall not alter the status of such Pool Receivable as a Delinquent Receivable or a Defaulted Receivable or limit the rights of any Purchaser or the Administrator under this Agreement and (iii) if a Termination Event has occurred and is continuing and CONSOL Energy or an Affiliate thereof is serving as the Servicer, CONSOL Energy or such Affiliate may make such extension or adjustment only upon the prior approval of the Administrator. The Seller shall deliver to the Servicer and the Servicer shall hold for the benefit of the Seller and the Administrator (individually and for the benefit of Purchasers), in accordance with their respective interests, all records and documents (including computer tapes or disks) with respect to each Pool Receivable. Notwithstanding anything to the contrary contained herein, following the occurrence and continuation of a Termination Event or an Unmatured Termination Event under Exhibit V , clause (j) hereof, the Administrator may direct the Servicer (whether the Servicer is CONSOL Energy or any other Person) to commence or settle any legal action to enforce collection of any Pool Receivable or to foreclose upon or repossess any Related Security.

(b) The Servicer shall, as soon as practicable following actual receipt of collected funds, turn over to the Seller or other applicable person, the collections of any indebtedness that is not a Pool Receivable, less, if CONSOL Energy or an Affiliate thereof is not the Servicer, all reasonable and appropriate out-of-pocket costs and expenses of such Servicer of servicing, collecting and administering such collections. The Servicer, if other than CONSOL Energy or an Affiliate thereof, shall, as soon as practicable upon demand, deliver to the Seller all records in its possession that evidence or relate to any indebtedness that is not a Pool Receivable, and copies of records in its possession that evidence or relate to any indebtedness that is a Pool Receivable.

(c) The Servicer’s obligations hereunder shall terminate on the later of: (i) the Facility Termination Date, (ii) the date on which no Capital, or Discount in respect of the Purchased Interest shall be outstanding, (iii) the date on which an amount equal to 100% of the LC Participation Amount has been deposited in the LC Collateral Account or the Letters of Credit have expired and (iv) the date on which all amounts required to be paid to the Purchasers,

the Administrator and any other Indemnified Party or Affected Person hereunder shall have been paid in full. After such termination, if CONSOL Energy or an Affiliate thereof was not the Servicer on the date of such termination, the Servicer shall promptly deliver to the Seller all books, records and related materials that the Seller previously provided to the Servicer, or that have been obtained by the Servicer, in connection with this Agreement.

Section 4.3 Lock-Box Arrangements .

Prior to the initial purchase hereunder, the Seller shall enter into Lock-Box Agreements with all of the Lock-Box Banks and deliver original counterparts thereof to the Administrator. Upon the occurrence of and continuance of a Termination Event, the Administrator may at any time thereafter give notice to each Lock-Box Bank that the Administrator is exercising its rights under the Lock-Box Agreements to do any or all of the following: (a) to have the exclusive ownership and control of the Lock-Box Accounts transferred to the Administrator and to exercise exclusive dominion and control over the funds deposited therein, (b) to have the proceeds that are sent to the respective Lock-Box Accounts redirected pursuant to the Administrator’s instructions rather than deposited in the applicable Lock-Box Account, and (c) to take any or all other actions permitted under the applicable Lock-Box Agreement. The Seller hereby agrees that if the Administrator at any time takes any action set forth in the preceding sentence, the Administrator shall have exclusive control of the proceeds (including Collections) of all Pool Receivables and the Seller hereby further agrees to take any other action that the Administrator may reasonably request to transfer such control. Any proceeds of Pool Receivables received by the Seller or the Servicer thereafter shall be sent immediately to the Administrator. The parties hereto hereby acknowledge that if at any time the Administrator takes control of any Lock-Box Account, the Administrator shall not have any rights to the funds therein in excess of the unpaid amounts due to the Administrator, the Purchasers or any other Person hereunder, and the Administrator shall distribute or cause to be distributed such funds in accordance with Section 4.2(b) and Article I (in each case as if such funds were held by the Servicer thereunder).

Section 4.4 Enforcement Rights .

(a) At any time following the occurrence of and continuance of a Termination Event:

(i) the Administrator may direct the Obligors that payment of all amounts payable under any Pool Receivable is to be made directly to the Administrator or its designee,

(ii) the Administrator may instruct the Seller or the Servicer to give notice of the Purchasers’ interest in Pool Receivables to each Obligor, which notice shall direct that payments be made directly to the Administrator or its designee, and the Seller or the Servicer, as the case may be, shall give such notice at the expense of the Seller or the Servicer, as the case may be; provided , that if the Seller or the Servicer, as the case may be, fails to so notify each Obligor, the Administrator (at the Seller’s or the Servicer’s, as the case may be, expense) may so notify the Obligors,

(iii) the Administrator may request the Servicer to, and upon such request the Servicer shall: (A) assemble all of the records necessary or desirable to collect the Pool

Receivables and the Related Security, and transfer or license to the extent permissible under applicable agreements to a successor Servicer the use of all software necessary or desirable to collect the Pool Receivables and the Related Security, and make the same available to the Administrator or its designee at a place selected by the Administrator, and (B) segregate all cash, checks and other instruments received by it from time to time constituting Collections in a manner reasonably acceptable to the Administrator and, promptly upon receipt, remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to the Administrator or its designee, and

(iv) the Administrator may collect any amounts due from any Originator under the Sale Agreement and/or CONSOL Energy under the CONSOL Guaranty.

(b) The Seller hereby authorizes the Administrator, and irrevocably appoints the Administrator as its attorney-in-fact with full power of substitution and with full authority in the place and stead of the Seller, which appointment is coupled with an interest, to take any and all steps in the name of the Seller and on behalf of the Seller necessary or desirable, in the determination of the Administrator, to collect any and all amounts or portions thereof due under any and all Pool Assets, including endorsing the name of the Seller on checks and other instruments representing Collections and enforcing such Pool Assets. Notwithstanding anything to the contrary contained in this subsection, none of the powers conferred upon such attorney-in-fact pursuant to the preceding sentence (i) shall be exercised by attorney-in-fact prior to the occurrence of a Termination Event, or (ii) shall subject such attorney-in-fact to any liability provided such action is not grossly negligent or willful misconduct if any action taken by it shall prove to be inadequate or invalid, nor shall they confer any obligations upon such attorney-in-fact in any manner whatsoever (except for liability arising from the Administrator’s gross negligence and or willful misconduct).

Section 4.5 Responsibilities of the Seller .

(a) Anything herein to the contrary notwithstanding, the Seller shall: (i) perform all of its obligations, if any, under the Contracts related to the Pool Receivables to the same extent as if interests in such Pool Receivables had not been transferred hereunder, and the exercise by the Administrator or any Purchaser of their respective rights hereunder shall not relieve the Seller from such obligations, and (ii) pay when due any taxes, including any sales taxes payable in connection with the Pool Receivables and their creation and satisfaction. Neither the Administrator nor any Purchaser shall have any obligation or liability with respect to any Pool Asset, nor shall either of them be obligated to perform any of the obligations of the Seller, CONSOL Energy or any Originator thereunder.

(b) CONSOL Energy hereby irrevocably agrees that if at any time it shall cease to be the Servicer hereunder, it shall act (if the then-current Servicer so requests) as the data-processing agent of the Servicer and, in such capacity, CONSOL Energy shall conduct the data-processing functions of the administration of the Receivables and the Collections thereon in substantially the same way that CONSOL Energy conducted such data-processing functions while it acted as the Servicer.

Section 4.6 Servicing Fee .

(a) Subject to clause (b) , the Servicer shall be paid a fee equal to .50% per annum (the “ Servicing Fee Rate ”) of the average aggregate Outstanding Balance of the Pool Receivables (computed as the average of the Outstanding Balance of the Pool Receivables at the beginning and the ending of each Settlement Period (or the beginning and ending of the other applicable period of measurement if the Servicing Fee is payable within a Settlement Period). The Purchasers’ Share of such fee shall be paid through the distributions contemplated by Section 1.4(d) , and the Seller’s Share of such fee shall be paid by the Seller on each Monthly Settlement Date.

(b) If the Servicer ceases to be CONSOL Energy or an Affiliate thereof, the servicing fee shall be the greater of: (i) the amount calculated pursuant to clause (a) , and (ii) an alternative amount specified by the successor Servicer not to exceed 110% of the aggregate reasonable costs and expenses incurred by such successor Servicer in connection with the performance of its obligations as Servicer.

ARTICLE V.

ADMINISTRATOR

Section 5.1 Appointment and Authorization .

(a) Each Purchaser and Purchaser Agent hereby irrevocably designates and appoints PNC as the “Administrator” hereunder and authorizes the Administrator to take such actions and to exercise such powers as are delegated to the Administrator hereby and to exercise such other powers as are reasonably incidental thereto. The Administrator shall hold, in its name, for the benefit of each Purchaser, ratably, the Purchased Interest. The Administrator shall not have any duties other than those expressly set forth herein or any fiduciary relationship with any Purchaser or Purchaser Agent, and no implied obligations or liabilities shall be read into this Agreement, or otherwise exist, against the Administrator. The Administrator does not assume, nor shall it be deemed to have assumed, any obligation to, or relationship of trust or agency with, the Seller or Servicer. Except to the extent provided in Section 5.10 hereof, notwithstanding any provision of this Agreement or any other Transaction Document to the contrary, in no event shall the Administrator ever be required to take any action which exposes the Administrator to personal liability or which is contrary to the provision of any Transaction Document or applicable law.

(b) Each Purchaser hereby irrevocably designates and appoints the respective institution identified as the Purchaser Agent for such Purchaser’s Purchaser Group on the signature pages hereto or in the Assumption Agreement pursuant to which such Purchaser becomes a party hereto. Each Purchaser hereby authorizes its Purchaser Agent to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to such Purchaser Agent by the terms of this Agreement, if any, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, no Purchaser Agent shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Purchaser or other Purchaser Agent or the Administrator, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of such Purchaser Agent shall be read into this Agreement or otherwise exist against such Purchaser Agent.

(c) Except as otherwise specifically provided in this Agreement, the provisions of this Article V are solely for the benefit of the Purchaser Agents, the Administrator and the Purchasers, and none of the Seller or Servicer shall have any rights or obligations as a third-party beneficiary or otherwise under any of the provisions of this Article V , except that this Article V shall not affect any obligations which any Purchaser Agent, the Administrator or any Purchaser may have to the Seller or the Servicer under the other provisions of this Agreement. Furthermore, no Purchaser shall have any rights as a third party beneficiary or otherwise under any of the provisions hereof in respect of a Purchaser Agent which is not the Purchaser Agent for such Purchaser.

(d) In performing its functions and duties hereunder, the Administrator shall act solely as the agent of the Purchasers and the Purchaser Agents and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for the Seller or Servicer or any of their successors and assigns. In performing its functions and duties hereunder, each Purchaser Agent shall act solely as the agent of its respective Purchaser and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for the Seller, the Servicer, any other Purchaser, any other Purchaser Agent or the Administrator, or any of their respective successors and assigns.

Section 5.2 Delegation of Duties .

The Administrator may execute any of its duties through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrator shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

Section 5.3 Exculpatory Provisions .

None of the Purchaser Agents, the Administrator or any of their directors, officers, agents or employees shall be liable for any action taken or omitted (i) with the consent or at the direction of the Majority Purchaser Agents (or in the case of any Purchaser Agent, the Purchasers within its Purchaser Group that have a majority of the Group Commitment of such Purchaser Group) or (ii) in the absence of such Person’s gross negligence or willful misconduct. The Administrator shall not be responsible to any Purchaser, Purchaser Agent or other Person for (i) any recitals, representations, warranties or other statements made by the Seller, Servicer, or any of their Affiliates, (ii) the value, validity, effectiveness, genuineness, enforceability or sufficiency of any Transaction Document, (iii) any failure of the Seller, any Originator or any of their Affiliates to perform any obligation or (iv) the satisfaction of any condition specified in Exhibit II . The Administrator shall not have any obligation to any Purchaser or Purchaser Agent to ascertain or inquire about the observance or performance of any agreement contained in any Transaction Document or to inspect the properties, books or records of the Seller, Servicer, Originator or any of their Affiliates.

Section 5.4 Reliance by Administrator .

(a) Each Purchaser Agent and the Administrator shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document or other writing or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person and upon advice and statements of legal counsel (including counsel to the Seller), independent accountants and other experts selected by the Administrator. Each Purchaser Agent and the Administrator shall in all cases be fully justified in failing or refusing to take any action under any Transaction Document unless it shall first receive such advice or concurrence of the Majority Purchaser Agents (or in the case of any Purchaser Agent, the Purchasers within its Purchaser Group that have a majority of the Group Commitment of such Purchaser Group), and assurance of its indemnification, as it deems appropriate.

(b) The Administrator shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Majority Purchaser Agents (or in the case of any Purchaser Agent, the Purchasers within its Purchaser Group that have a majority of the Group Commitment of such Purchaser Group) and such request and any action taken or failure to act pursuant thereto shall be binding upon all Purchasers, Purchaser Agents and the Administrator.

(c) The Purchasers within each Purchaser Group with a majority of the Group Commitment of such Purchaser Group shall be entitled to request or direct the related Purchaser Agent to take action, or refrain from taking action, under this Agreement on behalf of such Purchasers. Such Purchaser Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of such majority Purchasers, and such request and any action taken or failure to act pursuant thereto shall be binding upon all of such Purchaser Agent’s Purchasers.

(d) Unless otherwise advised in writing by a Purchaser Agent or by any Purchaser on whose behalf such Purchaser Agent is purportedly acting, each party to this Agreement may assume that (i) such Purchaser Agent is acting for the benefit of each of the Purchasers in respect of which such Purchaser Agent is identified as being the “Purchaser Agent” in the definition of “Purchaser Agent” hereto, as well as for the benefit of each assignee or other transferee from any such Person, and (ii) each action taken by such Purchaser Agent has been duly authorized and approved by all necessary action on the part of the Purchasers on whose behalf it is purportedly acting. Each Purchaser Agent and its Purchaser(s) shall agree amongst themselves as to the circumstances and procedures for removal, resignation and replacement of such Purchaser Agent.

Section 5.5 Notice of Termination Events .

Neither any Purchaser Agent nor the Administrator shall be deemed to have knowledge or notice of the occurrence of any Termination Event or Unmatured Termination Event unless the Administrator and the Purchaser Agents have received notice from any Purchaser, the Servicer or the Seller stating that a Termination Event or Unmatured Termination Event has occurred hereunder and describing such Termination Event or Unmatured Termination Event. In the event that the Administrator receives such a notice, it shall promptly give notice thereof to

each Purchaser Agent and Seller, whereupon each such Purchaser Agent shall promptly give notice thereof to its Purchasers. In the event that a Purchaser or Purchaser Agent receives such a notice (other than from the Administrator), it shall promptly give notice thereof to the Administrator and Seller. The Administrator shall take such action concerning a Termination Event or Unmatured Termination Event as may be directed by the Majority Purchaser Agents (unless such action otherwise requires the consent of all Purchasers, the LC Bank and/or the Required LC Participants), but until the Administrator receives such directions, the Administrator may (but shall not be obligated to) take such action, or refrain from taking such action, as the Administrator deems advisable and in the best interests of the Purchasers and Purchaser Agents.

Section 5.6 Non-Reliance on Administrator .

Each Purchaser and Purchaser Agent expressly acknowledges that none of the Administrator, the Purchaser Agents nor any of their respective officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrator, or any Purchaser Agent hereafter taken, including any review of the affairs of the Seller, Servicer or any Originator, shall be deemed to constitute any representation or warranty by the Administrator or such Purchaser Agent, as applicable. Each Purchaser and Purchaser Agent represents and warrants to the Administrator, the other Purchasers and Purchaser Agents that it has, independently and without reliance upon the Administrator or any other Purchaser or Purchaser Agent and based on such documents and information as it has deemed appropriate, it has made and will continue to make its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the Seller, Servicer or the Originators, and the Receivables and its own decision to enter into this Agreement and to take, or omit, action under any Transaction Document. Except for items specifically required to be delivered hereunder, the Administrator shall not have any duty or responsibility to provide any Purchaser or Purchaser Agent with any information concerning the Seller, Servicer or the Originators or any of their Affiliates that comes into the possession of the Administrator or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.

Section 5.7 Administrator, Purchasers, Purchaser Agents and Affiliates .

Each of the Purchasers, Purchaser Agents and the Administrator and their respective Affiliates may extend credit to, accept deposits from and generally engage in any kind of banking, trust, debt, equity or other business with the Seller, Servicer or any Originator or any of their Affiliates and PNC may exercise or refrain from exercising its rights and powers as if it were not the Administrator. With respect to the acquisition of the Pool Assets pursuant to this Agreement, each of the Purchaser Agents and the Administrator, to the extent they are also a Purchaser, shall have the same rights and powers under this Agreement as any Purchaser and may exercise the same as though it were not the Purchaser Agent or the Administrator, as applicable, and the terms “Purchaser” and “Purchasers” shall include the Purchaser Agent and the Administrator in their individual capacities.

Section 5.8 Indemnification .

Each LC Participant agrees to indemnify and hold harmless the Administrator (but solely in its capacity as Administrator) and the LC Bank and its officers, directors, employees, representatives and agents of the Administrator and the LC Bank (to the extent not reimbursed by the Seller, or Servicer and without limiting the obligation of the Seller or Servicer to do so), ratably according to its Pro Rata Share from and against any and all liabilities, obligations, losses, damages, penalties, judgments, settlements, costs, expenses and disbursements of any kind whatsoever (including in connection with any investigative or threatened proceeding, whether or not the Administrator, the LC Bank or such Person shall be designated a party, thereto) that may at any time be imposed on, incurred by or asserted against the Administrator, the LC Bank or such Person as a result of, or related to, any of the transactions contemplated by the Transaction Documents or the execution, delivery or performance of the Transaction Documents or any other document furnished in connection therewith (but excluding any such liabilities, obligations, losses, damages, penalties, judgments, settlements, costs, expenses or disbursements resulting solely from the Administrator’s or the LC Bank’s gross negligence or willful misconduct as finally determined by a final non-appealable judgment of a court of competent jurisdiction. Notwithstanding anything in this Section 5.8 to the contrary, the Administrator, each Purchaser and Purchaser Agent hereby covenants and agrees that it shall not institute against, or join any other Person in instituting against, any Conduit Purchaser any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or other proceedings under any federal or state bankruptcy or similar law, for one year and a day after the latest maturing Note issued by such Conduit Purchaser is paid in full. Without limiting the generality of the foregoing, each LC Participant agrees to reimburse the Administrator and the LC Bank, ratably according to its Pro Rata Shares, promptly upon demand, for any out-of-pocket expenses (including reasonable counsel fees) incurred by the Administrator or the LC Bank in connection with the administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of its rights or responsibilities under, this Agreement.

Section 5.9 Successor Administrator .

The Administrator may, upon at least five (5) Business Days notice to the Seller and each Purchaser, resign as Administrator. Such resignation shall not become effective until a successor Administrator is appointed by the Majority Purchaser Agents and the LC Bank and has accepted such appointment. Upon such acceptance of its appointment as Administrator hereunder by a successor Administrator, such successor Administrator shall succeed to and become vested with all the rights and duties of the retiring Administrator, and the retiring Administrator shall be discharged from its duties and obligations under the Transaction Documents. After any retiring Administrator’s resignation hereunder, the provisions of Sections 3.1 and 3.2 and this Article V shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrator.

Section 5.10 Certain Tax Matters .

The Administrator (i) covenants, for the benefit of Seller and its affiliates, that it (and any Person other than the Seller or any affiliate thereof with whom it contracts for the performance of

all or a portion of its duties as Servicer hereunder) shall comply with all tax withholding and information reporting obligations imposed in connection with any payments that it (or such Person) makes or controls the making of in connection with its activities as Administrator and (ii) agrees to indemnify Seller and its affiliates for any and all liabilities, obligations, losses, damages, penalties, judgments, settlements, costs, expenses and disbursements of any kind whatsoever arising as a result of a breach of such covenant; provided, however, that no obligation to indemnify shall arise hereunder for any failure that is directly or indirectly attributable to any act or omission by the Seller or any affiliate thereof.

ARTICLE VI.

MISCELLANEOUS

Section 6.1 Amendments, Etc .

No amendment or waiver of any provision of this Agreement or any other Transaction Document, or consent to any departure by the Seller or the Servicer therefrom, shall be effective unless in a writing signed by the Administrator, the LC Bank and the Majority LC Participants and each Conduit Purchaser, and, in the case of any amendment, by the other parties thereto; and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such material amendment shall be effective until both Moody’s and Standard & Poor’s have notified the respective Purchaser Agent in writing that such action will not result in a reduction or withdrawal of the rating of any Notes to the extent required by each Conduit Purchaser’s commercial paper program. No failure on the part of any Purchaser or the Administrator to exercise, and no delay in exercising any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.

Section 6.2 Notices, Etc .

All notices and other communications hereunder shall, unless otherwise stated herein, be in writing (which shall include facsimile communication) and be sent or delivered to each party hereto at its address set forth under its name on the signature pages hereof (or in any Assumption Agreement pursuant to which it became a party hereto) or at such other address as shall be designated by such party in a written notice to the other parties hereto. Notices and communications by facsimile shall be effective when sent (and shall be followed by hard copy sent by first class mail), and notices and communications sent by other means shall be effective when received.

Section 6.3 Assignability .

(a) Successors and Assigns . Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; all covenants, promises and agreements by or on behalf of any parties hereto that are contained in this Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. Except as otherwise provided herein, neither the Seller nor the Servicer may assign or transfer any of its rights or delegate any of its duties hereunder or under any Transaction Document without the prior written consent of the Administrator, the LC Bank and

the Required LC Participants. Each of the LC Participants, with the prior written consent of the Administrator, the LC Bank, the Servicer and, unless a Termination Event exists, the Seller (such consent not to be unreasonably withheld, conditioned or delayed), may assign any of its interests, rights and obligations hereunder to an Eligible Assignee; provided, that (i) the Commitment amount to be assigned by any such LC Participant hereunder shall not be less than $5,000,000 and (ii) prior to the effective date of any such assignment, the assignee and assignor shall have executed and delivered to the Administrator and the LC Bank an assignment and acceptance agreement in form and substance reasonably satisfactory to the Administrator, the LC Bank and, unless a Termination Event exists, the Seller. Upon the effectiveness of any such permitted assignment, (i) the assignee thereunder shall, to the extent of the interests assigned to it, be entitled to the interests, rights and obligations of an LC Participant under this Agreement and (ii) the assigning LC Participant shall, to the extent of the interest assigned, be released from any further obligations under this Agreement.

(b) Participations . Notwithstanding anything contained in paragraph (a) of this Section 6.3, each of the LC Bank and each LC Participant may sell participations in all or any part of any Funded Purchase or Funded Purchases made by such LC Participant to another bank or other entity (the “Participant”) so long as (i) no such grant of a participation shall, without the consent of the Seller, require the Seller to file a registration statement with the SEC and (ii) no holder of any such participation shall be entitled to require such LC Participant to take or omit to take any action hereunder except that such LC Participant may agree with such participant that, without such Participant’s consent, such LC Participant will not consent to an amendment, modification or waiver referred to in Section 6.1. Any such Participant shall not have any rights hereunder or under the Transaction Documents except that such Participant shall have rights under Sections 1.7, 1.8 and 1.9 hereunder as if it were an LC Participant; provided that no such Participant shall be entitled to receive any payment pursuant to such sections which is greater in amount than the payment which the Originator LC Participant would have otherwise been entitled to receive in respect of the participation interest so sold.

(c) This Agreement and any Conduit Purchaser’s rights and obligations herein (including ownership of the Purchased Interest or an interest therein) shall be assignable, in whole or in part, by any Conduit Purchaser and its successors and assigns with the prior written consent of the Administrator and the Seller; provided , however , that such consent by the Seller and the Administrator shall not be unreasonably withheld; and provided further , that no such consent by the Seller shall be required if the assignment is made to PNC, any Affiliate of PNC (other than a director or officer of PNC), any Purchaser or other Program Support Provider or any Person that is: (i) in the business of issuing Notes and (ii) administered by PNC or any Affiliate of PNC. Each assignor may, in connection with the assignment, disclose to the applicable assignee (that shall have agreed to be bound by Section 5.6 ) any information relating to the Servicer, the Seller or the Pool Receivables furnished to such assignor by or on behalf of the Servicer, the Seller, any Conduit Purchaser or the Administrator. Any Conduit Purchaser shall give prior written notice of any assignment of the such Conduit Purchaser’s rights and obligations (including ownership of the Purchased Interest to any Person other than a Program Support Provider).

(d) Any Conduit Purchaser may at any time grant to one or more banks or other institutions (each, a “ Liquidity Provider ”) party to the Liquidity Agreement, or to any other

Program Support Provider, participating interests in the Purchased Interest. In the event of any such grant by a Conduit Purchaser of a participating interest to a Liquidity Provider or other Program Support Provider, such Conduit Purchaser shall remain responsible for the performance of its obligations hereunder. The Seller agrees that each Liquidity Provider or other Program Support Provider shall be entitled to the benefits of Sections 1.7 and 1.8 .

(e) This Agreement and the rights and obligations of the Administrator, the LC Bank, each LC Participant and the Purchaser Agents hereunder shall be assignable, in whole or in part, by the Administrator, the LC Bank, each LC Participant and the Purchaser Agents and their respective successors and assigns; provided , that unless: (i) such assignment is to an Affiliate of PNC or such Purchaser Agent, (ii) it becomes unlawful for PNC to serve as the Administrator or (iii) a Termination Event exists, the Seller has consented to such assignment, which consent shall not be unreasonably withheld.

(f) Except as provided in Section 4.1(d) , none of the Seller, CONSOL Energy or the Servicer may assign its rights or delegate its obligations hereunder or any interest herein without the prior written consent of the Administrator.

(g) Without limiting any other rights that may be available under applicable law, the rights of any Purchaser may be enforced through it or by its Purchaser Agent.

(h) Each of (A) the Purchasers and Purchaser Agents, (B) its successors and assigns, (C) any Program Support Provider, (D) any assignee under Section 6.3(a) and (E) any recipient of a participating interest under Section 6.3(b) that, in each case, is not a United States Person (as such term is defined in Section 7701(a)(30) of the United States Internal Revenue Code of 1986, as amended (the “ Code ”)) for United States federal tax purposes shall, if any amount derived by such person, directly or indirectly, in connection with this Agreement is subject to an exemption from withholding or deduction for or on account of United States federal income taxes, deliver to the Seller, with a copy to the Servicer, a United Slates Internal Revenue Service Form W-8BEN or W-8ECI (or successor form) properly completed with all required attachments and certifying in each case that the party delivering, such form is entitled to the relevant exemption from withholding or deduction. Each Purchaser, if required to deliver such form, shall deliver such form on the Closing Date or on the date upon which such Purchaser becomes party to this Agreement. A party described in any of the foregoing clauses (B) through (E) shall deliver such form concurrently with such party becoming described in any of such clauses. Each party obligated to deliver a form under the first sentence of this Section 6.3(h) shall, to the extent permitted by law, further, deliver to the Seller, with a copy to the Servicer, a United States Internal Revenue Service Form W-8BEN or W-8ECI (or successor form) on or before the date that any such form expires or becomes obsolete or after, the occurrence of any event requiring a change in the most recent form previously delivered by such party to the Seller, properly completed and certifying in each case that the party delivering such form is entitled, to the relevant exemption from withholding or deduction. Each Person described in any of clauses (A) through (E) that is a United States Person (as such term is defined in Section 7701(a)(30) of the Code) shall deliver to the Seller, with a copy to the Servicer, a United States Internal Revenue Service Form W-9 and shall update such form as required to ensure that the Seller and the Servicer have a valid Form W-9 from such Person at all times that such Person is described in any of clauses (A) through (E) . The Seller shall not be required to pay to or on behalf of any

Indemnified Party or Affected Person, any additional amount or indemnity payment under Sections 1.8 or 3.1 hereof in respect of any taxes required to be deducted or withheld from any payment to such party or an affiliate of such party or to any person in the chain of payment between such party or an affiliate of such party except to the extent that both (i) such requirement to deduct or withhold would have applied had such party, its affiliates, each direct or indirect holder of an interest in such party and its affiliates or in such party’s rights to payments under the Transaction Documents and each person in the chain of payment between the Obligor and such party complied with all requirements applicable to it for claiming an exemption from such deduction or withholding, including, without limitation, the provision of U.S. tax forms, and (ii) subject to the second sentence of Section 3.1 hereof, such requirement to deduct or withhold would not have applied but for a change in treaty, law or regulation (a “ Change in Law ”) adopted or issued after the date on which the Indemnified Party or Affected Person became an Indemnified Party or Affected Person; provided that (x) where a requirement to deduct or withhold on account of taxes is imposed as a result of a characteristic of a direct or indirect interestholder in an Indemnified Party or Affected Person or of a person holding a direct or indirect interest in such Indemnified Party’s or Affected Person’s rights to payments under any of the Transaction Documents, such requirement will not be treated as described in clause (ii) above to the extent that such direct or indirect interestholder became, or increased its interest as, a direct or indirect interestholder in the relevant Indemnified Party, Affected Person or rights to payments after the date of the Change in Law and (y) where an Indemnified Party or Affected Person acquires additional direct or indirect rights to payments under the Transaction Documents after the date of the relevant Change in Law, requirements to deduct or withhold in respect of such increased interest shall not be treated as described in clause (ii) above.

Section 6.4 Costs, Expenses and Taxes .

(a) In addition to the rights of indemnification granted under Section 3.1 , the Seller agrees to pay on demand (which demand shall be accompanied by documentation thereof in reasonable detail) all reasonable costs and expenses in connection with the preparation, execution, delivery and administration (including periodic internal audits of Pool Receivables by the Administrator, or by third parties at the direction of the Administrator, provided that the Seller shall not pay for more than one audit per year unless a Termination Event has occurred and is continuing) of this Agreement, the other Transaction Documents and the other documents and agreements to be delivered hereunder (and all reasonable costs and expenses in connection with any amendment, waiver or modification of any thereof), including: (i) Attorney Costs for the Administrator, the Purchasers and their respective Affiliates and agents with respect thereto and with respect to advising the Administrator, the Purchasers and their respective Affiliates and agents as to their rights and remedies under this Agreement and the other Transaction Documents, and (ii) all reasonable costs and expenses (including Attorney Costs), if any, of the Administrator, the Purchasers and their respective Affiliates and agents in connection with the enforcement of this Agreement and the other Transaction Documents.

(b) In addition, the Seller shall pay on demand any and all stamp and other taxes and fees payable in connection with the execution, delivery, filing and recording of this Agreement or the other documents or agreements to be delivered hereunder, and agrees to save each Indemnified Party harmless from and against any liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees.

Section 6.5 No Proceedings; Limitation on Payments .

(a) Each of the Seller, CONSOL Energy, the Servicer, the Administrator, the LC Bank, each LC Participant and each assignee of the Purchased Interest or any interest therein, and each Person that enters into a commitment to purchase the Purchased Interest or interests therein, hereby covenants and agrees that it will not institute against, or join any other Person in instituting against, any Conduit Purchaser or Purchaser Agent any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one year and one day after the latest maturing Note issued by all Conduit Purchasers is paid in full. The provision of this Section 6.5 shall survive any termination of this Agreement.

(b) Notwithstanding any provisions contained in this Agreement to the contrary, no Conduit Purchaser shall pay or be obligated to pay any amount payable by it pursuant to this Agreement or any other Transaction Document unless (i) such Conduit Purchaser has received funds which may be used to make such payment and which are not required to repay the Notes when due and (ii) after giving effect to such payment, either (x) such Conduit Purchaser could issue Notes to refinance all of its outstanding Notes (assuming such outstanding Notes matured at such time) in accordance with the program documents governing such Conduit Purchaser’s securitization program or (y) all of its Notes are paid in full. Any amount which such Conduit Purchaser does not pay pursuant to the operation of the preceding sentence shall not constitute a claim (as defined in §101 of the Bankruptcy Code) against or company obligation of such Conduit Purchaser for any such insufficiency unless and until such Conduit Purchaser satisfies the provisions of clauses (i) and (ii) above. The provisions of this paragraph shall survive any termination of this Agreement.

Section 6.6 Confidentiality .

Each of the Seller and the Servicer agrees to maintain the confidentiality of this Agreement and the other Transaction Documents (and all drafts thereof) in communications with third parties and otherwise; provided , that this Agreement may be disclosed to: (a) third parties to the extent such disclosure is made pursuant to a written agreement of confidentiality in form and substance reasonably satisfactory to the Administrator, (b) the Seller’s legal counsel and auditors if they agree to hold it confidential, and (c) as otherwise required by applicable law. Unless otherwise required by applicable law, each of the Administrator, the Purchaser Agents and the Purchasers agrees to maintain the confidentiality of non-public information regarding CONSOL Energy and its Subsidiaries and Affiliates; provided , that such information may be disclosed to: (i) third parties to the extent such disclosure is made pursuant to a written agreement of confidentiality in form and substance reasonably satisfactory to CONSOL Energy, (ii) legal counsel and auditors of any Purchaser Agent, any Purchaser or the Administrator if they agree to hold it confidential, (iii) the rating agencies rating the Notes, (iv) any Program Support Provider or potential Program Support Provider (if they agree to hold it confidential), (v) any placement agent placing the Notes and (vi) any regulatory authorities having jurisdiction over PNC, any Purchaser Agent, any Purchaser, any Program Support Provider or any Purchaser.

Section 6.7 GOVERNING LAW AND JURISDICTION .

(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF A SECURITY INTEREST OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF NEW YORK COUNTY, NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK; AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.

Section 6.8 Execution in Counterparts .

This Agreement may be executed in any number of counterparts, each of which, when so executed, shall be deemed to be an original, and all of which, when taken together, shall constitute one and the same agreement.

Section 6.9 Survival of Termination .

The provisions of Sections 1.7 , 1.8 , 3.1 , 3.2 , 6.4 , 6.5 , 6.6 , 6.7 , 6.10 and 6.13 shall survive any termination of this Agreement. Neither the Servicer nor any other Person may waive a breach of Exhibit III , Section 1(g) or 1(j) or Exhibit IV , Section 1(d) or 2(i) of this Agreement for so long as the Notes are outstanding.

Section 6.10 WAIVER OF JURY TRIAL .

EACH OF THE PARTIES HERETO WAIVES THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.

WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING THAT SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

Section 6.11 Entire Agreement .

This Agreement and the other Transaction Documents embody the entire agreement and understanding between the parties hereto, and supersede all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof, except for any prior arrangements made with respect to the payment by the Conduit Purchasers of (or any indemnification for) any fees, costs or expenses payable to or incurred (or to be incurred) by or on behalf of the Seller, the Servicer and the Administrator.

Section 6.12 Headings .

The captions and headings of this Agreement and any Exhibit, Schedule or Annex hereto are for convenience of reference only and shall not affect the interpretation hereof or thereof.

Section 6.13 Purchasers’ and Purchaser Agents’ Liabilities .

The obligations of each Purchaser and Purchaser Agent under the Transaction Documents are solely the corporate obligations of such Purchaser or Purchaser Agent. No recourse shall be had for any obligation or claim arising out of or based upon any Transaction Document against any stockholder, employee, officer, director or incorporator of any Purchaser or Purchaser Agent; provided , however , that this Section shall not relieve any such Person of any liability it might otherwise have for its own gross negligence or willful misconduct.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.


SELLER:	CNX FUNDING CORPORATION

	By:
		Name:
		Title:

Address:

CONSOL Plaza

Treasury Suite 125

1800 Washington Road

Pittsburgh, PA 15241

Attention:

Treasurer

Telephone:

Facsimile:


INITIAL SERVICER:	CONSOL ENERGY INC.

	By:
		Name:
		Title:

Address:

CONSOL Plaza

1800 Washington Road

Pittsburgh, PA 15241

Attention:

Treasurer

Telephone:

412-831-4128

Facsimile:

412-831-4151


SUB-SERVICERS:	CONSOL ENERGY SALES COMPANY

	By:
		Name:
		Title:

Address:

CONSOL Plaza

1800 Washington Road

Pittsburgh, PA 15241

Attention:

Treasurer

Telephone:

412-831-4128

Facsimile:

412-831-4151


		S-1		CONSOL – A&R RPA


						CONSOL OF KENTUCKY INC.

						By:
								Name:
								Title:

Address:

CONSOL Plaza

1800 Washington Road

Pittsburgh, PA 15241

Attention:

Treasurer

Telephone:

412-831-4128

Facsimile:

412-831-4151


						CONSOL PENNSYLVANIA COAL COMPANY

						By:
								Name:
								Title:

Address:

CONSOL Plaza

1800 Washington Road

Pittsburgh, PA 15241

Attention:

Treasurer

Telephone:

412-831-4128

Facsimile:

412-831-4151


		S-2		CONSOL – A&R RPA


CONSOLIDATION COAL COMPANY

By:
	Name:
	Title:

Address:		CONSOL Plaza 1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		412-831-4128
Facsimile:		412-831-4151

ISLAND CREEK COAL COMPANY

By:
	Name:
	Title:

Address:		CONSOL Plaza 1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		412-831-4128
Facsimile:		412-831-4151


S-3		CONSOL – A&R RPA


WINDSOR COAL COMPANY

By:
	Name:
	Title:

Address:		CONSOL Plaza 1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		412-831-4128
Facsimile:		412-831-4151

MCELROY COAL COMPANY

By:
	Name:
	Title:

Address:		CONSOL Plaza 1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		412-831-4128
Facsimile:		412-831-4151


S-4		CONSOL – A&R RPA


KEYSTONE COAL MINING CORPORATION

By:
	Name:
	Title:

Address:		CONSOL Plaza 1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		412-831-4128
Facsimile:		412-831-4151

EIGHTY-FOUR MINING COMPANY

By:
	Name:
	Title:

Address:		CONSOL Plaza 1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		412-831-4128
Facsimile:		412-831-4151


S-5		CONSOL – A&R RPA


	CNX MARINE TERMINALS INC.

	By:
		Name:
		Title:

	Address:		CONSOL Plaza 1800 Washington Road Pittsburgh, PA 15241
	Attention:		President
	Telephone:		412-831-4128
	Facsimile:		412-831-4151

CONDUIT PURCHASERS:	MARKET STREET FUNDING LLC

	By:
		Name:
		Title:

	Address:		Market Street Funding LLC c/o AMACAR Group, LLC 6525 Morrison Boulevard, Suite 318 Charlotte, North Carolina 28211
	Attention:		Doug Johnson
	Telephone:		704-365-0569
	Facsimile:		704-365-1362

	With a copy to:

	PNC Bank, National Association One PNC Plaza, 26th floor 249 Fifth Avenue Pittsburgh, PA 15222
	Attention:		Bill Falcon
	Telephone:		412-762-5442
	Facsimile:		412-762-9184
	Commitment:		$87,500,000


S-6		CONSOL – A&R RPA


LIBERTY STREET FUNDING CORP.

By:
	Name:
	Title:

Address:		Liberty Street Funding Corp. c/o Global Securitization Services, LLC 114 West 47 ^th Street New York, New York 10036
		Attention: Andrew L. Stidd
		Telephone No.: (212) 302-5151
		Facsimile No.: (212) 302-8767

With a copy to its Purchaser Agent

Commitment:		$62,500,000


S-7		CONSOL – A&R RPA


ADMINISTRATOR AND PURCHASER AGENT FOR MARKET STREET:	PNC BANK, NATIONAL ASSOCIATION

	By:
		Name:
		Title:

	Address:		PNC Bank, National Association One PNC Plaza, 26th floor 249 Fifth Avenue Pittsburgh, PA 15222
	Attention:		Bill Falcon
	Telephone:		412-762-5442
	Facsimile:		412-762-9184

PURCHASER AGENT FOR LIBERTY STREET:	THE BANK OF NOVA SCOTIA

	By:
		Name:
		Title:

	Address:		The Bank of Nova Scotia One Liberty Plaza New York, New York 10006

	Attention:		Michael Eden
	Telephone:		212-225-5007
	Facsimile:		212-225-5274


S-8		CONSOL – A&R RPA


LC BANK/LC PARTICIPANTS:	PNC BANK, NATIONAL ASSOCIATION, as the LC Bank and as an LC Participant

	By:
		Name:
		Title:	Senior Vice President

	Address:		PNC Bank, National Association 500 First Avenue Third Floor Pittsburgh, PA 15219
	Attention:		Richard Munsick
	Telephone:		412-762-4299
	Facsimile:		412-762-9184

	Commitment:		$87,500,000
	Pro-Rata Share:		58.33%

	THE BANK OF NOVA SCOTIA, as LC Participant

	By:
		Name:
		Title:

	Address:		The Bank of Nova Scotia One Liberty Plaza New York, New York 10006
	Attention:		Michael Eden
	Telephone:		212-225-5007
	Facsimile:		212-225-5274

	Commitment:		$62,500,000
	Pro-Rata Share:		41.66%


S-9		CONSOL – A&R RPA

EXHIBIT I

DEFINITIONS

As used in the Agreement (including its Exhibits, Schedules and Annexes), the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined). Unless otherwise indicated, all Section, Annex, Exhibit and Schedule references in this Exhibit are to Sections of and Annexes, Exhibits and Schedules to the Agreement.

“Administrator” has the meaning set forth in the preamble to the Agreement.

“Adverse Claim” means (i) a lien, security interest or other charge or encumbrance, or any other type of preferential arrangement; it being understood that any thereof in favor of, or assigned to, any Purchaser Agent, Purchaser or the Administrator (for the benefit of such Purchaser Agent or Purchaser) or PNC shall not constitute an Adverse Claim, or, (ii) when used in connection with a Receivable or Collections or Related Rights with respect to a Receivable, a claim or contention by or on behalf of a representative of the estate of any Originator which may be created under § 541 of the Bankruptcy Code that a Receivable generated by such Originator (or Collections or Related Rights with respect to such Receivable) which has been purchased or accepted as a contribution by the Seller from such Originator pursuant to the Sale Agreement constitutes property of such estate or that the transfer of such Receivable (or Collections or Related Rights with respect to such Receivable) should be avoided under § 544 or 548 of the Bankruptcy Code.

“Affected Person” has the meaning set forth in Section 1.7 of the Agreement.

“Affiliate” means, as to any Person: (a) any Person that, directly or indirectly, is in control of, is controlled by or is under common control with such Person, or (b) who is a director or officer: (i) of such Person or (ii) of any Person described in clause (a) , except that, with respect to any Purchaser, Affiliate shall mean the holder(s) of its capital stock. For purposes of this definition, control of a Person shall mean the power, direct or indirect: (x) to vote 25% or more of the securities having ordinary voting power for the election of directors or managers of such Person, or (y) to direct or cause the direction of the management and policies of such Person, in either case whether by ownership of securities, contract, proxy or otherwise.

“Agreement” has the meaning set forth in the preamble to the Agreement.

“Assumption Agreement” means an agreement substantially in the form acceptable to the Administrator.

“Alternate Rate” for any Settlement Period for any Portion of Capital of the Purchased Interest means an interest rate per annum equal to: (a) 1.75% per annum above the Euro-Rate for such Settlement Period; provided , however , that if (x) it shall become unlawful for any Purchaser or Program Support Provider to obtain funds in the London interbank eurodollar market in order to make, fund or maintain any Purchased Interest, or if such funds shall not be reasonably available to any Purchaser or Program Support Provider, or (y) there shall not be at least two Business Days prior to the commencement of an applicable Settlement Period to determine a Euro-Rate in accordance with its terms, then the “Alternate Rate” shall be equal to the Base Rate

I-1

in effect for each day during the remainder of such Settlement Period or (b) if requested by the Seller the Base Rate for such Settlement Period; provided , however , that the “Alternate Rate” for any day while a Termination Event exists shall be an interest rate equal to 2.00% per annum above the Base Rate in effect on such day.

“Amended and Restated Credit Agreement” means that certain Amended and Restated Credit Agreement, dated as of April 1, 2005, by and among CONSOL Energy Inc., as borrower, the guarantors and lenders party thereto, Bank of Nova Scotia – New York, Fleet National Bank, and Union Bank of California, N.A., each as co-syndication agents, and PNC Bank, National Association and Citicorp North America, Inc., as co-administrative agents, as such agreement may be amended, supplemented or otherwise modified from time to time.

“Attorney Costs” means and includes all reasonable fees and disbursements of any law firm or other external counsel.

“Bankruptcy Code” means the United States Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq.), as amended from time to time.

“Base Rate” means, for any day, (i) in the case of Market Street, the Market Street Base Rate, and (ii) in the case of each other Conduit Purchaser, the rate set forth as the Base Rate for such Conduit Purchaser in the related Fee Letter.

“ Base Rate Portion of Capital ” shall mean a Portion of Capital, the Discount with respect to which is calculated at a per annum rate based on the interest rate determined by reference to the Base Rate.

“BBA” means the British Bankers’ Association.

“Benefit Plan” means any employee benefit pension plan as defined in Section 3(2) of ERISA in respect of which the Seller, any Originator, CONSOL Energy or any ERISA Affiliate is, or at any time during the immediately preceding six years was, an “employer” as defined in Section 3(5) of ERISA.

“Business Day” means any day (other than a Saturday or Sunday) on which: (a) banks are not authorized or required to close in New York City, New York or Pittsburgh, Pennsylvania and (b) if this definition of “Business Day” is utilized in connection with the Euro-Rate, dealings are carried out in the London interbank market.

“Capital” means the aggregate amounts paid to the Seller in connection with Funded Purchases in respect of the Purchased Interest by the Purchasers pursuant to the Agreement (including Section 1.2(e)) , or such amount divided or combined in order to determine the Discount applicable to any Portion of Capital, in each case reduced from time to time by Collections distributed and applied on account of such Capital pursuant to Section 1.4(d) of the Agreement; provided , that if such Capital shall have been reduced by any distribution, and thereafter all or a portion of such distribution is rescinded or must otherwise be returned for any reason, such Capital shall be increased by the amount of such rescinded or returned distribution as though it had not been made.

I-2

“Change in Control” means that (a) CONSOL Energy, ceases to own, directly or indirectly, 100% of the capital stock of the Seller free and clear of all Adverse Claims, or (b) CONSOL Energy ceases to own, directly or indirectly, 100% of the capital stock of the Originators.

“Closing Date” means April 30, 2003.

“Collections” means, with respect to any Pool Receivable: (a) all funds that are received by any Originator, CONSOL Energy, the Seller or the Servicer in payment of any amounts owed in respect of such Receivable (including purchase price, finance charges, interest and all other charges), or applied to amounts owed in respect of such Receivable (including insurance payments and net proceeds of the sale or other disposition of repossessed goods or other collateral or property of the related Obligor or any other Person directly or indirectly liable for the payment of such Pool Receivable and available to be applied thereon), (b) all amounts deemed to have been received pursuant to Section 1.4(e) of the Agreement and (c) all other proceeds of such Pool Receivable.

“Commitment” shall mean, (i) as to a Conduit Purchaser, that dollar amount set forth as the “Commitment” under its name on the signature pages to the Agreement and (ii) as to any LC Participant, its commitment to make participation advances and/or share in draws, in each case, under Letters of Credit up to that dollar amount set forth as the “Commitment” under its name on the signature pages to the Agreement or in the Assumption Agreement pursuant to which it became a Purchaser, as such amount may be modified in connection with any subsequent assignment, and “Commitments” shall mean the aggregate commitments of the LC Participants to make participating advances in the Letters of Credit up to the Purchase Limit (or, if less, the amount permitted under Section 1.1(a) ).

“Company Notes” has the meaning set forth in Section 3.1 of the Sale Agreement.

“Concentration Percentage” means: (a) for any Group A Obligor, 24.0%, (b) for any Group B Obligor, 24.0%, (c) for any Group C Obligor 12.0% and (d) for any Group D Obligor, 6.0%.

“Concentration Reserve” means, at any time, the product of: (a) the Capital plus the LC Participation Amount, at such time multiplied by (b)(i) the Concentration Reserve Percentage, divided by (ii) 100%, minus the Concentration Reserve Percentage.

“Concentration Reserve Percentage” means, at any time the following expressed as a percentage (as opposed to a fraction), (a) the largest of the following: (i) the sum of four largest Group D Obligor Receivables balances (up to the Concentration Percentage for each Obligor), (ii) the sum of the two largest Group C Obligor Receivables balances (up to the Concentration Percentage for each Obligor) and (iii) the largest Group B Obligor Receivables balances (up to the Concentration Percentage for each Obligor) or Group A Obligor Receivables balances (up to the Concentration Percentage for each Obligor), divided by (b) Eligible Receivables.

“Conduit Purchaser” has the meaning set forth in the preamble to the Agreement.

“CONSOL Energy” has the meaning set forth in the preamble to the Agreement.

I-3

“CONSOL Guaranty” means the Agreement of Guaranty and Suretyship, dated as of even date herewith, executed by CONSOL Energy in favor of Seller, as such agreement may be amended, restated, supplemented or otherwise modified from time to time.

“Contract” means, with respect to any Receivable, any and all contracts, instruments, agreements, leases, invoices, notes or other writings pursuant to which such Receivable arises or that evidence such Receivable or under which an Obligor becomes or is obligated to make payment in respect of such Receivable.

“CP Rate” for any Settlement Period for any Portion of Capital means (i) in the case of Market Street, a rate calculated by the Administrator equal to: (a) the rate (or if more than one rate, the weighted average of the rates) at which Notes of Market Street on each day during such period have been outstanding; provided , that if such rate(s) is a discount rate(s), then the CP Rate shall be the rate (or if more than one rate, the weighted average of the rates) resulting from converting such discount rate(s) to an interest-bearing equivalent rate plus (b) the commissions and charges charged by such placement agent or commercial paper dealer with respect to such Notes, expressed as a percentage of the face amount of such Notes and converted to an interest-bearing equivalent rate per annum, and (ii) in the case of each other Conduit Purchaser, the rate set forth as the CP Rate for such Conduit Purchaser in the related Fee Letter. Notwithstanding the foregoing, the “CP Rate” for any day while a Termination Event exists shall be an interest rate equal to 2% above the Base Rate in effect on such day.

“Credit and Collection Policy” means, as the context may require, those receivables credit and collection policies and practices of the Originators in effect on the date of the Agreement and described in Schedule I to the Agreement, as modified in compliance with the Agreement.

“Cut-off Date” has the meaning set forth in the Sale Agreement.

“Days’ Sales Outstanding” means, at any time, an amount computed as of the last day of each calendar month equal to: (a) the average of the Outstanding Balance of all Pool Receivables as of the last day of each of the three most recent calendar months ended on the last day of such calendar month divided by (b)(i) the aggregate credit sales made by the Originators during the three calendar months ended on or before the last day of such calendar month divided by (ii) 90.

“Debt” means: (a) indebtedness for borrowed money, (b) obligations evidenced by bonds, debentures, notes or other similar instruments, (c) obligations to pay the deferred purchase price of property or services, (d) obligations as lessee under leases that shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases, and (e) obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (a) through (d) .

“Defaulted Receivable” means a Receivable:

I-4

(a) as to which any payment, or part thereof, remains unpaid for more than 60 days from the original due date for such payment, or

(b) without duplication (i) as to which an Insolvency Proceeding shall have occurred with respect to the Obligor thereof or any other Person obligated thereon or owning any Related Security with respect thereto, or (ii) that has been written off the Seller’s books as uncollectible.

“Default Ratio” means the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each calendar month by dividing: (a) the aggregate Outstanding Balance of all Pool Receivables that became Defaulted Receivables during such month, by (b) the aggregate credit sales made by the Originators during the month that is five calendar months before such month.

“Delinquent Receivable” means a Receivable as to which any payment, or part thereof, remains unpaid for more than 60 days from the original due date for such payment.

“Dilution Horizon” means, for any calendar month, the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of such calendar month of: (a) the aggregate credit sales made by the Originators during the two most recent calendar months to (b) the Net Receivables Pool Balance at the last day of the most recent calendar month.

“Dilution Ratio” means the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward), computed as of the last day of each calendar month by dividing: (a) the aggregate amount of payments required to be made by the Seller pursuant to Section 1.4(e)(i) of the Agreement (excluding any credit adjustments related to reversals of invoices that are re-invoiced) during such calendar month by (b) the aggregate credit sales made by the Originators during the month that is one month prior to the current calendar month.

“Dilution Reserve” means, on any date, an amount equal to: (a) the sum of the Capital plus the LC Participation Amount at the close of business of the Seller on such date multiplied by (b) (i) the Dilution Reserve Percentage on such date, divided by (ii) 100% minus the Dilution Reserve Percentage on such date.

“Dilution Reserve Percentage” means on any date, the following expressed as a percentage (as opposed to a fraction): the product of (i) the Dilution Horizon multiplied by (ii) the sum of (x) 2 times the average of the Dilution Ratios for the twelve most recent calendar months and (y) the Spike Factor.

“Discount” means with respect to any Purchaser:

I-5

(a) for the Portion of Capital for any Settlement Period to the extent such Conduit Purchaser will be funding such Portion of Capital during such Settlement Period through the issuance of Notes:

CPR x C x ED/360

(b) for the Portion of Capital for any Settlement Period to the extent such Purchaser will not be funding such Portion of Capital during such Settlement Period through the issuance of Notes or, to the extent the LC Bank and/or any LC Participant has made a Funded Purchase, in connection with any drawing under a Letter of Credit that has not been reimbursed pursuant to Section 1.14 of the Agreement, which accrues Discount pursuant to Section 1.2(e) of the Agreement:

AR x C x ED/Year + TF

where:


AR =		the Alternate Rate for the Portion of Capital for such Settlement Period with respect to such Purchaser,

C =		the Portion of Capital during such Settlement Period with respect to such Purchaser,

CPR =		the CP Rate for the Portion of Capital for such Settlement Period with respect to such Purchaser,

ED =		the actual number of days during such Settlement Period,

Year =		if such Portion of Capital is funded based upon: (i) the Euro-Rate, 360 days, and (ii) the Base Rate, 365 or 366 days, as applicable, and

TF =		the Termination Fee, if any, for the Portion of Capital for such Settlement Period with respect to such Purchaser;

provided , that no provision of the Agreement shall require the payment or permit the collection of Discount in excess of the maximum permitted by applicable law; and provided further , that Discount for the Portion of Capital shall not be considered paid by any distribution to the extent that at any time all or a portion of such distribution is rescinded or must otherwise be returned for any reason.

“Drawing Date” has the meaning set forth in Section 1.14 of the Agreement.

“Eligible Assignee” means any bank or financial institution acceptable to the LC Bank and the Administrator.

“Eligible Foreign Obligor” means an Obligor which is a resident (i) of any country (other than the United States of America or Canada) that has a foreign currency rating of at least “A” by Standard & Poor’s and “A2” by Moody’s or (ii) of a territory of the United States.

“Eligible Receivable” means, at any time, a Pool Receivable:

I-6

(a) the Obligor of which is a United States or Canadian resident or an Eligible Foreign Obligor,

(b) the Obligor of which is not a government or a governmental subdivision, affiliate or agency,

(c) the Obligor of which is not subject to any action of the type described in paragraph (f) of Exhibit V to the Agreement,

(d) the Obligor of which is not an Affiliate of CONSOL Energy or any other Originator,

(e) the Obligor of which is not an Obligor as to which the Administrator, in its reasonable business judgment, has notified the Seller that such Obligor is not acceptable,

(f) that is denominated and payable only in U. S. dollars in the United States to any Originator at a Lockbox Account and results from goods sold and shipped from such Originator in the United States,

(g) that does not have a stated maturity which is more than 90 days after the original invoice date of such Receivable,

(h) that arises under a duly authorized Contract for the sale and delivery of goods and services in the ordinary course of any Originator’s business,

(i) that arises under a duly authorized Contract that is in full force and effect and that is a legal, valid and binding obligation of the related Obligor, enforceable against such Obligor in accordance with its terms subject to applicable bankruptcy, fraudulent transfer or conveyance, insolvency, reorganization, moratorium and other similar laws limiting the enforceability of creditor’s rights generally, or from time to time in effect,

(j) that conforms in all material respects with all applicable laws, rulings and regulations in effect,

(k) that is not the subject of any asserted dispute, offset, hold back defense, Adverse Claim or other claim, provided , that, with respect to any Receivable which is subject to any such a claim, the amount of such Receivable which shall be treated as an Eligible Receivable shall equal the excess of the amount of such Receivable over the amount of such claim asserted by or available to the account party or other obligor,

(l) that satisfies all applicable requirements of the applicable Credit and Collection Policy,

(m) that has not been modified, waived or restructured since its creation, except as permitted pursuant to Section 4.2 of the Agreement,

(n) in which the Seller owns good and marketable title, free and clear of any Adverse Claims, and that is freely assignable by the Seller (including without any consent of the related Obligor),

(o) for which the Administrator, for the benefit of the Purchasers, shall have a valid and enforceable undivided percentage ownership or security interest, to the extent of the Purchased Interest, and a valid and enforceable first priority perfected security interest therein and in the Related Security and Collections with respect thereto, in each case free and clear of any Adverse Claim,

(p) that constitutes an account as defined in the UCC, and that is not evidenced by instruments or chattel paper,

(q) that is neither a Defaulted Receivable nor a Delinquent Receivable,

(r) for which neither any Originator thereof, the Seller nor the Servicer has established any offset arrangements with the related Obligor,

I-7

(s) for which Defaulted Receivables of the related Obligor do not exceed 35% of the Outstanding Balance of all such Obligor’s Receivables,

(t) that represents amounts earned and payable by the Obligor that are not subject to the performance of additional services by any Originator thereof,

(u) that has not been classified as “shipped but not billed” for more than 60 days.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections.

“ERISA Affiliate” means: (a) any corporation that is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as the Seller, any Originator or CONSOL Energy, (b) a trade or business (whether or not incorporated) under common control (within the meaning of Section 414(c) of the Internal Revenue Code) with the Seller, any Originator or CONSOL Energy, or (c) a member of the same affiliated service group (within the meaning of Section 414(m) of the Internal Revenue Code) as the Seller, any Originator, any corporation described in clause (a) or any trade or business described in clause (b) .

“Euro-Rate” means with respect to any Settlement Period the interest rate per annum determined by the Administrator by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the rate of interest determined by the Administrator in accordance with its usual procedures (which determination shall be conclusive absent manifest error) to be the average of the London interbank market offered rates for U. S. dollars quoted by the BBA as set forth on Dow Jones Markets Service (formerly known as Telerate) (or appropriate successor or, if the BBA or its successor ceases to provide display page 3750 (or such other display page on the Dow Jones Markets Service system as may replace display page 3750) at or about 11:00 a.m. (London time) on the Business Day which is two (2) Business Days prior to the first day of such Settlement Period for an amount comparable to the Portion of Capital to be funded at the Alternate Rate and based upon the Euro-Rate during such Settlement Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. The Euro-Rate may also be expressed by the following formula:

Euro-Rate =

Average of London interbank offered rates quoted

by BBA as shown on Dow Jones Markets Service

display page 3750 or appropriate successor

1.00 - Euro-Rate Reserve Percentage

where “Euro-Rate Reserve Percentage” means, the maximum effective percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including without limitation, supplemental, marginal, and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”). The Euro-Rate shall be adjusted with respect to any Portion of Capital funded at the Alternate Rate and based upon the Euro-Rate that is outstanding on the effective date of any change in the Euro-Rate Reserve Percentage as of such effective

I-8

date. The Administrator shall give prompt notice to the Seller of the Euro-Rate as determined or adjusted in accordance herewith (which determination shall be conclusive absent manifest error).

“Excess Concentration” means the sum of (i) the amounts by which the Outstanding Balance of Eligible Receivables of each Obligor then in the Receivables Pool exceeds an amount equal to: (a) the Concentration Percentage for such Obligor multiplied by (b) the Outstanding Balance of all Eligible Receivables then in the Receivables Pool, plus (ii) the amount by which the sum of all Eligible Receivables the Obligors of which are Canadian residents exceeds 10% of all Eligible Receivables, plus (iii) the amount by which the sum of all Eligible Receivables with a stated maturity of more than 60 days but less than or equal to 90 days exceeds 5% of all Eligible Receivables, plus (iv) the amount by which the sum of all Eligible Receivables classified as “shipped but not billed” for more than 30 days but less than or equal to 60 days exceeds 20% of all Eligible Receivables, plus (v) the amount by which the sum of all Eligible Receivables then in the Receivables Pool for which the Obligor is an Eligible Foreign Obligor exceeds 5% of the Outstanding Balance of all Eligible Receivables then in the Receivables Pool.

“Exiting Notice” has the meaning set forth in Section 1.4(b)(ii) of the Agreement.

“Exiting Purchaser” has the meaning set forth in Section 1.4(b)(ii) of the Agreement.

“Facility Termination Date” means the earliest to occur of: (a) April 30, 2012, (b) the date determined pursuant to Section 2.2 of the Agreement, (c) the date the Purchase Limit reduces to zero pursuant to Section 1.1(b) of the Agreement, (d) the date that the commitments of the Liquidity Providers terminate under the Liquidity Agreement, and (e) any Conduit Purchaser or any Purchaser Agent shall fail to cause the amendment or modification of any Transaction Document or related opinion as required by Moody’s or Standard and Poor’s, and such failure shall continue for 30 days after such amendment is initially requested.

“Federal Funds Rate” means, for any day, the per annum rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, “H.15(519)”) for such day opposite the caption “Federal Funds (Effective).” If on any relevant day such rate is not yet published in H. 15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the “Composite 3:30 p.m. Quotations”) for such day under the caption “Federal Funds Effective Rate.” If on any relevant day the appropriate rate is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic mean as determined by the Administrator of the rates for the last transaction in overnight Federal funds arranged before 9:00 a.m. (New York time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Administrator.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its principal functions.

“Fee Letters” has the meaning set forth in Section 1.5 of the Agreement.

I-9

“Funded Purchase” shall mean a purchase or deemed purchase of undivided interests in the Purchased Interest under the Agreement which (i) is paid for in cash (other than through reinvestment of Collections pursuant to Section 1.4(b) of the Agreement), (ii) treated as a Funded Purchase pursuant to Section 1.2(e) of the Agreement and/or any of the provisions set forth in Sections 1.11 through 1.20 of the Agreement or (iii) without double counting any of the amounts described in clause (i) or (ii), above, is the result of the issuance of Notes by a Conduit Purchaser, pursuant to the Agreement or otherwise, the proceeds of which are used to reimburse draws on the LC Bank and/or any LC Participant under any Letter of Credit, whether on, prior to or after the date any such draw is treated as or deemed to be a Funded Purchase under the Agreement.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any body or entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any court, and any Person owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

“Group A Obligor” means any Obligor with a short-term rating of at least: (a) “A-l” by Standard & Poor’s, or if such Obligor does not have a short-term rating from Standard & Poor’s, a rating of “A+” or better by Standard & Poor’s on its long-term senior unsecured and uncreditenhanced debt securities, and (except with respect to the Special Obligor) (b) “P-1” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Al” or better by Moody’s on its long-term senior unsecured and uncredit-enhanced debt securities.

“Group B Obligor” means an Obligor, not a Group A Obligor, with a short-term rating of at least: (a) “A-2” by Standard & Poor’s, or if such Obligor does not have a short-term rating from Standard & Poor’s, a rating of “BBB+” to “A” by Standard & Poor’s on its long-term senior unsecured and uncredit-enhanced debt securities, and (except with respect to the Special Obligor) (b) “P-2” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Baal” to “A2” by Moody’s on its long-term senior unsecured and uncredit-enhanced debt securities.

“Group C Obligor” means an Obligor, not a Group A Obligor or a Group B Obligor, with a short-term rating of at least: (a) “A-3” by Standard & Poor’s, or if such Obligor does not have a short-term rating from Standard & Poor’s, a rating of “BBB-” to “BBB” by Standard & Poor’s on its long-term senior unsecured and uncredit-enhanced debt securities, and (except with respect to the Special Obligor) (b) “P-3” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Baa3” to “Baa2” by Moody’s on its long-term senior unsecured and uncreditenhanced debt securities.

“Group Commitment” means with respect to any Purchaser Group the aggregate of the Commitments of each Purchaser within such Purchaser Group.

“Group D Obligor” means any Obligor that is not a Group A Obligor, Group B Obligor or Group C Obligor.

“Indemnified Amounts” has the meaning set forth in Section 3.1 of the Agreement.

I-10

“Indemnified Party” has the meaning set forth in Section 3.1 of the Agreement.

“Independent Director” has the meaning set forth in paragraph 3(c) of Exhibit IV to the Agreement.

“Information Package” means a report, in substantially the form of Annex A to the Agreement, furnished to the Administrator pursuant to the Agreement.

“Insolvency Proceeding” means: (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors of a Person, composition, marshaling of assets for creditors of a Person, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in each of cases (a) and (b) undertaken under U. S. Federal, state or foreign law, including the Bankruptcy Code.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of the Internal Revenue Code also refer to any successor sections.

“ISP98 Rules” has the meaning set forth in Section 1.12 of the Agreement.

“LC Bank” has the meaning set forth in the preamble to the Agreement.

“LC Collateral Account” means the account designated as the LC Collateral Account established and maintained by the Administrator (for the benefit of the LC Bank and the LC Participants), or such other account as may be so designated as such by the Administrator.

“LC Commitment” means, the “Commitment” of each LC Participant party hereto as set forth under its name on the signature pages to the Agreement or as set forth in any assignment agreement pursuant to which it became a party hereto.

“LC Participant” has the meaning set forth in the preamble to the Agreement.

“LC Participation Amount” shall mean, at any time, the then aggregate face amount of the outstanding Letters of Credit.

“Letter of Credit” shall mean any stand-by letter of credit issued by the LC Bank for the account of the Seller pursuant to the Agreement.

“Letter of Credit Application” has the meaning set forth in Section 1.12 of the Agreement.

“Liquidity Agent” means each of the banks acting as agent for the various Liquidity Banks under each Liquidity Agreement.

I-11

“Liquidity Agreement” means any agreement entered into in connection with this Agreement pursuant to which a Liquidity Provider agrees to make purchases or advances to, or purchase assets from, any Conduit Purchaser in order to provide liquidity for such Conduit Purchaser’s Purchases.

“Liquidity Provider” means each bank or other financial institution that provides liquidity support to any Conduit Purchaser pursuant to the terms of a Liquidity Agreement.

“Lock-Box Account” means an account in the name of the Seller and maintained by the Seller at a bank or other financial institution for the purpose of receiving Collections, either by check deposit or wire or ACH transfer.

“Lock-Box Agreement” means an agreement, in form and substance satisfactory to the Administrator, among the Seller, the Servicer, the Administrator, and a Lock-Box Bank.

“Lock-Box Bank” means any of the banks or other financial institutions holding one or more Lock-Box Accounts.

“Loss Reserve” means, on any date, an amount equal to: (a) the sum of Capital plus the LC Participation Amount at the close of business of the Seller on such date multiplied by (b)(i) the Loss Reserve Percentage on such date divided by (ii) 100% minus the Loss Reserve Percentage on such date.

“Loss Reserve Percentage” means, on any date, the following expressed as a percentage (as opposed to a fraction):

(2.0) *(ADR) * (ACS)

Net Receivables Pool Balance

As used herein:

“ADR” means the highest average of the Default Ratios for any three consecutive calendar months during the twelve most recent calendar months times,

“ACS” means the aggregate credit sales made by the Originators (or Receivables of such Originators otherwise created) during the six most recent calendar months.

“Majority LC Participants” shall mean LC Participants whose Pro Rata Shares aggregate 51% or more.

“Majority Purchaser Agents” means, at any time, the Purchaser Agents whose Group Commitments aggregate 2/3rds or more of the aggregate of the Group Commitments of all Purchaser Groups; provided, however, that so long as any Purchaser Group’s Group Commitment is greater than 50% of the aggregate Group Commitments, then “Majority Purchaser Agents” shall mean a minimum of two Purchaser Agents whose Group Commitments aggregate more than 50% of the aggregate Group Commitments.

I-12

“Market Street” means Market Street Funding LLC, a Delaware limited liability company.

“Market Street Base Rate” means, for any day, a fluctuating interest rate per annum as shall be in effect from time to time, which rate shall be at all times equal to the higher of:

(a) the rate of interest in effect for such day as publicly announced from time to time by PNC in Pittsburgh, Pennsylvania as its “prime rate.” Such “prime rate” is set by PNC based upon various factors, including PNC’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such announced rate, and

(b) 0.50% per annum above the latest Federal Funds Rate.

“Material Adverse Effect” means with respect to any event or circumstance, a material adverse effect on:

(a) the assets, operations, business or financial condition of (i) the Seller, or (ii) CONSOL Energy or its Subsidiaries,

(b) the ability of any of the Originators, the Servicer, any of the SubServicers, or the Seller to perform its obligations under the Agreement or any other Transaction Document to which it is a party,

(c) the validity or enforceability of the Agreement or any other Transaction Document, or the validity, enforceability or collectibility of a material portion of the Pool Receivables, or

(d) the status, perfection, enforceability or priority of the Administrator’s or any Purchaser’s or the Seller’s interest in the Pool Assets.

“Minimum Dilution Reserve” means, on any date, an amount equal to the product of (a) the sum of the Capital plus the LC Participation Amount at the close of business of the Seller on such date multiplied by (b) (i) the Minimum Dilution Reserve Percentage on such date, divided by (ii) 100% minus the Minimum Dilution Reserve Percentage on such date.

“Minimum Dilution Reserve Percentage” means on any date, the following expressed as a percentage (as opposed to a fraction): the product of (x) the Dilution Horizon multiplied by (y) the average of the Dilution Ratios for the twelve most recent calendar months.

“Monthly Settlement Date” means the twenty-third day of each calendar month (or the next succeeding Business Day if such day is not a Business Day), beginning May 23, 2007.

“Moody’s” means Moody’s Investors Service, Inc.

“Net Receivables Pool Balance” means, at any time: (a) the Outstanding Balance of Eligible Receivables then in the Receivables Pool minus (b) Excess Concentration.

“Notes” means short-term promissory notes issued, or to be issued, by each Conduit Purchaser to fund its investments in accounts receivable or other financial assets.

“Obligor” means, with respect to any Receivable, the Person obligated to make payments pursuant to the Contract relating to such Receivable.

I-13

“Originator” has the meaning set forth in the Sale Agreement.

“Originator Assignment Certificate” means the assignment by each Originator, in substantially the form of Exhibit C to the Sale Agreement, evidencing Seller’s ownership of the Receivables generated by the Originators, as the same may be amended, supplemented, amended and restated, or otherwise modified from time to time in accordance with the Sale Agreement.

“Outstanding Balance” of any Receivable at any time means the then outstanding principal balance thereof.

“Paydown Notice” has the meaning set forth in Section 1.4(f)(i) of the Agreement.

“Payment Date” has the meaning set forth in Section 2.1 of the Sale Agreement.

“Person” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.

“PNC” has the meaning set forth in the preamble to the Agreement.

“Pool Assets” has the meaning set forth in Section 1.2(d) of the Agreement.

“Pool Receivable” means a Receivable in the Receivables Pool.

“Portion of Capital” means with respect to any Purchaser and its related Capital, the portion of such Capital being funded or maintained by such Purchaser(or its successors or permitted assigns) by reference to a particular interest rate basis. In addition, at any time when the Capital of the Purchased Interest is not divided into two or more such portions, “Portion of Capital” means 100% of the Capital.

“Pro Rata Share” shall mean, as to any LC Participant, a fraction, the numerator of which equals the Commitment of such LC Participant at such time and the denominator of which equals the aggregate of the Commitments of all LC Participants at such time.

“Program Support Agreement” means and includes any Liquidity Agreement and any other agreement entered into by any Program Support Provider providing for: (a) the issuance of one or more letters of credit for the account of any Conduit Purchaser in connection with such Conduit Purchaser’s Receivables securitization program, (b) the issuance of one or more surety bonds in connection with such Conduit Purchaser’s Receivables securitization program for which any Conduit Purchaser is obligated to reimburse the applicable Program Support Provider for any drawings thereunder, (c) the sale by any Conduit Purchaser to any Program Support Provider of the Purchased Interest (or portions thereof) and/or (d) the making of loans and/or other extensions of credit to any Conduit Purchaser in connection with such Conduit Purchaser’s Receivables-securitization program contemplated in the Agreement, together with any letter of credit, surety bond or other instrument issued thereunder (but excluding any discretionary advance facility provided by the Administrator).

I-14

“Program Support Provider” means and includes any Purchaser, any Liquidity Provider and any other Person (other than any customer of the related Conduit Purchaser) now or hereafter extending credit or having a commitment to extend credit to or for the account of, or to make purchases from, any Conduit Purchaser pursuant to any Program Support Agreement.

“Purchase Notice” has the meaning set forth in Section 1.2(a) of the Agreement.

“Purchase and Sale Indemnified Amounts” has the meaning set forth in Section 9.1 of the Sale Agreement.

“Purchase and Sale Indemnified Party” has the meaning set forth in Section 9.1 of the Sale Agreement.

“Purchase and Sale Termination Date” has the meaning set forth in Section 1.4 of the Sale Agreement.

“Purchase and Sale Termination Event” has the meaning set forth in Section 8.1 of the Sale Agreement.

“Purchase Facility” has the meaning set forth in Section 1.1 of the Sale Agreement.

“Purchase Limit” means $150,000,000, as such amount may be reduced pursuant to Section 1.1(b) of the Agreement. References to the unused portion of the Purchase Limit shall mean, at any time, the Purchase Limit minus the sum of the then aggregate outstanding Capital plus the LC Participation Amount.

“Purchase Price” has the meaning set forth in Section 2.1 of the Sale Agreement.

“Purchase Report” has the meaning set forth in Section 2.1 of the Sale Agreement.

“Purchased Interest” means, at any time, the undivided percentage ownership interest of all Purchasers, collectively, in: (a) each and every Pool Receivable now existing or hereafter arising, (b) all Related Security with respect to such Pool Receivables and (c) all Collections with respect to, and other proceeds of, such Pool Receivables and Related Security. Such undivided percentage interest shall be computed as:

Capital + LC Participation Amount + Total Reserves

Net Receivables Pool Balance

The Purchased Interest shall be determined from time to time pursuant to Section 1.3 of the Agreement.

“Purchaser Agent” has the meaning set forth in the preamble to the Agreement.

“Purchaser Group” means, for each Conduit Purchaser, such Conduit Purchaser, its related Purchaser Agent and, in the case of Market Street as a Conduit Purchaser, the LC Bank, and in the case of each other Conduit Purchaser, the related LC Participant in addition to itself and Purchaser Agent.

I-15

“Purchasers” means each Conduit Purchaser, the LC Bank and each LC Participant.

“Purchasers’ Share” of any amount means such amount multiplied by the Purchased Interest at the time of determination.

“Ratable Share” means, for each Purchaser Group, such Purchaser Group’s Group Commitment divided by the aggregate Group Commitments of all Purchaser Groups.

“Receivable” means any indebtedness and other obligations owed to the Seller (as assignee of each Originator) or any Originator by, or any right of the Seller or any Originator to payment from or on behalf of, an Obligor, whether constituting an account, chattel paper, instrument or general intangible, arising in connection with the sale of goods or the rendering of services by any Originator, and includes the obligation to pay any finance charges, fees and other charges with respect thereto. Indebtedness and other obligations arising from any one transaction, including indebtedness and other obligations represented by an individual invoice or agreement, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other obligations arising from any other transaction.

“Receivables Pool” means, at any time, all of the then outstanding Receivables purchased by the Seller pursuant to the Sale Agreement prior to the Facility Termination Date.

“Reimbursement Obligation” has the meaning set forth in Section 1.14 of the Agreement.

“Reference Bank” means PNC.

“Related Rights” has the meaning set forth in Section 1.1 of the Sale Agreement.

“Related Security” means, with respect to any Receivable:

(a) all of the Seller’s and each Originator’s interest in any goods (including returned goods), and documentation of title evidencing the shipment or storage of any goods (including returned goods), relating to any sale giving rise to such Receivable,

(b) all instruments and chattel paper that may evidence such Receivable,

(c) all other security interests or liens and property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all UCC financing statements or similar filings relating thereto, and

(d) all of the Seller’s and each Originator’s rights, interests and claims under the Contracts and all guaranties, indemnities, insurance and other agreements (including the related Contract) or arrangements of whatever character from time to time supporting or securing payment of such Receivable or otherwise relating to such Receivable, whether pursuant to the Contract related to such Receivable or otherwise.

“Required LC Participants” shall mean the LC Participants whose Pro Rata Shares aggregate 66 ² / 3 % or more.

“Restatement Date” means April 30, 2007.

I-16

“Sale Agreement” means the Purchase and Sale Agreement, dated as of even date herewith, between the Seller and the Originators, as such agreement may be amended, restated, supplemented or otherwise modified from time to time.

“Seller” has the meaning set forth in the preamble to the Agreement.

“Seller’s Share” of any amount means the greater of: (a) $0 and (b) such amount minus the Purchasers’ Share.

“Servicer” has the meaning set forth in the preamble to the Agreement.

“Servicing Fee” shall mean the fee referred to in Section 4.6 of the Agreement.

“Servicing Fee Rate” shall mean the rate referred to in Section 4.6 of the Agreement.

“Settlement Date” means with respect to any Portion of Capital for any Settlement Period, (i) prior to the Facility Termination Date, the Monthly Settlement Date and (ii) on and after the Facility Termination Date, each day selected from time to time by the Administrator (it being understood that the Administrator may select such Settlement Date to occur as frequently as daily), or, in the absence of such selection, the Monthly Settlement Date.

“Settlement Period” means: (a) before the Facility Termination Date: (i) initially the period commencing on the date of the initial purchase pursuant to Section 1.2 of the Agreement (or in the case of any fees payable hereunder, commencing on the Closing Date) and ending on (but not including) the next Monthly Settlement Date, and (ii) thereafter, each period commencing on such Monthly Settlement Date and ending on (but not including) the next Monthly Settlement Date, and (b) on and after the Facility Termination Date: such period (including a period of one day) as shall be selected from time to time by the Administrator or, in the absence of any such selection, each period of 30 days from the last day of the preceding Settlement Period.

“Solvent” means, with respect to any Person at any time, a condition under which:

(i) the fair value and present fair saleable value of such Person’s total assets is, on the date of determination, greater than such Person’s total liabilities (including contingent and unliquidated liabilities) at such time;

(ii) the fair value and present fair saleable value of such Person’s assets is greater than the amount that will be required to pay such Person’s probable liability on its existing debts as they become absolute and matured (“ debts ,” for this purpose, includes all legal liabilities, whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent);

(iii) such Person is and shall continue to be able to pay all of its liabilities as such liabilities mature; and

(iv) such Person does not have unreasonably small capital with which to engage in its current and in its anticipated business.

For purposes of this definition:

I-17

(A) the amount of a Person’s contingent or unliquidated liabilities at any time shall be that amount which, in light of all the facts and circumstances then existing, represents the amount which can reasonably be expected to become an actual or matured liability;

(B) the “fair value” of an asset shall be the amount which may be realized within a reasonable time either through collection or sale of such asset at its regular market value;

(C) the “regular market value” of an asset shall be the amount which a capable and diligent business person could obtain for such asset from an interested buyer who is willing to Purchase such asset under ordinary selling conditions; and

(D) the “present fair saleable value” of an asset means the amount which can be obtained if such asset is sold with reasonable promptness in an arm’s-length transaction in an existing and not theoretical market.

“Special Obligor” means Ontario Power Generation, Inc., for so long as such corporation has debt securities which are rated by Standard & Poor’s and its debt securities are not rated by Moody’s.

“Spike Factor” means, for any calendar month, (a) the positive difference, if any, between: (i) the highest Dilution Ratio for any one calendar month during the twelve most recent calendar months and (ii) the arithmetic average of the Dilution Ratios for such twelve months times (b) (i) the highest Dilution Ratio for any one calendar month during the twelve most recent calendar months divided by (ii) the arithmetic average of the Dilution Ratios for such twelve months.

“Standard & Poor’s” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock of each class or other interests having ordinary voting power (other than stock or other interests having such power only by reason of the happening of a contingency) to elect a majority of the Board of Directors or other managers of such entity are at the time owned, or management of which is otherwise controlled: (a) by such Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and one or more Subsidiaries of such Person.

“Termination Day” means: (a) each day on which the conditions set forth in Section 2 of Exhibit II to the Agreement are not satisfied or (b) each day that occurs on or after the Facility Termination Date.

“Termination Event” has the meaning specified in Exhibit V to the Agreement.

“Termination Fee” means, for any Settlement Period during which a Termination Day occurs, with respect to any Purchaser, the amount, if any, by which: (a) the additional Discount (calculated without taking into account any Termination Fee or any shortened duration of such Settlement Period pursuant to the definition thereof) that would have accrued during such Settlement Period on the reductions of Capital relating to such Settlement Period had such reductions not been made, exceeds (b) the income, if any, received by the Purchasers from investing the proceeds of such reductions of Capital, as determined by the Administrator, which determination shall be binding and conclusive for all purposes, absent manifest error.

I-18

“Total Reserves” means, at any time the sum of: (a) the Yield Reserve, plus (b) the greater of (i) the sum of the Loss Reserve plus the Dilution Reserve or (ii) the Minimum Dilution Reserve plus the Concentration Reserve.

“Transaction Documents” means the Agreement, the Lock-Box Agreements, the Fee Letters, the Sale Agreement, the CONSOL Guaranty, and all other certificates, instruments, UCC financing statements, reports, notices, agreements and documents executed or delivered under or in connection with the Agreement, in each case as the same may be amended, supplemented or otherwise modified from time to time in accordance with the Agreement.

“UCC” means the Uniform Commercial Code as from time to time in effect in the applicable jurisdiction.

“UCP 500” has the meaning set forth in Section 1.12 of the Agreement.

“Unmatured Purchase and Sale Termination Event” means any event which, with the giving of notice or lapse of time, or both, would become a Purchase and Sale Termination Event.

“Unmatured Termination Event” means an event that, with the giving of notice or lapse of time, or both, would constitute a Termination Event.

“Yield Reserve” means, on any date, an amount equal to: (a) the sum of the Capital plus the LC Participation Amount at the close of business of the Seller on such date multiplied by (b)(i) the Yield Reserve Percentage on such date divided by (ii) 100% minus the Yield Reserve Percentage on such date.

“Yield Reserve Percentage” means at any time:

(BR+SFR) x l.5 x DSO

360

where:


BR =		the Base Rate computed for the most recent Settlement Period,

DSO =		Days’ Sales Outstanding, and

SFR =		the Servicing Fee Rate

Other Terms . All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9. Unless the context otherwise requires, “or” means “and/or,” and “including” (and with correlative meaning “include” and “includes”) means including without limiting the generality of any description preceding such term.

I-19

EXHIBIT II

CONDITIONS OF PURCHASES

1. Conditions Precedent to Effectiveness of Amendment and Restatement of Original Agreement . The effectiveness of this Agreement is subject to the following conditions precedent that the Administrator shall have received on or before the Restatement Date, each in form and substance (including the date thereof) satisfactory to the Administrator:

(a) A counterpart of the Agreement and the other Transaction Documents duly executed by the parties thereto.

(b) Certified copies of: (i) the resolutions of the Board of Directors or members or managers, as applicable, of each of the Seller, CONSOL Energy and each Originator authorizing the execution, delivery and performance by the Seller, CONSOL Energy and each Originator, as the case may be, of the Agreement and the other Transaction Documents to which it is a party; (ii) all documents evidencing other necessary corporate or organizational action and governmental approvals, if any, with respect to the Agreement and the other Transaction Documents and (iii) the certificate of incorporation or articles of organization and by-laws or limited liability company agreement, as applicable, of the Seller, CONSOL Energy and each Originator.

(c) A certificate of the Secretary or Assistant Secretary of the Seller, each Originator and CONSOL Energy certifying the names and true signatures of its officers who are authorized to sign the Agreement and the other Transaction Documents. Until the Administrator receives a subsequent incumbency certificate from the Seller, any Originator, or CONSOL Energy, as the case may be, the Administrator shall be entitled to rely on the last such certificate delivered to it by the Seller, such Originator, or CONSOL Energy, as the case may be.

(d) Completed UCC search reports, dated on or shortly before the Restatement Date, listing the financing statements filed in all applicable jurisdictions that name the Originators or the Seller as debtor, as the Administrator may request, showing no Adverse Claims on any Pool Assets, other than those UCC search reports identified in Section 4(a) of Exhibit IV .

(e) Favorable opinions, in form and substance reasonably satisfactory to the Administrator, of Morgan, Lewis & Bockius LLP, counsel for the Seller, CONSOL Energy, the Originators, and the Servicer.

(f) Satisfactory results of a review, field examination and audit (performed by representatives of the Administrator or by third parties at the direction of the Administrator) of the Servicer’s collection, operating and reporting systems, the Credit and Collection Policy of the Originators, historical receivables data and accounts, including satisfactory results of a review of the Servicer’s operating location(s) and satisfactory review and approval of the Eligible Receivables in existence on the date of the initial purchase under the Agreement.

(g) Evidence of payment by the Seller of all accrued and unpaid fees (including those contemplated by the Fee Letters), costs and expenses to the extent then due and payable on the date thereof, including any such costs, fees and expenses arising under or referenced in Section 6.4 of the Agreement and the Fee Letters.

II-1

(h) The Fee Letters duly executed by the Seller and the Servicer and the other parties thereto.

(i) Good standing certificates with respect to each of the Seller, CONSOL Energy, each Originator, and the Servicer issued by the Secretary of State (or similar official) of the state of each such Person’s organization or formation.

(j) Each Liquidity Agreement and all other Transaction Documents duly executed by the parties thereto including the lenders participating in such Liquidity Agreement.

(k) All information with respect to the Receivables as the Administrator or the Conduit Purchasers may reasonably request.

(l) Such other approvals, opinions or documents as the Administrator or the Conduit Purchasers may reasonably request.

2. Conditions Precedent to All Funded Purchases, Issuances of Letters of Credit and Reinvestments . Each Funded Purchase, including the initial Funded Purchase, and the Issuance of any Letters of Credit and each reinvestment shall be subject to the further conditions precedent that:

(a) in the case of each Funded Purchase and the issuance of any Letters of Credit, the Servicer shall have delivered to the Administrator and each Purchaser Agent on or before such purchase or issuance, as the case may be, in form and substance satisfactory to the Administrator, a completed pro forma Information Package to reflect the level of Capital, the LC Participation Amount and related reserves and the calculation of the Purchased Interest after such subsequent purchase or issuance, as the case may be, and a completed Purchase Notice in the form of Annex B; and

(b) on the date of such Funded Purchase, issuance or reinvestment the following statements shall be true (and acceptance of the proceeds of such Funded Purchase, issuance or reinvestment shall be deemed a representation and warranty by the Seller that such statements are then true):

(i) the representations and warranties contained in Exhibit III to the Agreement are true and correct in all material respects on and as of the date of such Funded Purchase, issuance or reinvestment as though made on and as of such date;

(ii) no event has occurred and is continuing, or would result from such Funded Purchase, issuance or reinvestment, that constitutes a Termination Event or an Unmatured Termination Event; and

(iii) the sum of the Capital plus the LC Participation Amount, after giving effect to any such Funded Purchase, issuance or reinvestment, as the case may be, shall not exceed the Purchase Limit.

II-2

EXHIBIT III

REPRESENTATIONS AND WARRANTIES

1. Representations and Warranties of the Seller . The Seller represents and warrants as follows:

(a) The Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified to do business and is in good standing as a foreign corporation in every jurisdiction where the nature of its business requires it to be so qualified, except where the failure to be so qualified would not have a Material Adverse Effect.

(b) The execution, delivery and performance by the Seller of the Agreement and the other Transaction Documents to which it is a party, including its use of the proceeds of purchases and reinvestments: (i) are within its organizational powers; (ii) have been duly authorized by all necessary organizational action; (iii) do not contravene or result in a default under or conflict with: (A) its certificate of incorporation, formation, limited liability company agreement or any other organizational document of the Seller, (B) any law, rule or regulation applicable to it, (C) any indenture, loan agreement, mortgage, deed of trust or other material agreement or instrument to which it is a party or by which it is bound, or (D) any order, writ, judgment, award, injunction or decree binding on or affecting it or any of its property; and (iv) do not result in or require the creation of any Adverse Claim upon or with respect to any of its properties. The Agreement and the other Transaction Documents to which it is a party have been duly executed and delivered by the Seller.

(c) No authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or other Person is required for its due execution, delivery and performance by the Seller of its obligations under the Agreement or any other Transaction Document to which it is a party, other than the Uniform Commercial Code filings referred to in Exhibit II to the Agreement, all of which shall have been filed on or before the date of the first purchase hereunder.

(d) Each of the Agreement and the other Transaction Documents to which the Seller is a party constitutes (assuming due authorization and execution by the other parties thereto) its legal, valid and binding obligation enforceable against the Seller in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws from time to time in effect affecting the enforcement of creditors’ rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(e) There is no pending or, to Seller’s knowledge, threatened action or proceeding affecting Seller or any of its properties before any Governmental Authority or arbitrator.

(f) No proceeds of any purchase or reinvestment will be used to acquire any equity security of a class that is registered pursuant to Section 12 of the Securities Exchange Act of 1934.

III-1

(g) The Seller is the legal and beneficial owner of, and has good and marketable title to, the Pool Receivables, the Lock-Box Accounts (and related lock-boxes) and Related Security, free and clear of any Adverse Claim. Upon each purchase or reinvestment, the Administrator or the Purchasers shall acquire pro rata valid and enforceable perfected undivided percentage ownership or security interests, to the extent of each Purchaser’s percentage interest of the Purchased Interest, in each Pool Receivable then existing or thereafter arising and in the Related Security, Collections and other proceeds with respect thereto, free and clear of any Adverse Claim. The Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in favor of the Administrator in the Pool Assets and the Lock-Box Accounts (and related lock-boxes), which security interest is prior to all Adverse Claims, and is enforceable as such against creditors of and purchases from the Seller. The Pool Assets constitute “accounts”, “general intangibles” or “tangible chattel paper” within the meaning of the applicable UCC. Each Lock-Box Account constitutes a “deposit account” within the meaning of the applicable UCC. The Seller has caused or will have caused, within ten (10) days, the filing of all appropriate UCC financing statements in the proper filing offices in the appropriate jurisdictions under applicable laws in order to perfect the security interest in the Pool Assets and the Lock-Box Accounts (and related lock-boxes) granted to the Administrator hereunder. Other than the security interest granted to the Administrator pursuant to this Agreement, Seller has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Pool Assets or the Lock-Box Accounts (and related lock-boxes). Seller has not authorized the filing of and is not aware of any UCC financing statements against Seller that include a description of collateral covering the Pool Assets, other than any UCC financing statement relating to the security interest granted to the Administrator hereunder or in connection with the Original Agreement or that has been terminated. Seller is not aware of any judgment, ERISA or tax lien filings against the Seller. With respect to any Pool Receivable that constitutes “tangible chattel paper”, the Servicer is in possession of the original copies of the tangible chattel paper that constitutes or evidences such Pool Receivables, and the Seller has filed or has caused to be filed within ten (10) days after the date hereof the financing statements described in this section above, each of which will contain a statement that “A purchase of or a grant of a security interest in any property described in this financing statement will violate the rights of the Purchasers.” The Pool Receivables to the extent they are evidenced by “tangible chattel paper” do not have any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Seller or the Purchasers.

(h) Each Information Package (if prepared by the Seller or one of its Affiliates, or to the extent that information contained therein is supplied by the Seller or an Affiliate), exhibit, financial statement, document, book, record or report furnished or to be furnished at any time by or on behalf of the Seller to the Administrator in connection with the Agreement or any other Transaction Document to which it is a party is or will be complete and accurate in all material respects as of its date or (except as otherwise disclosed to the Administrator at such time) as of the date so furnished,

(i) The Seller’s principal place of business, chief executive office and state of formation (as such terms are used in the UCC) and the office where it keeps its records concerning the Receivables are located at the address referred to in Sections l(b) and 2(b) of Exhibit IV to the Agreement.

III-2

(j) The names and addresses of all the Lock-Box Banks, together with the account numbers of the Lock-Box Accounts at such Lock-Box Banks, are specified in Schedule II to the Agreement (or at such other Lock-Box Banks and/or with such other Lock-Box Accounts as have been notified to the Administrator in accordance with the Agreement) and all Lock-Box Accounts are subject to Lock-Box Agreements. With respect to all Lock-Box Accounts (and related lock-boxes), the Seller has delivered to the Administrator a fully executed Lock-Box Agreement pursuant to which the applicable Lock-Box Bank has agreed, following the occurrence and continuation of a Termination Event, to comply with all instructions given by the Administrator with respect to all funds on deposit in such Lock-Box Account (and all funds sent to the respective lock-box), without further consent by the Seller or the Servicer. None of the Lock-Box Accounts (and the related lock-boxes) are in the name of any Person other than the Seller, the Administrator or the Purchasers. The Seller has not consented to any Lock-Box Bank’s complying with instructions of any person other than the Administrator.

(k) The Seller is not in violation of any order of any court, arbitrator or Governmental Authority.

(l) Neither the Seller nor any of its Affiliates has any direct or indirect ownership or other financial interest in any Conduit Purchaser.

(m) No proceeds of any purchase or reinvestment will be used for any purpose that violates any applicable law, rule or regulation, including Regulations T, U or X of the Federal Reserve Board.

(n) Each Pool Receivable included as an Eligible Receivable in the calculation of the Net Receivables Pool Balance is an Eligible Receivable.

(o) No event has occurred and is continuing, or would result from a purchase in respect of, or reinvestment in respect of, the Purchased Interest or from the application of the proceeds therefrom, that constitutes a Termination Event or an Unmatured Termination Event.

(p) The Seller has accounted for each sale of undivided percentage ownership interests in Receivables in its books and financial statements as sales, consistent with generally accepted accounting principles.

(q) The Seller has complied in all material respects with the Credit and Collection Policy of the Originators with regard to each Receivable originated by the Originators.

(r) The Seller has complied in all material respects with all of the terms, covenants and agreements contained in the Agreement and the other Transaction Documents that are applicable to it.

(s) The Seller’s complete organizational name is set forth in the preamble to the Agreement, and it does not use and has not during the last six years used any other organizational name, trade name, doing-business name or fictitious name, except as set forth on Schedule II to the Agreement and except for names first used after the date of the Agreement and set forth in a notice delivered to the Administrator pursuant to Section 1(1)(iv) of Exhibit IV to the Agreement.

III-3

(t) The Seller is not an “investment company,” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

2. Representations and Warranties of CONSOL Energy (including in its capacity as the Servicer) . CONSOL Energy, individually and in its capacity as the Servicer, represents and warrants as follows:

(a) CONSOL Energy is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified to do business and is in good standing as a foreign corporation in every jurisdiction where the nature of its business requires it to be so qualified, except where the failure to be so qualified would not have a Material Adverse Effect.

(b) The execution, delivery and performance by CONSOL Energy of its obligations under the Agreement and the other Transaction Documents to which it is a party, including the Servicer’s use for the benefit of the Seller of the proceeds of purchases and reinvestments: (i) are within its organizational powers; (ii) have been duly authorized by all necessary organizational action; (iii) do not contravene or result in a default under or conflict with: (A) its certificate of incorporation, formation, limited liability company agreement or any other organizational document of CONSOL Energy, (B) any law, rule or regulation applicable to it, (C) any indenture, loan agreement, mortgage, deed of trust or other material agreement or instrument to which it is a party or by which it is bound, or (D) any order, writ, judgment, award, injunction or decree binding on or affecting it or any of its property; and (iv) do not result in or require the creation of any Adverse Claim upon or with respect to any of its properties. The Agreement and the other Transaction Documents to which CONSOL Energy is a party have been duly executed and delivered by CONSOL Energy.

(c) No authorization, approval or other action by, and no notice to or filing with any Governmental Authority or other Person, is required for the due execution, delivery and performance by CONSOL Energy of the Agreement or any other Transaction Document to which it is a party.

(d) Each of the Agreement and the other Transaction Documents to which CONSOL Energy is a party constitutes the legal, valid and binding obligation of CONSOL Energy enforceable (assuming the due authorization and execution of the other parties thereto) against CONSOL Energy in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws from time to time in effect affecting the enforcement of creditors’ rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(e) The balance sheets of CONSOL Energy and its consolidated Subsidiaries as at December 31, 2006, and the related statements of income and retained earnings for the fiscal year then ended, copies of which have been furnished to the Administrator, fairly present the financial condition of CONSOL Energy and its consolidated Subsidiaries as at such date and the results of the operations of CONSOL Energy and its Subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied, and since December 31, 2006, there has been no event or circumstances which have had a Material Adverse Effect.

III-4

(f) There is no pending or, to its best knowledge, threatened action or proceeding affecting it or any of its Subsidiaries before any Governmental Authority or arbitrator that could reasonably be expected to have a Material Adverse Effect.

(g) No proceeds of any purchase or reinvestment will be used to acquire any equity security of a class that is registered pursuant to Section 12 of the Securities Exchange Act of 1934. No proceeds of any purchase or reinvestment will be used for any purpose that violates any applicable law, rule or regulation, including Regulations T, U or X of the Federal Reserve Board.

(h) Each Information Package (if prepared by CONSOL Energy or one of its Affiliates, or to the extent that information contained therein is supplied by CONSOL Energy or an Affiliate), exhibit, financial statement, document, book, record or report furnished or to be furnished at any time by or on behalf of CONSOL Energy to the Administrator in connection with the Agreement is or will be complete and accurate in all material respects as of its date or (except as otherwise disclosed to the Administrator at such time) as of the date so furnished.

(i) The principal place of business, chief executive office and state of formation (as such terms are used in the UCC) of CONSOL Energy and the office where it keeps its records concerning the Receivables are located at the address referred to in Section 2(b) of Exhibit IV to the Agreement.

(j) CONSOL Energy is not in violation of any order of any court, arbitrator or Governmental Authority, which is reasonably likely to have a Material Adverse Effect.

(k) Neither CONSOL Energy nor any of its Affiliates has any direct or indirect ownership or other financial interest in any Conduit Purchaser.

(l) CONSOL Energy has complied in all material respects with the Credit and Collection Policy of the Originators with regard to each Receivable originated by the Originators.

(m) CONSOL Energy has complied in all material respects with all of the terms, covenants and agreements contained in the Agreement and the other Transaction Documents that are applicable to it.

(n) CONSOL Energy is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

III-5

EXHIBIT IV

COVENANTS

1. Covenants of the Seller . Until the latest of (i) the Facility Termination Date, (ii) the date on which no Capital of or Discount in respect of the Purchased Interest shall be outstanding, (iii) the date on which an amount equal to 100% of the LC Participation Amount has been deposited in the LC Collateral Account or all Letters of Credit have expired and (iv) the date all other amounts owed by the Seller under the Agreement to the Purchasers, Purchaser Agents, the Administrator and any other Indemnified Party or Affected Person shall be paid in full:

(a) Compliance with Laws, Etc . The Seller shall comply in all material respects with all applicable laws, rules, regulations and orders, and preserve and maintain its organizational existence, rights, franchises, qualifications and privileges, except to the extent that the failure so to comply with such laws, rules, regulations or orders or the failure so to preserve and maintain such rights, franchises, qualifications and privileges would not have a Material Adverse Effect.

(b) Offices, Records and Books of Account, Etc . The Seller: (i) shall keep its principal place of business, chief executive office and state of formation (as such terms or similar terms are used in the UCC) and the office where it keeps its records concerning the Receivables at the address of the Seller set forth on Schedule IV or, pursuant to clause (1)(iv) below, at any other locations in jurisdictions where all actions reasonably requested by the Administrator to protect and perfect the interest of the Administrator in the Receivables and related items (including the Pool Assets) have been taken and completed and (ii) shall provide the Administrator with at least 30 days’ written notice before making any change in the Seller’s name or making any other change in the Seller’s identity or organizational structure (including a Change in Control) that could render any UCC financing statement filed in connection with this Agreement “seriously misleading” as such term (or similar term) is used in the UCC; each notice to the Administrator pursuant to this sentence shall set forth the applicable change and the effective date thereof. The Seller also will maintain and implement (or cause the Servicer to maintain and implement) administrative and operating procedures (including an ability to recreate records evidencing Receivables and related Contracts in the event of the destruction of the originals thereof), and keep and maintain (or cause the Servicer to keep and maintain) all documents, books, records, computer tapes and disks and other information reasonably necessary or advisable for the collection of all Receivables (including records adequate to permit the daily identification of each Receivable and all Collections of and adjustments to each existing Receivable). Notwithstanding the above, in no event shall the Seller have or maintain, or be a partner in any partnership that has or maintains, its jurisdiction of organization, principal place of business or principal assets in any of the states of Colorado, Kansas, New Mexico, Oklahoma, Utah or Wyoming.

(c) Performance and Compliance with Contracts and Credit and Collection Policy . The Seller shall (and shall cause the Servicer to), at its expense, timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and timely and fully comply in all material respects with the applicable Credit and Collection Policy with regard to each Receivable and the related Contract.

IV-1

(d) Ownership Interest, Etc . The Seller shall (and shall cause the Servicer to), at its expense, take all action necessary or desirable to establish and maintain a valid and enforceable undivided percentage ownership or security interest, to the extent of the Purchased Interest, in the Pool Receivables, the Related Security and Collections with respect thereto, and a first priority perfected security interest in the Pool Assets, in each case free and clear of any Adverse Claim, in favor of the Administrator (on behalf of each Purchaser), including taking such action to perfect, protect or more fully evidence the interest of each Purchaser as a Purchaser, through the Administrator, may reasonably request. The Seller shall from time to time and within the time limits established by law prepare and present to the Administrator for the Administrator’s authorization and approval all financing statements, amendments, continuations or initial financing statements in lieu of a continuation statement, or other filings necessary to continue, maintain and perfect the Administrator’s security interest in the Pool Assets as a first-priority interest. The Administrator’s approval of such filings shall authorize the Seller to file such financing statements under the UCC without the signature of the Seller or the Administrator where allowed by applicable law. Notwithstanding anything else in the Transaction Documents to the contrary, neither the Seller, the Servicer nor any other Person shall have any authority to file a termination, partial termination, release or partial release or any amendment that deletes the name of a debtor or excludes collateral of any such financing statements without the prior written consent of the Administrator.

(e) Sales, Liens, Etc . The Seller shall not sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Adverse Claim upon or with respect to, any or all of its right, title or interest in, to or under any Pool Assets (including the Seller’s undivided interest in any Receivable, Related Security or Collections, or upon or with respect to any account to which any Collections of any Receivables are sent), or assign any right to receive income in respect of any items contemplated by this paragraph.

(f) Extension or Amendment of Receivables . Except as provided in the Credit and Collection Policy, the Seller shall not, and shall not permit the Servicer to, extend the maturity or adjust the Outstanding Balance or otherwise modify the terms of any Pool Receivable in any material respect, or amend, modify or waive, in any material respect, any term or condition of any related Contract (which term or condition relates to payments under, or the enforcement of, such Contract).

(g) Change in Business or Credit and Collection Policy . The Seller shall not make (or permit the Originator to make) any material change in the character of its business or in any Credit and Collection Policy, or any change in any Credit and Collection Policy that would have a Material Adverse Effect with respect to the Receivables. The Seller shall not make (or permit the Originator to make) any other change in any Credit and Collection Policy without giving 30 days’ prior written notice thereof to the Administrator.

(h) Audits . The Seller shall (and shall cause the Originators to), from time to time during regular business hours as reasonably requested in advance (unless a Termination Event or Unmatured Termination Event exists) by the Administrator, permit the Administrator, or its agents or representatives: (i) to examine and make copies of and abstracts from all books, records and documents (including computer tapes and disks) in the possession or under the control of the Seller (or the Originators) relating to Receivables and the Related Security,

IV-2

including the related Contracts, (ii) to visit the offices and properties of the Seller and each Originator for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to Receivables and the Related Security or the Seller’s, CONSOL Energy’s or each Originator’s performance under the Transaction Documents or under the Contracts with any of the officers, employees, agents or contractors of the Seller, CONSOL Energy or any Originator having knowledge of such matters and (iii) without limiting the clauses (i) and (ii) above, to engage certified public accountants or other auditors acceptable to the Seller and the Administrator to conduct, at the Seller’s reasonable expense (such review shall not be at the Seller’s expense if the Administrator has previously conducted a review within the current fiscal year, unless a Termination Event has occurred and is continuing (in which case such review shall be at the Seller’s expense)), a review of the Seller’s books and records with respect to such Receivables.

(i) Change in Lock-Box Banks, Lock-Box Accounts and Payment Instructions to Obligors . The Seller shall not, and shall not permit the Servicer or the Originators to, add or terminate any bank as a Lock-Box Bank or any account as a Lock-Box Account from those listed in Schedule II to the Agreement, or make any change in its instructions to Obligors regarding payments to be made to the Seller, the Originators, the Servicer or any Lock-Box Account (or related post office box), unless the Administrator shall have consented thereto in writing and the Administrator shall have received copies of all agreements and documents (including Lock-Box Agreements) that it may request in connection therewith.

(j) Deposits to Lock-Box Accounts . The Seller shall (or shall cause the Servicer to): (i) instruct all Obligors to make payments of all Receivables to one or more Lock-Box Accounts or to post office boxes to which only Lock-Box Banks have access (and shall instruct the Lock-Box Banks to cause all items and amounts relating to such Receivables received in such post office boxes to be removed and deposited into a Lock-Box Account on a daily basis), and (ii) deposit, or cause to be deposited, any Collections received by it, the Servicer or the Originators into Lock-Box Accounts not later than two Business Days after receipt thereof. Each Lock-Box Account shall at all times be subject to a Lock-Box Agreement. The Seller will not (and will not permit the Servicer to) deposit or otherwise credit, or cause or permit to be so deposited or credited, to any Lock-Box Account cash or cash proceeds other than Collections.

(k) Identifying of Records . At its expense, the Seller shall: (i) identify (or cause the Servicer to identify) its master data processing records relating to Pool Receivables and related Contracts with a legend placed on a separate “declaration page” which indicates that the Receivables associated with certain company account numbers (which company account numbers shall be listed on such “declaration page”) have been sold in accordance with the Agreement, and (ii) cause each Originator so to identify its master data processing records with a legend placed on a separate “declaration page” pursuant to the Sale Agreement.

(l) Reporting Requirements . The Seller will provide to the Administrator (in multiple copies, if requested by the Administrator) the following:

(i) as soon as available and in any event within 120 days after the end of each fiscal year of the Seller, a copy of the annual report for such year for the Seller,

IV-3

containing unaudited financial statements for such year certified as to accuracy by the senior financial officer or treasurer of the Seller;

(ii) as soon as possible and in any event within five (5) Business Days after becoming aware of the occurrence of each Termination Event or Unmatured Termination Event, a statement of the senior financial officer or Treasurer of the Seller setting forth details of such Termination Event or Unmatured Termination Event and the action that the Seller has taken and proposes to take with respect thereto;

(iii) promptly after the filing or receiving thereof, copies of all reports and notices that the Seller or any Affiliate files under ERISA with the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U. S. Department of Labor or that the Seller or any Affiliate receives from any of the foregoing or from any multiemployer plan (within the meaning of Section 400l(a)(3) of ERISA) to which the Seller or any of its Affiliates is or was, within the preceding five years, a contributing employer, in each case in respect of the assessment of withdrawal liability or an event or condition that could, in the aggregate, result in the imposition of liability on the Seller and/or any such Affiliate;

(iv) at least thirty days before any change in the Seller’s name or any other change requiring the amendment of UCC financing statements, a notice setting forth such changes and the effective date thereof;

(v) promptly after the Seller obtains knowledge thereof, notice of any: (A) material litigation, investigation or proceeding that may exist at any time between the Seller and any Person or (B) material litigation or proceeding relating to any Transaction Document;

(vi) promptly after becoming aware of the occurrence thereof, notice of a material adverse change in the business, operations, property or financial or other condition of the Seller, the Servicer or any Originator; and

(viii) such other information respecting the Receivables or the condition or operations, financial or otherwise, of the Seller or any of its Affiliates as the Administrator may from time to time reasonably request.

(m) Certain Agreements . Without the prior written consent of the Administrator, the Seller will not (and will not permit the Originators to) amend, modify, waive, revoke or terminate any Transaction Document to which it is a party or any provision of Seller’s certificate of formation, limited liability company agreement or other organizational document of the Seller.

(n) Restricted Payments.

(i) Except pursuant to clause (ii) below, the Seller will not: (A) purchase or redeem any shares of its capital stock, (B) declare or pay any dividend or set aside any funds for any such purpose, (C) prepay, purchase or redeem any Debt, (D) lend or advance any funds or (E) repay any loans or advances to, for or from any of its Affiliates (the amounts described in clauses (A) through (E) being referred to as “ Restricted Payments ”).

IV-4

(ii) Subject to the limitations set forth in clause (iii) below, the Seller may make Restricted Payments so long as such Restricted Payments are made only in one or more of the following ways: (A) the Seller may make cash payments (including prepayments) on the Company Notes in accordance with their terms, and (B) if no amounts are then outstanding under the Company Notes, the Seller may declare and pay distributions.

(iii) The Seller may make Restricted Payments only out of the funds it receives pursuant to Sections 1.4(b)(ii) and (iv) of the Agreement. Furthermore, the Seller shall not pay, make or declare: (A) any distributions if, after giving effect thereto, the Seller’s tangible net worth would be less than $10,000,000, or (B) any Restricted Payment (including any dividend) if, after giving effect thereto, any Termination Event or Unmatured Termination Event shall have occurred and be continuing.

(o) Other Business . The Seller will not: (i) engage in any business other than the transactions contemplated by the Transaction Documents; (ii) create, incur or permit to exist any Debt of any kind (or cause or permit to be issued for its account any letters of credit or bankers’ acceptances) other than pursuant to this Agreement or the Company Notes; or (iii) form any Subsidiary or make any investments in any other Person; provided, however, that the Seller shall be permitted to incur minimal obligations to the extent necessary for the day-to-day operations of the Seller (such as expenses for stationery, audits, maintenance of legal status, etc.).

(p) Use of Seller’s Share of Collections . The Seller shall apply the Seller’s Share of Collections to make payments in the following order of priority: (i) the payment of its expenses (including all obligations payable to the Conduit Purchasers and the Administrator under the Agreement and under the Fee Letters); (ii) the payment of accrued and unpaid interest on the Company Notes; and (iii) other legal and valid organizational purposes.

(q) Tangible Net Worth . The Seller will not permit its tangible net worth, at any time, to be less than $10,000,000.

2. Covenants of the Servicer and CONSOL Energy . Until the latest of (i) the Facility Termination Date, (ii) the date on which no Capital of or Discount in respect of the Purchased Interest shall be outstanding, (iii) the date on which an amount equal to 100% of the LC Participation Amount has been deposited in the LC Collateral Account or all Letters of Credit have expired and (iv) the date all other amounts owed by the Seller under the Agreement to the Purchasers, the Administrator and any other Indemnified Party or Affected Person shall be paid in full:

(a) Compliance with Laws, Etc . The Servicer and, to the extent that it ceases to be the Servicer, CONSOL Energy shall comply (and shall cause the Originators to comply) in all material respects with all applicable laws, rules, regulations and orders, and preserve and maintain its organizational existence, rights, franchises, qualifications and privileges, except to the extent that the failure so to comply with such laws, rules, regulations or orders or the failure

IV-5

so to preserve and maintain such existence, rights, franchises, qualifications and privileges would not have a Material Adverse Effect.

(b) Offices, Records and Books of Account, Etc . The Servicer and, to the extent that it ceases to be the Servicer, CONSOL Energy, shall keep (and shall cause the Originators to keep) its principal place of business, chief executive office and state of formation (as such terms or similar terms are used in the applicable UCC) and the office where it keeps its records concerning the Receivables at the address(es) set forth on Schedule IV or, upon at least 30 days’ prior written notice of a proposed change to the Administrator, at any other locations in jurisdictions where all actions reasonably requested by the Administrator to protect and perfect the interest of the Administrator and the Purchasers in the Receivables and related items (including the Pool Assets) have been taken and completed. The Servicer and, to the extent that it ceases to be the Servicer, CONSOL Energy, also will (and will cause the Originators to) maintain and implement administrative and operating procedures (including an ability to recreate records evidencing Receivables and related Contracts in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records, computer tapes and disks and other information reasonably necessary or advisable for the collection of all Receivables (including records adequate to permit the daily identification of each Receivable and all Collections of and adjustments to each existing Receivable).

(c) Performance and Compliance with Contracts and Credit and Collection Policy . The Servicer and, to the extent that it ceases to be the Servicer, CONSOL Energy, shall (and shall cause the Originators to), at its expense, timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and timely and fully comply in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract.

(d) Extension or Amendment of Receivables . Except as provided in the Credit and Collection Policy, the Servicer and, to the extent that it ceases to be the Servicer, CONSOL Energy, shall not extend (and shall not permit the Originators to extend), the maturity or adjust the Outstanding Balance or otherwise modify the terms of any Pool Receivable in any material respect, or amend, modify or waive, in any material respect, any term or condition of any related Contract (which term or condition relates to payments under, or the enforcement of, such Contract).

(e) Change in Business or Credit and Collection Policy . The Servicer and, to the extent that it ceases to be the Servicer, CONSOL Energy, shall not make (and shall not permit the Originators to make) any material change without the consent of the Administrator in its business or in any Credit and Collection Policy, or any change in any Credit and Collection Policy that would have a Material Adverse Effect. The Servicer and, to the extent that it ceases to be the Servicer, CONSOL Energy, shall not make (and shall not permit the Originators to make) any other change in any Credit and Collection Policy without giving prior written notice thereof to the Administrator.

(f) Audits . The Servicer and, to the extent that it ceases to be the Servicer, CONSOL Energy, shall (and shall cause the Originators to), from time to time during regular business hours as reasonably requested in advance (unless a Termination Event or Unmatured

IV-6

Termination Event exists) by the Administrator, permit the Administrator, or its agents or representatives: (i) to examine and make copies of and abstracts from all books, records and documents (including computer tapes and disks) in its possession or under its control relating to Receivables and the Related Security, including the related Contracts; (ii) to visit its offices and properties for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to Receivables and the Related Security or its performance hereunder or under the Contracts with any of its officers, employees, agents or contractors having knowledge of such matters and (iii), without limiting the clauses (i) and (ii) above, to engage certified public accountants or other auditors acceptable to the Servicer and the Administrator to conduct, at the Servicer’s reasonable expense (such review shall not be at the Servicer’s expense if the Administrator has previously conducted a review within the current fiscal year unless a Termination Event has occurred and is continuing (in which case such review shall be at the Seller’s expense)), a review of the Servicer’s books and records with respect to such Receivables.

(g) Change in Lock-Box Banks, Lock-Box Accounts and Payment Instructions to Obligors . The Servicer and, to the extent that it ceases to be the Servicer, CONSOL Energy, shall not (and shall not permit the Originators to) add or terminate any bank as a Lock-Box Bank or any account as a Lock-Box Account from those listed in Schedule II to the Agreement, or make any change in its instructions to Obligors regarding payments to be made to the Servicer or any Lock-Box Account (or related post office box), unless the Administrator shall have consented thereto in writing and the Administrator shall have received copies of all agreements and documents (including Lock-Box Agreements) that it may request in connection therewith.

(h) Deposits to Lock-Box Accounts . The Servicer shall: (i) instruct all Obligors to make payments of all Receivables to one or more Lock-Box Accounts or to post office boxes to which only Lock-Box Banks have access (and shall instruct the Lock-Box Banks to cause all items and amounts relating to such Receivables received in such post office boxes to be removed and deposited into a Lock-Box Account on a daily basis); and (ii) deposit, or cause to be deposited, any Collections received by it into Lock-Box Accounts not later than one Business Day after receipt thereof. Each Lock-Box Account shall at all times be subject to a Lock-Box Agreement.

(i) Preservation of Security Interest . The Servicer shall (and shall cause the Seller to) take any and all action as the Administrator may require to preserve and maintain the perfection and priority of the security interest of the Administrator in the Pool Assets pursuant to this Agreement.

(j) Identifying of Records . At its expense, the Servicer shall identify its master data processing records relating to Pool Receivables and related Contracts with a legend placed on a separate “declaration page” which indicates that the Receivables associated with certain company account numbers (which company account numbers shall be listed on such “declaration page”) have been sold in accordance with the Agreement.

(k) Reporting Requirements . CONSOL Energy shall provide to the Administrator (in multiple copies, if requested by the Administrator) the following:

IV-7

(i) as soon as available and in any event within 60 days after the end of the first three quarters of each fiscal year of CONSOL Energy, balance sheets of CONSOL Energy and the consolidated Subsidiaries of CONSOL Energy as of the end of such quarter and statements of income, retained earnings and cash flow of CONSOL Energy and consolidated Subsidiaries of CONSOL Energy for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, certified by the senior financial officer or treasurer of such Person;

(ii) as soon as available and in any event within 120 days after the end of each fiscal year of CONSOL Energy, a copy of the annual report for such year for CONSOL Energy and its consolidated Subsidiaries, containing financial statements for such year audited by independent certified public accountants of nationally recognized standing;

(iii) together with the financial statements required in (i) and (ii) above, a compliance certificate in substantially the form of Annex D signed by the senior financial officer or treasurer of the Seller or CONSOL Energy, or such other Person as may be acceptable to the Administrator;

(iv) as to the Servicer only, as soon as available and in any event not later than two (2) Business Days prior to the Monthly Settlement Date, an Information Package as of the most recently completed calendar month or, if in the opinion of the Administrator reasonable grounds for insecurity exist with respect to the collectibility of the Pool Receivables or with respect to the Seller or Servicer’s performance or ability to perform its obligations under the Agreement, within six Business Days of a request by the Administrator, supplemental interim information relating to the Receivables to the extent that such information is reasonably obtainable for such periods as is specified by the Administrator (but in no event more frequently than weekly);

(v) as soon as possible and in any event within five Business days after becoming aware of the occurrence of each Termination Event or Unmatured Termination Event, a statement of the chief financial officer of CONSOL Energy setting forth details of such Termination Event or Unmatured Termination Event and the action that such Person has taken and proposes to take with respect thereto;

(vi) promptly after the sending or filing thereof, copies of all reports that CONSOL Energy sends to any of its security holders, and copies of all reports and registration statements that CONSOL Energy or any Subsidiary files with the Securities and Exchange Commission or any national securities exchange; provided, that any filings with the Securities and Exchange Commission that have been granted “confidential” treatment shall be provided promptly after such filings have become publicly available;

(vii) promptly after the filing or receiving thereof notice of and, upon the request of the Administrator, copies of all reports and notices that CONSOL Energy or any Affiliate of CONSOL Energy files under ERISA with the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U. S. Department of Labor or that such Person or any of its Affiliates receives from any of the foregoing or from any multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA) to which such

IV-8

Person or any Affiliate of CONSOL Energy is or was, within the preceding five years, a contributing employer, in each case in respect of the assessment of withdrawal liability or an event or condition that could, in the aggregate, result in the imposition of material liability on CONSOL Energy and/or any such Affiliate;

(viii) at least thirty days before any change in CONSOL Energy’s or any Originator’s name or any other change requiring the amendment of UCC financing statements, a notice setting forth such changes and the effective date thereof;

(ix) promptly after CONSOL Energy obtains knowledge thereof, notice of any: (A) litigation, investigation or proceeding which is reasonably expected to result in liability to CONSOL Energy or its Subsidiaries that may exist at any time between CONSOL Energy or any of its Subsidiaries and any Governmental Authority that, if not cured or if adversely determined, as the case may be, would have a Material Adverse Effect; (B) litigation or proceeding adversely affecting such Person or any of its Subsidiaries in which the amount involved is $10,000,000 or more and not covered by insurance or in which injunctive or similar relief is sought; or (C) litigation or proceeding relating to any Transaction Document;

(x) promptly after becoming aware of the occurrence thereof, notice of a material adverse change in the business, operations, property or financial or other condition of CONSOL Energy or any of its Subsidiaries;

(xi) the occurrence of a default or any event of default under any other financing arrangement evidencing $25,000,000 or more of indebtedness pursuant to which CONSOL Energy or any Originator is a debtor or an obligor; and

(xii) such other information respecting the Receivables or the condition or operations, financial or otherwise, of CONSOL Energy or any of its Affiliates as the Administrator may from time to time reasonably request.

All reports required to be delivered pursuant to clauses (i), (ii) or (vi) shall be deemed to have been delivered on the date on which the senior financial officer or treasurer of CONSOL Energy notifies the Administrator that such report is posted on the SEC’s website at www.sec.gov (notice of the financial statements to be delivered under clauses (i) and (ii) may be contained in the compliance certificate referred to in clause (iii) above) and such posting shall be deemed to satisfy the reporting requirements of clauses (i), (ii), and (vi), provided that CONSOL Energy shall provide a paper of the certification set forth in paragraph (i).

3. Separate Existence . Each of the Seller and CONSOL Energy hereby acknowledges that the Purchasers, the Conduit Purchasers and the Administrator are entering into the transactions contemplated by this Agreement and the other Transaction Documents in reliance upon the Seller’s identity as a legal entity separate from CONSOL Energy and its Affiliates. Therefore, from and after the date hereof, each of the Seller and CONSOL Energy shall take all steps specifically required by the Agreement or reasonably required by the Administrator to continue the Seller’s identity as a separate legal entity and to make it apparent to third Persons that the Seller is an entity with assets and liabilities distinct from those of

IV-9

CONSOL Energy and any other Person, and is not a division of CONSOL Energy, its Affiliates or any other Person. Without limiting the generality of the foregoing and in addition to and consistent with the other covenants set forth herein, each of the Seller and CONSOL Energy shall take such actions as shall be required in order that:

(a) The Seller will be a limited purpose corporation whose primary activities are restricted in its certificate of incorporation to: (i) purchasing or otherwise acquiring from the Originators (or their Affiliates), owning, holding, granting security interests or selling interests in Pool Assets (or other receivables originated by the Originators or their Affiliates, and certain related assets), (ii) entering into agreements for the selling and servicing of the Receivables Pool (or other receivables pools originated by the Originators or their Affiliates), and (iii) conducting such other activities as it deems necessary or appropriate to carry out its primary activities;

(b) The Seller shall not engage in any business or activity, or incur any indebtedness or liability, other than as expressly permitted by the Transaction Documents;

(c) Not less than one member of the Seller’s Directors (the “ Independent Director ”) shall be an individual who is not a direct, indirect or beneficial stockholder, officer, director, employee, affiliate, associate or supplier of CONSOL Energy or any of its Affiliates. The certificate of incorporation of the Seller shall provide that: (i) the Seller’s Board of Directors shall not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition with respect to the Seller unless the Independent Director shall approve the taking of such action in writing before the taking of such action, and (ii) such provision cannot be amended without the prior written consent of the Independent Director;

(d) The Independent Director shall not at any time serve as a trustee in bankruptcy for the Seller, CONSOL Energy or any Affiliate thereof;

(e) Any employee, consultant or agent of the Seller will be compensated from the Seller’s funds for services provided to the Seller. The Seller will not engage any agents other than its attorneys, auditors and other professionals, and a servicer and any other agent contemplated by the Transaction Documents for the Receivables Pool, which servicer will be fully compensated for its services by payment of the Servicing Fee, and a manager, which manager will be fully compensated from the Seller’s funds;

(f) The Seller will contract with the Servicer to perform for the Seller all operations required on a daily basis to service the Receivables Pool. The Seller will pay the Servicer the Servicing Fee pursuant hereto. The Seller will not incur any material indirect or overhead expenses for items shared with CONSOL Energy (or any other Affiliate thereof) that are not reflected in the Servicing Fee. To the extent, if any, that the Seller (or any Affiliate thereof) shares items of expenses not reflected in the Servicing Fee or the manager’s fee, such as legal, auditing and other professional services, such expenses will be allocated to the extent practical on the basis of actual use or the value of services rendered, and otherwise on a basis reasonably related to the actual use or the value of services rendered; it being understood that CONSOL Energy shall pay all expenses relating to the preparation, negotiation, execution and delivery of the Transaction Documents, including legal, agency and other fees;

IV-10

(g) The Seller’s operating expenses will not be paid by CONSOL Energy or any other Affiliate thereof;

(h) All of the Seller’s business correspondence and other communications shall be conducted in the Seller’s own name and on its own separate stationery;

(i) The Seller’s books and records will be maintained separately from those of CONSOL Energy and any other Affiliate thereof;

(j) All financial statements of CONSOL Energy or any Affiliate thereof that are consolidated to include Seller will contain detailed notes clearly stating that: (i) a special purpose corporation exists as a Subsidiary of CONSOL Energy, and (ii) the Originators have sold receivables and other related assets to such special purpose Subsidiary that, in turn, has sold undivided interests therein to certain financial institutions and other entities;

(k) The Seller’s assets will be maintained in a manner that facilitates their identification and segregation from those of CONSOL Energy or any Affiliate thereof;

(l) The Seller will strictly observe organizational formalities in its dealings with CONSOL Energy or any Affiliate thereof, and funds or other assets of the Seller will not be commingled with those of CONSOL Energy or any Affiliate thereof except as permitted by the Agreement in connection with servicing the Pool Receivables. The Seller shall not maintain joint bank accounts or other depository accounts to which CONSOL Energy or any Affiliate thereof has independent access. The Seller is not named, and has not entered into any agreement to be named, directly or indirectly, as a direct or contingent beneficiary or loss payee on any insurance policy with respect to any loss relating to the property of CONSOL Energy or any Subsidiary or other Affiliate of CONSOL Energy. The Seller will pay to the appropriate Affiliate the marginal increase or, in the absence of such increase, the market amount of its portion of the premium payable with respect to any insurance policy that covers the Seller and such Affiliate;

(m) The Seller will maintain arm’s-length relationships with CONSOL Energy (and any Affiliate thereof). Any Person that renders or otherwise furnishes services to the Seller will be compensated by the Seller at market rates for such services it renders or otherwise furnishes to the Seller. Neither the Seller nor CONSOL Energy will be or will hold itself out to be responsible for the debts of the other or the decisions or actions respecting the daily business and affairs of the other. The Seller and CONSOL Energy will immediately correct any known misrepresentation with respect to the foregoing, and they will not operate or purport to operate as an integrated single economic unit with respect to each other or in their dealing with any other entity;

(n) CONSOL Energy shall not pay the salaries of Seller’s employees, if any;

(o) The Seller does not and will not hold itself responsible for the obligations of any other Person, and shall not guarantee or become liable for the debts of any other Person;

(p) The Seller will conduct its business in its own name and shall hold itself out as a separate entity from any other Person;

IV-11

(q) The Seller shall maintain a sufficient number of employees and adequate capital in light of its contemplated business activities;

(r) The Seller shall not acquire the obligations or securities of any of its shareholders; and

(s) The Seller shall not pledge its assets for the benefit of any other Person or make any loans or advances to any other Person, except pursuant to the Transaction Documents.

4. Additional Covenants . The Seller hereby covenants and agrees that it shall cause to be delivered to the Administrator on or before May 9, 2007, in form and substance reasonably satisfactory to the Administrator, each of the following:

(a) Completed UCC search reports, dated on or shortly before May 9, 2007, listing the financing statements filed in all applicable local jurisdictions that name the Originators or the Seller as debtor, as the Administrator may request, showing no Adverse Claims on any Pool Assets.

(b) Favorable opinions, covering the UCC search reports identified in Section 4(a) of this Exhibit IV , in form and substance reasonably satisfactory to the Administrator, of Morgan, Lewis & Bockius LLP, counsel for the Seller, CONSOL Energy, the Originators, and the Servicer.

IV-12

EXHIBIT V

TERMINATION EVENTS

Each of the following shall be a “Termination Event”:

(a) (i) the Seller, CONSOL Energy, any Originator or the Servicer (if CONSOL Energy or any of its Affiliates) shall fail to perform or observe any term, covenant or agreement under the Agreement or any other Transaction Document and, except as otherwise provided herein, such failure shall continue for thirty calendar days after knowledge or notice thereof, (ii) the Seller or the Servicer shall fail to make when due any payment or deposit to be made by it under the Agreement and such failure shall continue unremedied for one Business Day or (iii) CONSOL Energy shall resign as Servicer, and no successor Servicer reasonably satisfactory, to the Administrator shall have been appointed;

(b) CONSOL Energy (or any Affiliate thereof) shall fail to transfer to any successor Servicer when required any rights pursuant to the Agreement that CONSOL Energy (or such Affiliate) then has as Servicer;

(c) any representation or warranty made or deemed made by the Seller, CONSOL Energy or Originator (or any of their respective officers) under or in connection with the Agreement or any other Transaction Document, or any information or report delivered by the Seller, CONSOL Energy or Originator or the Servicer pursuant to the Agreement or any other Transaction Document, shall prove to have been incorrect or untrue in any material respect when made or deemed made or delivered and shall remain incorrect or untrue for thirty calendar days after knowledge or notice thereof (if the warranty is of a type that is capable of being cured);

(d) the Seller or the Servicer shall fail to deliver the Information Package pursuant to the Agreement, and such failure shall remain unremedied for two Business Days;

(e) the Agreement or any purchase or reinvestment pursuant to the Agreement shall for any reason: (i) cease to create, or the Purchased Interest shall for any reason cease to be, a valid and enforceable perfected undivided percentage ownership or security interest to the extent of the Purchased Interest in each Pool Receivable, the Related Security and Collections with respect thereto, free and clear of any Adverse Claim, or (ii) cease to create with respect to the Pool Assets, or the interest of the Administrator with respect to such Pool Assets shall cease to be, a valid and enforceable first priority perfected security interest, free and clear of any Adverse Claim;

(f) the Seller, CONSOL Energy, or any Originator shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Seller, CONSOL Energy, or any Originator seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted

V-1

by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Seller, CONSOL Energy, or any Originator shall take any corporate or organizational action to authorize any of the actions set forth above in this paragraph;

(g) (i) the (A) Default Ratio shall exceed 5.0% or (B) the Delinquency Ratio shall exceed 6.0% or (ii) the average for three consecutive calendar months of: (A) the Default Ratio shall exceed 3.0%, (B) the Delinquency Ratio shall exceed 5.0% or (C) the Dilution Ratio shall exceed 3.0%;

(h) at any time the Days’ Sales Outstanding shall exceed 45 days;

(i) a Change in Control shall occur;

(j) at any time (i) the sum of (A) the Capital, plus the LC Participation Amount, plus (B) the Total Reserves, exceeds (ii) the sum of (A) the Net Receivables Pool Balance at such time plus (B) the Purchasers’ Share of the amount of Collections then on deposit in the Lock-Box Accounts (other than amounts set aside therein representing Discount and fees), and such circumstance shall not have been cured within five Business Days after knowledge thereof by the Seller, CONSOL Energy, the Servicer or any Originator; provided that each month upon the due date for the Information Package, such parties shall be deemed to have knowledge thereof (regardless of whether or not such parties had such knowledge or whether or not the Information Package due to be delivered on such date was delivered to the Administrator);

(k) (i) CONSOL Energy or any Originator shall fail to pay any principal of or premium or interest on any of its Debt that is outstanding in a principal amount of at least $25,000,000 in the aggregate when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement, mortgage, indenture or instrument relating to such Debt (and shall have not been waived); or (ii) any other event shall occur or condition shall exist under any agreement, mortgage, indenture or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement, mortgage, indenture or instrument (and shall have not been waived), if, in either case: (a) the effect of such non-payment, event or condition is to give the applicable debtholders the right (whether acted upon or not) to accelerate the maturity of such Debt, or (b) any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to repay, redeem, purchase or defease such Debt shall be required to be made, in each case before the stated maturity thereof; or

(l) either: (i) a contribution failure shall occur with respect to any Benefit Plan sufficient to give rise to a lien under Section 302(f) of ERISA and such failure is not cured and any related lien released within 30 days, (ii) the Internal Revenue Service shall file a notice of lien asserting a claim or claims pursuant to the Internal Revenue Code with regard to any of the assets of (a) the Seller or (b) any Originator, CONSOL Energy or any ERISA Affiliate (other

V-2

than the Seller) in an amount in excess of $250,000 and such lien shall have been filed and not released within 30 days, or (iii) the Pension Benefit Guaranty Corporation shall, or shall indicate its intention in writing to the Seller, any Originator, CONSOL Energy or any ERISA Affiliate to, either file a notice of lien asserting a claim pursuant to ERISA with regard to any assets of the Seller, any Originator, CONSOL Energy, or any ERISA Affiliate or terminate any Benefit Plan that has unfunded benefit liabilities, or any steps shall have been taken to terminate any Benefit Plan subject to Title IV of ERISA so as to result in any material liability and such lien shall have been filed and not released within 30 days.

V-3

SCHEDULE I

CREDIT AND COLLECTION POLICY

Schedule I-1

SCHEDULE II

LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS


Lock-Box Bank	Lock-Box	Account	P.O. Box
PNC Bank	643391	1017285895	P.O.Box 643391 Pittsburgh, PA 15264-3391

	532786	1017285895	P.O.Box 532786 Atlanta, GA 30353-2786

Schedule II-1

SCHEDULE III

TRADE NAMES

Organizational Name Trade Names / Fictitious Names

CONSOL Energy Inc.

Consol Energy Sales Company

CONSOL of Kentucky Inc.

Consol Pennsylvania Coal Company

Consolidation Coal Company

Island Creek Coal Company

Windsor Coal Company

McELROY COAL COMPANY

Keystone Coal Mining Corporation

Eighty-Four Mining Company

CNX Marine Terminals Inc. f/a/k/a Consolidation Coal Sales Company

Schedule III-1

SCHEDULE IV

OFFICE LOCATIONS

The Principal Place of Business, Chief Executive Office and State of Formation of the Seller is:

CNX Funding Corporation

300 Delaware Avenue

Suite 567

Wilmington, DE 19801

Delaware Corporation

The Seller maintains its master books and records relating to Receivables at:

CNX Funding Corporation

300 Delaware Avenue

Suite 567

Wilmington, DE 19801

The Principal Place of Business, Chief Executive Office and State of Formation of the Servicer:

1800 Washington Road

Pittsburgh, PA 15241

Delaware Corporation

The Servicer maintains its master books and records relating to the Receivables at:

1800 Washington Road

Pittsburgh, PA 15241

Schedule IV-1

ANNEX A

FORM OF INFORMATION PACKAGE

Annex A-1

ANNEX B

FORM OF PURCHASE NOTICE

, [200 ]

PNC Bank, National Association, as Administrator and a Purchaser Agent

One PNC Plaza, 26 ^th Floor

249 Fifth Avenue

Pittsburgh, PA 15222-2707

The Bank of Nova Scotia, as a Purchaser Agent

One Liberty Plaza

New York, NY 10006

Ladies and Gentlemen:

Reference is hereby made to the Amended and Restated Receivables Purchase Agreement, dated as of April 30, 2007 (as heretofore amended, supplemented or otherwise modified, the “ Receivables Purchase Agreement ”), among CNX Funding Corporation, as Seller, CONSOL Energy Inc., as Servicer, CONSOL Energy Sales Company, CONSOL of Kentucky Inc., CONSOL Pennsylvania Coal Company, Consolidation Coal Company, Island Creek Coal Company, Windsor Coal Company, McElroy Coal Company, Keystone Coal Mining Corporation, Eighty-Four Mining Company and CNX Marine Terminals, as the Sub-Servicers, the Conduit Purchasers party thereto, the Purchaser Agents party thereto, PNC Bank, National Association, as Administrator and as LC Bank and the LC Participants from time to time party thereto. Capitalized terms used in this Purchase Notice and not otherwise defined herein shall have the meanings assigned thereto in the Receivables Purchase Agreement.

This letter constitutes a Purchase Notice pursuant to Section 1.2(a) of the Receivables Purchase Agreement. Seller desires to sell an undivided variable interest in a pool of receivables on , [200_], for a purchase price of $ ($ of which represents the Capital funded by the Purchaser Group for which Market Street is a member and $ of which represents the Capital funded by the Purchaser Group for which Liberty Street is a member). Subsequent to this purchase, the aggregate outstanding Capital will be $ . Each Purchaser Group’s Share of such purchase and resulting aggregate Capital and LC Participation Amount is set forth on a schedule attached hereto.

Seller hereby represents and warrants as of the date hereof, and as of the date of purchase, as follows:

(i) the representations and warranties contained in Exhibit III of the Receivables Purchase Agreement are correct on and as of such dates as though made on and as of such dates and shall be deemed to have been made on such dates;

Annex B-1

(ii) no Termination Event or Unmatured Termination Event has occurred and is continuing, or would result from such purchase;

(iii) after giving effect to the purchase proposed hereby, the Purchased Interest will not exceed 100% and the Capital plus the LC Participation Amount will not exceed the Purchase Limit; and

(iv) the Facility Termination Date shall not have occurred.

Annex B-2

IN WITNESS WHEREOF, the undersigned has caused this Purchase Notice to be executed by its duly authorized officer as of the date first above written.


CNX FUNDING CORPORATION

By:
Name:
Title:

Annex B-3

ANNEX C

FORM OF PAYDOWN NOTICE

PNC Bank, National Association, as Administrator and a Purchaser Agent

One PNC Plaza, 26 ^th Floor

249 Fifth Avenue

Pittsburgh, PA 15222-2707

The Bank of Nova Scotia, as a Purchaser Agent

One Liberty Plaza

New York, NY 10006

Ladies and Gentlemen:

Reference is hereby made to the Amended and Restated Receivables Purchase Agreement, dated as of April 30, 2007 (as heretofore amended, supplemented or otherwise modified, the “ Receivables Purchase Agreement ”), among CNX Funding Corporation, as Seller, CONSOL Energy Inc., as Servicer, CONSOL Energy Sales Company, CONSOL of Kentucky Inc., CONSOL Pennsylvania Coal Company, Consolidation Coal Company, Island Creek Coal Company, Windsor Coal Company, McElroy Coal Company, Keystone Coal Mining Corporation, Eighty-Four Mining Company and CNX Marine Terminals, as the Sub-Servicers, the Conduit Purchasers party thereto, the Purchaser Agents party thereto, PNC Bank, National Association, as Administrator and as the LC Bank and the LC Participants from time to time party thereto. Capitalized terms used in this paydown notice and not otherwise defined herein shall have the meanings assigned thereto in the Receivables Purchase Agreement.

This letter constitutes a paydown notice pursuant to Section 1.4(f)(i) of the Receivables Purchase Agreement. The Seller desires to reduce the Capital on , ¹ by the application of $ ($ of which shall be applied to the Capital funded by the Purchaser Group for which Market Street is a member and $ of which shall be applied to the Capital funded by the Purchaser Group for which Liberty Street is a member) in cash to pay Capital and Discount to accrue (until such cash can be used to pay commercial paper notes) with respect to such Capital, together with all costs related to such reduction of Capital. Subsequent to this paydown, the aggregate Capital will be $ . Each Purchaser Group’s Share of such reduction and resulting aggregate Capital is set forth on a schedule attached hereto.

¹	Notice must be given at least two (2) Business Days’ prior to the requested paydown date.

Annex C-1

IN WITNESS WHEREOF, the undersigned has caused this paydown notice to be executed by its duly authorized officer as of the date first above written


CNX FUNDING CORPORATION

By:
Name:
Title:

Annex C-2

ANNEX D

to Receivables Purchase Agreement

FORM OF COMPLIANCE CERTIFICATE

To: PNC Bank, National Association, as Administrator

This Compliance Certificate is furnished pursuant to that certain Amended and Restated Receivables Purchase Agreement, dated as of April 30, 2007 among CNX Funding Corporation, as Seller (the “ Seller ”), CONSOL Energy Inc., as Servicer (the “ Servicer ”), Consol Energy Sales Company, CONSOL of Kentucky Inc., Consol Pennsylvania Coal Company, Consolidation Coal Company, Island Creek Coal Company, Windsor Coal Company, McELROY COAL COMPANY, Keystone Coal Mining Corporation, Eighty-Four Mining Company, and CNX Marine Terminals Inc., as the Sub-Servicers, the Conduit Purchasers party thereto, the Purchaser Agents party thereto, and PNC Bank, National Association (the “ Administrator ”) and as the LC Bank and the various LC Participants from time to time party thereto (as amended, supplemented or otherwise modified (the “ Agreement ”). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

1. I am the duly elected of the Servicer.

2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and condition of Seller during the accounting period covered by the attached financial statements.

3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Termination Event or an Unmatured Termination Event, as each such term is defined under the Agreement, during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth in paragraph 5 below.

4. Schedule I attached hereto sets forth (i) financial data and computations evidencing the compliance with certain covenants of the Agreement (and the Amended and Restated Credit Agreement), all of which data and computations are true, complete and correct, and (ii) notice to the Administrator that the financial statements of CONSOL Energy and its Subsidiaries for the period referenced on Schedule I hereto are available on the SEC’s website.

5. Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which Seller has taken, is taking, or proposes to take with respect to each such condition or event:

Annex D-1

The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this day of , 20 .


CNX FUNDING CORPORATION

By:
Name:
Title:

Annex D-2

SCHEDULE I TO COMPLIANCE CERTIFICATE

A. Schedule of Compliance as of , 20 with Section(s) of the Agreement. Unless otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement.

This schedule relates to the month ended: .

B. The financial statements of CONSOL Energy and its Subsidiaries for the period ending on , 200 , are available on the SEC’s website.

C. The Leverage Ratio (as such term is defined in the Amended and Restated Credit Agreement) for the period ending on . 200 is .

ANNEX E

FORM OF LETTER OF CREDIT APPLICATION

, [200 ]

PNC Bank, National Association, as Administrator and a Purchaser Agent

One PNC Plaza, 26 ^th Floor

249 Fifth Avenue

Pittsburgh, PA 15222-2707

The Bank of Nova Scotia, as a Purchaser Agent

One Liberty Plaza

New York, NY 10006

Ladies and Gentlemen:

This letter constitutes a notice pursuant to Section 1.12(a) of the Receivables Purchase Agreement. Seller desires that LC Bank issue a Letter of Credit on , [20 ], with a face amount of $ . Subsequent to this purchase, the LC Participation Amount will be $ and the aggregate outstanding Capital will be $ . Each Purchaser Group’s Share of such purchase and resulting aggregate Capital and LC Participation Amount is set forth on a schedule attached hereto.

Seller hereby represents and warrants as of the date hereof, and as of the date of purchase, as follows:

(ii) no Termination Event or Unmatured Termination Event has occurred and is continuing, or would result from such purchase;

Annex E-1

(iii) after giving effect to the purchase proposed hereby, the Purchased Interest will not exceed 100% and the Capital plus the LC Participation Amount will not exceed the Purchase Limit; and

(iv) the Facility Termination Date shall not have occurred.

S-2

IN WITNESS WHEREOF, the undersigned has caused this Purchase Notice to be executed by its duly authorized officer as of the date first above written.


CNX FUNDING CORPORATION

By:
Name:
Title:

S-3

Exhibit 10.34

EXECUTION COPY

[CONSOL]

FIRST AMENDMENT TO AMENDED AND RESTATED

RECEIVABLES PURCHASE AGREEMENT

THIS FIRST AMENDMENT TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (this “ Amendment ”), dated as of May 9, 2007, is entered into among CNX FUNDING CORPORATION, (the “ Seller ”), CONSOL ENERGY INC. (“ CONSOL Energy ”), as the initial Servicer (in such capacity, the “ Servicer ”), the Conduit Purchasers listed on the signature pages hereto, the Purchaser Agents listed on the signature pages hereto, the LC Participants listed on the signature pages hereto and PNC BANK, NATIONAL ASSOCIATION, as Administrator (in such capacity, the “ Administrator ”) and as LC Bank (in such capacity, the “ LC Bank ”).

RECITALS

1. Reference is made to that certain Amended and Restated Receivables Purchase Agreement, dated as of April 30, 2007 (the “ Agreement ”) by and among the parties hereto and the various Sub-Servicers from time to time party thereto; and

2. The parties hereto desire to amend the Agreement as hereinafter set forth.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

SECTION 1. Certain Defined Terms . Capitalized terms that are used but not defined herein shall have the meanings set forth in the Agreement.

SECTION 2. Amendment to the Agreement . Section 4 of Exhibit IV to the Agreement is hereby amended by deleting each reference to the date “May 9, 2007” set forth therein and substituting the date “August 1, 2007” therefor.

SECTION 3. Representations and Warranties . Each of the Seller, CONSOL Energy and the Servicer hereby represents and warrants to the Administrator, the Purchaser Agents and the Purchasers as follows:

(a) Representations and Warranties . The representations and warranties made by it in the Transaction Documents are true and correct as of the date hereof (unless stated to relate solely to an earlier date, in which case such representations or warranties were true and correct as of such earlier date).

(b) Enforceability . The execution and delivery by such Person of this Amendment, and the performance of each of its obligations under this Amendment and the Agreement, as amended hereby, are within each of its corporate powers and have been duly authorized by all necessary corporate action on its part. This Amendment and the Agreement, as amended hereby, are such Person’s valid and legally binding obligations, enforceable in accordance with its terms.

(c) No Default . Both before and immediately after giving effect to this Amendment and the transactions contemplated hereby, no Termination Event or Unmatured Termination Event exists or shall exist.

SECTION 4. Effect of Amendment . All provisions of the Agreement, as expressly amended and modified by this Amendment, shall remain in full force and effect. After this Amendment becomes effective, all references in the Agreement (or in any other Transaction Document) to “this Agreement”, “hereof”, “herein” or words of similar effect referring to the Agreement shall be deemed to be references to the Agreement as amended by this Amendment. This Amendment shall not be deemed, either expressly or impliedly, to waive, amend or supplement any provision of the Agreement other than as set forth herein.

SECTION 5. Effectiveness . This Amendment shall become effective as of the date hereof upon receipt by the Administrator of:

(a) counterparts of this Amendment (whether by facsimile or otherwise) executed by each of the other parties hereto; and

(b) such other documents and instruments as the Administrator may reasonably request.

SECTION 6. Counterparts . This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument.

SECTION 7. Governing Law . This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York.

SECTION 8. Section Headings . The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Agreement or any provision hereof or thereof.

[S IGNATURES BEGIN ON NEXT PAGE ]

- 2 -

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.


SELLER:	CNX FUNDING CORPORATION

	By:
		Name:
		Title:

		Address:	300 Delaware Avenue Suite 567 Wilmington, DE 19801
		Attention:	Treasurer
		Telephone:
		Facsimile:

INITIAL SERVICER:	CONSOL ENERGY INC.

	By:
		Name:
		Title:

		Address:	CONSOL Plaza 1800 Washington Road Pittsburgh, PA 15241
		Attention:	Treasurer
		Telephone:	412-831-4128
		Facsimile:	412-831-4151


		S-1		First Amendment to A&R RPA (CONSOL)


MARKET STREET FUNDING LLC, as a Conduit Purchaser

By:
Name:
Title:

PNC BANK, NATIONAL ASSOCIATION, as Administrator and as Purchaser Agent for Market Street

By:
Name:
Title:

PNC BANK, NATIONAL ASSOCIATION, as the LC Bank and as an LC Participant

By:
Name:
Title:


		S-2		First Amendment to A&R RPA (CONSOL)


LIBERTY STREET FUNDING LLC, as a Conduit Purchaser

By:
Name:
Title:

THE BANK OF NOVA SCOTIA, as Purchaser Agent for Liberty Street

By:
Name:
Title:

THE BANK OF NOVA SCOTIA, as an LC Participant

By:
Name:
Title:


		S-3		First Amendment to A&R RPA (CONSOL)

Exhibit 10.35

EXECUTION COPY

[CONSOL]

SECOND AMENDMENT TO AMENDED AND RESTATED

RECEIVABLES PURCHASE AGREEMENT

THIS SECOND AMENDMENT TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (this “ Amendment ”), dated as of July 27, 2007, is entered into among CNX FUNDING CORPORATION, (the “ Seller ”), CONSOL ENERGY INC. (“ CONSOL Energy ”), as the initial Servicer (in such capacity, the “ Servicer ”), the Conduit Purchasers listed on the signature pages hereto, the Purchaser Agents listed on the signature pages hereto, the LC Participants listed on the signature pages hereto and PNC BANK, NATIONAL ASSOCIATION, as Administrator (in such capacity, the “ Administrator ”) and as LC Bank (in such capacity, the “ LC Bank ”).

RECITALS

2. The parties hereto desire to amend the Agreement as hereinafter set forth.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

SECTION 1. Certain Defined Terms . Capitalized terms that are used but not defined herein shall have the meanings set forth in the Agreement.

SECTION 2. Amendment to the Agreement . Section 4 of Exhibit IV to the Agreement is hereby amended by deleting each reference to the date “August 1, 2007” set forth therein and substituting the date “September 3, 2007” therefor.

(c) No Default . Both before and immediately after giving effect to this Amendment and the transactions contemplated hereby, no Termination Event or Unmatured Termination Event exists or shall exist.

SECTION 5. Effectiveness . This Amendment shall become effective as of the date hereof upon receipt by the Administrator of:

(a) counterparts of this Amendment (whether by facsimile or otherwise) executed by each of the other parties hereto; and

(b) such other documents and instruments as the Administrator may reasonably request.

SECTION 7. Governing Law . This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York.

[S IGNATURES BEGIN ON NEXT PAGE ]

- 2 -

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.


SELLER:	CNX FUNDING CORPORATION

	By:
		Name:
		Title:

		Address:	300 Delaware Avenue Suite 567 Wilmington, DE 19801
		Attention:	Treasurer
		Telephone:
		Facsimile:

INITIAL SERVICER:	CONSOL ENERGY INC.

	By:
		Name:
		Title:

		Address:	CONSOL Plaza 1800 Washington Road Pittsburgh, PA 15241
		Attention:	Treasurer
		Telephone:	412-831-4128
		Facsimile:	412-831-4151


		S-1		Second Amendment to A&R RPA (CONSOL)


MARKET STREET FUNDING LLC, as a Conduit Purchaser

By:
Name:
Title:

PNC BANK, NATIONAL ASSOCIATION, as Administrator and as Purchaser Agent for Market Street

By:
Name:
Title:

PNC BANK, NATIONAL ASSOCIATION, as the LC Bank and as an LC Participant

By:
Name:
Title:


		S-2		Second Amendment to A&R RPA (CONSOL)


LIBERTY STREET FUNDING LLC, as a Conduit Purchaser

By:
Name:
Title:

THE BANK OF NOVA SCOTIA, as Purchaser Agent for Liberty Street

By:
Name:
Title:

THE BANK OF NOVA SCOTIA, as an LC Participant

By:
Name:
Title:


		S-3		Second Amendment to A&R RPA (CONSOL)

Exhibit 10.36

EXECUTION COPY

[CONSOL]

THIRD AMENDMENT TO AMENDED AND RESTATED

RECEIVABLES PURCHASE AGREEMENT

THIS THIRD AMENDMENT TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (this “ Amendment ”), dated as of November 16, 2007, is entered into among CNX FUNDING CORPORATION, (the “ Seller ”), CONSOL ENERGY INC. (“ CONSOL Energy ”), as the initial Servicer (in such capacity, the “ Servicer ”), the various new sub-servicers listed on the signature pages hereto (the “ New Sub-Servicers ”), the Conduit Purchasers listed on the signature pages hereto, the Purchaser Agents listed on the signature pages hereto, the LC Participants listed on the signature pages hereto and PNC BANK, NATIONAL ASSOCIATION, as Administrator (in such capacity, the “ Administrator ”) and as LC Bank (in such capacity, the “ LC Bank ”).

RECITALS

1. Reference is made to that certain Amended and Restated Receivables Purchase Agreement, dated as of April 30, 2007 (as amended, restated, supplemented or otherwise modified, the “ Agreement ”) by and among the Seller, the Servicer, the various Sub-Servicers, Conduit Purchasers, Purchaser Agents and LC Participants party thereto, the Administrator and the LC Bank; and

2. The parties hereto desire to amend the Agreement as hereinafter set forth.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

SECTION 1. Certain Defined Terms . Capitalized terms that are used but not defined herein shall have the meanings set forth in the Agreement.

SECTION 2. Amendments to the Agreement .

2.1 The preamble to the Agreement is hereby amended and restated in its entirety as follows:

INSTITUTIONS FROM TIME TO TIME PARTIES HERETO AS LC PARTICIPANTS (each together with their successors and permitted assigns in such capacity, an “ LC Participant ”), and PNC BANK, NATIONAL ASSOCIATION, a national banking association (“ PNC ”), as Purchaser Agent for Market Street, and as administrator for the Conduit Purchasers (in such capacity, together with its successors and assigns in such capacity, the “ Administrator ”) and as issuer of Letters of Credit (in such capacity, together with its successors and assigns in such capacity, the “ LC Bank ”) and each of the other members of each Purchaser Group party hereto or that become parties hereto by executing an Assumption Agreement or a Transfer Supplement.

2.2 Clause (i) of Section 4.1(d) of the Agreement is hereby amended and restated in its entirety as follows:

(i) each such Sub-Servicer by its signature hereto or in any applicable Joinder Agreement hereby agrees in writing to perform the duties and obligations of the Servicer pursuant to the terms hereof,

2.3 The following new Section 6.1A is hereby inserted after Section 6.1 of the Agreement:

Section 6.1A Amendment or Termination of UCC Financing Statements .

Notwithstanding any other provision set forth herein or in any other Transaction Document, in connection with the sale of any real property with respect to which any UCC Financing Statement has been filed pursuant hereto or pursuant to the Sale Agreement in favor of the Seller and assigned to the Administrator or in favor of the Administrator (each such UCC Financing Statement, a “ Filed Financing Statement ”), so long as no Termination Event has occurred and is continuing, Seller or Servicer may, without the consent of the Administrator, the Purchasers or the Purchaser Agents, either (i) if such sale is of real property to which a Receivable relates or is of real property to which no Receivable relates but a Receivable has related thereto during the prior three calendar months, amend any such Filed Financing Statement related to such real property to exclude receivables, and the goods and other property related thereto, arising from such real property from and after the date of sale of such real property to a party who is not the Seller or an Originator and owed to parties other than Seller or any Originator or (ii) if such sale is of real property to which no Receivable relates during the prior three calendar months, terminate such financing statement effective upon the sale of such real property to a party who is not the Seller or an Originator. Servicer shall give the Administrator (x) at least five days prior written notice of any such amendment or termination and (y) file-stamped copies of any such amendment or termination as soon as practicable after the filing thereof.

- 2 -

2.4 Exhibit I to the Agreement is hereby amended by inserting in the appropriate alphabetical order the following new definitions:

“ Joinder Agreement ” has the meaning set forth in Section 11.1 of the Sale Agreement.

“ MINER Receivable ” means a Receivable that arises out of a contractual obligation to reimburse an Originator’s estimated cost incurred in connection with the Mine Improvement and New Emergency Response Act of 2006 (MINER Act) or any related or similar legislation or regulation.

2.5 The definition of “Default Ratio” set forth in Exhibit I to the Agreement is hereby amended and restated in its entirety as follows:

2.6 The definition of “Delinquency Ratio” set forth in Exhibit I to the Agreement is hereby amended and restated in its entirety as follows:

“Delinquency Ratio” means the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each calendar month by dividing: (a) the aggregate Outstanding Balance of all Pool Receivables that were Delinquent Receivables on such day by (b) the aggregate Outstanding Balance of all Pool Receivables on such day (it being understood and agreed that, beginning with the calendar month ending on June 30, 2007, no MINER Receivables shall be included in the calculation of the “Delinquency Ratio”).

2.7 The definition of “Eligible Receivables” set forth in Exhibit I to the Agreement is hereby amended by (a) deleting the period at the end of clause (u) and substituting in its place the text “, and” and (b) inserting the following new clause (v) as follows:

(v) that is not a MINER Receivable.

2.8 The definition of “Purchase Limit” set forth in Exhibit I to the Agreement is hereby amended by deleting the amount “$150,000,000” therein and substituting the amount “$165,000,000” therefor.

2.9 The Commitments and Pro Rata Shares of the Conduit Purchasers and LC Participants are hereby amended to be the amounts set forth beneath such party’s name on the signature pages hereto.

- 3 -

2.10 Clause (f) of Section 1 of Exhibit III to the Agreement is hereby amended and restated in its entirety as follows:

(f) [Reserved].

2.11 Clause (g) of Section 2 of Exhibit III to the Agreement is hereby amended by deleting the first sentence thereof.

2.12 Schedule I to the Agreement is hereby amended and restated in its entirety as Schedule I attached hereto.

2.13 Schedule III to the Agreement is hereby amended and restated in its entirety as Schedule III attached hereto.

2.14 The first paragraph of Annex B to the Agreement is hereby amended and restated in its entirety as follows:

Reference is hereby made to the Amended and Restated Receivables Purchase Agreement, dated as of April 30, 2007 (as heretofore amended, supplemented or otherwise modified, the “ Receivables Purchase Agreement ”), among CNX Funding Corporation, as Seller, CONSOL Energy Inc., as Servicer, the Originators from time to time parties thereto as Sub-Servicers, the Conduit Purchasers from time to time parties thereto, the Purchaser Agents from time to time parties thereto, the LC Participants from time to time parties thereto and PNC Bank, National Association, as Administrator and as LC Bank. Capitalized terms used in this Purchase Notice and not otherwise defined herein shall have the meanings assigned thereto in the Receivables Purchase Agreement.

2.15 The first paragraph of Annex C to the Agreement is hereby amended and restated in its entirety as follows:

Reference is hereby made to the Amended and Restated Receivables Purchase Agreement, dated as of April 30, 2007 (as heretofore amended, supplemented or otherwise modified, the “ Receivables Purchase Agreement ”), among CNX Funding Corporation, as Seller, CONSOL Energy Inc., as Servicer, the Originators from time to time parties thereto as Sub-Servicers, the Conduit Purchasers from time to time parties thereto, the Purchaser Agents from time to time parties thereto, the LC Participants from time to time parties thereto and PNC Bank, National Association, as Administrator and as LC Bank. Capitalized terms used in this Paydown Notice and not otherwise defined herein shall have the meanings assigned thereto in the Receivables Purchase Agreement.

2.16 The first paragraph of Annex D to the Agreement is hereby amended and restated in its entirety as follows:

This Compliance Certificate is furnished pursuant to that certain Amended and Restated Receivables Purchase Agreement, dated as of April 30, 2007 among CNX Funding Corporation, as Seller (the “ Seller ”), CONSOL Energy Inc., as Servicer (the “ Servicer ”), the Originators from time to time parties thereto as Sub-Servicers, the Conduit Purchasers from time to time parties thereto, the Purchaser Agents from time to time parties thereto, the various LC Participants from time to

- 4 -

time parties thereto and PNC Bank, National Association, as the Administrator (the “ Administrator ”) and as the LC Bank (as amended, restated, supplemented or otherwise modified, the “ Agreement ”). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Agreement.

2.17 The first paragraph of Annex E to the Agreement is hereby amended and restated in its entirety as follows:

Reference is hereby made to the Amended and Restated Receivables Purchase Agreement, dated as of April 30, 2007 (as heretofore amended, supplemented or otherwise modified, the “ Receivables Purchase Agreement ”), among CNX Funding Corporation, as Seller, CONSOL Energy Inc., as Servicer, the Originators from time to time parties thereto as Sub-Servicers, the Conduit Purchasers from time to time parties thereto, the Purchaser Agents from time to time parties thereto, the LC Participants from time to time parties thereto and PNC Bank, National Association, as Administrator and as LC Bank. Capitalized terms used in this Letter of Credit Application and not otherwise defined herein shall have the meanings assigned thereto in the Receivables Purchase Agreement.

SECTION 3. Joinder and Release of Sub-Servicers . Effective upon the Effective Date:

3.1 The Servicer hereby delegates its duties and obligations under the Agreement to each of the New Sub-Servicers, in their capacities as Originators, on the terms and subject to the conditions of the Agreement, including but not limited to Section 4.1(d) of the Agreement;

3.2 Each New Sub-Servicer shall become a party to the Agreement and hereby agrees to be bound as a Sub-Servicer by the terms, conditions and provisions of the Agreement and each of the other relevant Transaction Documents (each, as amended hereby) and shall have all the rights and obligations of a Sub-Servicer thereunder (and under any other Transaction Document);

3.3 Each New Sub-Servicer hereby agrees in writing to perform the duties and obligations of the Servicer pursuant to the terms hereof and of the Agreement;

3.4 All references to (i) each “Sub-Servicer” and (ii) the “Sub-Servicers” in the Agreement and each other relevant Transaction Document shall be deemed to include each New Sub-Servicer;

3.5 With respect to the New Sub-Servicers, any reference in the Agreement and each other relevant Transaction Document to the “Closing Date”, the “date hereof”, the “effective date” or any similar term shall be deemed to be a reference to the date hereof;

3.6 Each New Sub-Servicer hereby acknowledges that it has received copies of the Agreement and the other Transaction Documents; and

3.7 Each of the undersigned parties hereby consents to the release of Windsor Coal Company as a Sub-Servicer.

- 5 -

SECTION 4. Representations and Warranties . Each of the Seller, CONSOL Energy, the Servicer and the New Sub-Servicers hereby represents and warrants to the Administrator, the Purchaser Agents and the Purchasers as follows:

(c) No Default . Both before and immediately after giving effect to this Amendment and the transactions contemplated hereby, no Termination Event or Unmatured Termination Event exists or shall exist.

SECTION 5. Effect of Amendment . All provisions of the Agreement, as expressly amended and modified by this Amendment, shall remain in full force and effect. After this Amendment becomes effective, all references in the Agreement (or in any other Transaction Document) to “this Agreement”, “hereof”, “herein” or words of similar effect referring to the Agreement shall be deemed to be references to the Agreement as amended by this Amendment. This Amendment shall not be deemed, either expressly or impliedly, to waive, amend or supplement any provision of the Agreement other than as set forth herein.

SECTION 6. Effectiveness . This Amendment shall become effective as of the date hereof (the “ Effective Date ”) upon receipt by the Administrator of:

(a) counterparts (whether by facsimile or otherwise) of this Amendment duly completed, executed and delivered by each of the other parties hereto;

(b) counterparts (whether by facsimile or otherwise) of that certain Second Amendment to Purchase and Sale Agreement, dated as of the date hereof, duly completed, executed and delivered by each of the parties thereto, and evidence of satisfaction of each of the conditions to effectiveness referred to therein;

(c) counterparts (whether by facsimile or otherwise) of (i) that certain Fee Letter, dated as of the date hereof, by and among the Seller, the Servicer, the Administrator and Market Street Funding LLC and receipt of the “Amendment Fee” referred to therein and (ii) that certain Fee Letter, dated as of the date hereof, by and among the Seller, the Servicer, The Bank of Nova Scotia and Liberty Street Funding LLC, in each case, duly completed, executed and delivered by each of the parties thereto; and

(d) such other documents and instruments as the Administrator may reasonably request.

- 6 -

SECTION 7. Counterparts . This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument.

SECTION 8. Governing Law . This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York.

SECTION 9. Section Headings . The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Agreement or any provision hereof or thereof.

[S IGNATURES BEGIN ON NEXT PAGE ]

- 7 -

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.


CNX FUNDING CORPORATION, as Seller

By:
	Name:	Christopher C. Jones
	Title:	Treasurer and Assistant Secretary

	Address:	300 Delaware Avenue Suite 567 Wilmington, DE 19801
	Attention:	Treasurer
	Telephone:	(302) 225-5194
	Facsimile:	(302) 225-1594
CONSOL ENERGY INC., as initial Servicer

By:
	Name:	John M. Reilly
	Title:	Vice President and Treasurer

	Address:	CONSOL Plaza 1800 Washington Road Pittsburgh, PA 15241
	Attention:	Treasurer
	Telephone:	(412) 831-4128
	Facsimile:	(412) 831-6030


		S-1		Third Amendment to A&R RPA (CONSOL)


FOLA COAL COMPANY, L.L.C., as a Sub-Servicer

By:
Name:		Kevin C. Perkins
Title:		Treasurer

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(304) 587-4100 ext. 104
Facsimile:		(304) 587-2469

LITTLE EAGLE COAL COMPANY., L.L.C, as a Sub-Servicer

By:
Name:		Gary Patterson
Title:		President

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(304) 587-4100
Facsimile:		(304) 587-2469


		S-2		Third Amendment to A&R RPA (CONSOL)


MON RIVER TOWING, INC., as a Sub-Servicer

By:
Name:		John M. Reilly
Title:		Treasurer

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4128
Facsimile:		(412) 831-6030

TERRY EAGLE COAL COMPANY, L.L.C., as a Sub-Servicer

By:
Name:		John M. Reilly
Title:		Treasurer

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4128
Facsimile:		(412) 831-6030


		S-3		Third Amendment to A&R RPA (CONSOL)


TRI-RIVER FLEETING HARBOR SERVICE, INC., as a Sub-Servicer

By:
Name:		John M. Reilly
Title:		Treasurer

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4128
Facsimile:		(412) 831-6030

TWIN RIVERS TOWING COMPANY, as a Sub-Servicer

By:
Name:		Deniel S. Cangilla
Title:		Treasurer

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4564
Facsimile:		(412) 831-6030


		S-4		Third Amendment to A&R RPA (CONSOL)


CONSOL ENERGY SALES COMPANY, as a Sub-Servicer

By:
Name:		John M. Reilly
Title:		Treasurer

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4128
Facsimile:		(412) 831-6030

CONSOL OF KENTUCKY INC., as a Sub-Servicer

By:
Name:		John M. Reilly
Title:		Treasurer

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4128
Facsimile:		(412) 831-6030

CONSOLIDATION COAL COMPANY, as a Sub-Servicer

By:
Name:		Daniel S. Cangilla
Title:		Treasurer

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4564
Facsimile:		(412) 831-6030


		S-5		Third Amendment to A&R RPA (CONSOL)


ISLAND CREEK COAL COMPANY, as a Sub-Servicer

By:
Name:		Daniel S. Cangilla
Title:		Treasurer

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4564
Facsimile:		(412) 831-6030

MCELROY COAL COMPANY, as a Sub-Servicer

By:
Name:		Daniel S. Cangilla
Title:		Treasurer

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4564
Facsimile:		(412) 831-6030

KEYSTONE COAL MINING CORPORATION, as a Sub-Servicer

By:
Name:		Daniel S. Cangilla
Title:		Treasurer

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4564
Facsimile:		(412) 831-6030


		S-6		Third Amendment to A&R RPA (CONSOL)


EIGHTY-FOUR MINING COMPANY, as a Sub-Servicer

By:
Name:		Daniel S. Cangilla
Title:		Treasurer

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4564
Facsimile:		(412) 831-6030

CNX MARINE TERMINALS INC., as a Sub-Servicer

By:
Name:		John M. Reilly
Title:		Treasurer

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4128
Facsimile:		(412) 831-6030

CONSOL PENNSYLVANIA COAL COMPANY LLC, as a Sub-Servicer

By:
Name:		John M. Reilly
Title:		Treasurer

Address:		1800 Washington Road Pittsburgh, PA 15241
Attention:		Treasurer
Telephone:		(412) 831-4128
Facsimile:		(412) 831-6030


		S-7		Third Amendment to A&R RPA (CONSOL)


MARKET STREET FUNDING LLC, as a Conduit Purchaser

By:
Name:
Title:

Commitment:		$87,500,000

PNC BANK, NATIONAL ASSOCIATION, as Administrator and as Purchaser Agent for Market Street

By:
Name:
Title:

PNC BANK, NATIONAL ASSOCIATION, as the LC Bank and as an LC Participant

By:
Name:
Title:

Commitment:		$87,500,000

Pro Rata Share: 53.03%


		S-8		Third Amendment to A&R RPA (CONSOL)


LIBERTY STREET FUNDING LLC, as a Conduit Purchaser

By:
Name:
Title:

Commitment:		$77,500,000

THE BANK OF NOVA SCOTIA, as Purchaser Agent for Liberty Street

By:
Name:
Title:

THE BANK OF NOVA SCOTIA, as an LC Participant

By:
Name:
Title:

Commitment:		$77,500,000
Pro Rata Share:		46.97%


		S-9		Third Amendment to A&R RPA (CONSOL)

SCHEDULE I

CREDIT AND COLLECTION POLICY


		Sch.I-1		Third Amendment to A&R RPA (CONSOL)

SCHEDULE III

TRADE NAMES


Organizational Name		Trade Names/Fictitious Names

CNX Marine Terminals Inc. f/a/k/a Consolidation Coal Sales Company

CONSOL Energy Inc.

CONSOL Energy Sales Company

CONSOL of Kentucky Inc.

Consol Pennsylvania Coal Company LLC

Consolidation Coal Company

Eighty-Four Mining Company

Fola Coal Company, L.L.C. d/b/a Powellton Coal Company and Powellton Coal Company, L.L.C.

ISLAND CREEK COAL COMPANY

Keystone Coal Mining Corporation

Little Eagle Coal Company, L.L.C.

McELROY COAL COMPANY

Mon River Towing, Inc.

Terry Eagle Coal Company, L.L.C.

Tri-River Fleeting Harbor Service, Inc. a/k/a Tri River Fleeting Harbor SVC, Inc.

TWIN RIVERS TOWING COMPANY


		Sch. III-1		Third Amendment to A&R RPA (CONSOL)

Exhibit 10.38

AMENDED AND RESTATED COLLATERAL

TRUST AGREEMENT

by and among

CONSOL ENERGY INC.

And

Its Designated Subsidiaries

and

WILMINGTON TRUST COMPANY,

as Corporate Trustee

and

DAVID A. VANASKEY,

as Individual Trustee

Dated as of June 27, 2007

AMENDED AND RESTATED COLLATERAL TRUST AGREEMENT

AMENDED AND RESTATED COLLATERAL TRUST AGREEMENT (“Agreement”) dated as of June 27, 2007, by and among CONSOL Energy, Inc., a Delaware corporation (the “Borrower”), the subsidiaries of the Borrower which have joined this Agreement (the “Designated Subsidiaries”, collectively with the Borrower, the “Loan Parties”), Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity but solely as corporate trustee (together with any successor corporate trustee appointed pursuant to Section 5, the “Corporate Trustee”), and David A. Vanaskey, an individual residing in the State of Delaware, not in his individual capacity but solely as individual trustee (together with any successor individual trustee appointed pursuant to Section 5, the “Individual Trustee”; the Corporate Trustee and the Individual Trustee are each a “Collateral Trustee” and together the “Collateral Trustees”), as trustees for the Secured Parties.

WITNESSETH:

WHEREAS, the Loan Parties and the Credit Facility Lenders entered into the Original Credit Facility Agreement;

WHEREAS, pursuant to the Original Credit Facility Agreement, the Loan Parties agreed to secure, subject to the terms and conditions of the Existing Collateral Trust Agreement, the payment of certain secured debt;

WHEREAS, the Loan Parties and the Credit Facility Lenders amended and restated the Original Credit Facility Agreement by entering into the Existing Credit Facility Agreement;

WHEREAS, the Loan Parties and the Credit Facility Lenders have agreed to amend and restate the Existing Credit Facility Agreement by entering into the Credit Facility Agreement;

WHEREAS, to induce the Credit Facility Lenders to enter into the Credit Facility Agreement, the Loan Parties have agreed to continue to secure, subject to the terms and conditions of this Agreement and the Security Documents, the payment of the Secured Debt;

WHEREAS, the effectiveness of the Credit Facility Agreement is conditioned upon this Agreement and the related Security Documents having been duly executed and delivered; and

WHEREAS, the terms of the Public Indenture require, in the circumstances specified therein, that any indebtedness issued thereunder be equally and ratably secured; and

WHEREAS, there currently is outstanding under the Public Indenture an aggregate $250 million principal amount of 7.875% notes due 2012.

DECLARATION OF TRUST

Contemporaneously herewith, to secure the payment, observance and performance of the Secured Debt, the Borrower and the other Loan Parties are granting the Collateral Trust Estate to the Collateral Trustees in accordance with the terms of the Security Documents for the equal and

ratable benefit of the Secured Parties. The Collateral Trustees hereby declare that they, or their permitted designees, in accordance with the terms hereof, hold and shall hold the Collateral Trust Estate in trust for the use and benefit of the Secured Parties subject to the terms and conditions of this Agreement.

SECTION 1 DEFINITION

Section 1.1 Definitions and Other Matters .

(a) As used in this Agreement, including the introductory provisions hereof, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“Actionable Default” means (i) an Event of Default under and as defined by the Credit Facility Agreement or (ii) an event of default under the Public Indenture.

“Affiliate” means “Affiliate” as defined in the Credit Facility Agreement.

“Agents” means the collective reference to the Credit Facility Agent and the Public Trustee.

“Bankruptcy Code” means the federal Bankruptcy Code, as amended from time to time.

“Business Day” shall have the meaning ascribed to it in the Credit Facility Agreement.

“Collateral” shall have the meaning ascribed to it in the Credit Facility Agreement.

“Collateral Account” shall have the meaning ascribed to in Section 3.1(a) hereof.

“Collateral Account Investments” shall mean (i) direct obligations of the United States of America or any agency or instrumentality thereof or obligations backed by the full faith and credit of the United States of America or (ii) investments in shares of institutional mutual funds whose investment policies are limited to such securities, which funds may (but shall not be required to) be funds owned and/or managed by the Wilmington Funds or an Affiliate thereof (“Related Funds”).

“Collateral Trustees” shall have the meaning ascribed to it in the introductory paragraph hereto.

“Collateral Trust Estate” means the right, title, and interest of the Collateral Trustees in the Collateral and all rights of the Collateral Trustees under each of the Security Documents.

“Credit Facility Agent” means the Paying Agent as defined in the Credit Facility Agreement, and any successor thereto.

“ Credit Facility Agreement means the Amended and Restated Credit Agreement, dated as of June 27, 2007, by and among Borrower, each of the Guarantors (as defined therein), PNC Bank, National Association and Citicorp North America, Inc., as co-administrative agents, and the banks or other financial institutions listed on the signature pages thereto, as amended, modified, supplemented, extended or restated or refinanced from time to time.”

“Credit Facility Debt” means, as of any date, the amount of Obligations (as that term is defined in the Credit Facility Agreement) outstanding on such date.

“ Credit Facility Documents” means, as of any date, the Loan Documents and the Specified Swap Agreements (as such terms are defined in the Credit Facility Agreement).

“Credit Facility Lender” means, as of any date, a holder of Credit Facility Debt on such date.

“Default Notice” means a notice from the Credit Facility Agent to the Collateral Trustees of the occurrence of an Event of Default or Potential Default (as such terms are defined in the Credit Facility Agreement) under the Credit Facility Agreement.

“Debt Instruments” means the Credit Facility Documents, the Public Indenture, and the notes, guarantees or other instruments or securities issued pursuant thereto.

“Existing Collateral Trust Agreement” means the Collateral Trust Agreement dated as of June 30, 2004, as amended, by and among CONSOL Energy, Inc., the Borrower, the subsidiaries of the Borrower which have joined such Collateral Trust Agreement, Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity but solely as corporate trustee, and David A. Vanaskey, an individual residing in the State of Delaware, not in his individual capacity but solely as individual trustee, as trustees for the Secured Parties.

“Existing Credit Facility Agreement” means the Amended and Restated Credit Agreement, dated as of April 1, 2005, by and among Borrower, each of the Guarantors (as defined therein), PNC Bank, National Association and Citicorp North America, Inc., as co-administrative agents, and the banks or other financial institutions listed on the signature pages thereto, as amended, modified, supplemented, extended or restated or refinanced from time to time.”

“Governmental Authority” shall mean any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Holder” means, as of any date, any holder of Secured Debt on such date.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance, lien (statutory or otherwise), preference, priority or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any financing or similar statement or notice perfecting a security interest under the Uniform Commercial Code as adopted and in effect in the relevant jurisdiction, or other similar recording or notice statute, and any lease in the nature thereof), but shall not include any operating lease.

“Moody’s” means Moody’s Investor Service Inc.

“Notice of Actionable Default” means a written certification (i) from the Credit Facility Agent certifying that Credit Facility Debt under the Credit Facility Agreement has not been paid in full at the stated maturity thereof or has been declared to be due and payable prior to the stated maturity thereof in accordance with the terms thereof or (ii) from the Public Trustee certifying that Public Debt under the Public Indenture has not been paid in full at the stated maturity thereof or has been declared to be due and payable prior to the stated maturity thereof.

“Original Credit Facility Agreement” means the Credit Agreement, dated as of June 30, 2004, by and among Borrower, each of the Guarantors (as defined therein), PNC Bank, National Association and Citicorp North America, Inc., as co-administrative agents, and the banks or other financial institutions listed on the signature pages thereto, as amended, modified, supplemented, extended or restated or refinanced from time to time.

“Permitted Investments” shall have the meaning ascribed to it in the Credit Facility Agreement.

“Person” means any individual, partnership, limited liability company, joint venture, firm, corporation, association, trust or other enterprise (whether or not incorporated) or any governmental or political subdivision or any agency, department or instrumentality thereof.

“Public Debt” means, as of any date, the amount of indebtedness outstanding on such date under the Public Indenture.

“Public Indenture” means the Indenture, dated March 7, 2002, as amended by the First Supplemental Indenture, dated March 7, 2002, and as amended by the Second Supplemental Indenture, dated September 30, 2003, by and among the Borrower, certain subsidiaries of the Borrower and the Public Trustee, as trustee, providing for the issuance of $250 million 7.875% senior unsecured notes due March 1, 2012, as further amended, modified, supplemented, extended or restated from time to time.

“Public Lenders” means, as of any date, the holders of indebtedness outstanding on such date under the Public Indenture.

“Public Trustee” means, as of any date, the trustee under the Public Indenture, and any successor thereto.

“Release Notice” means a written notice, signed by a Responsible Officer, that requests the release of Liens in favor of the Collateral Trustees in certain Collateral, describes in reasonable detail such Collateral and that certifies to the Collateral Trustees and the Credit Facility Lenders that (a) the release of such Collateral is permitted under the applicable terms of the Credit Facility Agreement and (b) a Potential Default or an Event of Default under the Credit Facility Agreement is not then in existence.

“Responsible Officer” means the chief executive officer, the president, the chief financial officer or the treasurer of the Borrower.

“S & P” means Standard & Poor’s Corporation.

“Secured Debt” means, as of any date, (i) the Credit Facility Debt and the Public Debt and (ii), without duplication, all fees, expenses and charges (including, without limitation, indemnification, reimbursement or contribution obligations) due or owing to any Secured Party arising under any Debt Instrument, this Agreement or any Security Document.

“Secured Party” means any Credit Facility Lender, the Collateral Trustees, any Public Lender, the Public Trustee, the Credit Facility Agent and the Co-Administrative Agents.

“Security Documents” means this Agreement, the documents set forth on Schedule 1.1 hereto, any additional documents executed on or after the date hereof to reflect the grant to the Collateral Trustees of a lien upon or security interest in any Collateral and any agreement or document referred to in Section 4.7 or Section 7.1 (b) of this Agreement, as the same may be amended, supplemented, extended, restated, replaced or otherwise modified in accordance with their respective terms.

“Super-Majority Lenders” shall have the meaning ascribed to it in the Credit Facility Agreement.

“Trustees’ Fees” means all fees, costs and expenses of the Collateral Trustees of the types described in Sections 4.3, 4.4, 4.5 and 4.6 of this Agreement.

(b) The words “hereof’, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement and section references are to this Agreement unless otherwise specified.

(c) In each case herein where any payment or distribution is to be made or notice is to be given to “Holders,” such payments, distributions and notices (i) in respect of the Public Debt, shall be made to the Public Trustee for the benefit of the Public Lenders and (ii) in respect of the Credit Facility Debt, shall be made to the Credit Facility Agent for the benefit of the Credit Facility Lenders.

(d) All terms defined in this Agreement in the singular shall have comparable meanings when used in the plural, and vice versa, unless otherwise specified.

(e) Terms not otherwise defined herein which are defined in or used in Article 9 of the Uniform Commercial Code as in effect in the Commonwealth of Pennsylvania shall herein have the respective meanings given to them in Article 9.

SECTION 2 ACTIONABLE DEFAULTS; REMEDIES

Section 2.1 Actionable Default .

(a) Upon receipt of a Notice of Actionable Default, the Collateral Trustees shall, within five (5) Business Days thereafter, notify each Agent that it has received a Notice of Actionable Default. Upon receipt of any written directions pursuant to Section 2.2, 2.6(a) or 2.6(b) the Collateral Trustees shall, within five (5) Business Days thereafter, send a copy thereof to each Agent.

(b) Each Agent that delivered a Notice of Actionable Default (or successors in interest thereto) shall be entitled (but not obligated) to withdraw a Notice of Actionable Default sent by such Agent by delivering written notice of withdrawal to the Collateral Trustees. The Collateral Trustees shall promptly notify the Borrower as to the receipt of, and provide a copy of, any such notice of withdrawal and shall promptly notify each other Agent of the withdrawal of any Notice of Actionable Default.

Section 2.2 Remedies .

(a) After receipt of any Notice of Actionable Default with respect to which the Collateral Trustees shall not have received a notice of withdrawal in accordance with Section 2.1(b), the Collateral Trustees shall, following receipt of the written direction of the Credit Facility Agent, initiate the exercise of remedies with respect to the Collateral and exercise the rights and remedies provided in any of the Security Documents, in each case, as directed in writing by the Credit Facility Agent pursuant to Section 2.6. Other than as provided in the preceding sentence, no Secured Party (including, without limitation, the Collateral Trustees), shall have the right to direct the Collateral Trustees with respect to the exercise of rights and remedies under the Security Documents or otherwise with respect to the Collateral. Each Collateral Trustee shall be entitled to assume conclusively that no Actionable Default has occurred and is continuing until and unless it receives a Notice of Actionable Default. Each Collateral Trustee shall be entitled to assume conclusively that a Notice of Actionable Default has not been withdrawn unless and until it receives a notice of withdrawal in accordance with Section 2.1(b).

(b) As to any matters not expressly provided for under this Agreement or the other Security Documents (including, without limitation, matters relating to enforcement and collection of the Secured Debt), the Collateral Trustees shall not be required to exercise any discretion or to take any action under this Agreement or the other Security Documents, or under applicable law, including title 11 of the United States Code, or in respect of the Collateral, but shall be required to act or to refrain from acting (and shall be fully protected in acting or refraining from acting) in accordance with the written instructions of the Credit Facility Agent which instructions shall reference Section 4.6 hereof.

Section 2.3 Right to Initiate Judicial Proceedings, Etc . If and only if the Collateral Trustees shall have received a Notice of Actionable Default and during such time as the Collateral Trustees shall not have received a notice of withdrawal of such Notice of Actionable Default in accordance with the provisions of Section 2.1(b) hereof, at the direction in writing of the Credit Facility Agent as provided in Section 2.2, the Corporate Trustee, and if the Corporate

Trustee deems necessary or desirable, the Individual Trustee, jointly or individually as the Corporate Trustee may determine in its sole discretion, (i) shall have the right and power to institute and maintain such suits and proceedings as the Credit Facility Agent may deem appropriate to protect and enforce the rights vested in the Collateral Trustees by this Agreement and each Security Document, and (ii) may, either after entry or without entry, proceed by suit or suits at law or in equity to enforce such rights and to foreclose upon the Collateral and to sell all or, from time to time, any of the Collateral Trust Estate under the judgment or decree of a court of competent jurisdiction.

Section 2.4 Appointment of a Receiver . If a receiver of the Collateral Trust Estate shall be appointed in judicial proceedings, the Collateral Trustees may be appointed, in their discretion, as such receiver. Notwithstanding the appointment of a receiver, the Collateral Trustees shall be entitled to retain possession and control of all cash held by or deposited with them or their agents or co-trustees pursuant to any provision of this Agreement or any Security Document.

Section 2.5 Exercise of Powers . All of the powers, remedies and rights of the Collateral Trustees as set forth in this Agreement may be exercised by the Collateral Trustees in respect of any Security Document as though set forth at length therein and all the powers, remedies and rights of the Collateral Trustees as set forth in any Security Document may be exercised from time to time as herein and therein provided.

Section 2.6 Direction from Credit Facility Agent .

(a) Subject to Section 2.6(b) of this Agreement, if the Collateral Trustees shall have received a Notice of Actionable Default and during such time as the Collateral Trustees shall not have received a notice of withdrawal of such Notice of Actionable Default in accordance with the provisions of Section 2.1(b) hereof, (i) the Credit Facility Agent shall have the right, by an instrument in writing executed and delivered to the Collateral Trustees, to direct the Collateral Trustees to initiate the exercise of remedies with respect to the Collateral and (ii) the Credit Facility Agent shall have the right, by an instrument in writing executed and delivered to the Collateral Trustees, to direct the Collateral Trustees to refrain from exercising any right, remedy, trust or power available to or conferred upon the Collateral Trustees hereunder. Notwithstanding any other provision contained in this Agreement or any of the Security Documents to the contrary, the Collateral Trustees shall not take any action or exercise any right with respect to the exercise of remedies, the preservation of the Collateral or otherwise (except for the giving of notices hereunder, the application of moneys pursuant to Section 3 and the release of Collateral pursuant to Section 6) without written instructions from the Credit Facility Agent.

(b) Except as otherwise provided in Section 5.5(d) and subject to Section 5.5(b) and 5.5(c), the Collateral Trustees shall be obligated to follow any written directions received pursuant to Sections 2.1, 2.2 or 2.6(a) or otherwise under this Agreement.

Section 2.7 Remedies Not Exclusive .

(a) No remedy conferred upon or reserved to the Collateral Trustees herein or in any of the Security Documents is intended to be exclusive of any other remedy or remedies, but every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or in any of the Security Documents or now or hereafter existing at law or in equity or by statute.

(b) No delay or omission of or by the Collateral Trustees to exercise any right, remedy or power accruing upon receipt of any Notice of Actionable Default shall impair any such right, remedy or power or shall be construed to be a waiver thereof or an acquiescence therein; and, subject in all respects to Section 2.1(b), 2.2, 2.3 and 2.6, every right, power and remedy given by this Agreement or any Security Document to the Collateral Trustees may be exercised from time to time and as often as may be deemed expedient by the Collateral Trustees.

(c) In case the Collateral Trustees shall have proceeded to enforce any right, remedy or power under this Agreement or any Security Document and the proceeding for the enforcement thereof shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Collateral Trustees, then and in every such case the Borrower, the other Loan Parties, the Collateral Trustees and the Secured Parties shall, subject to any effect of or determination in such proceeding, severally and respectively be restored to their former positions and rights hereunder and under such Security Document with respect to the Collateral Trust Estate and in all other respects, and thereafter all rights, remedies and powers of the Collateral Trustees shall continue as though no such proceeding had been taken.

(d) All rights of action and rights to assert claims upon or under this Agreement and the Security Documents may be enforced by the Collateral Trustees without the possession of any Debt Instrument or the production thereof in any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Collateral Trustees may be brought in either of their names as Collateral Trustee and any recovery of judgment shall be held as part of the Collateral Trust Estate.

Section 2.8 Loan Parties’ and Collateral Trustees’ Rights as to Collateral; Limitation on Collateral Trustees’ Duties in Respect of Collateral.

(a) So long as no Notice of Actionable Default shall have been received by the Collateral Trustees (or if received, shall have been withdrawn in accordance with the provisions hereof), the Borrower and the other Loan Parties shall be entitled to exercise all rights, powers, privileges and remedies in respect of the Collateral, in each case free and clear of any liens or encumbrance arising out of this Agreement, notwithstanding the grant of security provided for in the Security Documents, subject, however, to the provisions of Section 3.1 and 6.1 hereof, to the provisions in the other Security Documents and to the provisions of the Credit Facility Agreement.

(b) Each Loan Party, on behalf of itself and all who may claim through or under it, including, without limitation, any and all subsequent affiliates, creditors, vendees, assignees and lienors, expressly waives and releases, to the fullest extent permitted by law, any, every and all rights to demand or to have any marshalling of the Collateral Trust Estate upon any enforcement of any Security Document, including, without limitation, upon any sale, whether made under any power of sale herein granted or pursuant to judicial proceedings or upon any foreclosure or any enforcement of any Security Document and consents and agrees that all the Collateral Trust Estate and any such sale may be offered and sold as an entirety or in parcels.

(c) Beyond its duties set forth in this Agreement as to the custody of the Collateral and the payment to the Borrower, the other Loan Parties and the Secured Parties for moneys received by it hereunder, the Collateral Trustees shall not have any duty to the Borrower, the other Loan Parties or the Secured Parties as to any Collateral in its possession or control or in the possession or control of any agent or nominee of it or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. To the extent, however, that the Collateral Trustees or an agent or nominee of the Collateral Trustees maintains possession or control of any of the Collateral, the Collateral Trustees shall, or shall instruct such agent or nominee to, grant the Borrower or the other Loan Parties the access to such Collateral, which the Borrower requires for the conduct of its business or to enable the Borrower and the other Loan Parties to exercise all rights, powers, privileges and remedies in respect of the Collateral so long as the Collateral Trustees shall not have received a Notice of Actionable Default.

Section 2.9 Limitation by Law . All rights, remedies and powers provided by this Section 2 may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, regulation or court order and all the provisions of this Section 2 are intended to be subject to all applicable mandatory provisions of law, regulation or court order which may be controlling and to be limited to the extent necessary so that they will not render this Agreement invalid, unenforceable in whole or in part.

Section 2.10 Absolute Rights of Holders . Notwithstanding any other provision of this Agreement or any provision of any Security Document, the right of each Holder, which is absolute and unconditional, to receive payments of the Secured Debt held by such Holder as therein expressed, to institute suit for the enforcement of such payment, or to assert its position and views as a secured creditor in, and to otherwise exercise any right (other than the right to enforce the security interest in and lien on the Collateral, which shall in all circumstances be exercisable only by the Collateral Trustees at the written direction of the Credit Facility Agent) it may have in connection with, a case under the Bankruptcy Code in which the Borrower or any Loan Party is a debtor, or the obligation of the Borrower or any Loan Party, which is also absolute and unconditional, to pay the Secured Debt owing by the Borrower or any Loan Party to each Holder at the time and place expressed therein shall not be impaired or affected without the consent of such Holder.

Section 2.11 Equal and Ratable Security . This Agreement and the Security Documents are intended to secure the Secured Debt equally and ratably to the extent required by the Public Indenture. All of the Secured Parties shall be bound by any instruction or delivery given by the Credit Facility Agent pursuant to this Agreement.

SECTION 3 APPLICATION OF MONEYS

Section 3.1 Application of Proceeds .

(a) If, pursuant to the exercise by the Collateral Trustees, at the written direction of the Credit Facility Agent, of any rights and remedies set forth in any Security Document, any Collateral is sold or otherwise realized upon by the Collateral Trustees, the proceeds received by the Collateral Trustees in respect of such Collateral shall be deposited in a cash collateral account (the “Collateral Account”), maintained by the Corporate Trustee at its offices at its corporate trust

department in the State of Delaware, which shall be non-interest bearing until such time as the Collateral Trustees shall cause to be effected written directions received pursuant to Section 3.4(a), at which time the investments acquired pursuant to such directions shall accrue such interest and/or other income as provided by the terms thereof. All moneys held by the Corporate Trustee in the Collateral Account, shall, to the extent available for distribution, be distributed by the Corporate Trustee on each date upon which a distribution is made (each, a “Distribution Date”) as follows:

FIRST: to the payment (in such priority as the Corporate Trustee shall elect, but without duplication) of all reasonable fees and expenses of legal counsel and other professionals and other reasonable costs or expenses or other liabilities of any kind incurred by the Collateral Trustees as secured parties under any Security Document or otherwise in connection with any Security Document or this Agreement (including, without limitation, any reasonable costs or expenses or liabilities incurred in connection with the sale of any assets covered by any Security Document, or in the operation or maintenance of any of the assets covered by any Security Document), including the reimbursement to any Secured Party of any amounts theretofore advanced by such Secured Party for the payment of such fees, costs and expenses, except only for any such fees, expenses, costs or liabilities incurred by either Collateral Trustee as a result of its gross negligence or willful misconduct; provided, however, that nothing herein is intended to relieve the Loan Parties of their duties to pay such costs, fees, expenses and liabilities otherwise payable to the Collateral Trustees from funds outside of the Collateral Account, as required by this Agreement;

SECOND: to the Collateral Trustees (without duplication) in an amount equal to the Trustees’ Fees which are unpaid as of the Distribution Date and to the Agents for the benefit of any of their respective Secured Parties which has theretofore advanced or paid any such Trustees’ Fees in an amount equal to the amount thereof so advanced or paid by such Secured Party prior to such Distribution Date; provided, however, that nothing herein is intended to relieve the Loan Parties of their duties to pay such fees and claims from funds outside of the Collateral Account, as required by this Agreement;

THIRD: To each Agent in an amount equal to the costs and expenses of and any other amounts due to the Secured Parties represented by such Agent and the representatives of such Secured Parties not otherwise referred to in this Section 3.1(a) which are payable by the Borrower to the Secured Parties under the relevant Debt Instrument, and, in case such moneys shall be insufficient to pay in full such costs and expenses and other amounts, then to the payment thereof ratably (without priority of any one over any other) to each Agent;

FOURTH: To each Agent in an amount equal to the unpaid interest on the Secured Debt held by the Secured Parties represented by such Agent, and, in case such moneys shall be insufficient to pay in full such interest, then to the payment thereof ratably (without priority of any one over any other) to each such Agent in proportion to the unpaid amounts thereof;

FIFTH: To each Agent in an amount equal to the unpaid remainder of the Secured Debt held by the Secured Parties represented by such Agent whether or not then due and payable, and, in case such moneys shall be insufficient to pay in full such Secured Debt, then to the payment thereof equally and ratably (without priority of any one over any other) to each such Agent; provided that if at the time of any such distribution, there are any undrawn Letters of Credit under the Credit Facility Agreement, the amount attributable to the undrawn Letters of Credit that otherwise would be distributed to the Credit Facility Agent pursuant hereto shall be retained by the Collateral Trustees as cash collateral security for the undrawn Letters of Credit and distributed in accordance with Section 3.1(d); and

SIXTH: Any surplus then remaining shall be paid to the Borrower or its successors or assigns, or to whomever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct.

(b) The term “unpaid” as used in such clause SECOND, FOURTH and FIFTH of subsection (a) shall mean all amounts of outstanding Trustees’ Fees and other Secured Debt as to which prior payments or distributions (whether actually distributed or set aside) have not been made, or if made, have subsequently been recovered from the recipient thereof.

(c) In order to determine the ratable amount to be distributed to each of the Secured Parties pursuant to clauses THIRD, FOURTH and FIFTH above on each Distribution Date, the Corporate Trustee shall rely on a certificate of a Responsible Officer of the Borrower, which shall be delivered to the Collateral Trustees within five (5) Business Days after receipt by the Borrower from the Collateral Trustee of a copy of the applicable distribution request delivered by a Secured Party pursuant to Section 3.3 hereof, setting forth the Secured Debt (identified by type and amount) outstanding under each Debt Instrument on such Distribution Date and such other matters set forth in Section 4.2(a) hereof. The ratable portion of the aggregate amount available for distribution hereunder on any Distribution Date which shall be distributed to each Agent for the benefit of the Secured Parties represented by such Agent on such Distribution Date shall be a fraction, (x) the numerator of which shall be the aggregate amount of Secured Debt represented by such Agent for such Secured Party on such Distribution Date and (y) the denominator of which shall be the aggregate amount of all Secured Debt on such Distribution Date; provided, however, that, for such purposes, amounts distributable to any Agent on a prior Distribution Date and held by the Corporate Trustee on behalf of such Agent pursuant to Section 3.3 or 4.2(a) of this Agreement shall be deemed to have been applied to the Secured Debt of the Holders of the applicable Secured Debt, regardless of whether such application has occurred.

(d) Any amounts retained by the Collateral Trustees pursuant to the FIFTH clause with respect to undrawn Letters of Credits shall be distributed as follows:

(i) if a drawing is made on an outstanding Letter of Credit, upon written notice to such effect from the Credit Facility Agent to the Collateral Trustees, the Collateral Trustees shall distribute to the Credit Facility Agent from the cash collateral being held as security for the undrawn Letters of Credit a ratable portion of the amount of the Letter of Credit so drawn; and

(ii) if a Letter of Credit expires or is returned undrawn, upon written notice to such effect from the Credit Facility Agent to the Collateral Trustees, the cash collateral with respect to such expired or undrawn Letters of Credit held by the Collateral Trustees shall be distributed to the Agents by the Collateral Trustees so that all distributions made pursuant to the FIFTH clause through such date shall have resulted in an equal and ratable distribution to the Secured Parties pursuant to such clause.

Section 3.2 Intentionally Omitted .

Section 3.3 Release of Amounts in Collateral Account . Amounts distributable to an Agent on any Distribution Date pursuant to Section 3.1 shall be paid to such Agent for the benefit of the Secured Party(ies) represented by such Agent by the Corporate Trustee upon receipt by the Corporate Trustee of a distribution request of such Agent setting forth appropriate payments instructions for such Agent and receipt by the Corporate Trustee of a certificate of Borrower required by Sections 3.1(c) and 4.2(a) hereof. The Corporate Trustee shall promptly provide a copy of any such distribution request received by the Corporate Trustee to the Borrower. If no such distribution request is delivered by an Agent or no such certificate is delivered by Borrower within 10 Business Days of deposit in the Collateral Account of proceeds received by the Collateral Trustees in respect of any Collateral, the Corporate Trustee shall continue to hold amounts otherwise distributable to such Agent in a separate non-interest bearing account of the Corporate Trustee for the benefit of such Agent and the applicable Secured Party(ies) and the Corporate Trustee shall not be required to make any distributions until such distribution request or certificate is received.

Section 3.4 Investments of Amounts in Collateral Account .

(a) Cash on deposit in the Collateral Account and any other account established pursuant to Section 3.3 or 4.2(a) hereof shall be invested and reinvested in Collateral Account Investments by the Corporate Trustee, who shall make such Collateral Account Investments at the written direction of (i) the Borrower prior to Notice of Actionable Default, (unless such notice is withdrawn) with respect to amounts in the Collateral Account or (ii) the applicable Agent with respect to amounts in any other account established pursuant to Section 3.3 or 4.2(a). The Collateral Trustees shall not have any liability to the Borrower, any Agent or any Secured Party resulting from any losses on investments made by it in Collateral Account Investments in accordance with this Section 3.4 or if the earnings realized on any investment in Collateral Account Investments are less than otherwise could have been achieved had other Collateral Account Investments been selected. The Corporate Trustee shall sell or liquidate all or any part of the Collateral Account Investments held in the Collateral Account or other account established pursuant to Section 3.3 or 4.2(a) at any time it determines, in its sole judgment, that the proceeds thereof are required to make a distribution from the Collateral Account or such other account, and the Collateral Trustees shall not be liable to any Person for any loss suffered because of such sale or liquidation.

(b) All investments in Collateral Account Investments made by the Corporate Trustee, and the net proceeds of the sale, liquidation or payment thereof, and all interest on, or other earnings realized with respect to, any investment in the Collateral Account or other account

established pursuant to Section 3.3 or 4.2(a), shall be held in the Collateral Account or such other account and for the same purposes as the cash used to purchase such Collateral Account Investments.

(c) In the absence of written directions pursuant to Section 3.4(a) from the Borrower as to the investment by the Corporate Trustee of cash on deposit in the Collateral Account and any other account established pursuant to Section 3.3 or 4.2(a) hereof in Collateral Account Investments, and at all times after Notice of Actionable Default (which has not been withdrawn), the Corporate Trustee shall invest all such cash on deposit in U.S. Governmental securities or Service class shares of the U.S. Government Portfolio (the “Portfolio”) of the Wilmington Funds, a mutual fund (the “Fund”) managed by Rodney Square Management Corporation, a subsidiary of Corporate Trustee. The Borrower acknowledges and agrees that (i) shares in the Portfolio and shares in Related Funds are not (x) obligations of Wilmington Trust Company, (y) deposits or (z) insured by the FDIC, (ii) the Wilmington Trust Company and/or one or more of its Affiliates are compensated by the Fund and by the Related Funds for (1) services rendered in its capacity as investment advisor, custodian and/or transfer agent; and (2) providing shareholder services; and (iii) such compensation is described in detail in the prospectus for the Fund and Related Funds, and exclusive of and additional to the compensation and other amounts payable to Wilmington Trust Company in its capacity as Corporate Trustee hereunder.

SECTION 4 AGREEMENTS WITH TRUSTEES

Section 4.1 Delivery of Debt Instruments . On the date hereof, the Borrower will deliver to the Collateral Trustees true and complete copies of the Credit Facility Agreement, the Public Indenture, and each Security Document, to the extent not previously delivered. The Borrower agrees that, promptly upon the execution thereof, the Borrower will deliver to the Collateral Trustees a true and complete copy of any and all amendments, modifications or supplements to the Credit Facility Agreement, the Public Indenture and each Security Document entered into by the Borrower subsequent to the date hereof.

Section 4.2 Information as to Holders .

(a) The Borrower agrees that it shall deliver to the Collateral Trustees from time to time within five (5) Business Days after a request by the Collateral Trustees, a list setting forth (i) the aggregate amount of Obligations outstanding under the Credit Facility Agreement and the aggregate principal amount outstanding under the Public Indenture, or any of them, (ii) the interest rates then in effect under the Credit Facility Agreement and the Public Indenture, to the extent known by Borrower and (iii) such other information in the Borrower’s possession regarding the Secured Parties and the Debt Instruments as the Collateral Trustees may reasonably request. The Borrower will furnish to the Collateral Trustees on the date hereof a list setting forth the name and address of the Credit Facility Agent and the Public Trustee, to the extent not previously delivered, and the Borrower agrees to furnish promptly to the Collateral Trustees any changes or additions to such list. In addition, the Borrower shall deliver to the Collateral Trustees, each time a distribution from the Collateral Trust Estate or the Collateral Account is to be made pursuant to the terms hereof, not later than five (5) Business Days after receipt by the Borrower from the Collateral Trustee of a copy of the applicable distribution request delivered by a Secured Party pursuant to Section 3.3 hereof, a certificate of a Responsible Officer of the Borrower,

setting forth the information required by Section 3.1(c) hereof in connection with the determination of amounts to be distributed and the Persons to whom such distributions are to be made, including appropriate payment instructions therefor (the “Payment Information”), provided that if any distribution is directed to be made to any Agent, if such Agent shall have notified the Collateral Trustees in writing that such Agent is unable to accept such distribution, such distribution shall be made instead to an account established for the benefit of such Agent and the Holders of the applicable Secured Debt. The Collateral Trustees may, for all purposes hereunder, rely on such information given by the Borrower.

(b) If the Borrower shall not have delivered the Payment Information to the Collateral Trustees at least five (5) Business Days prior to the applicable Distribution Date, the Collateral Trustees shall request the Payment Information from the Credit Facility Agent, and if after such request the Collateral Trustees shall not have received the Payment Information from any of the Borrower, or the Credit Facility Agent, the Collateral Trustees shall not be required to take any action under clauses THIRD, FOURTH, FIFTH or SIXTH of Section 3.1(a) until it receives such Payment Information. The Collateral Trustees may, for all purposes hereunder, rely on such information given by the Credit Facility Agent.

Section 4.3 Compensation and Expenses . The Loan Parties agree, jointly and severally, to pay to the Collateral Trustees and any co-trustees or successor trustees appointed hereunder, from time to time upon demand, (a) such compensation for their services hereunder and under the Security Documents and for administering the Collateral Trust Estate, the Collateral Account and any account or accounts established pursuant to this Agreement as set forth on the fee schedule attached hereto as Schedule 4.3, as such Schedule 4.3 may be amended, supplemented or otherwise modified by the written agreement of the Loan Parties and the Collateral Trustees from time to time and (b) all the reasonable fees, costs and expenses incurred by any of them (including, without limitation, the reasonable fees and disbursements of legal counsel and other professionals) (i) arising in connection with the preparation, negotiation, execution, delivery, modification and termination of this Agreement and each of the Security Documents or the administration, monitoring or enforcement of any of the provisions hereof or thereof or (ii) incurred or advanced in connection with the administration of the Collateral Trust Estate, the Collateral Account, any account or accounts established pursuant to Section 3.3 or 4.2(a) hereof, the sale or other disposition of Collateral pursuant to any Security Document and the preservation, protection or defense of their rights under this Agreement and in and to the Collateral, the Collateral Account, any account or accounts established pursuant to Section 3.3 or 4.2(a) hereof and the Collateral Trust Estate. As security for such payment, the Collateral Trustees shall have a prior lien upon all Collateral (as effected pursuant to Article 3 herein) and other property and funds held or collected by the Collateral Trustees as part of the Collateral Trust Estate. Each Loan Parties’ obligations under this Section 4.3 shall survive the termination of this Agreement.

Section 4.4 Stamp and Other Similar Taxes . The Loan Parties agree, jointly and severally, to indemnify and hold harmless the Collateral Trustees from any present or future claim for liability for any stamp or other similar tax and any penalties or interest with respect thereto, which may be assessed, levied or collected by any jurisdiction in connection with this Agreement, any Security Document, the Collateral Trust Estate, or any Collateral. The obligations of the Borrower and the other Loan Parties under this Section 4.4 shall survive the termination of the other provisions of this Agreement.

Section 4.5 Filing Fees, Excise Taxes, Etc . The Loan Parties agree, jointly and severally, to pay or to reimburse the Collateral Trustees for any and all amounts in respect of all search, filing, recording and registration fees, taxes, excise taxes and other similar imposts which may be payable in respect of the execution, delivery, performance and enforcement of this Agreement and each Security Document. The obligations of the Borrower and the other Loan Parties under this Section 4.5 shall survive the termination of the other provisions of this Agreement.

Section 4.6 Indemnification .

(a) Each Loan Party agrees, jointly and severally, to pay, indemnify, and hold harmless the Collateral Trustees, their respective Affiliates, and each of the officers, directors, employees, stockholders, agents, attorneys-in-fact and representatives of either Collateral Trustee and such Affiliates, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, the reasonable costs and expenses of defending any claim against any of them) with respect to the execution, delivery, enforcement, performance and administration of this Agreement and the Security Documents unless and to the extent arising from the gross negligence or willful misconduct of such of the Collateral Trustees, their respective Affiliates, or each of the officers, directors, employees, stockholders, agents, attorneys-in-fact or representatives of either Collateral Trustee or such Affiliates as are seeking indemnification. As security for such payment, any such Collateral Trustee shall have a prior lien upon all Collateral (as effected pursuant to Article 3 herein) and other property and funds held or collected by the Collateral Trustees as part of the Collateral Trust Estate.

(b) In any suit, proceeding or action brought by the Collateral Trustees under or with respect to any Security Document or the Collateral for any amount owing thereunder, or to enforce any provisions thereof, each Loan Party will, jointly and severally, save, indemnify and hold harmless the Collateral Trustee from and against all expense, loss or damage suffered by reason of any defense, set-off, counterclaim, recoupment or reduction of liability whatsoever of the obligee thereunder, arising out of a breach by any Loan Party of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such obligee or its successors from such Loan Party and all such obligations of any Loan Party shall be and remain enforceable against and only against such Loan Party and shall not be enforceable against the Collateral Trustees.

Section 4.7 Further Assurances .

(a) Each Loan Party agrees, from time to time, at its own expense to execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, financing statements and continuations thereof, notices of assignment, transfers,

certificates, assurances and other instruments as may be reasonably necessary or desirable, or as any Collateral Trustee may reasonably request from time to time in order to carry out the purposes of the terms and conditions of the Security Documents. Without limiting the generality of the foregoing, each Loan Party will take any such action required to be taken by it pursuant to any Security Document.

(b) Each Loan Party hereby authorizes the Collateral Trustees to file one or more financing or continuation statements relative to all or any part of the Collateral, and amendments thereto to correct the name and address of such Loan Party or the Collateral Trustees or to correct the description of the “Collateral” contained in any of the Security Documents to be consistent with the description of the Collateral contained in such Security Document, in each case without the signature of such Loan Party where permitted by law and which shall be filed by the Collateral Trustees upon the receipt of an instruction letter from the Credit Facility Agent requesting the taking of such action and attaching the form of financing statement. A photocopy or other reproduction of this Agreement, any other Security Document or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.

(c) The Loan Parties will furnish such information about the Collateral as the Collateral Trustees may reasonably request from time to time.

Section 4.8 Recording . The Borrower shall furnish to the Collateral Trustees, upon the execution and delivery of this Agreement, opinions of counsel to the Loan Parties required by the Credit Facility Agreement, addressed to the Collateral Trustees, among others.

Section 4.9 Insurance . On the Closing Date and annually thereafter, the Loan Parties shall deliver to the Collateral Trustees the certificate of insurance (and the attachments thereto) and the summary schedule required by clauses (x) and (y) of the second sentence of Section 8.1.3 of the Credit Facility Agreement.

SECTION 5 THE COLLATERAL TRUSTEES

Section 5.1 Acceptance of Trust . The Collateral Trustees, for themselves and their respective successors, hereby accepts the Collateral Trust Estate and the trusts created by this Agreement upon the terms and conditions hereof, including those contained in this Section 5.

Section 5.2 Exculpatory Provisions .

(a) The Collateral Trustees shall not be responsible in any manner whatsoever for the correctness of any recitals, statements, representations or warranties contained herein or in the Security Documents. The Collateral Trustees make no representations as to the value or condition of the Collateral Trust Estate or any part thereof, or as to the title of the Borrower or any other Loan Party thereto or as to the security interest (if any) and perfection and/or priority thereof afforded by the Security Documents or this Agreement or as to the validity, execution (except its own execution), enforceability, legality or sufficiency of this Agreement, any Security Document or of the Secured Debt secured hereby and thereby, and the Collateral Trustees shall incur no liability or responsibility in respect of any such matters. The Collateral Trustees shall not be responsible for insuring the Collateral Trust Estate or for the payment of taxes, charges,

assessments or liens upon the Collateral Trust Estate or otherwise as to the maintenance of the Collateral Trust Estate, except that in the event the Collateral Trustees enter into possession of a part or all of the Collateral Trust Estate, the Collateral Trustees shall, subject to Section 5.13, preserve the part in its possession.

(b) The Collateral Trustees shall not be required to ascertain or inquire as to the performance by the Borrower or any other Loan Party of any of the covenants or agreements contained herein, in any Security Document or in any Debt Instrument. Whenever it is necessary or in the opinion of the Collateral Trustees advisable, for the Collateral Trustees to ascertain the amount of Secured Debt then held by a Holder, the Collateral Trustees may rely on a certificate of such Holder, an Agent with respect thereto or the Borrower as to such amount. In the event that there shall be due to or from the Collateral Trustees any material performance or the delivery of any material instrument or the Collateral Trustees have actual knowledge of any material breach of this Agreement or the Security Documents by the Borrower or any other Loan Party, the Collateral Trustees shall promptly advise the Credit Facility Agent of the matter and the Credit Facility Agent shall have the exclusive right to direct the Collateral Trustees’ response to such matter.

(c) In any event, neither the Collateral Trustees, their respective Affiliates, nor any of the officers, directors, employees, stockholders, agents, attorneys-in-fact and representatives of either Collateral Trustees and such Affiliates shall be liable for any acts or omissions by it in accordance with this Agreement or any Security Document except for those arising out of or in connection with the Collateral Trustees’ gross negligence or willful misconduct (which shall not include action taken or omitted to be taken in accordance with any direction, instruction or certificate of the Credit Facility Agent, any Loan Party or any Secured Party, for which the Collateral Trustees shall have no liability). Notwithstanding anything set forth herein to the contrary, the Collateral Trustees shall have a duty of ordinary care with respect to any Collateral delivered to the Collateral Trustees or its designated representatives that are in the Collateral Trustees’ or its designated representatives’ possession and control.

(d) The Collateral Trustees shall not take or refrain from taking actions if to do so would, in the Collateral Trustees’ reasonable judgment, violate any applicable law, regulation or court order or the terms of this Agreement, the Debt Instruments, the Security Documents or if the Collateral Trustees shall not be indemnified to their satisfaction as provided in Section 4.6(b) and/or 5.5(c).

Section 5.3 Delegation of Duties . The Collateral Trustees may execute any of the trusts or powers hereof and perform any duty hereunder either directly or by or through agents, nominees or attorneys-in-fact. The Collateral Trustees shall be entitled to rely upon advice of counsel and other professionals concerning all matters pertaining to such trusts, powers and duties. The Collateral Trustees shall not be responsible for the negligence or misconduct of any agents, nominees or attorneys-in-fact selected by it without gross negligence or willful misconduct.

Section 5.4 Reliance by Collateral Trustees .

(a) Whenever in the administration of the trusts of this Agreement, or pursuant to any of the Security Documents, the Collateral Trustees shall deem it necessary or desirable that a matter be proved or established with respect to the Borrower or any other Loan Party in connection with the taking, suffering or omitting of any action hereunder by the Collateral Trustees, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively provided or established by a certificate of a Responsible Officer delivered to the Collateral Trustees and such certificate shall be full warranty to the Collateral Trustees for any action taken, suffered or omitted in reliance thereon; subject, however, to the provisions of Section 5.5.

(b) The Collateral Trustees may consult with independent counsel, independent public accountants and other experts selected by them, and any opinion of such counsel, any such accountant, and any such other expert shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in accordance therewith. The Collateral Trustees shall have the right at any time to seek instructions concerning the administration of the Collateral Trust Estate from any court of competent jurisdiction.

(c) The Collateral Trustees may rely, and shall be fully protected in acting, upon any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order, bond or other paper or document which they reasonably believe to be genuine and to have been signed or presented by the proper party or parties or, in the case of facsimiles, to have been sent by the proper party or parties. In the absence of its gross negligence or willful misconduct, the Collateral Trustees may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Collateral Trustees and conforming to the requirements of this Agreement or any Security Document.

Section 5.5 Limitations on Duties of Collateral Trustees .

(a) Prior to receipt of a Notice of an Actionable Default, the Collateral Trustees shall be obligated to perform such duties and only such duties as are specifically set forth in this Agreement or in any Security Document, and no implied covenants or obligations shall be read into this Agreement or any Security Document against the Collateral Trustees. The Collateral Trustees shall, upon receipt of (x) a Notice of Actionable Default and during such time as the Collateral Trustees shall not have received a notice of withdrawal of such Notice of Actionable Default in accordance with the provisions of Section 2.1(b) hereof, and (y) directions in writing from the Credit Facility Agent (i) exercise the rights and powers vested in it by this Agreement or

by any Security Document, and the Collateral Trustees shall not be liable with respect to any action taken or omitted by it in accordance with the direction of the Credit Facility Agent pursuant to Section 2.2 or 2.6 of this Agreement or (ii) if the Collateral Trustees shall have received the written direction of the Credit Facility Agent to initiate the exercise of any remedy with respect to the Collateral, exercise such of the rights and powers vested in it by this Agreement or by any Security Document. Subject to the provisions of Section 2.6(b) the Collateral Trustees shall follow written instructions of the Credit Facility Agent, if any are received, as to the time, method and place of conducting any proceeding for any right or remedy available to the Collateral Trustees, or of exercising any trust or power conferred on the Collateral Trustees, or for the appointment of a receiver, or for the taking of any other action authorized by Section 2.

(b) The Collateral Trustees shall not be under any obligation to take an action which is discretionary under the provisions hereof or under any Security Document. The Collateral Trustees shall furnish to the Credit Facility Agent and the Public Trustee promptly upon receipt thereof, a copy of each certificate or other paper furnished to the Collateral Trustees by the Borrower or any other Loan Party under or in respect of this Agreement, any Security Document or any of the Collateral Trust Estate, unless by the express terms of any Security Document a copy of the same is required to be furnished by some other Person directly to the Credit Facility Agent and the Public Trustees, or the Collateral Trustees shall have determined that the same has already been so furnished.

(c) In connection with written instructions from the Credit Facility Agent pursuant to Section 2.6(a), the Collateral Trustees shall be under no obligation to exercise any of the rights, remedies or powers vested in them by this Agreement or any Security Document, unless (i) the Collateral Trustees shall have been provided adequate security or indemnity as determined by the Collateral Trustees in their sole discretion (including without limitation from the Secured Parties) against any and all costs, expenses and liabilities which the Collateral Trustees anticipate might be reasonably incurred by them in compliance with such instructions, including reasonable advances as may be requested by the Collateral Trustees and (ii) the Collateral Trustees shall receive such clear, unambiguous, written instructions as the Collateral Trustees deem appropriate.

(d) The obligations of the Collateral Trustees hereunder are several and not joint.

Section 5.6 Moneys to Be Held in Trust . All moneys received by the Corporate Trustee under or pursuant to any provision of this Agreement or any Security Document shall be held in trust for the purposes for which they were paid or are held. The Individual Trustee shall promptly turn over to the Corporate Trustee any Collateral, or any part thereof, delivered to or received by the Individual Trustee.

Section 5.7 Resignation and Removal of the Collateral Trustees .

(a) Each or both of the Collateral Trustees may at any time, by giving 30 days’ prior written notice to the Borrower and the Credit Facility Agent, resign and be discharged of their responsibilities hereby created, such resignation to become effective upon the appointment of a successor trustee or trustees by the Borrower prior to Notice of Actionable Default, and thereafter (unless such notice is withdrawn) by the Credit Facility Agent and the acceptance of such

appointment by such successor trustee or trustees. The Collateral Trustees shall be entitled to their fees and expenses accrued to the date of the resignation becoming effective. Either or both of the Collateral Trustees may be removed at any time (with or without cause) and a successor trustee or trustees appointed by the Borrower prior to Notice of Actionable Default, and thereafter (unless such notice is withdrawn) by the Credit Facility Agent, provided that the Collateral Trustees or either of them shall be entitled to their fees and expenses accrued to the date of removal. If no successor trustee or trustees shall be appointed and approved within 30 days from the date of the giving of the aforesaid notice of resignation or within 30 days from the date of such removal, the Collateral Trustees, shall, or any Holder may, apply to any court of competent jurisdiction to appoint a successor trustee or trustees to act until such time, if any, as a successor trustee or trustees shall have been appointed as above provided. Any successor trustee or trustees so appointed by such court shall immediately and without further act be superseded by any successor trustee or trustees approved, as above provided.

(b) If at any time either or both of the Collateral Trustees shall resign, be removed or otherwise become incapable of acting, or if at any time a vacancy shall occur in the office of the Collateral Trustees for any other cause, a successor trustee or trustees may be appointed by the Borrower, and the powers, duties, authority and title of the predecessor trustee or trustees terminated and cancelled without procuring the resignation of such predecessor trustee or trustees, and without any other formality (except as may be required by applicable law) than the appointment and designation of a successor trustee or trustees in writing, duly acknowledged, delivered to the predecessor trustee or trustees and the Borrower, and filed for record in each public office, if any, in which this Agreement is required to be filed.

(c) The appointment and designation referred to in Section 5.7(b) of this Agreement shall, after any required filing, be full evidence of the right and authority to make the same and of all the facts therein recited, and this Agreement shall vest in such successor or trustee or trustees, without any further act, deed or conveyance, all of the estate and title of its predecessor or their predecessors, and upon such filing for record the successor trustee or trustees shall become fully vested with all the estates, properties, rights, powers, trusts, duties, authority and title of its predecessor or their predecessors; but such predecessor or predecessors shall, nevertheless, on the written request of the Credit Facility Agent, the Borrower, or its or their successor trustee or trustees, execute and deliver an instrument transferring to such successor or successors all the estates, properties, rights, powers, trusts, duties, authority and title of such predecessor or predecessors hereunder and shall deliver all securities and moneys held by it or them to such successor trustee or trustees. Should any deed, conveyance or other instrument in writing from the Borrower or any other Loan Party be required by any successor trustee or trustees for more fully and certainly vesting in such successor trustee or trustees the estates, properties, rights, powers, trusts, duties, authority and title vested or intended to be vested in the predecessor trustee or trustees, any and all such deeds, conveyances and other instruments in writing shall, on request of such successor trustee or trustees, be so executed, acknowledged and delivered.

(d) Any required filing for record of the instrument appointing a successor trustee or trustees as hereinabove provided shall be at the expense of the Borrower and the other Loan Parties. The resignation of any trustee or trustees and the instrument or instruments removing any trustee or trustees, together with all other instruments, deeds and conveyances provided for in this Section 5 shall, if required by law, be forthwith recorded, registered and filed by and at the expense of the Borrower and the other Loan Parties, wherever this Agreement is recorded, registered and filed.

Section 5.8 Status of Successors to the Corporate Trustee . Every successor to the Corporate Trustee appointed pursuant to Section 5.7 of this Agreement and every corporation resulting from a merger or consolidation pursuant to Section 5.9 of this Agreement shall be a bank or trust company in good standing and having power so to act, incorporated under the laws of the United States or any State thereof or the District of Columbia, and having its principal corporate trust office within the forty-eight (48) contiguous States, and shall also have capital, surplus and undivided profits of not less than $100,000,000, if there be such an institution with such capital, surplus and undivided profits willing, qualified and able to accept the trust upon reasonable or customary terms.

Section 5.9 Merger of the Corporate Trustee . Any corporation into which the Corporate Trustee shall be merged, or with which it shall be consolidated, or any corporation resulting from any merger or consolidation to which the Corporate Trustee shall be a party, shall be the Corporate Trustee under this Agreement without the execution or filing of any paper or any further act on the part of the parties hereto.

Section 5.10 Powers of Individual Trustee . The Individual Trustee has been joined as a party hereunder so that if, by any present or future applicable law in any jurisdiction in which it may be necessary to perform any act in the execution or enforcement of the trusts hereby created, the Corporate Trustee may be incompetent, unqualified or unable to act as a Collateral Trustee or the Corporate Trustee determines in its sole discretion not to so act as a Collateral Trustee, then all of the acts required to be performed in such jurisdiction, in the execution or enforcement of the trusts hereby created, shall and will be performed by the Individual Trustee, acting alone. Notwithstanding any other term or provision of this Agreement to the contrary, the Corporate Trustee alone shall have and exercise the rights and powers granted herein and shall be solely charged with the performance of the duties herein declared on the part of the Collateral Trustees to be had and exercised or to be performed without any action taken by the Individual Trustee; provided, however, that if the Corporate Trustee deems it necessary or desirable for the Individual Trustee to act in a particular jurisdiction, the Individual Trustee shall have and exercise the rights and powers granted herein (but no greater powers) and shall be charged with the performance of the duties herein declared on the part of the Collateral Trustees to be had and exercised or to be performed, but only in such particular jurisdiction.

Section 5.11 Additional Co-Trustees; Separate Trustees .

(a) If at any time or times it shall be necessary or prudent in order to conform to any law, regulation or court order of any jurisdiction in which any of the Collateral shall be located, or the Collateral Trustees shall be advised by counsel, satisfactory to them, that it is so necessary or prudent in the interest of the Holders, or the Credit Facility Agent shall in writing so request, or the Collateral Trustees shall deem it desirable for their own protection in the performance of their duties hereunder, the Collateral Trustees and the Borrower and the other Loan Parties, as applicable, shall execute and deliver all instruments and agreements necessary or proper to constitute another bank or trust company, or one or more persons approved by the Collateral Trustees, the Borrower and the Credit Facility Agent either to act as co-trustee or co-trustees of all

or any of the Collateral, jointly with the Collateral Trustees originally named herein or any successor or successors, or to act as separate trustee or trustees of any such property. In the event the Borrower and the other Loan Parties, as applicable, shall not have joined in the execution of such instruments and agreements within ten (10) days after the receipt of a written request from the Collateral Trustees so to do, or in case an Actionable Default shall have occurred and be continuing, the Collateral Trustees may act under the foregoing provisions of this Section 5.11 without the concurrence of the Borrower, and each of the Borrower and the other Loan Parties hereby irrevocably appoints the Collateral Trustees, and each of them, as its agent and attorney to act for it under the foregoing provisions of this Section 5.11 in either of such contingencies. Each Loan Party acknowledges and agrees that the foregoing power of attorney is coupled with an interest and may not be revoked or modified except with the consent of the Collateral Trustees or as otherwise provided herein.

(b) Every separate trustee and every co-trustee (other than any trustee which may be appointed as successor to the Corporate Trustee or the Individual Trustee pursuant to Section 5.7), shall, to the extent permitted by law, be appointed and act and be such, subject to the following provisions and conditions, namely:

(i) all rights, powers, duties and obligations conferred upon the Collateral Trustees in respect of the custody, control and management of moneys, papers or securities shall be exercised solely by the Collateral Trustees, or their respective successors as Collateral Trustees hereunder;

(ii) all rights, powers, duties and obligations conferred or imposed upon the Collateral Trustees hereunder shall be conferred or imposed and exercised or performed by the Collateral Trustees and such separate trustee or separate trustees or co-trustee or co-trustees, jointly, as shall be provided in the instrument appointing such separate trustee or separate trustees or co-trustee or co-trustees, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Collateral Trustees shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate trustee or separate trustees or co-trustee or co-trustees;

(iii) no power given hereby to, or which it is provided hereby may be exercised by, any such co-trustee or co-trustees or separate trustee or separate trustees, shall be exercised hereunder by such co-trustee or co-trustees or separate trustee or separate trustees, except jointly with, or with the consent in writing of, the Collateral Trustees, anything herein contained to the contrary notwithstanding;

(iv) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and

(v) the Borrower, the Credit Facility Agent and the Collateral Trustees, at any time by an instrument in writing, executed by them jointly, may accept the resignation of or remove any such separate trustee or co-trustee, and in that case, by an instrument in writing executed by the Borrower, the Credit Facility Agent and the Collateral Trustees jointly, may appoint a successor to such separate trustee or co-trustee, as the case may be,

anything herein contained to the contrary notwithstanding. In the event that the Borrower shall not have joined in the execution of any such instrument within ten (10) days after the receipt of a written request from the Collateral Trustees so to do, or in case an Actionable Default shall have occurred and be continuing, the Collateral Trustees shall have the power to accept the resignation of or remove any such separate trustee or co-trustee and to appoint a successor without the concurrence of the Borrower or the other Loan Parties, each of the Borrower and the other Loan Parties hereby irrevocably appointing the Collateral Trustees its agent and attorney to act for it in such connection in either of such contingencies. In the event that the Collateral Trustees shall have appointed a separate trustee or separate trustees or co-trustee or co-trustees as above provided, it may at any time, by an instrument in writing, accept the resignation of or remove any such separate trustee or co-trustee, the successor to any such separate trust or co-trustee to be appointed by the Borrower and the Collateral Trustees, or by the Collateral Trustees alone, as hereinabove provided in this Section 5.11.

Section 5.12 Ordinary Care . The Collateral Trustees shall be deemed to have exercised ordinary care in the custody and preservation of the Collateral in their possession if the Collateral is accorded treatment substantially equal to that which the Collateral Trustees accord their own property, it being understood that the Collateral Trustees shall not have any responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not the Collateral Trustees have or are deemed to have knowledge of such matters, (ii) taking any necessary steps to preserve rights against any parties with respect to any Collateral or (iii) taking any action other than as directed by the Credit Facility Agent after compliance with Section 5.5(c) hereof.

SECTION 6 RELEASE OF COLLATERAL

Section 6.1 Condition to Release .

All, or the designated portion of (in the case of a release pursuant to Section 6.1(b)), the Collateral shall be released on the earlier of (each a “Release Event”):

(a) the date on which the Borrower and the Credit Facility Agent jointly deliver a notice to the Collateral Trustees, requesting the release of all Liens on the Collateral and (i) (A) all obligations owing to the Credit Facility Lenders shall have been satisfied and all obligations of the Credit Facility Lenders under the Credit Facility Documents shall have terminated and (B) accrued and unpaid Trustees’ Fees shall have been paid in full; or (ii) a Security Release Event, as defined in the Credit Facility Agreement, shall have occurred; or

(b) the date on which the Borrower delivers a Release Notice and no Default Notice has been given that has not been rescinded by the Credit Facility Agent; or

Section 6.2 Procedure for Release .

(a) Upon the occurrence of a Release Event, the Collateral Trustees shall, to the extent requested by the Borrower in the Release Notice or other notice requesting release of Liens pursuant to Section 6.1(a), take the actions set forth in Section 6.3. The Collateral Trustees shall promptly send a copy of each Release Notice and other notice requesting release of Liens pursuant to Section 6.1(a) to the Credit Facility Agent and the Public Trustee.

(b) The Collateral Trustee shall not take any actions requested of it by the Borrower after the receipt by the Collateral Trustees of a Default Notice, unless (i) such actions are consented to in writing by the Credit Facility Agent, (ii) the Credit Facility Agent has rescinded such Default Notice and has notified the Collateral Trustee of the rescission of such Default Notice, or (iii) the Collateral Trustees shall have received a final order of a court of competent jurisdiction either directing it to release the applicable Collateral or determining that the conditions to the release of the Collateral specified in Section 6.1 have been satisfied. The Credit Facility Agent hereby agrees, promptly upon a cure of all existing Potential Defaults and the waiver of all Events of Default, to deliver a notice to the Collateral Trustees rescinding any Default Notices relating to such Potential Defaults and Events of Default previously delivered to the Collateral Trustees.

Section 6.3 Effective Time of Release .

(a) The release of the applicable Collateral shall be effective (i) upon the occurrence of the events specified in Section 6.1(a), (ii) in connection with an event described in Section 6.1(b), upon receipt by the Collateral Trustees of such Release Notice; provided that the Collateral Trustee has not received a Default Notice that has not been rescinded, or (iii) in connection with an event described in Section 6.1(c), upon receipt by Collateral Trustees of such Release Notice. Subsequent to the Collateral Trustee’s receipt of a Default Notice, until such Default Notice has been rescinded, the Collateral shall be released only by a Release Notice or other notice requesting release of Liens pursuant to Section 6.1(a) jointly submitted by the Borrower and the Credit Facility Agent.

(b) (i) Upon the effectiveness of the release of all the Collateral, all right, title and interest of the Collateral Trustees in, to and under the Collateral Trust Estate, the Collateral and the Security Documents, and (except as otherwise provided in Section 7.7) the Collateral Trustees’ obligations and liabilities under this Agreement, shall terminate and shall revert to the Borrower or the applicable Loan Party, as the case may be, or its successors and assigns, and the estate, right, title and interest of the Collateral Trustees therein shall thereupon cease, and in such case, upon the written request of the Borrower or any Loan Party or its successors or assigns, and at the cost and expense of the Borrower or such Loan Party or its successors or assigns, the Collateral Trustees shall execute a satisfaction of the Security Documents and such other instruments, documents or agreements as Borrower or any Loan Party may request or may be necessary or desirable to terminate and remove of record any documents constituting public notice of the Security Documents and the security interests and assignments granted thereunder and shall assign and transfer, or cause to be assigned and transferred, and shall deliver or cause to be delivered to the Borrower or the applicable Loan Party, as the case may be,

all property, including all moneys, instruments and securities of the Borrower then held by the Collateral Trustees. The cancellation and satisfaction of the Security Documents shall be without prejudice to the rights of the Collateral Trustees or any successor trustee to charge and be reimbursed for any expenditures which it may thereafter incur in connection therewith.

(i) Upon the effectiveness of the release of a portion of the Collateral as specified in the applicable Release Notice (the “Released Collateral”), all right, title and interest of the Collateral Trustees in, to and under the Released Collateral shall terminate and shall revert to the Borrower or the applicable Loan Party, as the case may be, or its successors and assigns, and the estate, right, title and interest of the Collateral Trustees therein shall thereupon cease. Upon the written request of the Borrower or any Loan Party or its successors or assigns, and at the cost and expense of the Borrower or its successors or assigns, the Collateral Trustees shall execute such instruments, documents or agreements as Borrower or such Loan Party may request or may be necessary or desirable to terminate and remove of record any documents constituting public notice of the security interests and assignments granted in such Released Collateral under the Security Documents.

SECTION 7 MISCELLANEOUS

Section 7.1 Amendments, Supplements and Waivers .

(a) Subject to Section 7.1(b), at the written direction of the Credit Facility Agent and the Borrower, the Collateral Trustees shall, from time to time, enter into written agreements supplemental hereto for the purpose of adding to or waiving any provision of this Agreement or any of the Security Documents or amending the definition of any capitalized term used herein or therein, as such capitalized term is used herein or therein, or changing in any manner the rights of the Collateral Trustees, the Holders or the Borrower hereunder or thereunder; provided, however, that no such supplemental agreement or amendment shall:

(i) result in a breach of a provision or covenant contained in the Public Indenture providing for the securing of indebtedness thereunder equally and ratably with other indebtedness or obligations of the Borrower or any of its subsidiaries,

(ii) amend, modify or waive any provision of this Agreement or any Security Document so as to adversely affect any of the Collateral Trustees’ rights, immunities or indemnities hereunder or thereunder or enlarge its duties hereunder or thereunder, without the written consent of the Collateral Trustees; and

(iii) unless in writing and signed by the Individual Trustee, amend, waive or otherwise modify any provision of Section 5.10.

Any such supplemental agreement shall be binding upon the Borrower, the other Loan Parties, the Holders and the Collateral Trustees and their respective successors and assigns. The Collateral Trustees shall not enter into any such supplemental agreement or amendment unless it shall have received an instruction letter from the Credit Facility Agent requesting the Corporate Trustee and Individual Trustee to execute such supplemental agreement or amendment and a

certificate signed by a Responsible Officer to the effect that such supplemental agreement or amendment will not result in a breach of any provision or covenant contained in the Public Indenture.

(b) Subject to the consent of the Credit Facility Agent (whose consent shall be required for any amendments or supplements or modifications to this Agreement or any Security Document or to any new Security Document), and without limiting the generality of the foregoing, the Borrower, the other Loan Parties and the Collateral Trustees, at any time and from time to time, may amend or modify the Security Documents or enter into additional Security Documents or one or more agreements supplemental hereto or to any Security Document, in form satisfactory to the Collateral Trustees,

(i) to add to the covenants of the Borrower for the benefit of the Holders;

(ii) to mortgage, pledge or grant a security interest in favor of the Collateral Trustees as additional security for the Secured Debt pursuant to any Security Document; or

(iii) to cure any ambiguity, to correct or supplement any provision herein or in any Security Document which may be defective or inconsistent with any other provision herein or therein.

Section 7.2 Notices . Except as otherwise expressly provided herein, all notices and other communications shall be given to the respective parties at the address set forth below, or at such other address as such party may specify by written notice to the other party hereto:

If to the Borrower, at CONSOL Energy Inc, Consol Plaza, 1800 Washington Road, Pittsburgh, PA 15241-1421, Attention: Treasurer

if to the Collateral Trustees:

If to the Corporate Trustee, at Rodney Square North, 1100 North Market St., Wilmington, DE 19890, Attention: Corporate Trust Division, or at such other address as shall be designated by it in a written notice to the Loan Parties and each Agent, with a copy to the Individual Trustee, c/o Wilmington Trust Company, at 1100 North Market St. Rodney Square North Wilmington, DE 19890, Attention: Corporate Trust Division, or at such other address as shall be designated by him in a written notice to the Loan Parties and each Agent; provided that failure to send a copy of any notice to the Individual Trustee shall not render any notice to the Collateral Trustees ineffective

if to the Public Trustee or the Credit Facility Agent: to it at the address specified from time to time in the list provided by the Borrower to the Collateral Trustees.

All such notices, requests, demands and communications shall, to be effective hereunder, be in writing, and shall be deemed to have been given or made upon receipt if delivered by hand, upon receipt if given by overnight courier, four (4) days after its deposit in the mail, first class or air postage prepaid with return receipt requested, or in the case of notice by facsimile transmission,

when sent to the applicable party’s facsimile machine’s telephone number if the party sending such notice receives confirmation of the delivery thereof from its own facsimile machine; provided that a copy is sent by hand, overnight courier or mail, first class or air postage prepaid with return receipt requested following such facsimile transmission.

Section 7.3 Headings . Section, subsection and other headings used in this Agreement are for convenience only and shall not affect the construction of this Agreement.

Section 7.4 Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable of such provision in any other jurisdiction, provided that this Agreement shall be construed so as to give effect to the intention expressed in Section 2.11 hereof.

Section 7.5 Treatment of Payee or Indorsee by Collateral Trustees .

(a) The Collateral Trustees may treat the registered holder of any registered note, and the payee or indorsee of any note or debenture which is not registered, as the absolute owner thereof for all purposes hereunder and shall not be affected by any notice to the contrary, whether such note or debenture shall be past due or not.

(b) Any Person which shall be designated as the duly authorized representative of one or more Holders of Secured Debt to act as such in connection with any matters pertaining to this Agreement or any Security Document or the Collateral shall present to the Collateral Trustees such documents, including, without limitation, opinions of counsel, as the Collateral Trustees may reasonably require, in order to demonstrate to the Collateral Trustees the authority of such Person to act as the representative of such Holders.

Section 7.6 Dealings with the Borrower .

(a) Upon any application or demand by the Borrower or the other Loan Parties to the Collateral Trustees to take or permit any action under any of the provisions of this Agreement or any Security Document, the Borrower shall furnish to the Collateral Trustees a certificate signed by a Responsible Officer stating that all conditions precedent, if any, provided for in this Agreement or any Security Document relating to the proposed action have been complied with.

(b) Any opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate of Responsible Officers delivered to the Collateral Trustees.

Section 7.7 Claims Against the Collateral Trustees . Any claims or causes of action which the Credit Facility Lenders, the Public Trustee, or any other Holders of Secured Debt or the Borrower or the other Loan Parties shall have against the Collateral Trustees shall survive the termination of this Agreement and the release of the Collateral hereunder.

Section 7.8 Binding Effect . This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and shall inure to the benefit of the Holders and their respective successors and assigns, and nothing herein or in any Security Document is intended or shall be construed to give any other Person any right, remedy or claim under, to or in respect of this Agreement, any Security Document, the Collateral or the Collateral Trust Estate.

Section 7.9 Conflict with Other Agreements . The parties agree that in the event of any conflict between the provisions of this Agreement and the provisions of any of the Security Documents, the provisions of this Agreement shall control. Notwithstanding any provision in any of the Security Documents to the contrary, the parties and signatories hereto acknowledge and agree that any and all rights, powers, privileges, duties, responsibilities, liabilities and/or obligations (including but not limited to the right to grant or withhold consent and the right to act or refrain from acting), whether discretionary or mandatory, are and shall be exercised by the Collateral Trustees solely in accordance with the terms and conditions of this Agreement, at the direction of the Credit Facility Agent or other entity specified in this Agreement as having the right to give direction to the Collateral Trustees, and subject further to the rights of the Collateral Trustees to require officers’ certificate(s), opinion(s) and advice from counsel, accountants, appraisers and other third parties, advancement of expenses and/or assurances of indemnity satisfactory to the Collateral Trustees. If no direction or insufficient direction of the Credit Facility Agent or other entity specified in this Agreement as having the right to give direction to the Collateral Trustees is received by the Collateral Trustees, the Collateral Trustees shall have no obligation or responsibility whatsoever to take any action in connection with this Agreement, any Security Document or any other agreement or instrument with respect to any Collateral, and nothing contained in any Security Document or any other agreement or instrument with respect to any Collateral shall create, expand or otherwise increase in any manner whatsoever the duties, responsibilities, liabilities and/or obligations of the Collateral Trustees set forth in this Agreement.

Section 7.10 Governing Law . The provisions of this Agreement creating a trust for the benefit of the Secured Parties and setting forth the rights, duties, obligations and responsibilities of the Collateral Trustees hereunder shall be governed by and construed in accordance with the laws of the State of Delaware, so long as Wilmington Trust Company shall serve as Corporate Trustee hereunder. In all other respects, including, without limitation, all matters governed by the Uniform Commercial Code, and if Wilmington Trust Company shall cease to serve as Corporate Trustee hereunder, this Agreement shall be governed by and construed in accordance with the laws of the State of New York, except as otherwise required by mandatory provisions of law.

Section 7.11 Joinder of Additional Designated Subsidiaries . Any Subsidiary of the Borrower (which was not previously a Loan Party) which grants a Lien as security for the Secured Debt shall be deemed to join this Agreement as a Loan Party by executing and delivering to the Collateral Trustees a Guarantor Joinder pursuant to the terms of the Credit Facility Agreement.

Section 7.12 Additional Collateral . Any Loan Party which is required, in accordance with the Credit Facility Agreement, to grant a Lien on additional Collateral (not presently secured by the Security Documents) shall execute and deliver to the Collateral Trustees (i) appropriate Security Documents, in a form substantially similar to the Security Documents provided by the other Loan Parties, in favor of the Collateral Trustee as security for the Secured Debt, and (ii) opinions of counsel set forth in Section 4.8(a) hereof.

Section 7.13 Counterparts . This Agreement may be executed in separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.

Section 7.14 CONSENT TO FORUM; WAIVER OF JURY TRIAL .

(a) EACH PARTY HERETO IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH PARTY AT THE ADDRESSES PROVIDED FOR IN SECTION 7.2 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.

(b) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTION 7.14(a), SO LONG AS WILMINGTON TRUST COMPANY SHALL SERVE AS CORPORATE TRUSTEE HEREUNDER, ANY SUIT, CLAIM, DEMAND OR OTHER LEGAL OR ABRITRAL PROCEEDING, WHETHER AT LAW OR IN EQUITY, AGAINST EITHER OR BOTH OF THE COLLATERAL TRUSTEES SHALL BE BROUGHT ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN WILMINGTON, DELAWARE. FOR PURPOSES OF THIS SECTION 7.14(b), EACH PARTY HERETO IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN WILMINGTON, DELAWARE, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH PARTY AT THE ADDRESSES PROVIDED FOR IN SECTION 7.2 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.

(c) EACH PARTY HERETO WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED IN SECTION 7(a) AND 7(b) ABOVE AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE. EACH PARTY HERETO WAIVE TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.

Section 7.15 Confidentiality . The Collateral Trustees agree to keep confidential all information obtained from any Loan Party or its Subsidiaries which is nonpublic and confidential or proprietary in nature, including any information the Borrower specifically designates as confidential (except that the Collateral Trustees shall be permitted to disclose such information in the same circumstances that the Paying Agent is permitted to disclose such information under Section 11.12 of the Credit Facility Agreement), and to use such information only in connection with their respective capacities under this Agreement and for the purposes contemplated hereby and by the Security Documents; provided that nothing herein shall limit the Collateral Trustees’ right or obligation to communicate with Secured Parties as provided herein.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.


						CONSOL ENERGY INC.

						By:


Corporate Trustee:						WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Corporate Trustee

						By:



Individual Trustee:
								DAVID A. VANASKEY, not in his individual capacity, but solely as Individual Trustee

SCHEDULE 1.1

COLLATERAL TRUST AGREEMENT

1. Amended and Restated Security Agreement executed on June 27, 2007, among CONSOL Energy Inc., each of the other parties thereto and Wilmington Trust Company, as Collateral Trustee.

2. Amended and Restated Pledge Agreement executed on June 27, 2007, among each of the Pledgors party thereto and Wilmington Trust Company, as Collateral Trustee.

3. Amended and Restated Patent, Trademark and Copyright Security Agreement executed on June 27, 2007, among each of the Pledgors party thereto and Wilmington Trust Company, as Collateral Trustee.

4. First Preferred Fleet Mortgage executed on June 30, 2004 between CONSOLIDATION COAL COMPANY and Wilmington Trust Company, as Collateral Trustee, as amended by that certain First Amendment to First Preferred Fleet Mortgage executed on April 1, 2005, as further amended by that certain Second Amendment to First Preferred Fleet Mortgage executed on June 27, 2007.

5. First Preferred Ship Mortgage executed on June 30, 2004 between Quarto Mining Company and Wilmington Trust Company, as Collateral Trustee, as amended by that certain First Amendment to First Ship Fleet Mortgage executed on April 1, 2005, as further amended by that certain Second Amendment to First Preferred Ship Mortgage executed on June 27, 2007.

6. Account Control Agreement executed on June 30, 2004 among CONSOLIDATION COAL COMPANY, Wilmington Trust Company, as Collateral Trustee, and Citibank, N.A.

7. Account Control Agreement executed on June 30, 2004 among CONSOLIDATION COAL COMPANY, Wilmington Trust Company, as Collateral Trustee, and PNC Bank, National Association.

8. Securities Account Control Agreement executed on June 30, 2004 among CONSOL Energy Inc., Wilmington Trust Company, as Collateral Trustee, and PNC Bank, National Association.

9. Securities Account Control Agreement executed on July 27, 2005 among CONSOL Energy Inc., Wilmington Trust Company, as Collateral Trustee and National City Bank.

10. Accounts Control Agreement and Commercial Paper Control Agreement executed on August 8, 2005 among CONSOL Energy Inc., Wilmington Trust Company, as Collateral Trustee, LaSalle Bank National Association and LaSalle Bank Corporation.

11. Account Control Agreement executed on October 27, 2005 among CONSOL Energy Inc., Wilmington Trust Company, as Collateral Trustee and First Commonwealth Bank.

12. Securities Account Control Agreement executed on July 27, 2005 among CONSOL Energy Inc., Wilmington Trust Company, as Collateral Trustee and Citifunds Institutional Trust.

13. Securities Account Control Agreement executed on July 28, 2004 among CONSOL Energy Inc., Wilmington Trust Company, as Collateral Trustee and Blackrock Institutional Management Corporation.

14. Amended and Restated Regulated Substances Certificate and Indemnity Agreement executed on June 27, 2007 among CONSOL Energy Inc., each Guarantor party thereto, Wilmington Trust Company, as Corporate Trustee, and David A. Vanaskey, as Individual Trustee.

15. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Marshall County, West Virginia, by RESERVE COAL PROPERTIES COMPANY, and Consol Pennsylvania Coal Company LLC, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Alexander Reserve.

16. Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Fayette County, Pennsylvania, by Consol Docks Inc., as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Alicia Dock Facility.

17. Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing April 1, 2005 and recorded in Tazewell County, Virginia, by RESERVE COAL PROPERTIES COMPANY, CONSOLIDATION COAL COMPANY, and Consol Pennsylvania Coal Company LLC, collectively, as Grantor, to BI Mortgage Trustee LLC, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Amonate Mine.

18. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases,

Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in McDowell County, West Virginia, by RESERVE COAL PROPERTIES COMPANY, CONSOLIDATION COAL COMPANY, and Consol Pennsylvania Coal Company LLC, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, that certain Amonate Mine.

19. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004 effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Marshall County, West Virginia, by RESERVE COAL PROPERTIES COMPANY, CONSOLIDATION COAL COMPANY, Conrhein Coal Company, and Consol Pennsylvania Coal Company LLC, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Bailey Mine/Enlow Fork Complex.

20. Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing to be effective April 1, 2005 and recorded in Greene County, Pennsylvania, by RESERVE COAL PROPERTIES COMPANY, CONSOLIDATION COAL COMPANY, Conrhein Coal Company, and Consol Pennsylvania Coal Company LLC, collectively, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Bailey Mine/Enlow Fork Complex.

21. Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Washington County, Pennsylvania, by RESERVE COAL PROPERTIES COMPANY, CONSOLIDATION COAL COMPANY, Conrhein Coal Company, and Consol Pennsylvania Coal Company LLC, collectively, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Bailey Mine/Enlow Fork Complex.

22. Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Washington County, Pennsylvania, by CONSOLIDATION COAL COMPANY and Consol Pennsylvania Coal Company LLC, collectively, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Berkshire Reserve.

23. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Braxton County, West Virginia, by WOLFPEN KNOB DEVELOPMENT COMPANY, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Birch Reserve.

24. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Clay County, West Virginia, by WOLFPEN KNOB DEVELOPMENT COMPANY, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Birch Reserve.

25. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, and as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 recorded in Nicholas County, West Virginia, by WOLFPEN KNOB DEVELOPMENT COMPANY, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Birch Reserve.

26. Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Greene County, Pennsylvania, by CONSOLIDATION COAL, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Blacksville #2 Mine.

27. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Monongalia County, West Virginia, by CONSOLIDATION COAL, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Blacksville #2 Mine.

28. Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Greene County, Pennsylvania, by RESERVE COAL PROPERTIES COMPANY and CONSOLIDATION COAL COMPANY, collectively, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Blacksville #3 Reserve.

29. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded

in Monongalia County, West Virginia, by RESERVE COAL PROPERTIES COMPANY and CONSOLIDATION COAL COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Blacksville #3 Reserve.

30. Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, a as amended by First Amendment to Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Buchanan County, Virginia, by RESERVE COAL PROPERTIES COMPANY and CONSOLIDATION COAL COMPANY, collectively, as Grantor, to BI Mortgage Trustee LLC, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Buchanan Mine.

31. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005and recorded in Clark County Illinois, by RESERVE COAL PROPERTIES COMPANY, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Clark County Reserve.

32. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005and recorded in Vermilion County Illinois, by RESERVE COAL PROPERTIES COMPANY, Consol Pennsylvania Coal Company LLC, and CNX Marine Terminals Inc., collectively, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Danville Reserve.

33. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005and recorded in Edgar County Illinois, by RESERVE COAL PROPERTIES COMPANY, Consol Pennsylvania Coal Company LLC, and CNX Marine Terminals Inc., collectively, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Danville Reserve.

34. Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005and recorded in Washington County, Pennsylvania, by Eighty-Four Mining Company, ISLAND CREEK COAL COMPANY, Laurel Run Mining Company, and RESERVE COAL PROPERTIES COMPANY, collectively, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Eighty-Four Mine.

35. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Emery County, Utah, by CONSOLIDATION COAL COMPANY, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Emery Mine.

36. Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Washington County, Pennsylvania, by CNX Marine Terminals Inc., RESERVE COAL PROPERTIES COMPANY and CONSOLIDATION COAL COMPANY, collectively, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Fallowfield Reserve.

37. Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Greene County, Pennsylvania, by Consol Pennsylvania Coal Company LLC, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Greene Hill Reserve.

38. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005and recorded in Hamilton County, Illinois, by RESERVE COAL PROPERTIES COMPANY, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Hamilton Reserve.

39. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Saline County, Illinois, by RESERVE COAL PROPERTIES COMPANY, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Hamilton Reserve.

40. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Franklin County, Illinois, by RESERVE COAL PROPERTIES COMPANY, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Hamilton Reserve.

41. Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by

First Amendment to Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005and recorded in Buchanan County, Virginia, by RESERVE COAL PROPERTIES COMPANY and CONSOLIDATION COAL COMPANY, collectively, as Grantor, to BI Mortgage Trustee LLC, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Hurricane Branch Reserve.

42. Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Russell County, Virginia, by RESERVE COAL PROPERTIES COMPANY and CONSOLIDATION COAL COMPANY, collectively, as Grantor, to BI Mortgage Trustee LLC, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Hurricane Branch Reserve.

43. Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005and recorded in Tazewell County, Virginia, by RESERVE COAL PROPERTIES COMPANY and CONSOLIDATION COAL COMPANY, collectively, as Grantor, to BI Mortgage Trustee LLC, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Hurricane Branch Reserve.

44. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Breathitt County, Kentucky, by CONSOL of Kentucky, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Jones Fork Mine.

45. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Floyd County, Kentucky, by CONSOL of Kentucky, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Jones Fork Mine.

46. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Knott County, Kentucky, by CONSOL of Kentucky, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Jones Fork Mine.

47. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Magoffin County, Kentucky, by CONSOL of Kentucky, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Jones Fork Mine.

48. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Marion County, West Virginia, by CONSOLIDATION COAL COMPANY and RESERVE COAL PROPERTIES COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Loveridge Mine.

49. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Monongalia County, West Virginia, by CONSOLIDATION COAL COMPANY and RESERVE COAL PROPERTIES COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Loveridge Mine.

50. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Wetzel County, West Virginia, by CONSOLIDATION COAL COMPANY and RESERVE COAL PROPERTIES COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Loveridge Mine.

51. Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004 as amended by First Amendment to Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005, and recorded in Harrison County, Ohio, by CONSOLIDATION COAL COMPANY, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Mahoning Valley Mine.

52. Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Belmont County, Ohio, by CONSOLIDATION COAL COMPANY, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Mahoning Valley Mine.

53. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Marshall County, West Virginia, by CONSOLIDATION COAL COMPANY and Consol Pennsylvania Coal Company LLC, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Marshall County Reserve.

54. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Marshall County, West Virginia, by CONSOLIDATION COAL COMPANY and McELROY COAL COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain McElroy Mine.

55. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on March 30, 2005, to be effective April 1, 2005 and recorded in Marion County, West Virginia, by CONSOLIDATION COAL COMPANY, Grantor to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Mid-Allegheny Reserve.

56. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on March 30, 2005, to be effective April 1, 2005 and recorded in Marshall County, West Virginia, by CONSOLIDATION COAL COMPANY, Grantor to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Mid-Allegheny Reserve.

57. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on March 30, 2005, to be effective April 1, 2005 and recorded in Wetzel County, West Virginia, by CONSOLIDATION COAL COMPANY, Grantor to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Mid-Allegheny Reserve.

58. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Knott County, Kentucky, by CONSOL of Kentucky, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Mill Creek Mine.

59. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Letcher County, Kentucky, by CONSOL of Kentucky, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Mill Creek Mine.

60. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Pike County, Kentucky, by CONSOL of Kentucky, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Mill Creek Mine.

61. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Marion County, West Virginia, by CONSOLIDATION COAL COMPANY, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Nailer Reserve.

62. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Powder River County, Montana, by CONSOLIDATION COAL COMPANY and RESERVE COAL PROPERTIES COMPANY, collectively, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Otter Creek Reserve.

63. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Jefferson County, Illinois, by CONSOLIDATION COAL COMPANY, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Rend Lake Mine.

64. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statements and Fixture Filing effective April 1, 2005 and recorded in Marion County, West Virginia, by CONSOLIDATION COAL COMPANY and RESERVE COAL PROPERTIES COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Robinson Run Mine.

65. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004 as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005, and recorded in Harrison County, West Virginia, by CONSOLIDATION COAL COMPANY and RESERVE COAL PROPERTIES COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Robinson Run Mine.

66. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Wetzel County, West Virginia, by CONSOLIDATION COAL COMPANY and RESERVE COAL PROPERTIES COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Robinson Run Mine.

67. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Monongalia County, West Virginia, by CONSOLIDATION COAL COMPANY and RESERVE COAL PROPERTIES COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain St. Cloud Reserve.

68. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004 as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005, and recorded in Wetzel County, West Virginia, by CONSOLIDATION COAL COMPANY and RESERVE COAL PROPERTIES COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain St. Cloud Reserve.

69. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Marion County, West Virginia, by CONSOLIDATION COAL COMPANY, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain St. Leo Reserve.

70. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases,

Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Monongalia County, West Virginia, by CONSOLIDATION COAL COMPANY, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain St. Leo Reserve.

71. That certain Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004 as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005, and recorded in Wetzel County, West Virginia, by CONSOLIDATION COAL COMPANY, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain St. Leo Reserve.

72. Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Allegheny County, Pennsylvania, by RESERVE COAL PROPERTIES COMPANY, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Shaner Reserve.

73. Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Westmoreland County, Pennsylvania, by RESERVE COAL PROPERTIES COMPANY, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Shaner Reserve.

74. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Marshall County, West Virginia, by CONSOLIDATION COAL COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Shoemaker Mine.

75. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Ohio County, West Virginia, by CONSOLIDATION COAL COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Shoemaker Mine.

76. Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as

amended by First Amendment to Open-End Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Washington County, Pennsylvania, by CONSOLIDATION COAL COMPANY, collectively, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Shoemaker Mine.

77. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Doddridge County, West Virginia, by CONSOLIDATION COAL COMPANY and RESERVE COAL PROPERTIES COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Tetrick Reserve.

78. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Harrison County, West Virginia, by CONSOLIDATION COAL COMPANY and RESERVE COAL PROPERTIES COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Tetrick Reserve.

79. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Marion County, West Virginia, by CONSOLIDATION COAL COMPANY and RESERVE PROPERTIES COMPANY, collectively, as Grantor, to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Tetrick Reserve.

80. Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Buchanan County, Virginia, by ISLAND CREEK COAL COMPANY, as Grantor, to BI Mortgage Trustee LLC, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain VP3 Mine.

81. Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Buchanan County, Virginia, by ISLAND CREEK COAL COMPANY, as Grantor, to BI Mortgage Trustee LLC, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain VP8 Mine.

82. Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Mortgage, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in Sheridan County, Wyoming, by RESERVE COAL PROPERTIES COMPANY, as Mortgagor, to David A. Vanaskey, Collateral Trustee, as Mortgagee, encumbering that certain Youngs Creek Reserve.

83. Credit Line Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing executed on March 30, 2005, to be effective April 1, 2005 and recorded in Wetzel County, West Virginia, by CNX LAND RESOURCES INC. and RESERVE COAL PROPERTIES COMPANY, collectively, as Grantor to James A. Russell, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Wetzel Reserve.

84. Indemnity Deed of Trust, Security Agreement, Assignment of Rents and Leases, Financing Statement and Fixture Filing executed on June 14, 2004, effective June 30, 2004, as amended by First Amendment to Indemnity Deed of Trust, Assignment of Rents and Leases, Security Agreement, Financing Statement and Fixture Filing effective April 1, 2005 and recorded in the City of Baltimore, Maryland, by CNX Marine Terminals Inc., as Grantor, to Glenn P. Hare, as Trustee, for the benefit of David A. Vanaskey, Collateral Trustee, as Beneficiary, encumbering that certain Baltimore Dock Facility.

85. Promissory Note dated December 27, 2000 in the original principal amount of CAD$100,000,000 executed by CONSOL Energy Canada Ltd. in favor of CONSOL Energy Inc.

86. Promissory Note dated April 26, 2002 in the original principal amount of $350,000 executed by Universal Aggregates, LLC in favor of CONSOL Energy Inc.

87. Promissory Note dated July 1, 2002 in the original principal amount of $100,000 executed by Universal Aggregates, LLC in favor of CONSOL Energy Inc.

88. Promissory Note dated August 22, 2002 in the original principal amount of $100,000 executed by Universal Aggregates, LLC in favor of CONSOL Energy Inc.

89. Promissory Note dated October 23, 2002 in the original principal amount of $100,000 executed by Universal Aggregates, LLC in favor of CONSOL Energy Inc.

90. Promissory Note dated January 2, 2003 in the original principal amount of $100,000 executed by Universal Aggregates, LLC in favor of CONSOL Energy Inc.

91. Promissory Note dated March 3, 2003 in the original principal amount of $100,000 executed by Universal Aggregates, LLC in favor of CONSOL Energy Inc.

92. Promissory Note dated April 7, 2003 in the original principal amount of $200,000 executed by Universal Aggregates, LLC in favor of CONSOL Energy Inc.

93. Promissory Note dated May 27, 2003 in the original principal amount of $200,000 executed by Universal Aggregates, LLC in favor of CONSOL Energy Inc.

94. Promissory Note dated July 17, 2003 in the original principal amount of $100,000 executed by Universal Aggregates, LLC in favor of CONSOL Energy Inc.

95. Promissory Note dated August 7, 2003 in the original principal amount of $100,000 executed by Universal Aggregates, LLC in favor of CONSOL Energy Inc.

96. Promissory Note dated August 28, 2003 in the original principal amount of $100,000 executed by Universal Aggregates, LLC in favor of CONSOL Energy Inc.

97. Promissory Note dated August 30, 2004 in the original principal amount of $8,000,000 executed by Dynamic Energy, Inc. in favor or Laurel Run Mining Company.

98. Promissory Note dated April 27, 2006 in the original principal amount of $2,500,000 executed by PFBC Environmental Energy Technology Inc. in favor of CONSOL Energy Inc.

99. UCC FILINGS

(a) BLANKET COLLATERAL


DEBTOR NAME, TYPE OF ENTITY & STATE OF FORMATION		JURISDICTION

CONSOL Energy Inc. (Delaware corporation)		Delaware Secretary of State

Central Ohio Coal Company (Ohio corporation)		Ohio Secretary of State

CNX Land Resources Inc. (Delaware corporation)		Delaware Secretary of State

CNX Marine Terminals Inc. (Delaware corporation)		Delaware Secretary of State

Conrhein Coal Company (Pennsylvania general partnership)		Pennsylvania Secretary of State

Consol Docks Inc. (Delaware corporation)		Delaware Secretary of State


DEBTOR NAME, TYPE OF ENTITY & STATE OF FORMATION		JURISDICTION

CONSOL Energy Sales Company (Delaware corporation)		Delaware Secretary of State

CONSOL Financial Inc. (Delaware corporation)		Delaware Secretary of State

CONSOL of Canada Inc. (Delaware corporation)		Delaware Secretary of State

CONSOL of Central Pennsylvania LLC (Pennsylvania limited liability company)		Pennsylvania Secretary of State

CONSOL of Kentucky Inc. (Delaware corporation)		Delaware Secretary of State

CONSOL of Ohio LLC (Ohio limited liability company)		Ohio Secretary of State

CONSOL of WV LLC (West Virginia limited liability company)		West Virginia Secretary of State

CONSOL of Wyoming LLC (Delaware limited liability company)		Delaware Secretary of State

Consol Pennsylvania Coal Company LLC (Delaware limited liability company)		Delaware Secretary of State

CONSOLIDATION COAL COMPANY (Delaware corporation)		Delaware Secretary of State

Eighty-Four Mining Company (Pennsylvania corporation)		Pennsylvania Secretary of State

Helvetia Coal Company (Pennsylvania corporation)		Pennsylvania Secretary of State

ISLAND CREEK COAL COMPANY (Delaware corporation)		Delaware Secretary of State


DEBTOR NAME, TYPE OF ENTITY & STATE OF FORMATION		JURISDICTION

J.A.R. Barge Lines, LLC (Pennsylvania limited liability company)		Pennsylvania Secretary of State

Keystone Coal Mining Corporation (Pennsylvania corporation)		Pennsylvania Secretary of State

Laurel Run Mining Company (Virginia corporation)		Virginia Secretary of State

Leatherwood, Inc. (Pennsylvania corporation)		Pennsylvania Secretary of State

McELROY COAL COMPANY (Delaware corporation)		Delaware Secretary of State

Mon River Towing, Inc. (Pennsylvania corporation)		Pennsylvania Secretary of State

MTB Inc. (Delaware corporation)		Delaware Secretary of State

RESERVE COAL PROPERTIES COMPANY (Delaware corporation)		Delaware Secretary of State

Rochester & Pittsburgh Coal Company (Pennsylvania corporation)		Pennsylvania Secretary of State

SOUTHERN OHIO COAL COMPANY (West Virginia corporation)		West Virginia Secretary of State

Terra Firma Company (West Virginia corporation)		West Virginia Secretary of State

TWIN RIVERS TOWING COMPANY (Delaware corporation)		Delaware Secretary of State

Windsor Coal Company (West Virginia corporation)		West Virginia Secretary of State

DEBTOR NAME, TYPE OF ENTITY & STATE OF FORMATION

JURISDICTION

WOLFPEN KNOB DEVELOPMENT COMPANY

(Virginia corporation)

Virginia Secretary of State

(b) FIXTURE FILINGS


DEBTOR NAME(S)	JURISDICTION	COAL MINE/COAL RESERVE/TERMINAL/PORT

Consol Pennsylvania Coal Company LLC CONSOLIDATION COAL COMPANY RESERVE COAL PROPERTIES COMPANY	Tazewell County, VA	Amonate Mine and Associated Facilities

Consol Pennsylvania Coal Company LLC CONSOLIDATION COAL COMPANY RESERVE COAL PROPERTIES COMPANY	McDowell County, WV	Amonate Mine and Associated Facilities

Conrhein Coal Company Consol Pennsylvania Coal Company LLC CONSOLIDATION COAL COMPANY RESERVE COAL PROPERTIES COMPANY	Greene County, PA	Bailey Mine, Enlow Fork Mine, and Associated Facilities

Conrhein Coal Company Consol Pennsylvania Coal Company LLC CONSOLIDATION COAL COMPANY RESERVE COAL PROPERTIES COMPANY	Washington County, PA	Bailey Mine, Enlow Fork Mine, and Associated Facilities

CONSOLIDATION COAL COMPANY	Greene County, PA	Blacksville #2 Mine and Associated Facilities

CONSOLIDATION COAL COMPANY	Monongalia County, WV	Blacksville #2 Mine and Associated Facilities

RESERVE COAL PROPERTIES COMPANY CONSOLIDATION COAL COMPANY	Buchanan County, VA	Buchanan Mine and Associated Facilities


DEBTOR NAME(S)	JURISDICTION	COAL MINE/COAL RESERVE/TERMINAL/PORT

Eighty-Four Mining Company ISLAND CREEK COAL COMPANY Laurel Run Mining Company RESERVE COAL PROPERTIES COMPANY	Washington County, PA	Eighty-Four Mine and Associated Facilities

CONSOLIDATION COAL COMPANY	Emery County, UT	Emery Mine and Associated Facilities

CONSOL of Kentucky Inc.	Floyd County, KY	Jones Fork Mine and Associated Facilities

CONSOL of Kentucky Inc.	Knott County, KY	Jones Fork Mine and Associated Facilities

CONSOL of Kentucky Inc.	Magoffin County, KY	Jones Fork Mine and Associated Facilities

CONSOLIDATION COAL COMPANY RESERVE COAL PROPERTIES COMPANY	Marion County, WV	Loveridge Mine and Associated Facilities

CONSOLIDATION COAL COMPANY	Belmont County, OH	Mahoning Valley Mine and Associated Facilities

CONSOLIDATION COAL COMPANY	Harrison County, OH	Mahoning Valley Mine and Associated Facilities

CONSOLIDATION COAL COMPANY McELROY COAL COMPANY	Marshall County, WV	McElroy Mine and Associated Facilities

CONSOL of Kentucky Inc.	Knott County, KY	Mill Creek Mine and Associated Facilities

CONSOL of Kentucky Inc.	Letcher County, KY	Mill Creek Mine and Associated Facilities

CONSOL of Kentucky Inc.	Pike County, KY	Mill Creek Mine and Associated Facilities


DEBTOR NAME(S)	JURISDICTION	COAL MINE/COAL RESERVE/TERMINAL/PORT

CONSOLIDATION COAL COMPANY	Jefferson County, IL	Rend Lake Mine and Associated Facilities

CONSOLIDATION COAL COMPANY RESERVE COAL PROPERTIES COMPANY	Harrison County, WV	Robinson Run Mine and Associated Facilities

CONSOLIDATION COAL COMPANY	Washington County, PA	Shoemaker Mine and Associated Facilities

CONSOLIDATION COAL COMPANY	Marshall County, WV	Shoemaker Mine and Associated Facilities

ISLAND CREEK COAL COMPANY	Buchanan County, VA	VP3 Mine and Associated Facilities

ISLAND CREEK COAL COMPANY	Buchanan County, VA	VP8 Mine and Associated Facilities

Consol Docks Inc.	Fayette County, PA	Alicia Dock Facility

CNX Marine Terminals Inc.	City of Baltimore, MD	Baltimore Terminal


DEBTOR NAME(S), TYPE OF ENTITY & STATE OF FORMATION	JURISDICTION	MINE HEAD

CONSOLIDATION COAL COMPANY	Tazewell County, VA	Amonate Mine

CONSOLIDATION COAL COMPANY	McDowell County, WV	Amonate Mine

Conrhein Coal Company	Greene County, PA	Bailey Mine, Enlow Fork Mine

Conrhein Coal Company	Washington County, PA	Bailey Mine, Enlow Fork Mine

CONSOLIDATION COAL COMPANY	Monongalia County, WV	Blacksville #2 Mine

CONSOLIDATION COAL COMPANY	Buchanan County, VA	Buchanan Mine

Eighty-Four Mining Company	Washington County, PA	Eighty-Four Mine

CONSOLIDATION COAL COMPANY	Emery County, UT	Emery Mine

CONSOL of Kentucky Inc.	Knott County, KY	Jones Fork Mine

CONSOLIDATION COAL COMPANY	Marion County, WV	Loveridge Mine

CONSOLIDATION COAL COMPANY	Belmont County, OH	Mahoning Valley Mine

CONSOLIDATION COAL COMPANY	Harrison County, OH	Mahoning Valley Mine

CONSOLIDATION COAL COMPANY	Marshall County, WV	McElroy Mine

CONSOL of Kentucky Inc.	Letcher County, KY	Mill Creek Mine

CONSOLIDATION COAL COMPANY	Jefferson County, IL	Rend Lake Mine

CONSOLIDATION COAL COMPANY	Harrison County, WV	Robinson Run Mine

CONSOLIDATION COAL COMPANY	Marshall County, WV	Shoemaker Mine

ISLAND CREEK COAL COMPANY	Buchanan County, VA	VP3 Mine


DEBTOR NAME(S), TYPE OF ENTITY & STATE OF FORMATION	JURISDICTION	MINE HEAD
ISLAND CREEK COAL COMPANY	Buchanan County, VA	VP8 Mine

99. CONSOL - LIST OF PLEDGED EQUITY

(a) CORPORATIONS


FULL LEGAL NAME OF ENTITY (STATE OF INCORPORATION)	LEGAL NAME OF ENTITY’S SHAREHOLDER	ENTITY’S SHAREHOLDER AS LISTED ON STOCK CERTIFICATE(S)	STOCK CERTIFICATE NO. (NUMBER OF SHARES TO BE PLEDGED)

Central Ohio Coal Company (Ohio corporation)	CONSOLIDATION COAL COMPANY	Consolidation Coal Company	No. 25 (75,000)

CNX Gas Corporation (Delaware corporation)	CONSOLIDATION COAL COMPANY	CONSOLIDATION COAL COMPANY	No. 2 (122,896,667)

CNX Land Resources Inc. (Delaware corporation)	CONSOL Energy Inc.	CONSOL Energy Inc.	No. 1 (1,000 shares)

CNX Marine Terminals Inc. (Delaware corporation)	CONSOL Energy Sales Company	CONSOL Energy Sales Company	No. 3 (1,000 shares)

Consol Docks Inc. (Delaware corporation)	CONSOL Energy Sales Company	CONSOL Energy Sales Company	No. 3 (1,000 shares)

CONSOL Energy Sales Company (fka Consol Sales Company) (Delaware corporation)	CONSOL Energy Inc.	CONSOL Energy Inc.	No. 1A (490 shares)
	CONSOL Energy Inc.	Consol Inc. [merged into CONSOL Energy Inc.]	No. 3 (510 shares)

CONSOL Financial Inc. (Delaware corporation)	CONSOL Energy Inc.	CONSOL Energy Inc.	No. 1 (1,000 shares)

CONSOL of Canada Inc. (Delaware corporation)	CONSOL Energy Inc.	CONSOL Energy Inc.	No. 9 (3,430 shares)
CONSOL of Canada Inc. (Delaware corporation)	CONSOL Energy Inc.	CONSOL Inc. [merged into CONSOL Energy Inc.]	No. 8 (3,570 shares)


FULL LEGAL NAME OF ENTITY (STATE OF INCORPORATION)	LEGAL NAME OF ENTITY’S SHAREHOLDER	ENTITY’S SHAREHOLDER AS LISTED ON STOCK CERTIFICATE(S)	STOCK CERTIFICATE NO. (NUMBER OF SHARES TO BE PLEDGED)

CONSOL of Kentucky Inc. (Delaware corporation)	CONSOL Energy Inc.	CONSOL Energy Inc. CONSOL Inc. [merged into CONSOL Energy Inc.]	No. 7 (245 shares) No. 6 (255 shares)

CONSOLIDATION COAL COMPANY (Delaware corporation)	CONSOL Energy Inc.	CONSOL Energy Inc.	No. 6A (36,750 shares)
CONSOLIDATION COAL COMPANY (Delaware corporation)	CONSOL Energy Inc.	Consol Inc. [merged into CONSOL Energy Inc.]	No. 7 (38,250 shares)

Eighty-Four Mining Company (Pennsylvania corporation)	CONSOL Financial Inc.	New Century Holdings, Inc. [merged into CONSOL Financial Inc.]	No. 1A (10 shares)

Helvetia Coal Company (Pennsylvania corporation)	Rochester & Pittsburgh Coal Company	Rochester & Pittsburgh Coal Company	No. 2 (500 shares)

ISLAND CREEK COAL COMPANY (Delaware corporation)	CONSOLIDATION COAL COMPANY	CONSOLIDATION COAL COMPANY	No. 1 (100 shares)

Keystone Coal Mining Corporation (Pennsylvania corporation)	Rochester & Pittsburgh Coal Company	Rochester & Pittsburgh Coal Company	No. 2 (100 shares)

Laurel Run Mining Company (Virginia corporation)	ISLAND CREEK COAL COMPANY	Island Creek Coal Company	No. 17 (1,000 shares)

Leatherwood, Inc. (Pennsylvania corporation)	Rochester & Pittsburgh Coal Company	ROCHESTER & PITTSBURGH COAL COMPANY	No. 1A (100 shares)


FULL LEGAL NAME OF ENTITY (STATE OF INCORPORATION)	LEGAL NAME OF ENTITY’S SHAREHOLDER	ENTITY’S SHAREHOLDER AS LISTED ON STOCK CERTIFICATE(S)	STOCK CERTIFICATE NO. (NUMBER OF SHARES TO BE PLEDGED)

McELROY COAL COMPANY (Delaware corporation)	CONSOLIDATION COAL COMPANY	CONSOLIDATION COAL COMPANY	No. 1 (1,000 shares)

Mon River Towing, Inc. (Pennsylvania corporation)	CONSOL Energy Sales Company	CONSOL Energy Sales Company	No. 19 (1,000 shares)

MTB Inc. (Delaware corporation)	CONSOL Energy Inc.	CONSOL Energy Inc CONSOL Inc. [merged into CONSOL Energy Inc.]	No. 1A (490 shares) No. 2 (510 shares)

RESERVE COAL PROPERTIES COMPANY (Delaware corporation)	CONSOL Energy Inc.	CONSOL Energy Inc.	No. 4A (490 shares)
RESERVE COAL PROPERTIES COMPANY (Delaware corporation)	CONSOL Energy Inc.	CONSOL Inc. [merged into CONSOL Energy Inc.]	No. 5 (510 shares)

Rochester & Pittsburgh Coal Company (Pennsylvania corporation)	CONSOLIDATION COAL COMPANY	CONSOLIDATION COAL COMPANY	No. 2 (1,000 shares)

SOUTHERN OHIO COAL COMPANY (West Virginia corporation)	CONSOLIDATION COAL COMPANY	Consolidation Coal Company	No. 10 (5,000 shares)

Terra Firma Company (West Virginia corporation)	CNX Land Resources Inc.	CNX LAND RESOURCES INC.	No 1 (1 share)

TWIN RIVERS TOWING COMPANY (Delaware corporation)	CONSOL Energy Sales Company	CONSOL Energy Sales Company	No. 6 (1,000 shares)

Windsor Coal Company (West Virginia corporation)	CONSOLIDATION COAL COMPANY	Consolidation Coal Company	No. 29 (4,064 shares)

FULL LEGAL NAME OF

ENTITY (STATE OF

INCORPORATION)

LEGAL NAME OF
ENTITY’S

SHAREHOLDER

ENTITY’S
SHAREHOLDER AS
LISTED ON STOCK
CERTIFICATE(S)

STOCK
CERTIFICATE NO.
(NUMBER OF
SHARES TO BE
PLEDGED)

WOLFPEN KNOB

DEVELOPMENT COMPANY

(Virginia corporation)

CONSOL Energy Inc.

CONSOL Energy Inc.
CONSOL Inc.[merged
into CONSOL Energy
Inc.]

No. 5B (490 shares)
No. 6 (510 shares)

(b) FOREIGN CORPORATIONS OWNED BY A DOMESTIC LOAN PARTY


FULL LEGAL NAME OF ENTITY (STATE OF FORMATION)		ENTITY’S MEMBER(S)

CONSOL of Central Pennsylvania LLC (Pennsylvania limited liability company)		CONSOL Energy Inc. (100%)

CONSOL of Ohio LLC (Ohio limited liability company)		CONSOL Energy Inc. (100%)

CONSOL of WV LLC (West Virginia limited liability company)		CONSOL Energy Inc. (100%)

CONSOL of Wyoming LLC (Delaware limited liability company)		CONSOL Energy Inc. (100%)

Consol Pennsylvania Coal Company LLC (Delaware limited liability company)		CONSOL Energy Inc. (100%)

J.A.R. Barge Lines, LLC (Pennsylvania limited liability company)		CONSOL Energy Sales Company (100%)

(d) General Partnerships

FULL LEGAL NAME OF ENTITY

(STATE OF FORMATION)

ENTITY’S PARTNER(S)

Conrhein Coal Company

(Pennsylvania general partnership)

CONSOLIDATION COAL COMPANY (76%)

MTB Inc. (24%)

Exhibit 10.39

CONTINUING AGREEMENT OF GUARANTY AND SURETYSHIP

This Continuing Agreement of Guaranty and Suretyship (this “ Guaranty ”), dated as of this 30th day of June, 2004, is jointly and severally given by each of the UNDERSIGNED and each of the other Persons which become Guarantors hereunder from time to time (each a “ Guarantor ” and collectively the “ Guarantors ”) in favor of PNC BANK, NATIONAL ASSOCIATION , as paying agent for the Lenders (the “ Paying Agent ”), in connection with that certain Credit Agreement, dated as of the date hereof, by and among, CONSOL Energy Inc., a Delaware corporation (the “ Borrower ”), the Guarantors now or hereafter party thereto, Citibank North America, Inc. and PNC Bank, National Association in their capacity as co-administrative agents, LaSalle Bank National Association, Société Générale, New York Branch and SunTrust Bank, each in its capacity as a co-documentation agent, and the Lenders now or hereafter party thereto (the “ Lenders ”) (as amended, restated, modified, or supplemented from time to time hereafter, the “ Credit Agreement ”). Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them by the Credit Agreement and the rules of construction set forth in Section 1.2 [Construction] of the Credit Agreement shall apply to this Guaranty.

1. Guarantied Obligations . To induce the Paying Agent and the Lenders to make loans and grant other financial accommodations to the Borrower under the Credit Agreement, each Guarantor hereby jointly and severally unconditionally, and irrevocably, guaranties to the Paying Agent and each Lender, and becomes surety, as though it was a primary obligor for, the full and punctual payment and performance when due (whether on demand, at stated maturity, by acceleration, or otherwise and including any amounts which would become due but for the operation of an automatic stay under the federal bankruptcy code of the United States or any similar laws of any country or jurisdiction) of: (i) the payment and performance of all Obligations, including, without limiting the generality of the foregoing, all obligations, liabilities, and indebtedness from time to time of the Borrower or any other Guarantor to the Paying Agent or any of the Lenders under or in connection with the Credit Agreement or any other Loan Document or any Specified Swap Agreement, whether for principal, interest, fees, indemnities, expenses, or otherwise, and all refinancings or refundings thereof, whether such obligations, liabilities, or indebtedness are direct or indirect, secured or unsecured, joint or several, absolute or contingent, due or to become due, whether for payment or performance, now existing or hereafter arising (and including obligations, liabilities, and indebtedness arising or accruing after the commencement of any bankruptcy, insolvency, reorganization, or similar proceeding with respect to any of the Loan Parties or that would have arisen or accrued but for the commencement of such proceeding (including without limitation, interest after default), even if the claim for such obligation, liability or indebtedness is not enforceable or allowable in such proceeding, and including all Obligations, liabilities, and indebtedness arising from any extensions of credit under or in connection with the Loan Documents or any Specified Swap Agreement from time to time, regardless of whether any such extensions of credit are in excess of the amount committed under or contemplated by the Loan Documents or any Specified Swap Agreement or are made in circumstances in which any condition to extension of credit is not satisfied), (ii) any obligation or liability of any of the Loan Parties arising out of overdrafts on

deposits or other accounts or out of electronic funds (whether by wire transfer or through automated clearing houses or otherwise) or out of the return unpaid of, or other failure of the Paying Agent or any Lender to receive final payment for, any check, item, instrument, payment order or other deposit or credit to a deposit or other account, or out of the Paying Agent’s or any Lender’s non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository or other similar arrangements, and (iii) any amendments, extensions, renewals and increases of or to any of the foregoing (all of the foregoing obligations, liabilities and indebtedness are referred to herein collectively as the “ Guarantied Obligations ” and each as a “ Guarantied Obligation ”). Without limitation of the foregoing, any of the Guarantied Obligations shall be and remain Guarantied Obligations entitled to the benefit of this Guaranty if the Paying Agent or any of the Lenders (or any one or more assignees or transferees thereof) from time to time assign or otherwise transfer all or any portion of their respective rights and obligations under the Loan Documents, or any other Guarantied Obligations, to any other Person as provided by the Loan Documents or by the Specified Swap Agreements. In furtherance of the foregoing, each Guarantor jointly and severally agrees as follows:

2. Guaranty . Each Guarantor hereby promises to pay and perform all such Guarantied Obligations when due and payable immediately upon demand of the Paying Agent and the Lenders or any one or more of them. All payments made hereunder shall be made by each Guarantor in immediately available funds in U.S. Dollars and shall be made without setoff, counterclaim, withholding, or other deduction of any nature.

3. Obligations Absolute . The obligations of the Guarantors hereunder shall not be discharged or impaired or otherwise diminished by any failure, default, omission, or delay, willful or otherwise, by any Lender, the Paying Agent, or the Borrower or any other obligor on any of the Guarantied Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Guarantor or would otherwise operate as a discharge of any Guarantor as a matter of law or equity, except for, and to the extent of, payment and performance of the Guaranteed Obligations. Each of the Guarantors agrees that the Guarantied Obligations will be paid and performed strictly in accordance with the terms of the Loan Documents and the Specified Swap Agreements. Without limiting the generality of the foregoing, each Guarantor hereby consents to, at any time and from time to time, and the joint and several obligations of each Guarantor hereunder shall not be diminished, terminated, or otherwise similarly affected by any of the following:

(a) Any lack of genuineness, legality, validity, enforceability or allowability (in a bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or any avoidance or subordination, in whole or in part, of any Loan Document or any of the Guarantied Obligations and regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of the Guarantied Obligations, any of the terms of the Loan Documents or Specified Swap Agreements, or any rights of the Paying Agent or the Lenders or any other Person with respect thereto;

(b) Any increase, decrease, or change in the amount, nature, type or purpose of any of, or any release, surrender, exchange, compromise or settlement of the Guarantied Obligations (whether or not contemplated by the Loan Documents or Specified Swap Agreements as

presently constituted); any change in the time, manner, method, or place of payment or performance of, or in any other term of, any of the Guarantied Obligations; any execution or delivery of any additional Loan Documents or Specified Swap Agreements; or any amendment, modification or supplement to, or refinancing or refunding of, any Loan Document or any of the Guarantied Obligations;

(c) Any failure to assert any breach of or default under any Loan Document or any of the Guarantied Obligations; any extensions of credit in excess of the amount committed under or contemplated by the Loan Documents or Specified Swap Agreements, or in circumstances in which any condition to such extensions of credit has not been satisfied; any other exercise or non-exercise, or any other failure, omission, breach, default, delay, or wrongful action in connection with any exercise or non-exercise, of any right or remedy against the Borrower or any other Person under or in connection with any Loan Document or any of the Guarantied Obligations; any refusal of payment or performance of any of the Guarantied Obligations, whether or not with any reservation of rights against any Guarantor; or any application of collections (including but not limited to collections resulting from realization upon any direct or indirect security for the Guarantied Obligations) to other obligations, if any, not entitled to the benefits of this Guaranty, in preference to Guarantied Obligations entitled to the benefits of this Guaranty, or if any collections are applied to Guarantied Obligations, any application to particular Guarantied Obligations;

(d) Any taking, exchange, amendment, modification, waiver, supplement, termination, subordination, compromise, release, surrender, loss, or impairment of, or any failure to protect, perfect, or preserve the value of, or any enforcement of, realization upon, or exercise of rights, or remedies under or in connection with, or any failure, omission, breach, default, delay, or wrongful action by the Paying Agent or the Lenders, or any of them, or any other Person in connection with the enforcement of, realization upon, or exercise of rights or remedies under or in connection with, or, any other action or inaction by any of the Paying Agent or the Lenders, or any of them, or any other Person in respect of, any direct or indirect security for any of the Guarantied Obligations. As used in this Guaranty, “direct or indirect security” for the Guarantied Obligations, and similar phrases, includes any collateral security, guaranty, suretyship, letter of credit, capital maintenance agreement, put option, subordination agreement, or other right or arrangement of any nature providing direct or indirect assurance of payment or performance of any of the Guarantied Obligations, made by or on behalf of any Person;

(e) Any merger, consolidation, liquidation, dissolution, winding-up, charter revocation, or forfeiture, or other change in, restructuring or termination of the corporate structure or existence of, the Borrower or any other Person; any bankruptcy, insolvency, reorganization or similar proceeding with respect to the Borrower or any other Person; or any action taken or election made by the Paying Agent or the Lenders, or any of them (including but not limited to any election under Section 1111(b)(2) of the United States Bankruptcy Code), the Borrower, or any other Person in connection with any such proceeding;

(f) Any defense, setoff, or counterclaim which may at any time be available to or be asserted by the Borrower or any other Person with respect to any Loan Document or any of the Guarantied Obligations, other than, and to the extent of, payment and performance of the

Guaranteed Obligations; or any discharge by operation of law or release of the Borrower or any other Person from the performance or observance of any Loan Document or any of the Guarantied Obligations; and

(g) Any other event or circumstance, whether similar or dissimilar to the foregoing, and whether known or unknown, which might otherwise constitute a defense available to, or limit the liability of, any Guarantor, a guarantor or a surety, excepting only full, strict, and indefeasible payment and performance of the Guarantied Obligations in full.

Each Guarantor acknowledges, consents, and agrees that new Guarantors may join in this Guaranty pursuant to Section 11.18 of the Credit Agreement and each Guarantor affirms that its obligations shall continue hereunder undiminished.

4. Waivers, etc. Each of the Guarantors hereby waives any defense to (other than, and to the extent of, the defense of prior payment of the Guaranteed Obligations) or limitation on its obligations under this Guaranty arising out of or based on any event or circumstance referred to in Section 3 hereof. Without limitation and to the fullest extent permitted by applicable law, each Guarantor waives each of the following:

(a) Except as may be expressly contemplated by the Credit Agreement or other Loan Documents or Specified Swap Agreements, all notices, disclosures and demand of any nature which otherwise might be required from time to time to preserve intact any rights against any Guarantor, including the following: any notice of any event or circumstance described in Section 3 hereof; any notice required by any law, regulation or order now or hereafter in effect in any jurisdiction; any notice of nonpayment, nonperformance, dishonor, or protest under any Loan Document or any of the Guarantied Obligations; any notice of the incurrence of any Guarantied Obligation; any notice of any default or any failure on the part of the Borrower or any other Person to comply with any Loan Document or any of the Guarantied Obligations or any direct or indirect security for any of the Guarantied Obligations; and any notice of any information pertaining to the business, operations, condition (financial or otherwise) or prospects of the Borrower or any other Person;

(b) Any right to any marshalling of assets, to the filing of any claim against the Borrower or any other Person in the event of any bankruptcy, insolvency, reorganization or similar proceeding, or to the exercise against the Borrower or any other Person of any other right or remedy under or in connection with any Loan Document or any of the Guarantied Obligations or any direct or indirect security for any of the Guarantied Obligations; any requirement of promptness or diligence on the part of the Paying Agent or the Lenders, or any of them, or any other Person; any requirement to exhaust any remedies under or in connection with, or to mitigate the damages resulting from default under, any Loan Document or any of the Guarantied Obligations or any direct or indirect security for any of the Guarantied Obligations; any benefit of any statute of limitations; and any requirement of acceptance of this Guaranty or any other Loan Document or Specified Swap Agreement, and any requirement that any Guarantor receive notice of any such acceptance;

(c) Any defense or other right arising by reason of any law now or hereafter in effect in any jurisdiction pertaining to election of remedies (including but not limited to anti-deficiency laws, “one action” laws or the like), or by reason of any election of remedies or other action or inaction by the Paying Agent or the Lenders, or any of them (including but not limited to commencement or completion of any judicial proceeding or nonjudicial sale or other action in respect of collateral security for any of the Guarantied Obligations), which results in denial or impairment of the right of the Paying Agent or the Lenders, or any of them, to seek a deficiency against the Borrower or any other Person or which otherwise discharges or impairs any of the Guarantied Obligations; and

(d) Any and all defenses it may now or hereafter have based on principles of suretyship, impairment of collateral, or the like.

5. Reinstatement . This Guaranty is a continuing obligation of the Guarantors and shall remain in full force and effect notwithstanding that no Guarantied Obligations may be outstanding from time to time and notwithstanding any other event or circumstance. Upon termination of all Commitments, the expiration of all Letters of Credit and Specified Swap Agreements, the payment in full of all Guaranteed Obligations, the termination of the Credit Agreement and provided that none of the other obligations referred to in Section 1(ii) are then in default, this Guaranty shall terminate; provided, however, that this Guaranty shall continue to be effective or be reinstated, as the case may be, any time any payment of any of the Guarantied Obligations is rescinded, recouped, avoided, or must otherwise be returned or released by any Lender or the Paying Agent upon or during the insolvency, bankruptcy, or reorganization of, or any similar proceeding affecting, the Borrower or for any other reason whatsoever, all as though such payment had not been made and was due and owing.

6. Subrogation . Each Guarantor waives and agrees that it will not exercise any rights against the Borrower or any other Guarantor arising in connection with, or any Collateral securing, the Guarantied Obligations (including rights of subrogation, contribution, and the like) until the Guarantied Obligations have been paid in full, and all Commitments have been terminated and all Letters of Credit and Specified Swap Agreements have expired. If any amount shall be paid to any Guarantor by or on behalf of the Borrower or any other Guarantor by virtue of any right of subrogation, contribution, or the like, such amount shall be deemed to have been paid to such Guarantor for the benefit of, and shall be held in trust for the benefit of, the Paying Agent and the Lenders and shall forthwith be paid to the Paying Agent to be credited and applied upon the Guarantied Obligations, whether matured or unmatured, in accordance with the terms of the Credit Agreement.

7. No Stay . Without limitation of any other provision of this Guaranty, if any declaration of default or acceleration or other exercise or condition to exercise of rights or remedies under or with respect to any Guarantied Obligation shall at any time be stayed, enjoined, or prevented for any reason (including but not limited to stay or injunction resulting from the pendency against the Borrower or any other Person of a bankruptcy, insolvency, reorganization or similar proceeding), the Guarantors agree that, for the purposes of this Guaranty and their obligations hereunder, the Guarantied Obligations shall be deemed to have been declared in default or accelerated, and such other exercise or conditions to exercise shall be deemed to have been taken or met.

8. Taxes .

(a) No Deductions . All payments made by any Guarantor under any of the Loan Documents or Specified Swap Agreements shall be made free and clear of and without deduction for any present or future taxes, levies, imposts, deductions, charges, or withholdings, and all liabilities with respect thereto, excluding taxes imposed on the net income of any Lender and all income and franchise taxes of the United States applicable to any Lender (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings, and liabilities being hereinafter referred to as “ Taxes ”). If any Guarantor shall be required by law to deduct any Taxes from or in respect of any sum payable under any of the Loan Documents or Specified Swap Agreements, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Subsection (a) such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Guarantor shall make such deductions and (iii) such Guarantor shall timely pay the full amount deducted to the relevant tax authority or other authority in accordance with applicable law.

(b) Stamp Taxes . In addition, each Guarantor agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges, or similar levies which arise from any payment made hereunder or from the execution, delivery, or registration of, or otherwise with respect to, any of the Loan Documents or Specified Swap Agreements (hereinafter referred to as “ Other Taxes ”).

(c) Indemnification for Taxes Paid by any Lender . Each Guarantor shall indemnify each Lender for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Subsection) paid by any Lender and any liability (including penalties, interest, and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within thirty (30) days from the date a Lender makes written demand therefor.

(d) Certificate . Within thirty (30) days after the date of any payment of any Taxes by any Guarantor, such Guarantor shall furnish to each Lender, the original or a certified copy of a receipt evidencing payment thereof. If no Taxes are payable in respect of any payment by such Guarantor, such Guarantor shall, if so requested by a Lender, provide a certificate of an officer of such Guarantor to that effect.

9. Intentionally Deleted .

10. Notices . Each Guarantor agrees that all notices, statements, requests, demands and other communications under this Guaranty shall be given to such Guarantor at the address set forth on a Schedule to, or in a Guarantor Joinder given under, the Credit Agreement and in the manner provided in Section 11.6 of the Credit Agreement. The Paying Agent and the Lenders

may rely on any notice (whether or not made in a manner contemplated by this Guaranty) purportedly made by or on behalf of a Guarantor, and the Paying Agent and the Lenders shall have no duty to verify the identity or authority of the Person giving such notice.

11. Counterparts; Telecopy Signatures . This Guaranty may be executed by different parties hereto on any number of separate counterparts, each of which, when so executed and delivered, shall be an original, and all such counterparts shall together constitute one and the same instrument. Delivery of an executed signature page by telecopy or electronic signature delivery system (in either case in a form acceptable to the Paying Agent) shall be effective as delivery of a manually executed signature page to this Guaranty.

12. Setoff, Default Payments by Borrower .

(a) In the event that at any time any obligation of the Guarantors now or hereafter existing under this Guaranty shall have become due and payable, the Paying Agent and the Lenders, or any of them, shall have the right from time to time, without notice to any Guarantor, to set off against and apply to such due and payable amount any obligation of any nature of any Lender or the Paying Agent, or any subsidiary or affiliate of any Lender or the Paying Agent, to any Guarantor, including but not limited to all deposits (whether time or demand, general or special, provisionally credited or finally credited, however evidenced) now or hereafter maintained by any Guarantor with the Paying Agent or any Lender or any subsidiary or affiliate thereof. Such right shall be absolute and unconditional in all circumstances and, without limitation, shall exist whether or not the Paying Agent or the Lenders, or any of them, shall have given any notice or made any demand under this Guaranty or under such obligation to the Guarantor, whether such obligation to the Guarantor is absolute or contingent, matured or unmatured (it being agreed that the Paying Agent and the Lenders, or any of them, may deem such obligation to be then due and payable at the time of such setoff), and regardless of the existence or adequacy of any collateral, guaranty, or other direct or indirect security or right or remedy available to the Paying Agent or any of the Lenders. The rights of the Paying Agent and the Lenders under this Section are in addition to such other rights and remedies (including, without limitation, other rights of setoff and banker’s lien) which the Paying Agent and the Lenders, or any of them, may have, and nothing in this Guaranty or in any other Loan Document or Specified Swap Agreement shall be deemed a waiver of or restriction on the right of setoff or banker’s lien of the Paying Agent and the Lenders, or any of them. Each of the Guarantors hereby agrees that, to the fullest extent permitted by law, any affiliate or subsidiary of the Paying Agent or any of the Lenders and any holder of a participation in any obligation of any Guarantor under this Guaranty, shall have the same rights of setoff as the Paying Agent and the Lenders as provided in this Section (regardless whether such affiliate or participant otherwise would be deemed a creditor of the Guarantor).

(b) Upon the occurrence and during the continuation of any default under any Guarantied Obligation, if any amount shall be paid to any Guarantor by or for the account of the Borrower, such amount shall be held in trust for the benefit of each Lender and the Paying Agent and shall forthwith be paid to the Paying Agent to be credited and applied to the Guarantied Obligations when due and payable.

13. Construction . The section and other headings contained in this Guaranty are for reference purposes only and shall not affect interpretation of this Guaranty in any respect. This Guaranty has been fully negotiated between the applicable parties, each party having the benefit of legal counsel, and accordingly neither any doctrine of construction of guaranties or suretyships in favor of the guarantor or surety, nor any doctrine of construction of ambiguities in agreement or instruments against the party controlling the drafting thereof, shall apply to this Guaranty.

14. Successors and Assigns . This Guaranty shall be binding upon each Guarantor, its successors and assigns, and shall inure to the benefit of and be enforceable by the Paying Agent and the Lenders, or any of them, and their successors and assigns except that no Guarantor may assign or transfer any of its rights or obligations hereunder or any interest herein other than assignments and transfers permitted by the Credit Agreement. Without limitation of the foregoing, the Paying Agent and the Lenders, or any of them (and any successive assignee or transferee), from time to time may assign or otherwise transfer all or any portion of its rights or obligations under the Loan Documents (including all or any portion of any commitment to extend credit), or any other Guarantied Obligations, to any other Person as provided and permitted by the Credit Agreement and such Guarantied Obligations (including any Guarantied Obligations resulting from extension of credit by such other Person under or in connection with the Loan Documents or Specified Swap Agreements) shall be and remain Guarantied Obligations entitled to the benefit of this Guaranty, and to the extent of its interest in such Guarantied Obligations such other Person shall be vested with all the benefits in respect thereof granted to the Paying Agent and the Lenders in this Guaranty or otherwise.

15. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial .

(a) Governing Law . This Guaranty shall be governed by, construed, and enforced in accordance with the internal laws of the Commonwealth of Pennsylvania, without regard to its conflict of laws principles.

(b) Certain Waivers; Submission to Jurisdiction .

(i) Each Guarantor hereby irrevocably consents to the nonexclusive jurisdiction of the Court of Common Pleas of Allegheny County and the United States District Court for the Western District of Pennsylvania, and waives personal service of any and all process upon it and consents that all such service of process be made by certified or registered mail directed to it at the address provided for in Section 11.6 of the Credit Agreement and service so made shall be deemed to be completed upon actual receipt thereof. Each Guarantor waives any objection to jurisdiction and venue of any action instituted against it as provided herein and agrees not to assert any defense based on lack of jurisdiction or venue.

(ii) Each Guarantor hereby waives any objection to jurisdiction and venue of any action instituted against it as provided herein and agrees not to assert any defense based on lack of jurisdiction or venue.

(iii) EACH GUARANTOR, THE PAYING AGENT AND EACH LENDER (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS GUARANTY) HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS GUARANTY, THE CREDIT AGREEMENT, OR ANY OTHER LOAN DOCUMENT TO THE FULL EXTENT PERMITTED BY LAW.

16. Severability; Modification to Conform to Law .

(a) The provisions of this Guaranty are intended to be severable. If any provision of this Guaranty shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.

(b) Without limitation of the preceding Subsection (a), to the extent that applicable law (including applicable laws pertaining to fraudulent conveyance or fraudulent or preferential transfer) otherwise would render the full amount of the Guarantor’s obligations hereunder invalid, voidable, or unenforceable on account of the amount of a Guarantor’s aggregate liability under this Guaranty, then, notwithstanding any other provision of this Guaranty to the contrary, the aggregate amount of such liability shall, without any further action by the Paying Agent or any of the Lenders or such Guarantor or any other Person, be automatically limited and reduced to the highest amount which is valid and enforceable as determined in such action or proceeding, which (without limiting the generality of the foregoing) may be an amount which is equal to the greater of:

(i) the fair consideration actually received by such Guarantor under the terms and as a result of the Loan Documents and the Specified Swap Agreements and the value of the benefits described in Section 19(b) hereof, including (and to the extent not inconsistent with applicable federal and state laws affecting the enforceability of guaranties) distributions, commitments, and advances made to or for the benefit of such Guarantor with the proceeds of any credit extended under the Loan Documents or the Specified Swap Agreements, or

(ii) the excess of (1) the amount of the fair value of the assets of such Guarantor as of the date of this Guaranty as determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors as in effect on the date hereof, over (2) the amount of all liabilities of such Guarantor as of the date of this Guaranty, also as determined on the basis of applicable federal and state laws governing the insolvency of debtors as in effect on the date hereof.

(c) Notwithstanding anything to the contrary in this Section or elsewhere in this Guaranty, this Guaranty shall be presumptively valid and enforceable to its full extent in accordance with its terms, as if this Section (and references elsewhere in this Guaranty to enforceability to the fullest extent permitted by law) were not a part of this Guaranty, and in any related litigation the burden of proof shall be on the party asserting the invalidity or unenforceability of any provision hereof or asserting any limitation on any Guarantor’s obligations hereunder as to each element of such assertion.

17. Additional Guarantors . At any time after the initial execution and delivery of this Guaranty to the Paying Agent and the Lenders, additional Persons may become parties to this Guaranty and thereby acquire the duties and rights of being Guarantors hereunder by executing and delivering to the Paying Agent and the Lenders a Guarantor Joinder pursuant to the Credit Agreement. No notice of the addition of any Guarantor shall be required to be given to any pre-existing Guarantor and each Guarantor hereby consents thereto.

18. Joint and Several Obligations . The obligations and additional liabilities of each and every Guarantor under this Guaranty are joint and several obligations of the Guarantors, and each Guarantor hereby waives to the full extent permitted by law any defense it may otherwise have to the payment and performance of the Obligations that its liability hereunder is limited and not joint and several. Each Guarantor acknowledges and agrees that the foregoing waivers and those set forth below serve as a material inducement to the agreement of the Paying Agent and the Lenders to make the Loans, and that the Paying Agent and the Lenders are relying on each specific waiver and all such waivers in entering into this Guaranty. The undertakings of each Guarantor hereunder secure the obligations of itself and the other Guarantors. The Paying Agent and the Lenders, or any of them, may, in their sole discretion, elect to enforce this Guaranty against any Guarantor without any duty or responsibility to pursue any other Guarantor and such an election by the Paying Agent and the Lenders, or any of them, shall not be a defense to any action the Paying Agent and the Lenders, or any of them, may elect to take against any Guarantor. Each of the Lenders and the Paying Agent hereby reserve all rights against each Guarantor.

19. Receipt of Credit Agreement, Other Loan Documents, Benefits .

(a) Each Guarantor hereby acknowledges that it has received a copy of the Credit Agreement and the other Loan Documents and each Guarantor certifies that the representations and warranties made therein with respect to such Guarantor are true and correct. Further, each Guarantor acknowledges and agrees to perform, comply with, and be bound by all of the provisions of the Credit Agreement and the other Loan Documents.

(b) Each Guarantor hereby acknowledges, represents, and warrants that it receives synergistic benefits by virtue of its affiliation with the Borrower and the other Guarantors and that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Agreement and that such benefits, together with the rights of contribution and subrogation that may arise in connection herewith are a reasonably equivalent exchange of value in return for providing this Guaranty.

20. Release of Guarantor . In the event that all of the capital stock or other ownership interests of any Guarantor is sold or otherwise disposed of or liquidated and such sale or other disposition or liquidation has been approved in writing by Paying Agent (as contemplated by Section 10.20 of the Credit Agreement) or the Lenders (as required by Section 11.1.4 of the Credit Agreement), such Guarantor shall, upon consummation of such sale or other disposition,

be released from this Guaranty automatically and without further action, and this Guaranty shall, as to such Guarantor, terminate and have no further force or effect. In connection with the merger of the Guarantor into another Loan Party, this Guaranty will be assumed (as a matter of law) by such other Loan Party and will, together with any Guaranty of the Guarantied Obligations by such other Loan Party, constitute a single Guaranty.

21. Miscellaneous .

(a) Generality of Certain Terms . As used in this Guaranty, the terms “hereof”, “herein” and terms of similar import refer to this Guaranty as a whole and not to any particular term or provision.

(b) Amendments, Waivers . No amendment to or waiver of any provision of this Guaranty, and no consent to any departure by any Guarantor herefrom, shall in any event be effective unless in a writing manually signed by or on behalf of the Paying Agent and the Lenders. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No delay or failure of the Paying Agent or the Lenders, or any of them, in exercising any right or remedy under this Guaranty shall operate as a waiver thereof; nor shall any single or partial exercise of any such right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies of the Paying Agent and the Lenders under this Guaranty are cumulative and not exclusive of any other rights or remedies available hereunder, under any other agreement or instrument, by law, or otherwise.

(c) Telecommunications . Each Lender and the Paying Agent shall be entitled to rely on the authority of any individual making any telecopy or telephonic notice, request, or signature without the necessity of receipt of any verification thereof.

(d) Expenses . Each Guarantor unconditionally agrees to pay all costs and expenses, including reasonable attorney’s fees, incurred by the Paying Agent or any of the Lenders in enforcing this Guaranty against any Guarantor and each Guarantor shall pay and indemnify each Lender and the Paying Agent for, and hold it harmless from and against, any and all obligations, liabilities, losses, damages, costs, expenses (including disbursements and reasonable legal fees of counsel to any Lender or the Paying Agent), penalties, judgments, suits, actions, claims, and disbursements imposed on, asserted against, or incurred by any Lender or the Paying Agent (i) relating to the preparation, negotiation, execution, administration, or enforcement of or collection under this Guaranty or any document, instrument, or agreement relating to any of the Obligations, including in any bankruptcy, insolvency, or similar proceeding in any jurisdiction or political subdivision thereof; (ii) relating to any amendment, modification, waiver, or consent hereunder or relating to any telecopy or telephonic transmission purporting to be by any Guarantor or the Borrower; (iii) in any way relating to or arising out of this Guaranty, or any document, instrument, or agreement relating to any of the Guarantied Obligations, or any action taken or omitted to be taken by any Lender or the Paying Agent hereunder, and including those arising directly or indirectly from the violation or asserted violation by any Guarantor or the Borrower or the Paying Agent or any Lender of any law, rule, regulation, judgment, order, or the like of any jurisdiction or political subdivision thereof (including those relating to environmental protection, health, labor, importing, exporting, or safety) and regardless whether asserted by any governmental entity or any other Person.

(e) Prior Understandings . This Guaranty and the Credit Agreement supersede all prior understandings and agreements, whether written or oral, between the parties hereto and thereto and relating to the transactions provided for herein and therein.

(f) Survival . All representations and warranties of the Guarantors made in connection with this Guaranty shall survive, and shall not be waived by, the execution and delivery of this Guaranty, any investigation by or knowledge of the Paying Agent and the Lenders, or any of them, any extension of credit, or any other event or circumstance whatsoever.

[SIGNATURE PAGES FOLLOW]

[SIGNATURE PAGE - CONTINUING

AGREEMENT OF GUARANTY AND SURETYSHIP]

IN WITNESS WHEREOF, each Guarantor, intending to be legally bound, has executed this Guaranty as of the date first above written with the intention that this Guaranty shall constitute a sealed instrument.


GUARANTORS:
CENTRAL OHIO COAL COMPANY CHURCH STREET HOLDINGS, INC. CONSOL FINANCIAL INC. CONSOL OF CANADA INC. CONSOL OF KENTUCKY INC. CONSOL PENNSYLVANIA COAL COMPANY CONSOLIDATION COAL COMPANY EIGHTY-FOUR MINING COMPANY HELVETIA COAL COMPANY IC COAL, INC. ISLAND CREEK COAL COMPANY JEFFCO COAL COMPANY KEYSTONE COAL MINING CORPORATION LAUREL RUN MINING COMPANY LEATHERWOOD, INC. McELROY COAL COMPANY NEW CENTURY HOLDINGS, INC. QUARTO MINING COMPANY ROCHESTER & PITTSBURGH COAL COMPANY SOUTHERN OHIO COAL COMPANY THE WHITE STAR COAL CO., INC. TWIN RIVERS TOWING COMPANY UNITED EASTERN COAL SALES CORPORATION WINDSOR COAL COMPANY WOLFPEN KNOB DEVELOPMENT COMPANY

By:		_________________________________(Seal)
John M. Reilly, Treasurer of each Guarantor listed above on behalf of each such Guarantor

[SIGNATURE PAGE - CONTINUING

AGREEMENT OF GUARANTY AND SURETYSHIP]


GUARANTORS:

CNX LAND RESOURCES INC.

By:
Name:		William J. Lyons
Title:		Vice President and Controller


CNX MARINE TERMINALS INC.
CONSOL DOCKS INC.

By:
Ronald G. Stovash, President of each Guarantor listed above on behalf of each such Guarantor


CONSOL SALES COMPANY

By:		_______________________________(Seal)
Name:		Ronald G. Stovash
Title:		Vice President


MTB INC.

By:
Name:		William D. Stanhagen
Title:		President


RESERVE COAL PROPERTIES COMPANY

By:		(Seal)
Name:		Walter J. Scheller
Title:		Vice President

[SIGNATURE PAGE - CONTINUING

AGREEMENT OF GUARANTY AND SURETYSHIP]


GUARANTORS:

TERRA FIRMA COMPANY

By:
Name:		James A. Russell
Title:		President


CARDINAL STATES GATHERING COMPANY

By:		CONSOLIDATION COAL COMPANY, a general partner

		By:
		Name: John M. Reilly
		Title: Treasurer


CNX GAS COMPANY LLC

By:	CONSOLIDATION COAL COMPANY, its sole member

	By:	(Seal)
	Name: John M. Reilly
	Title: Treasurer

[SIGNATURE PAGE - CONTINUING

AGREEMENT OF GUARANTY AND SURETYSHIP]


GUARANTORS:

CONRHEIN COAL COMPANY

By:	CONSOLIDATION COAL COMPANY, a general partner

	By:	(Seal)
	Name: John M. Reilly
	Title: Treasurer


GREENE ENERGY LLC

By:	CONSOLIDATION COAL COMPANY, a member

	By:	(Seal)
	Name: John M. Reilly
	Title: Treasurer

Exhibit 10.40

PLEDGE AGREEMENT

THIS AMENDED AND RESTATED PLEDGE AGREEMENT, dated as of June 27, 2007 (as amended, restated, supplemented or modified from time to time, the “ Agreement ”), is given, made and entered into by each of the undersigned pledgors listed on the signature pages hereto and each of the other persons and entities that become bound hereby from time to time by joinder, assumption, or otherwise (each, a “ Pledgor ” and collectively, the “ Pledgors ”), and Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity but solely as collateral trustee (the “ Collateral Trustee ”) for the equal and ratable benefit of the Secured Parties (as defined below) pursuant to the Collateral Trust Agreement (as defined below).

WHEREAS, reference is made to that certain Credit Agreement, dated as of June 30, 2004, by and among CONSOL Energy Inc. (the “ Borrower ”), each of the Guarantors party thereto, the lenders party thereto, LaSalle Bank National Association, Société Générale, New York Branch and SunTrust Bank, each in its capacity as a co-documentation agent, and Citicorp North America, Inc. and PNC Bank, National Association, as co-administrative agents, pursuant to which the co-administrative agents and the lenders provided certain loans and other financial accommodations to the Borrower and its Subsidiaries (the “ Original Credit Agreement ”); and

WHEREAS, pursuant to the Original Credit Agreement and that certain Indenture, dated March 7, 2002, among the Borrower, certain of its Subsidiaries and The Bank of Nova Scotia Trust Company of New York, as trustee (as supplemented, modified, amended or restated from time to time, the “ Indenture ”), the Collateral Trustee has entered into that certain Collateral Trust Agreement, dated as of June 30, 2004 (as supplemented, modified, amended or restated from time to time, the “ Original Collateral Trust Agreement ”) with the Borrower, David A. Vanaskey, as individual trustee, and the Designated Subsidiaries (as defined therein) to accept the grant of a security interest under this Agreement as security for the Secured Obligations (as defined below) for the equal and ratable benefit of the Secured Parties.

WHEREAS, the obligations, liabilities and indebtedness of the Borrower and the other loan parties thereunder under the Original Credit Agreement, the Original Collateral Trust Agreement and under the other loan documents executed and delivered in connection therewith are secured pursuant to a pledge agreement given in connection with the Original Credit Agreement (the “ Original Pledge Agreement ”); and

WHEREAS, the Original Credit Agreement was amended and restated in its entirety by that certain Amended and Restated Credit Agreement dated as of April 1, 2005, by and among the Borrower, each of the Guarantors party thereto, the lenders party thereto, LaSalle Bank National Association, Société Générale, New York Branch and SunTrust Bank, each in its capacity as a co-documentation agent, and Citicorp North America, Inc. and PNC Bank, National Association, as co-administrative agents (the “ Original Amended and Restated Credit Agreement ”);

WHEREAS, the Original Amended and Restated Credit Agreement has been amended and restated in its entirety by that certain Amended and Restated Credit Agreement of even date

herewith, by and among the Borrower, each of the Guarantors party thereto, the Lenders party thereto (the “ Lenders ”), LaSalle Bank National Association, Société Générale, New York Branch and SunTrust Bank, each in its capacity as a co-documentation agent, and Citicorp North America, Inc. and PNC Bank, National Association, as Co-Administrative Agents (the “ Co-Administrative Agents ”) (as it may hereafter be amended, restated, modified or supplemented from time to time, the “ Credit Agreement ”); and

WHEREAS, pursuant to the Credit Agreement , the Lenders have agreed to continue to provide certain loans and other financial accommodations to the Borrower; and

WHEREAS, pursuant to and in consideration of the Credit Agreement, certain of the issued and outstanding capital stock, shares, securities, member interests, partnership interests and other ownership interests of each of the Companies shall continue to be pledged to the Collateral Trustee in accordance herewith; and

WHEREAS, each Pledgor owns the outstanding capital stock, shares, securities, member interests, partnership interests and other ownership interests of the Companies as set forth on Schedule A hereto.

NOW, THEREFORE, intending to be legally bound hereby, the parties hereto hereby agree as follows:

Defined Terms .

(a) Except as otherwise expressly provided herein, capitalized terms used in this Agreement shall have the respective meanings assigned to them in the Credit Agreement. Where applicable and except as otherwise expressly provided herein, terms used herein (whether or not capitalized) shall have the respective meanings assigned to them in the Uniform Commercial Code as enacted in Pennsylvania as amended from time to time (the “ Code ”).

(b) “Pledged Collateral” shall mean and include all of each Pledgor’s present and future right, title and interest in and to the following: (i) all capital stock, shares, member interests, partnership interests and other ownership interests in the corporations, limited liability companies, partnerships or other entities (each a “Company” and collectively the “Companies”) listed on Schedule A attached hereto and made a part hereof (as updated pursuant to Section 5(g) hereof); (ii) together with all dividends or distributions paid or payable on any of the foregoing, and all books and records (whether paper, electronic or any other medium) pertaining to the foregoing, including, without limitation, all stock record and transfer books; and (iii) all cash and non-cash proceeds (including, without limitation, insurance proceeds) of any of the foregoing property, all products thereof, and all additions and accessions thereto, substitutions therefor and

replacements thereof; provided, however, that pursuant to Section 8.1.14 of the Credit Agreement, the Pledged Collateral shall not include (I) any stock or assets acquired in a Permitted Acquisition, (II) any ownership interest in an Excluded Subsidiary (other than any wholly-owned Foreign Company or CNX Gas Corporation), (III) any assets described on Schedule 8.1.14 to the Credit Agreement, or (IV) any of the Pledged Collateral described in clauses (ii) and (iii) related to the foregoing.

(c) “ Company ” and “ Companies ” shall mean one or more of the entities issuing any of the Pledged Collateral which is or should be (in accordance with Section 5(g) hereof) described on Schedule A hereto.

(d) “ Debt Instruments ” shall have the meaning set forth in the Collateral Trust Agreement.

(e) “ Event of Default ” shall mean an Actionable Default (as defined in the Collateral Trust Agreement).

(f) “ Foreign Company ” shall mean one or more of the entities issuing any of the Pledged Collateral which is not organized under the laws of any state of the United States of America, which is, or should be, described on Schedule A .

(g) “ Secured Obligations ” shall mean the Secured Debt (as defined in the Collateral Trust Agreement).

(h) “ Secured Parties ” shall mean collectively, the Collateral Trustees (as defined in the Collateral Trust Agreement), the Co-Administrative Agents, the Paying Agent, the Lenders, The Bank of Nova Scotia Trust Company of New York or any successor thereto, as trustee under the Indenture, and any other holders from time to time of the Secured Obligations and “ Secured Party ” shall mean each of them individually.

Grant of Security Interests.

(a) To secure on a first priority perfected basis the payment and performance of all Secured Obligations in full, each Pledgor hereby grants to the Collateral Trustee a continuing first priority security interest under the Code in and hereby pledges to Collateral Trustee, in each case for the equal and ratable benefit of the Secured Parties, all of such Pledgor’s now existing and hereafter acquired or arising right, title and interest in, to, and under the Pledged Collateral whether now or hereafter existing and wherever located, subject in all cases to Permitted Liens contemplated by clauses (vi), (x), (xii), (xiv), (xv), (xvi) and (xviii) of the definition of Permitted Liens and inchoate Liens that do not have priority over the Liens granted under the Loan Documents (collectively, the “ Permitted Pledged Collateral Liens ”).

(b) Notwithstanding anything to the contrary contained in this Agreement, the Pledged Collateral with respect to any one Foreign Company shall not exceed sixty-five percent (65%) of the total combined voting power of all classes of capital stock, shares, securities, member interests, partnership interests and other ownership interests entitled to vote of such Foreign Company and this Agreement shall not apply to any such stock, shares, securities,

member interests, partnership interests or ownership interests which are in excess of such sixty five percent (65%) limitation. To the extent the Collateral Trustee receives more than sixty five percent (65%) of the total combined voting power of all classes of capital stock, shares, securities, member interests, partnership interests and other ownership interests entitle to vote of any Foreign Company, the Collateral Trustee shall return such excess stock, shares, securities, member interests, partnership interests and other ownership interests upon the request of a Pledgor.

Further Assurances .

Prior to or concurrently with the execution of this Agreement, and thereafter at any time and from time to time upon reasonable request of the Collateral Trustee, each Pledgor shall execute and deliver to the Collateral Trustee all financing statements, continuation financing statements, assignments, certificates and documents of title, affidavits, reports, notices, schedules of account, letters of authority, further pledges, powers of attorney and all other documents (collectively, the “ Security Documents ”) which the Collateral Trustee may reasonably request, in form reasonably satisfactory to the Collateral Trustee, and take such other action which the Collateral Trustee may reasonably request, to perfect and continue perfected and to create and maintain the first priority status of the Collateral Trustee’s security interest in the Pledged Collateral and to fully consummate the transactions contemplated under this Agreement, subject only to Permitted Pledged Collateral Liens. Each Pledgor hereby irrevocably makes, constitutes and appoints the Collateral Trustee (and any of the Collateral Trustee’s officers or employees or agents designated by the Collateral Trustee) as such Pledgor’s true and lawful attorney with power to sign the name of such Pledgor on all or any of the Security Documents which the Collateral Trustee determines must be executed, filed, recorded or sent in order to perfect or continue perfected the Collateral Trustee’s security interest in the Pledged Collateral in any jurisdiction. Such power, being coupled with an interest, is irrevocable until all of the Secured Obligations have been paid in full, the Commitments have terminated and all Letters of Credit and Specified Swap Agreements have expired.

Representations and Warranties .

Each Pledgor hereby jointly and severally represents and warrants to the Collateral Trustee and the Secured Parties as follows:

(a) Such Pledgor, has and will continue to have (or, in the case of after-acquired Pledged Collateral, at the time such Pledgor acquires rights in such Pledged Collateral, will have and will continue to have), title to its Pledged Collateral, free and clear of all Liens other than Permitted Pledged Collateral Liens;

(b) The capital stock shares, securities, member interests, partnership interests and other ownership interests constituting the Pledged Collateral have been duly authorized and validly issued to such Pledgor (as set forth on Schedule A hereto), are fully paid and nonassessable and constitute the following (i) the percentage listed on Schedule A of the issued and outstanding capital stock, member interests and partnership interests of each of the Companies which are not Foreign Companies, and (ii) the lesser of (x) sixty five percent (65%)

of the issued and outstanding capital stock, shares, securities, member interests and partnership interests of each of the Foreign Companies or (y) all of the issued and outstanding capital stock, member interests and partnership interests owned by any Loan Party of each Foreign Company;

(c) The security interests in the Pledged Collateral granted hereunder are valid, and, except to the extent permitted to be un-perfected pursuant to Section 5(n) hereof are perfected and of first priority, subject to the Lien of no other Person other than Permitted Pledged Collateral Liens;

(d) Other than restrictions on the sale or transfer of CNX Gas Corporation common stock or other securities beneficially owned by any Loan Party which are contained or entered into in connection with public or private underwriting/placement arrangements for public or private offering of the common stock or other securities of CNX Gas Corporation, there are no restrictions upon the transfer of the Pledged Collateral and such Pledgor has the power and authority and right to transfer the Pledged Collateral owned by such Pledgor free of any encumbrances, subject to Permitted Pledged Collateral Liens, and without obtaining the consent of any other Person;

(e) Such Pledgor has all necessary power to execute, deliver and perform this Agreement;

(f) Such Pledgor’s exact legal name is as set forth on the signature page hereto;

(g) The state of incorporation, formation or organization as applicable, of such Pledgor is as set forth on Schedule A hereto;

(h) Such Pledgor’s chief executive office is as set forth on the signature page hereto; and

(i) All rights of such Pledgor in connection with its ownership of each of the Companies pledged by such Pledgor hereunder are either (i) evidenced and governed solely by the stock certificates, instruments or other documents evidencing ownership and organizational documents of each of the Companies or (ii) uncertificated securities with respect to which such Pledgor has caused the issuer thereof either (A) to note or register the security interest of the Collateral Trustee in the appropriate company records or (B) to agree in an authenticated record with such Pledgor and the Collateral Trustee that, upon the occurrence and during the continuation of an Event of Default, such issuer will comply with instructions with respect to such security originated by the Collateral Trustee without further consent of such Pledgor, including without limitation, the Collateral Trustee’s instructions with respect to the assignment or other transfer of such securities; if such Pledgor is an issuer of such securities, such Pledgor confirms that it has received notice of such security interest;

(j) Other than as described on Schedule B hereto, no shareholder or other similar agreements, other than organizational documents, are applicable to any of the Pledged Collateral and no organizational document of any Company, except CNX Gas Corporation, contains any restrictions on the rights of shareholders, members or partners other than those that normally would apply to a company organized under the laws of the jurisdiction of organization of each of the Companies.

General Covenants .

Each Pledgor hereby covenants and agrees as follows:

(a) Such Pledgor shall do all reasonable acts that may be necessary and appropriate to maintain, preserve and protect the Pledged Collateral and the Collateral Trustee’s interest therein, subject to Permitted Pledged Collateral Liens and restrictions on the sale or transfer of CNX Gas Corporation common stock or other securities beneficially owned by any Loan Party which are contained or entered into in connection with public or private underwriting/placement agreements for public or private offering of the common stock or other securities of CNX Gas Corporation; such Pledgor shall be responsible for the risk of loss of, damage to, or destruction of the Pledged Collateral owned by such Pledgor, unless such loss is the result of the gross negligence or willful misconduct of the Collateral Trustee.

(b) [Intentionally Deleted]

(c) Such Pledgor shall, and shall cause each of the Companies to, keep separate, accurate and complete records of the Pledged Collateral, disclosing the Collateral Trustee’s security interest hereunder;

(d) Such Pledgor shall comply with all Laws applicable to the Pledged Collateral unless any noncompliance would not individually or in the aggregate materially impair the use or value of the Pledged Collateral or the Collateral Trustee’s rights hereunder;

(e) If and to the full extent required under the terms of any contract, agreement, document or instrument related to any of the Companies or their respective shareholders, members, partners or other equity owners, such Pledgor has heretofore and hereby reaffirms and ratifies its consent and approval to, and all necessary waivers with respect to, the pledge of the Pledged Collateral by any Pledgor under the terms of this Agreement and the exercise by the Collateral Trustee of any and all rights and remedies contemplated hereby and such Pledgor hereby waives any prior notice with respect to such consent and approval.

(f) Such Pledgor shall permit the Collateral Trustee, its officers, employees and agents at reasonable times to inspect all books and records related to the Pledged Collateral, provided that prior to an Event of Default, the same is done with reasonable advance notice during normal business hours and in accordance with such Pledgor’s standard safety, visit and inspection procedures and no such visit or inspection shall interfere with such Pledgor’s normal business operation;

(g) Subject to Section 2(b) hereof, to the extent, following the date hereof, such Pledgor acquires capital stock, shares, member interests, partnership interests and other ownership interests of any of the Companies or any Subsidiary of the Borrower acquired or formed after the date hereof, other than Subsidiaries acquired pursuant to a Permitted Acquisition and other than Excluded Subsidiaries (except for wholly-owned Foreign Companies or CNX Gas

Corporation), or any of the rights, property or securities, shares, capital stock, member interests, partnership interests or any other ownership interests described in the definition of Pledged Collateral with respect to any of the Companies or any Subsidiary of the Borrower acquired or formed after the date hereof, other than Subsidiaries acquired pursuant to a Permitted Acquisition and other than Excluded Subsidiaries (except for wholly-owned Foreign Companies or CNX Gas Corporation), such ownership interests shall be subject to the terms hereof and, upon such acquisition or formation, shall be deemed to be hereby pledged to the Collateral Trustee; and, such Pledgor thereupon shall deliver an updated Schedule A hereto to the Collateral Trustee;

(h) Except as permitted by the Credit Agreement, during the term of this Agreement, such Pledgor shall not sell, assign, replace, retire, transfer or otherwise dispose of its Pledged Collateral;

(i) Such Pledgor will not change its state of incorporation, formation or organization, as applicable without providing fifteen (15) days prior written notice to the Collateral Trustee;

(j) Such Pledgor will not change its name without providing fifteen (15) days prior written notice to the Collateral Trustee;

(k) [Intentionally Deleted]

(l) All certificates or instruments representing or evidencing Pledged Collateral shall be delivered to and held by or on behalf of the Collateral Trustee pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Collateral Trustee;

(m) With respect to any Pledged Collateral in which any Pledgor has any right, title or interest and that constitutes an uncertificated security, such Pledgor will cause the issuer thereof either (i) to note or register the security interest created hereby in the appropriate company records or (ii) to agree in an authenticated record with such Pledgor and the Collateral Trustee that upon the occurrence and during the continuance of an Event of Default such issuer will comply with instructions with respect to such security originated by the Collateral Trustee without further consent of such Pledgor, including without limitation, the Collateral Trustee’s instructions with respect to the assignment or other transfer of such securities, such authenticated record to be in form and substance reasonably satisfactory to the Collateral Trustee and such Pledgor. With respect to any Pledged Collateral in which any Pledgor has any right, title or interest and that is not an uncertificated security, upon the request of the Collateral Trustee, such Pledgor will notify each such issuer of such Pledged Collateral that such Pledged Collateral is subject to the security interest granted hereunder; and

(n) Except with respect to security entitlements in any account for which the average daily balance does not exceed $5,000,000, with respect to any Pledged Collateral in which any Pledgor has any right, title or interest and that constitutes a security entitlement in which the Collateral Trustee is not the entitlement holder, such Pledgor will use its commercial good faith efforts to cause the securities intermediary with respect to such security entitlement to either (i)

to identify in its records the Collateral Trustee as the entitlement holder of such security entitlement against such securities intermediary or (ii) agree in an authenticated record with such Pledgor and the Collateral Trustee that, upon the occurrence and during the continuance of an Event of Default, such securities intermediary will comply with entitlement orders (that is, notifications communicated to such securities intermediary directing transfer or redemption of the financial asset to which such Pledgor has a security entitlement) originated by the Collateral Trustee without further consent of such Pledgor, such authenticated record to be in substantially the form of Exhibit A hereto or otherwise in form and substance reasonably satisfactory to the Collateral Agent (such agreement being a “ Securities Account Control Agreement ”);

Other Rights With Respect to Pledged Collateral .

In addition to the other rights with respect to the Pledged Collateral granted to the Collateral Trustee hereunder, at any time and from time to time, after and during the continuation of an Event of Default, the Collateral Trustee, at its option and at the expense of the Pledgors, may (a) transfer into its own name, or into the name of its nominee, all or any part of the Pledged Collateral, thereafter receiving all dividends, income or other distributions upon the Pledged Collateral; (b) take control of and manage all or any of the Pledged Collateral; (c) apply to the payment of any of the Secured Obligations, whether any be due and payable or not, any moneys, including cash dividends and income from any Pledged Collateral, now or hereafter in the hands of the Collateral Trustee or any Secured Party, on deposit or otherwise, belonging to any Pledgor, as the Collateral Trustee in its sole discretion shall determine; and (d) do anything which any Pledgor is required but fails to do hereunder.

Additional Remedies Upon Event of Default .

Upon the occurrence of any Event of Default and while such Event of Default shall be continuing, the Collateral Trustee shall have, in addition to all rights and remedies of a secured party under the Code or other applicable Law, and in addition to its rights under Section 6 above and under the other Loan Documents to which it is a party, the following rights and remedies:

(a) The Collateral Trustee may, after ten (10) days’ advance notice to a Pledgor, sell, assign, give an option or options to purchase or otherwise dispose of such Pledgor’s Pledged Collateral or any part thereof at public or private sale, at any of the Collateral Trustee’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Collateral Trustee may deem commercially reasonable. Each Pledgor agrees that ten (10) days’ advance notice of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Collateral Trustee shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. The Collateral Trustee may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Pledgor recognizes that the Collateral Trustee may be compelled to resort to one or more private sales of the Pledged Collateral to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such securities, shares, capital stock, member interests, partnership interests or ownership interests for their own account for investment and not with a view to the distribution or resale thereof.

(b) The proceeds of any collection, sale or other disposition of the Pledged Collateral, or any part thereof, shall be applied as set forth in the Collateral Trust Agreement.

Collateral Trustee’s Duties .

The powers conferred on the Collateral Trustee hereunder are solely to protect its interest in the Pledged Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Pledged Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Trustee shall have no duty as to any Pledged Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Pledged Collateral.

Additional Pledgors .

It is anticipated that additional persons will from time to time become Subsidiaries of the Borrower or a Guarantor, each of whom may be required to join this Pledge Agreement to the extent required by the Credit Agreement. It is acknowledged and agreed that new Subsidiaries of the Borrower or of a Guarantor may become Pledgors hereunder and will be bound hereby simply by executing and delivering to Collateral Trustee a Guarantor Joinder in the form of Exhibit 1.1(G)(1) to the Credit Agreement. In addition, a new Schedule A hereto shall be provided to Collateral Trustee showing the pledge of the ownership interest in such new Subsidiary and any ownership interests that such new Subsidiary owns in any other Person.

10.

No Waiver; Cumulative Remedies .

No failure to exercise, and no delay in exercising, on the part of the Collateral Trustee, any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any further exercise thereof or the exercise of any other right, power or privilege. The remedies herein provided are cumulative and not exclusive of any remedies provided under the Debt Instruments or by Law. Each Pledgor waives any right to require the Collateral Trustee to proceed against any other Person or to exhaust any of the Pledged Collateral or other security for the Secured Obligations or to pursue any remedy in the Collateral Trustee’s power.

11.

No Discharge Until Payment of the Secured Obligations .

The pledge, security interests, and other Liens and the obligations of each Pledgor hereunder shall not be discharged or impaired or otherwise diminished by any failure, default, omission, or delay, willful or otherwise, by Collateral Trustee, or any other obligor on any of the Secured Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Pledgor or which would otherwise operate as a discharge of such Pledgor as a matter of law or equity except for, and to the extent of, payment and performance of the Secured Obligations. Without limiting the generality of the foregoing, each Pledgor hereby consents to, and the pledge, security interests,

and other Liens given by such Pledgor hereunder shall not be diminished, terminated, or otherwise similarly affected by any of the following at any time and from time to time:

(a) Any lack of genuineness, legality, validity, enforceability, or allowability (in a bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or any avoidance or subordination, in whole or in part, of any Debt Instrument or any of the Secured Obligations and regardless of any law, regulation, or order now or hereafter in effect in any jurisdiction affecting any of the Secured Obligations, any of the terms of the Debt Instruments, or any rights of the Collateral Trustee or any other Person with respect thereto;

(b) Any increase, decrease, or change in the amount, nature, type or purpose of any of the Secured Obligations (whether or not contemplated by the Debt Instruments as presently constituted); any change in the time, manner, method, or place of payment or performance of, or in any other term of, any of the Secured Obligations; any execution or delivery of any additional Debt Instruments, or documents evidencing or related to the Secured Obligations; or any amendment, modification or supplement to, or refinancing or refunding of, any Debt Instrument or any of the Secured Obligations;

(c) Any failure to assert any breach of or default under any Debt Instrument or any of the Secured Obligations; any extensions of credit in excess of the amount committed under or contemplated by any Debt Instrument, or in circumstances in which any condition to such extensions of credit has not been satisfied; any other exercise or non-exercise, or any other failure, omission, breach, default, delay, or wrongful action in connection with any exercise or non-exercise, of any right or remedy against such Pledgor or any other Person under or in connection with any Debt Instrument or any of the Secured Obligations; any refusal of payment or performance of any of the Secured Obligations, whether or not with any reservation of rights against any Pledgor; or any application of collections (including collections resulting from realization upon any direct or indirect security for the Secured Obligations) to other obligations, if any, not entitled to the benefits of this Agreement, in preference to Secured Obligations or, if any collections are applied to Secured Obligations, any application to particular Secured Obligations;

(d) Any taking, exchange, amendment, modification, supplement, termination, subordination, release, loss, or impairment of, or any failure to protect, perfect, or preserve the value of, or any enforcement of, realization upon, or exercise of rights or remedies under or in connection with, or any failure, omission, breach, default, delay, or wrongful action by the Collateral Trustee or any other Person in connection with the enforcement of, realization upon, or exercise of rights or remedies under or in connection with, or, any other action or inaction by Collateral Trustee or any other Person in respect of, any direct or indirect security for any of the Secured Obligations (including the Pledged Collateral). As used in this Agreement, “direct or indirect security” for the Secured Obligations, and similar phrases, includes any collateral security, guaranty, suretyship, letter of credit, capital maintenance agreement, put option, subordination agreement, or other right or arrangement of any nature providing direct or indirect assurance of payment or performance of any of the Secured Obligations, made by or on behalf of any Person;

(e) Any merger, consolidation, liquidation, dissolution, winding-up, charter revocation, or forfeiture, or other change in, restructuring or termination of the corporate structure or existence of, any Pledgor or the Borrower or any other Person; any bankruptcy, insolvency, reorganization or similar proceeding with respect to any Pledgor or the Borrower or any other Person; or any action taken or election (including any election under Section 1111(b)(2) of the United States Bankruptcy Code or any comparable law of any jurisdiction) made by the Collateral Trustee or any Pledgor or the Borrower or by any other Person in connection with any such proceeding;

(f) Any defense, setoff, or counterclaim which may at any time be available to or be asserted by any Pledgor or the Borrower or any other Person with respect to any Debt Instrument or any of the Secured Obligations, other than, and to the extent of, payment and performance of the Secured Obligations; or any discharge by operation of law or release of any Pledgor or the Borrower or any other Person from the performance or observance of any Debt Instrument or any of the Secured Obligations; and

(g) Any other event or circumstance, whether similar or dissimilar to the foregoing, and whether known or unknown, which might otherwise constitute a defense available to, or limit the liability of a guarantor or a surety, including any Pledgor, excepting only full, strict, and indefeasible payment and performance of the Secured Obligations in full.

12.

[ Intentionally Deleted ]

13.

Waivers .

Each Pledgor hereby waives any and all defenses which any Pledgor may now or hereafter have based on principles of suretyship, impairment of collateral, or the like, other than, and to the extent of, the defense of prior payment of the Secured Obligations, and each Pledgor hereby waives any defense to or limitation on its obligations under this Agreement arising out of or based on any event or circumstance referred to in Section 11 hereof, other than, and to the extent of, the defense of prior payment of the Secured Obligations. Without limiting the generality of the foregoing and to the fullest extent permitted by applicable law, each Pledgor hereby further waives each of the following:

(a) Except as may be expressly provided in the Credit Agreement or other Debt Instruments, all notices, disclosures and demands of any nature which otherwise might be required from time to time to preserve intact any rights against such Pledgor, including the following: any notice of any event or circumstance described in the immediately preceding section hereof; any notice required by any law, regulation or order now or hereafter in effect in any jurisdiction; any notice of nonpayment, nonperformance, dishonor, or protest under any Debt Instrument or any of the Secured Obligations; any notice of the incurrence of any Secured Obligations; any notice of any default or any failure on the part of such Pledgor or the Borrower or any other Person to comply with any Debt Instrument or any of the Secured Obligations or any requirement pertaining to any direct or indirect security for any of the Secured Obligations; and any notice or other information pertaining to the business, operations, condition (financial or otherwise), or prospects of the Borrower or any other Person;

(b) Any right to any marshalling of assets, to the filing of any claim against such Pledgor or the Borrower or any other Person in the event of any bankruptcy, insolvency, reorganization, or similar proceeding, or to the exercise against such Pledgor or the Borrower, or any other Person of any other right or remedy under or in connection with any Debt Instrument or any of the Secured Obligations or any direct or indirect security for any of the Secured Obligations; any requirement of promptness or diligence on the part of the Collateral Trustee or any other Person; any requirement to exhaust any remedies under or in connection with, or to mitigate the damages resulting from default under, any Debt Instrument or any of the Secured Obligations or any direct or indirect security for any of the Secured Obligations; any benefit of any statute of limitations; and any requirement of acceptance of this Agreement or any other Debt Instrument, and any requirement that any Pledgor receive notice of any such acceptance; and

(c) Any defense or other right arising by reason of any Law now or hereafter in effect in any jurisdiction pertaining to election of remedies (including anti-deficiency laws, “one action” laws, or the like), or by reason of any election of remedies or other action or inaction by the Collateral Trustee (including commencement or completion of any judicial proceeding or nonjudicial sale or other action in respect of collateral security for any of the Secured Obligations), which results in denial or impairment of the right of the Collateral Trustee to seek a deficiency against the Borrower or any other Person or which otherwise discharges or impairs any of the Secured Obligations.

14.

Assignment .

(a) This Agreement shall be binding upon and inure to the benefit of the Collateral Trustee, the Secured Parties and their respective successors and assigns, and each Pledgor and each of its respective successors and assigns, except that no Pledgor may assign or transfer such Pledgor’s obligations hereunder or any interest herein other than assignments and transfers permitted by the Credit Agreement.

(b) The Collateral Trustee may resign and a successor Collateral Trustee may be appointed in the manner provided in the Collateral Trust Agreement. Upon the acceptance of any appointment as a collateral trustee by a successor collateral trustee, that successor collateral trustee shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring collateral trustee, as secured party under this Agreement and the retiring collateral trustee shall thereupon be discharged from its duties and obligations under this Agreement. After any retiring collateral trustee’s resignation, the provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement while it was Collateral Trustee.

15.

Severability .

The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such

provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.

16.

Governing Law .

This Agreement shall be deemed to be a contract under the laws of the Commonwealth of Pennsylvania and for all purposes shall be governed by and construed in accordance with the laws of said Commonwealth without regard to its conflict of laws principles, except to the extent that the validity or perfection of the Lien and the security interest hereunder, or remedies hereunder, in respect of any particular Pledged Collateral are governed by the laws of a jurisdiction other than the Commonwealth of Pennsylvania.

17.

Notices .

All notices, requests, demands, directions and other communications (collectively, “notices”) given to or made upon any party hereto under the provisions of this Agreement shall be as set forth in Section 11.6 [Notices] of the Credit Agreement in the case of the Pledgors and as set forth in Section 7.2 of the Collateral Trust Agreement in the case of the Collateral Trustee.

18.

Specific Performance .

Each Pledgor acknowledges and agrees that, in addition to the other rights of the Collateral Trustee hereunder and under the other Loan Documents to which it is a party, because the Collateral Trustee’s remedies at law for failure of such Pledgor to comply with the provisions hereof relating to the Collateral Trustee’s rights (i) to inspect the books and records related to the Pledged Collateral, (ii) to receive the various notifications such Pledgor is required to deliver hereunder, (iii) to obtain copies of agreements and documents as provided herein with respect to the Pledged Collateral, (iv) to enforce the provisions hereof pursuant to which the such Pledgor has appointed the Collateral Trustee its attorney-in-fact, and (v) to enforce the Collateral Trustee’s remedies hereunder, would be inadequate and that any such failure would not be adequately compensable in damages, such Pledgor agrees that each such provision hereof may be specifically enforced.

19.

Voting Rights in Respect of the Pledged Collateral .

So long as no Event of Default shall occur and be continuing, each Pledgor may exercise any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the other Debt Instruments. The Pledgors shall not vote (i) to enable, or take any other action to permit, any of the Companies to issue any stock, capital stock, shares, member interests, partnership interests, other equity securities or other ownership interests of any nature of any such Company, other than stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards as well as performance awards of CNX Gas Corporation that may be made from time to time to directors, employees, and consultants of CNX Gas Corporation and its affiliates (including the Loan Parties) and overallotment options granted to underwriters or placement

agents for additional shares of common stock or other securities of CNX Gas Corporation granted in connection with public or private offerings of its common stock or other securities or (ii) to enter into any agreement or undertaking restricting the right or ability of the Pledgor or the Collateral Trustee to sell, assign or transfer any of the Pledged Collateral, other than restrictions on the sale or transfer of CNX Gas Corporation common stock or other securities beneficially owned by any Loan Party which are contained or entered into in connection with public or private underwriting/placement agreements for public or private offering of the common stock or other securities of CNX Gas Corporation.

20.

Consent to Jurisdiction .

EACH PLEDGOR, EACH COMPANY AND THE COLLATERAL TRUSTEE HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA AND THE DELAWARE STATE AND UNITED STATES DISTRICT COURTS LOCATED IN WILMINGTON, DELAWARE, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH PLEDGOR, SUCH COMPANY OR THE COLLATERAL TRUSTEE AT THE ADDRESSES PROVIDED FOR IN SECTION 17 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH PLEDGOR, EACH COMPANY AND THE COLLATERAL TRUSTEE WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE.

21.

Waiver of Jury Trial .

EACH PLEDGOR, EACH COMPANY AND THE COLLATERAL TRUSTEE HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE PLEDGED COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.

22.

Entire Agreement; Amendments .

This Agreement supersedes all prior understandings and agreements, whether written or oral, between the parties hereto and thereto relating to the transactions provided for herein.

23.

Counterparts; Telecopy Signatures .

This Agreement may be executed by different parties hereto on any number of separate counterparts, each of which, when so executed and delivered, shall be an original, and all such counterparts shall together constitute one and the same instrument. Delivery of an executed

signature page by telecopy or electronic signature delivery system (in either case in a form acceptable to the Collateral Trustee) shall be effective as delivery of a manually executed signature page to this Agreement.

24.

Construction .

The rules of construction contained in Section 1.2 of the Credit Agreement apply to this Agreement.

25.

Termination .

This Agreement shall terminate upon the satisfaction of the conditions set forth in, and in accordance with the provisions of, Section 6 of the Collateral Trust Agreement. All or any portion of the Pledged Collateral shall be released upon the satisfaction of the conditions set forth in, and in accordance with the provisions of, Section 6 of the Collateral Trust Agreement.

26.

No Conflict .

The parties agree that in the event of any conflict between the provisions of this Agreement and the provisions of the Collateral Trust Agreement, the provisions of the Collateral Trust Agreement shall control. Notwithstanding any provision in this Agreement to the contrary, the parties and signatories hereto acknowledge and agree that any and all rights, powers, privileges, duties, responsibilities, liabilities and/or obligations (including but not limited to the right to grant or withhold consent and the right to act or refrain from acting), whether discretionary or mandatory, are and shall be exercised by the Collateral Trustee solely in accordance with the terms and conditions of the Collateral Trust Agreement, at the direction of the Credit Facility Agent (as defined in the Collateral Trust Agreement) or other entity specified in the Collateral Trust Agreement as having the right to give direction to the Collateral Trustee, and subject further to the rights of the Collateral Trustee to require officers’ certificate(s), opinion(s) and advice from counsel, accountants, appraisers and other third parties, advancement of expenses and/or assurances of indemnity satisfactory to the Collateral Trustee.

27.

Amendment and Restatement; No Novation.

The Original Pledge Agreement is hereby amended and restated in its entirety, and this Agreement is not intended to constitute and does not constitute an interruption, suspension of continuity, satisfaction, discharge of prior duties, novation or termination of the liens, security interests, indebtedness, loans, liabilities, expenses or obligations under the Original Credit Agreement, the Original Collateral Trust Agreement or the Original Pledge Agreement. Each Pledgor acknowledges and agrees that the Original Pledge Agreement has continued to secure the indebtedness, loans, liabilities, expenses, and obligations under the Original Credit Agreement, as amended and restated by the Original Amended and Restated Credit Agreement, as amended and restated by the Credit Agreement, and the Original Collateral Trust Agreement, as amended and restated by the Collateral Trust Agreement, since the date of execution of the Original Pledge Agreement, and that this Agreement is entitled to all rights and benefits originally pertaining to the Original Pledge Agreement.

[SIGNATURES APPEAR ON FOLLOWING PAGES]

[SIGNATURE PAGE - AMENDED AND RESTATED PLEDGE AGREEMENT]

IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto have caused this Agreement to be duly executed as of the date first above written.


PLEDGORS

CONSOL ENERGY INC.

By:


Name:		John M. Reilly
Title:		Vice President and Treasurer


Address:		1800 Washington Road
		Pittsburgh, Pennsylvania 15241

[SIGNATURE PAGE - AMENDED AND RESTATED PLEDGE AGREEMENT]


PLEDGORS:

CNX MARINE TERMINALS INC.
CONSOL OF CANADA INC.
CONSOL OF CENTRAL PENNSYLVANIA LLC
CONSOL OF KENTUCKY INC.
CONSOL OF OHIO LLC
CONSOL OF WYOMING LLC
CONSOL PENNSYLVANIA COAL COMPANY LLC
J.A.R. BARGE LINES, LLC
LEATHERWOOD, INC.
MON RIVER TOWING, INC.
ROCHESTER & PITTSBURGH COAL COMPANY
WOLFPEN KNOB DEVELOPMENT COMPANY

By:
John M. Reilly, Treasurer of each Pledgor listed above on behalf of each such Pledgor

Address as to each Pledgor:
1800 Washington Road
Pittsburgh, Pennsylvania 15241

[SIGNATURE PAGE - AMENDED AND RESTATED PLEDGE AGREEMENT]


PLEDGORS:

CENTRAL OHIO COAL COMPANY
CONSOLIDATION COAL COMPANY
EIGHTY-FOUR MINING COMPANY
HELVETIA COAL COMPANY
ISLAND CREEK COAL COMPANY
KEYSTONE COAL MINING CORPORATION
LAUREL RUN MINING COMPANY
McELROY COAL COMPANY
SOUTHERN OHIO COAL COMPANY
TWIN RIVERS TOWING COMPANY
WINDSOR COAL COMPANY

By:
Daniel S. Cangilla, Treasurer of each Pledgor listed above on behalf of each such Pledgor

Address as to each Pledgor:
1800 Washington Road
Pittsburgh, Pennsylvania 15241

[SIGNATURE PAGE - AMENDED AND RESTATED PLEDGE AGREEMENT]


PLEDGORS:

CONSOL FINANCIAL INC.

By:


Name:		Christopher C. Jones
Title:		Treasurer and Assistant Secretary



CNX LAND RESOURCES INC.
MTB INC.
TERRA FIRMA COMPANY

By:


Name:		Robert P. King
Title:		President of each Pledgor listed above on behalf of each such entity


CONSOL ENERGY SALES COMPANY

By:


Name:		Robert F. Pusateri
Title:		President and CEO


RESERVE COAL PROPERTIES COMPANY

By:


Name:		Dennis R. McCracken
Title:		Vice President


Address as to each Pledgor:
1800 Washington Road
Pittsburgh, Pennsylvania 15241

[SIGNATURE PAGE - AMENDED AND RESTATED PLEDGE AGREEMENT]


PLEDGORS:

CONSOL DOCKS INC.

By:


Name:		James C. Grech
Title:		President



CONRHEIN COAL COMPANY

By:		CONSOLIDATION COAL COMPANY, a
		general partner

By:


Name:		Daniel S. Cangilla
Title:		Treasurer



CONSOL OF WV LLC

By:


Name:		Guy J. Dreskler
Title:		Manager


Address as to each Pledgor:
1800 Washington Road
Pittsburgh, Pennsylvania 15241

[SIGNATURE PAGE - AMENDED AND RESTATED PLEDGE AGREEMENT]


WILMINGTON TRUST COMPANY , as Collateral Trustee

By:
Name:
Title:



Address:
Wilmington Trust Company, as Collateral Trustee
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Attn: Corporate Trust Administration
Telephone: (302) 636-6043
Facsimile: (302) 636-4143

SCHEDULE A

PLEDGE AGREEMENT

Description of Pledged Collateral

A.	CORPORATIONS


SUBSIDIARY PLEDGED	PLEDGOR & PLEDGOR’S JURISDICTION OF FORMATION	PLEDGED SHARES	TYPE AND AMOUNT OF OWNERSHIP PLEDGED
Central Ohio Coal Company	CONSOLIDATION COAL COMPANY (Delaware)	75,000	100%
CNX Gas Corporation	CONSOLIDATION COAL COMPANY (Delaware)	122,896,667	Approx.80%
CNX Land Resources Inc.	CONSOL Energy Inc (Delaware)	1,000	100%
CNX Marine Terminals Inc.	CONSOL Energy Sales Company (Delaware)	1,000	100%
Consol Docks Inc.	CONSOL Energy Sales Company (Delaware)	1,000	100%
CONSOL Energy Sales Company	CONSOL Energy Inc. (Delaware)	1,000	100%
CONSOL Financial Inc.	CONSOL Energy Inc. (Delaware)	1,000	100%
CONSOL Godefroid Europe S. A.	CONSOL Energy Sales Company (Delaware)	73,450	65%
CONSOLIDATION COAL COMPANY	CONSOL Energy Inc. (Delaware)	75,000	100%
CONSOL of Canada Inc.	CONSOL Energy Inc. (Delaware)	7,000	100%
CONSOL of Kentucky Inc.	CONSOL Energy Inc. (Delaware)	500	100%
Cargo Dockers Limited.	CONSOL Energy Sales Company (Delaware)	72	65%
Eighty-Four Mining Company	Consol Financial Inc. (Delaware)	10	100%
Helvetia Coal Company	Rochester & Pittsburgh Coal Company (Pennsylvania)	500	100%
ISLAND CREEK COAL COMPANY	CONSOLIDATION COAL COMPANY (Delaware)	100	100%


SUBSIDIARY PLEDGED	PLEDGOR & PLEDGOR’S JURISDICTION OF FORMATION	PLEDGED SHARES	TYPE AND AMOUNT OF OWNERSHIP PLEDGED
Keystone Coal Mining Corporation	Rochester & Pittsburgh Coal Company (Pennsylvania)	100	100%
Laurel Run Mining Company	ISLAND CREEK COAL COMPANY (Delaware)	1,000	100%
Leatherwood, Inc.	Rochester & Pittsburgh Coal Company (Pennsylvania)	100	100%
McELROY COAL COMPANY	CONSOLIDATION COAL COMPANY (Delaware)	1,000	100%
Mon River Towing, Inc.	CONSOL Energy Sales Company (Delaware)	1,000	100%
MTB Inc.	CONSOL Energy Inc. (Delaware)	1,000	100%
RESERVE COAL PROPERTIES COMPANY	CONSOL Energy Inc. (Delaware)	1,000	100%
Rochester & Pittsburgh Coal Company	CONSOLIDATION COAL COMPANY (Delaware)	1,000	100%
SOUTHERN OHIO COAL COMPANY	CONSOLIDATION COAL COMPANY (Delaware)	5,000	100%
Terra Firma Company	CNX Land Resources Inc. (Delaware)	1	100%
TWIN RIVERS TOWING COMPANY	CONSOL Energy Sales Company (Delaware)	1,000	100%
Windsor Coal Company	CONSOLIDATION COAL COMPANY (Delaware)	4,064	100%
WOLFPEN KNOB DEVELOPMENT COMPANY	CONSOL Energy Inc. (Delaware)	1,000	100%

B.	LIMITED LIABILITY COMPANIES


SUBSIDIARY PLEDGED	PLEDGOR & PLEDGOR’S JURISDICTION OF FORMATION	TYPE AND AMOUNT OF OWNERSHIP PLEDGED
CONSOL of Central Pennsylvania LLC	CONSOL Energy Inc. (Delaware)	100% of Pledgor’s Membership Interest

CONSOL of Ohio LLC	CONSOL Energy Inc. (Delaware)	100% of Pledgor’s Membership Interest

CONSOL of WV LLC	CONSOL Energy Inc. (Delaware)	100% of Pledgor’s Membership Interest

CONSOL of Wyoming LLC	CONSOL Energy Inc. (Delaware)	100% of Pledgor’s Membership Interest


SUBSIDIARY PLEDGED	PLEDGOR & PLEDGOR’S JURISDICTION OF FORMATION	TYPE AND AMOUNT OF OWNERSHIP PLEDGED
Consol Pennsylvania Coal Company LLC	CONSOL Energy Inc. (Delaware)	100% of Pledgor’s Membership Interest
J.A.R. Barge Lines, LLC	CONSOL Energy Sales Company (Delaware)	100% of Pledgor’s Membership Interest

C.	PARTNERSHIPS

SUBSIDIARY PLEDGED

PLEDGOR & PLEDGOR’S

JURISDICTION OF FORMATION

TYPE AND AMOUNT OF

OWNERSHIP PLEDGED

Conrhein Coal Company

CONSOLIDATION COAL COMPANY (Delaware)

MTB Inc. (Delaware)

100% of Pledgor’s Partnership Interest

SCHEDULE B

PLEDGE AGREEMENT

Description of Shareholder Restrictions

None

EXHIBIT A

PLEDGE AGREEMENT

Form of Securities Account Control Agreement

SECURITIES ACCOUNT CONTROL AGREEMENT (this “ Agreement ”) dated as of , , among (i) , a (the “ Grantor ”), (ii) Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity, but solely as Collateral Trustee under that certain Amended and Restated Collateral Trust Agreement dated as of June 27, 2007 (the “ Collateral Trust Agreement ”), among Wilmington Trust Company, as corporate trustee, David A. Vanaskey, as individual trustee, CONSOL Energy Inc. and certain of its subsidiaries party thereto, as secured party for the equal and ratable benefit of the Secured Parties (as such term is defined in the Collateral Trust Agreement) (the “ Collateral Trustee ”), and (iii) , a , as securities intermediary (the “ Securities Intermediary ”).

PRELIMINARY STATEMENTS:

(1) The Grantor has granted the Collateral Trustee a security interest (the “ Security Interest ”) in account no. maintained by the Securities Intermediary for the Grantor (the “ Account ”).

(2) Terms defined in Article 8 or 9 of the Uniform Commercial Code in effect in the Commonwealth of Pennsylvania (“ PA Uniform Commercial Code ”) are used in this Agreement as such terms are defined in such Article 8 or 9.

NOW, THEREFORE, in consideration of the premises and of the mutual agreements contained herein, the parties hereto hereby agree as follows:

SECTION 1. The Account . The Grantor and Securities Intermediary represent and warrant to, and agree with, the Grantor and the Collateral Trustee that:

(a) The Securities Intermediary maintains the Account for the Grantor, and all property held by the Securities Intermediary for the account of the Grantor is, and will continue to be, credited to the Account.

(b) The Account is a securities account. The Securities Intermediary is the securities intermediary with respect to the property credited from time to time to the Account. The Grantor is the entitlement holder with respect to the property credited from time to time to the Account.

(c) The Commonwealth of Pennsylvania is, and will continue to be, the Securities Intermediary’s jurisdiction of organization for purposes of Section 8-110(e) of the UCC so long as the Security Interest shall remain in effect.

(d) Exhibit A attached hereto is a statement of the property credited to the Account on the most recent date practicable.

(e) The Grantor and Securities Intermediary do not know of any claim to or interest in the Account or any property credited to the Account, except for claims and interests of the parties referred to in this Agreement.

SECTION 2. Control by Collateral Trustee . Upon receipt of a Notice of Exclusive Control (as defined below) and thereafter until receipt of a Notice of Release (as defined below), the Securities Intermediary will comply with all notifications it receives directing it to transfer or redeem any property in the Account (each, and “ Entitlement Order ”) or other directions concerning the Account (including, without limitation, directions to distribute to the Collateral Trustee proceeds of any such transfer or redemption or interest or dividends on property in the Account) originated by the Collateral Trustee without further consent by the Grantor or any other person.

SECTION 3. Grantor’s Rights in Account .

(f) Until the Securities Intermediary receives a notice from the Collateral Trustee certifying that an Event of Default (as defined in the security documents between the Collateral Trustee and the Grantor) has occurred and is continuing and stating that the Collateral Trustee will exercise exclusive control over the Account (a “ Notice of Exclusive Control ” with respect to such Account), the Securities Intermediary will comply with Entitlement Orders originated by the Grantor without further consent by the Collateral Trustee.

(g) If the Securities Intermediary receives from the Collateral Trustee a Notice of Exclusive Control, the Securities Intermediary, until it has received a Notice of Release, will cease:

(i) complying with Entitlement Orders or other directions concerning the Account originated by the Grantor and

(ii) distributing to the Grantor interest and dividends on property in the Account.

(h) In the event a Notice of Exclusive Control is delivered by the Collateral Trustee to the Securities Intermediary, and subsequently the Event of Default triggering such notice is cured, the Collateral Trustee agrees promptly to send a notice to the Securities Intermediary directing the Securities Intermediary to comply with Entitlement Orders and other directions concerning each Account originated by the Grantor (a “ Notice of Release ”) and, at such time, the Account Holder will comply with Entitlement Orders as contemplated by clause (a).

SECTION 4. Priority of Collateral Trustee’s Security Interest .

(i) The Securities Intermediary subordinates in favor of the Collateral Trustee any security interest, lien, or right of setoff it may have, now or in the future, against the Account or property in the Account, except that the Securities Intermediary will retain its prior lien on property in the Account to secure payment for property purchased for the Account and normal commissions and fees for the Account.

(j) The Securities Intermediary will not agree with any Person not party to this Agreement that the Securities Intermediary will comply with Entitlement Orders originated by such Person.

SECTION 5. Statements, Confirmations, and Notices of Adverse Claims .

(k) The Securities Intermediary will send copies of all statements and confirmations for the Account simultaneously to the Grantor and the Collateral Trustee.

(l) When the Securities Intermediary knows of any claim or interest in the Account or any property credited to the Account other than the claims and interests of the parties referred to in this Agreement, the Securities Intermediary will promptly notify the Collateral Trustee and the Grantor of such claim or interest.

SECTION 6. The Securities Intermediary’s Responsibility .

(m) Except for permitting a withdrawal, delivery, or payment in violation of Section 3, the Securities Intermediary will not be liable to the Collateral Trustee for complying with Entitlement Orders or other directions concerning the Account from the Grantor that are received by the Securities Intermediary before the Securities Intermediary receives and has a reasonable opportunity to act on a Notice of Exclusive Control.

(n) The Securities Intermediary will not be liable to the Grantor or the Collateral Trustee for complying with a Notice of Exclusive Control or with an Entitlement Order or other direction concerning the Account originated by the Collateral Trustee, even if the Grantor notifies the Securities Intermediary that the Collateral Trustee is not legally entitled to issue the Notice of Exclusive Control or Entitlement Order or such other direction unless the Securities Intermediary takes the action after it is served with an injunction, restraining order, or other legal process enjoining it from doing so, issued by a court of competent jurisdiction, and had a reasonable opportunity to act on the injunction, restraining order or other legal process.

(o) This Agreement does not create any obligation of the Securities Intermediary except for those expressly set forth in this Agreement and in Part 5 of Article 8 of the PA Uniform Commercial Code. In particular, the Securities Intermediary need not investigate whether the Collateral Trustee is entitled under the Collateral Trustee’s agreements with the Grantor to give an Entitlement Order or other direction concerning the Account or a Notice of Exclusive Control. The Securities Intermediary may rely on notices and communications it believes given by the appropriate party.

SECTION 7. Indemnity . The Grantor will indemnify the Securities Intermediary, its officers, directors, employees and agents against claims, liabilities and expenses arising out of this Agreement (including, without limitation, reasonable attorney’s fees and disbursements), except to the extent the claims, liabilities or expenses are caused by the Securities Intermediary’s gross negligence of willful misconduct as found by a court of competent jurisdiction in a final, non-appealable judgment.

SECTION 8. Termination; Survival .

(p) The Collateral Trustee may terminate this Agreement by notice to the Securities Intermediary and the Grantor. If the Collateral Trustee notifies the Securities Intermediary that the Security Interest has terminated, this Agreement will immediately terminate.

(q) The Securities Intermediary may terminate this Agreement on 60 days’ prior notice to the Collateral Trustee and the Grantor, provided that before such termination the Securities Intermediary and the Grantor shall make arrangements to transfer the property in the Account to another securities intermediary that shall have executed, together with the Grantor, a control agreement in favor of the Collateral Trustee in respect of such property in substantially the form of this Agreement or otherwise in form and substance satisfactory to the Collateral Trustee.

(r) This Agreement shall terminate upon the satisfaction of the conditions set forth in, and in accordance with the provisions of, Section 6 of the Collateral Trust Agreement. The Collateral Trustee agrees to promptly give notice to the Securities Intermediary releasing all or any portion of the property (including, without limitation, all or any portion of the funds and financial assets) held by the Securities Intermediary for the account of Grantor upon the satisfaction of the conditions set forth in, and in accordance with the provisions of, Section 6 of the Collateral Trust Agreement.

(s) Sections 6 and 7 will survive termination of this Agreement.

SECTION 9. Governing Law . This Agreement shall be deemed to be a contract under the laws of the Commonwealth of Pennsylvania and this Agreement and the Account for all purposes shall be governed by and construed in accordance with the laws of said Commonwealth without regard to its conflict of laws principles. The Securities Intermediary and the Grantor may not change the law governing the Account without the Collateral Trustee’s express prior written agreement.

SECTION 10. Entire Agreement . This Agreement supersedes all prior understandings and agreements, whether written or oral, between the parties hereto relating to the transactions provided for herein.

SECTION 11. Amendments . No amendment of, or waiver of a right under, this Agreement will be binding unless it is in writing and signed by the party to be charged.

SECTION 12. Financial Assets . The Securities Intermediary agrees with the Collateral Trustee and the Grantor that, to the fullest extent permitted by applicable law, all property credited from time to time to the Account will be treated as financial assets under Article 8 of the PA Uniform Commercial Code.

SECTION 13. Notices . A notice or other communication to a party under this Agreement will be in writing (except that Entitlement Orders may be given orally), will be sent to the party’s address set forth under its name below or to such other address as the party may notify the other parties. Any notice or other communication shall be effective:

(t) In the case of hand-delivery, when delivered;

(u) If given by mail, four days after such notice or other communication is deposited with the United States Postal Service, with first-class postage prepaid, return receipt requested;

(v) In the case of a facsimile transmission, when sent to the applicable party’s facsimile machine’s telephone number if the party sending such notice or other communication receives confirmation of the delivery thereof from its own facsimile machine;

(w) In the case of electronic transmission, when actually received; and

(x) If given by any other means (including by overnight courier), when actually received.

SECTION 14. Binding Effect . This Agreement shall be binding upon and inure to the benefit of the Grantor, the Collateral Trustee and the Securities Intermediary and their respective successors and assigns except that the Grantor may not assign or transfer the Grantor’s obligations hereunder or any interest herein other than assignments and transfers permitted by the Amended and Restated Credit Agreement dated as of June 27, 2007 among CONSOL Energy Inc., the Guarantors party thereto, the Lenders party thereto, LaSalle Bank National Association, Société Générale, New York Branch and SunTrust Bank, each in its capacity as a co-documentation agent, and Citicorp North America, Inc. and PNC Bank, National Association as co-administrative agents.

SECTION 15. Execution in Counterparts . This Agreement may be executed by different parties hereto on any number of separate counterparts, each of which, when so executed and delivered, shall be an original, and all such counterparts shall together constitute one and the same instrument. Delivery of an executed signature page by telecopy or electronic signature delivery system (in either case in a form acceptable to the Collateral Trustee) shall be effective as delivery of a manually executed signature page to this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.


CONSOL ENERGY INC.

By


Name:		John M. Reilly
Title:		Treasurer

Address:
1800 Washington Road
Pittsburgh, Pennsylvania 15241

CNX MARINE TERMINALS INC.
CONSOL OF CANADA INC.
CONSOL OF CENTRAL PENNSYLVANIA LLC
CONSOL OF KENTUCKY INC.
CONSOL OF OHIO LLC
CONSOL OF WYOMING LLC
CONSOL PENNSYLVANIA COAL COMPANY LLC
J.A.R. BARGE LINES, LLC
LEATHERWOOD, INC.
MON RIVER TOWING, INC.
ROCHESTER & PITTSBURGH COAL COMPANY
WOLFPEN KNOB DEVELOPMENT COMPANY

By:


John M. Reilly, Treasurer of each Guarantor listed above on behalf of each such Guarantor

Address as to each Pledgor:
1800 Washington Road
Pittsburgh, Pennsylvania 15241


CENTRAL OHIO COAL COMPANY CONSOLIDATION COAL COMPANY
EIGHTY-FOUR MINING COMPANY
HELVETIA COAL COMPANY
ISLAND CREEK COAL COMPANY
KEYSTONE COAL MINING CORPORATION
LAUREL RUN MINING COMPANY
McELROY COAL COMPANY
SOUTHERN OHIO COAL COMPANY
TWIN RIVERS TOWING COMPANY
WINDSOR COAL COMPANY

By:
Daniel S. Cangilla, Treasurer of each Pledgor listed above on behalf of each such Pledgor

Address as to each Pledgor:
1800 Washington Road
Pittsburgh, Pennsylvania 15241


CONSOL FINANCIAL INC.

By:


Name:		Christopher C. Jones
Title:		Treasurer



CNX LAND RESOURCES INC.

By:


Name:		Robert P. King
Title:		President



CONSOL ENERGY SALES COMPANY

By:


Name:		Robert F. Pusateri
Title:		President and CEO



RESERVE COAL PROPERTIES COMPANY

By:


Name:		Dennis R. McCracken
Title:		Vice President

Address as to each Pledgor:
1800 Washington Road
Pittsburgh, Pennsylvania 15241


CONSOL DOCKS INC.

By:


Name:		James C. Grech
Title:		President



MTB INC.

By:
Name:		Robert P. King
Title:		President



TERRA FIRMA COMPANY

By:


Name:		Robert P. King
Title:		President



CONRHEIN COAL COMPANY

By:		Consolidation Coal Company, a general partner

By:


Name:		Daniel S. Cangilla
Title:		Treasurer

Address as to each Pledgor:
1800 Washington Road
Pittsburgh, Pennsylvania 15241


CONSOL OF WV LLC

By:


Name:		Guy J. Dreskler
Title:		Manager

Address:
1800 Washington Road
Pittsburgh, Pennsylvania 15241


WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Collateral Trustee

By


Name:
Title:

Address:
Wilmington Trust Company, as Collateral
		Trustee
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Attn: Corporate Trust Administration
Telephone: (302) 636-6043
Facsimile: (302) 636-4143
Email:

EXHIBIT A

[Statements of the various Accounts showing the property credited to each Account]

Exhibit 10.41

SECURITY AGREEMENT

THIS AMENDED AND RESTATED SECURITY AGREEMENT (the “ Agreement ”), dated as of June 27, 2007, is entered into by and between CONSOL ENERGY INC. , a Delaware corporation (the “ Borrower ”), and EACH OF THE OTHER UNDERSIGNED PARTIES listed on the signature pages hereto and each of the other persons and entities that become bound hereby from time to time by joinder, assumption or otherwise (each of the Borrower and each of the aforesaid entities is referred to herein as a “ Debtor ” and collectively the “ Debtors ”), and WILMINGTON TRUST COMPANY , a Delaware banking corporation, not in its individual capacity but solely as the collateral trustee (the “ Collateral Trustee ”) for the equal and ratable benefit of the Secured Parties (as defined below) pursuant to the Collateral Trust Agreement (as defined below).

WITNESSETH THAT:

WHEREAS, the Debtors are (or will be with respect to after-acquired property) the legal and beneficial owners and the holders of the Collateral (as defined in Section 1 hereof);

WHEREAS, the obligations, liabilities and indebtedness of the Borrower and the other loan parties thereunder under the Original Credit Agreement, the Original Collateral Trust Agreement and under the other loan documents executed and delivered in connection therewith are secured pursuant to a security agreement given in connection with the Original Credit Agreement (the “ Original Security Agreement ”);

Scotia - New York Agency, Fleet National Bank and Union Bank of California, N.A., each in its capacity as a co-syndication agent, and PNC Bank, National Association and Citicorp North America, Inc., as co-administrative agents (the “ Original Amended and Restated Credit Agreement ”);

WHEREAS, the Original Amended and Restated Credit Agreement has been amended and restated in its entirety by that certain Amended and Restated Credit Agreement of even date herewith, by and among the Borrower, each of the Guarantors party thereto, the lenders party thereto (the “ Lenders ”), The Bank of Nova Scotia, Bank of America, N.A. and Union Bank of California, N.A., each in its capacity as a co-syndication agent, and PNC Bank, National Association and Citicorp North America, Inc., as co-administrative agents, as Co-Administrative Agents (the “ Co-Administrative Agents ”) (as it may hereafter be amended, restated, modified or supplemented from time to time, the “ Credit Agreement ”);

WHEREAS, the Original Collateral Trust Agreement has been amended and restated in its entirety by that certain Amended and Restated Collateral Trust Agreement of even date herewith, by and among the Borrower, the Collateral Trustee, David A. Vanaskey, as individual trustee, and the Designated Subsidiaries (as defined therein) (as it may hereafter be amended, restated, modified or supplemented from time to time, the “ Collateral Trust Agreement ”) and the Collateral Trustee and the individual trustee has agreed to accept the grant of a security interest under this Agreement as security for the Secured Obligations (as defined below) for the equal and ratable benefit of the Secured Parties; and

WHEREAS, the obligation of the Co-Administrative Agents and the Lenders to continue to make loans and extend credit under the Credit Agreement is subject to the condition, among others, that the Debtors continue secure their obligations to the Collateral Trustee, the individual trustee and the Secured Parties under the Credit Agreement and the other Debt Instruments and otherwise as more fully described herein in the manner set forth herein.

NOW, THEREFORE, intending to be legally bound hereby, the parties hereto covenant and agree as follows:

1. Terms which are defined in the Credit Agreement and not otherwise defined herein are used herein as defined therein and the rules of Construction set forth in Section 1.2 [Construction] of the Credit Agreement shall apply to this Agreement. The following words and terms shall have the following meanings, respectively, unless the context hereof otherwise clearly requires:

(a) “ Code ” means the Uniform Commercial Code as in effect in the Commonwealth of Pennsylvania on the date hereof and as amended from time to time, except to the extent that the conflict of law rules of such Uniform Commercial Code shall apply the Uniform Commercial Code as in effect from time to time in any other state to specific property or other matters (and in such case “Code” means the Uniform Commercial Code as in effect from time to time in such other state).

- 2 -

(b) “ Collateral ” means all of any Debtor’s right, title and interest in, to and under the following described property of such Debtor (except for the references to the Debtors and capitalized terms otherwise defined in the Credit Agreement, each capitalized term used in this Section 1(b) shall have in this Agreement the meaning given to it by the Code):

(i) all now existing and hereafter acquired or arising Accounts, Goods, Health Care Insurance Receivables, General Intangibles, Payment Intangibles, Deposit Accounts, Chattel Paper (including, without limitation, Electronic Chattel Paper), Documents, Instruments, Software, Investment Property, Letters of Credit, Letter of Credit Rights, advices of credit, money, Inventory, As-Extracted Collateral (including As-Extracted Collateral from each Debtor’s present and future operations regardless of whether such mineral or gas interests are presently owned or hereafter acquired by such Debtor), Commercial Tort Claims as listed on Schedule B hereto (as such Schedule is amended or supplemented from time to time), Equipment, Fixtures, and Supporting Obligations, together with all products of and Accessions to any of the foregoing and all Proceeds of any of the foregoing (including without limitation all insurance policies and proceeds thereof);

(ii) to the extent, if any, not included in clause (i) above, each and every Debtor’s present and future contracts, agreements, arrangements, or understandings (A) for the sale, supply, provision or disposition of any coal, natural gas, coalbed methane gas or other minerals by any Debtor, or any one or more of its agents, representatives, successors, or assigns, to any purchaser or acquirer thereof, and all products, replacements, and proceeds thereof (including without limitation, all coal, natural gas and coalbed methane gas sales contracts) and (B) relating to the mining, drilling or recovery of any mineral or gas reserves for the benefit of or on behalf of any of the Debtors or any of their agents, representatives, successors, or assigns (including without limitation, all contract mining, drilling or recovery agreements and arrangements), and all products and Proceeds thereof and payments thereunder, together with all products and Proceeds (including without limitation all insurance policies and proceeds) of and any Accessions to any of the foregoing;

(iii) to the extent, if any, not included in clauses (i) and (ii) above, all coal, natural gas, coalbed methane gas and other minerals severed or extracted from the ground (specifically including all “As-Extracted Collateral” of each Debtor and all severed or extracted coal, natural gas and coalbed methane gas purchased, acquired or obtained from other parties), and all Accounts, General Intangibles and products and Proceeds thereof or related thereto, regardless of whether any such coal, natural gas, coalbed methane gas or other minerals are in raw form or processed for sale and regardless whether or not any Debtor had an interest in the coal, natural gas, coalbed methane gas or other minerals before extraction or severance;

(iv) to the extent, if any, not included in clauses (i) through (iii) above, each and every other item of personal property and fixtures, whether now existing or hereafter arising or acquired, including, without limitation, all licenses, contracts and agreements together with all products and Proceeds (including without limitation all insurance policies and proceeds) of and any Accessions to any of the foregoing; and

- 3 -

(v) all present and future business records and information, including computer tapes and other storage media containing the same and computer programs and software (including without limitation, source code, object code and related manuals and documentation and all licenses to use such software) for accessing and manipulating such information;

provided, that, notwithstanding any of the foregoing, “Collateral” shall not include (i) Excluded Properties, (ii) Pledged Collateral pledged under the Pledge Agreement, (iii) Intellectual Property Collateral, security interests in which are granted under the Patent, Trademark and Copyright Assignment, (iv) Vessels (as defined in the Ship Mortgages), security interests in which are granted under the Ship Mortgages, (v) pursuant to Section 8.1.14 of the Credit Agreement, any assets or stock acquired in a Permitted Acquisition or (vi) any assets described on Schedule 8.1.14 of the Credit Agreement.

(d) “ Event of Default ” shall mean an Actionable Default (as defined in the Collateral Trust Agreement).

(e) “ Intercompany Notes ” shall mean those certain notes evidencing indebtedness of one Loan Party in favor of another Loan Party.

(f) “ Receivables ” means all of the Collateral except Inventory, As-Extracted Collateral and Equipment of the Debtors.

(g) “ Secured Obligations ” shall mean the Secured Debt (as defined in the Collateral Trust Agreement).

(h) “ Secured Parties ” shall mean, collectively, the Collateral Trustees (as defined in the Collateral Trust Agreement), the Co-Administrative Agents, the Paying Agent, the Lenders, The Bank of Nova Scotia Trust Company of New York or any successor thereto, as trustee under the Indenture, and any holders from time to time of the Secured Obligations, and “ Secured Party ” shall mean each of them individually.

2. As security for the due and punctual payment and performance of the Secured Obligations in full, each Debtor hereby agrees that the Collateral Trustee for the equal and ratable benefit of the Secured Parties shall have, and each Debtor hereby grants to and creates in favor of the Collateral Trustee for the equal and ratable benefit of the Secured Parties, a continuing first priority lien on and security interest under the Code in and to the Collateral subject only to Permitted Liens.

Each Debtor jointly and severally represents and warrants to the Collateral Trustee and the Secured Parties that (a) such Debtor has good and marketable title to its Collateral, subject

- 4 -

only to Permitted Liens, (b) except for the security interest granted to and created in favor of the Collateral Trustee for the equal and ratable benefit of the Secured Parties hereunder, all the Collateral is free and clear of any Lien other than Permitted Liens, (c) each Account and General Intangible in each case arising out of a material coal supply contract or other Material Contract is in full force and effect, except to the extent that the failure to be in full force and effect would not reasonably be expected to result in a Material Adverse Change, (d) at the time any Account arising from a material coal supply contract or other Material Contract becomes subject to this Agreement, each such Account will be a good and valid Account representing a bona fide sale of goods or services by such Debtor except to the extent that the failure to be so would not reasonably be expected to result in a Material Adverse Change and such goods will have been shipped to the respective account debtors or the services will have been performed for the respective account debtors (or for those on behalf of whom the account debtors are obligated on the Accounts) except to the extent the failure to have so shipped or performed would not reasonably be expected to result in a Material Adverse Change, and no such Account will at such time be subject to any claim for credit, allowance, setoff, recoupment, defense, counterclaim or adjustment by any account debtor or otherwise, except for Permitted Liens and except to the extent any such claim would not reasonably be expected to result in a Material Adverse Change, (e) the exact legal name of the Debtor is as set forth on the signature page hereto, (f) the state of incorporation, formation or organization, as applicable, of such Debtor is as set forth on Schedule A hereto and (g) the county and state of each mining operation, other than Excluded Properties, of such Debtor is set forth on Schedule A hereto. Each Debtor also represents and warrants that it has provided the Collateral Trustee with a real estate description sufficient to enable the Collateral Trustee to record a financing statement in the county records sufficient to perfect a security interest in all Collateral constituting As-Extracted Collateral arising from such Debtor’s mining activities. Further, each Debtor represents and warrants that (i) this Agreement creates a valid security interest in favor of the Collateral Trustee, for the equal and ratable benefit of the Secured Parties hereunder, in the Collateral, except as may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity and (ii) the security interests granted hereunder in favor of the Collateral Trustee, for the equal and ratable benefit of the Secured Parties hereunder, will be perfected and constitute a first priority security interest (subject only to Permitted Liens), (A) with respect to the Collateral of the type that can be perfected by filing under the Code (other than As-Extracted Collateral) of each Debtor, upon the proper filing of the financing statements in the jurisdiction of the state of organization of such Debtor as indicated on Schedule A hereto, and (B) with respect to the Collateral constituting As-Extracted Collateral of each Debtor, upon the proper filing of the financing statements in the county’s real estate records in the county identified on Schedule A hereto as the location of “Mining and Drilling Operations” with respect to such Debtor.

3. Except to the extent that Debtors are not required to perfect security interests in certain Collateral as provided in Section 4 hereof, each Debtor will preserve and protect the Collateral Trustee’s security interest in the Collateral as a perfected security interest under the Code, superior and prior to the rights of all third Persons, except for holders of Permitted Liens, and will do all such other acts and things and will, upon request therefor by the Collateral Trustee, execute, deliver, file and record, and each Debtor hereby authorizes the Collateral

- 5 -

Trustee to so file, all such other documents and instruments, including, without limitation, financing statements, security agreements, assignments and documents and powers of attorney with respect to the Collateral, and pay all filing fees and taxes related thereto, as the Collateral Trustee in its reasonable discretion may deem necessary or advisable from time to time in order to attach, continue, preserve, perfect, and protect said security interest (including the filing at any time or times after the date hereof of financing statements under, and in the locations advisable pursuant to, the Code); and, each Debtor hereby irrevocably appoints the Collateral Trustee, its officers, employees and agents, or any of them, as attorneys-in-fact for such Debtor to execute, deliver, file and record such items for such Debtor and in such Debtor’s name, place and stead. This power of attorney, being coupled with an interest, shall be irrevocable for the life of this Agreement.

4. Each Debtor jointly and severally covenants and agrees that:

(a) it will defend the Collateral Trustee’s and the Secured Parties’ right, title and lien on and security interest in and to the Collateral against the claims and demands of all Persons whomsoever, other than any Person claiming a right in the Collateral pursuant to (i) an agreement between such Person and the Collateral Trustee, or (ii) any Permitted Lien;

(b) it will not suffer or permit to exist on any Collateral any Lien except for Permitted Liens;

(c) except as permitted by the Credit Agreement, it will not take or omit to take any action, the taking or the omission of which might result in a material alteration or impairment of the Collateral or of the Collateral Trustee’s rights under this Agreement;

(d) it will not sell, assign or otherwise dispose of any portion of the Collateral except as permitted by the Credit Agreement;

(e) it will (i) maintain its chief executive office and keep all records pertaining to the Collateral at the locations specified on the Security Interest Data Summary attached as Schedule A hereto, unless it shall have given the Collateral Trustee prior notice and taken any action reasonably requested by the Collateral Trustee to maintain its security interest therein, (ii) notify the Collateral Trustee if an Account in excess of $1,000,000 individually or $10,000,000 in the aggregate (such aggregate amount shall exclude all such Accounts in existence on or prior to the Closing Date) becomes evidenced or secured by an Instrument or Chattel Paper (specifically excluding, however, any such Instrument payable by an individual in an amount not in excess of $100,000) other than Intercompany Notes and deliver to the Collateral Trustee upon the Collateral Trustee’s request therefor all Collateral consisting of Instruments and Chattel Paper, other than Chattel Paper or Instruments representing less than $1,000,000 individually or $10,000,000 in the aggregate (such aggregate amount shall exclude all such Accounts in existence on or prior to the Closing Date) (and specifically excluding, however, any such Instrument payable by an individual in an amount not in excess of $100,000) other than Intercompany Notes, immediately upon such Debtor’s receipt of a request therefor, and (iii) keep materially accurate and complete books and records concerning the Collateral and such other books and records as the Collateral Trustee may from time to time reasonably require;

- 6 -

(f) after an Event of Default, it will promptly furnish to the Collateral Trustee such information and documents relating to the Collateral as the Collateral Trustee may reasonably request, including, without limitation, all invoices, Documents, contracts, Chattel Paper, Instruments and other writings pertaining to such Debtor’s contracts or the performance thereof, all of the foregoing to be certified upon request of the Collateral Trustee by an authorized officer of such Debtor;

(g) it shall immediately notify the Collateral Trustee if any Account in excess of $10,000,000 arises out of contracts with the United States or any department, agency or instrumentality thereof or any one or more of the states of the United States or any department, agency, or instrumentality thereof, and will execute any instruments and take any steps required by the Collateral Trustee so that all monies due and to become due under such contract shall be assigned to the Collateral Trustee and notice of the assignment given to and acknowledged by the appropriate government agency or authority under the Federal Assignment of Claims Act;

(h) such Debtor will not change its state of incorporation, formation or organization, as applicable without providing fifteen (15) days prior written notice to the Collateral Trustee;

(i) such Debtor will not commence commercial production from any new mining operation or permit any party to commence commercial production of minerals from any of its mineral reserves, in each case, other than with respect to Excluded Properties or properties already the subject of As-Extracted Collateral filings under the Code with security interests already perfected therein, (whether leased or owned in fee by such Debtor) without providing fifteen (15) days prior written notice to the Collateral Trustee, and providing the Collateral Trustee with sufficient real estate information to enable the Collateral Trustee to file financing statements to perfect an interest in Collateral consisting of As-Extracted Collateral with respect to such operation;

(j) such Debtor will not change its name without providing fifteen (15) days prior written notice to the Collateral Trustee;

(k) if such Debtor shall at any time acquire a commercial tort claim, as defined in the Code, with respect to which a recovery in excess of $5,000,000 would reasonably be expected to be obtained, such Debtor shall immediately notify the Collateral Trustee in a writing signed by such Debtor of the details thereof and grant to the Collateral Trustee for the equal and ratable benefit of the Secured Parties in such writing a security interest therein and in the proceeds thereof, with such writing to be in form and substance reasonably satisfactory to the Collateral Trustee and such writing shall constitute a supplement to Schedule B hereto;

(l) in furtherance of this Agreement, each Debtor hereby authorizes the Collateral Trustee to, at any time and from time to time, file in any one or more jurisdictions financing statements that describe the Collateral, together with continuation statements thereof and amendments thereto, without the signature of such Debtor and that contain any information required by the Code or any other applicable statute applicable to such jurisdiction for the sufficiency or filing office acceptance of any financing statements, continuation statements, or amendments. Each Debtor agrees to furnish any such information to the Collateral Trustee

- 7 -

promptly upon request. Any such financing statements, continuation statements, or amendments may be signed by the Collateral Trustee on behalf of such Debtor if the Collateral Trustee so elects and may be filed at any time in any jurisdiction;

(m) except with respect to any Deposit Account the average daily balance of which does not exceed $5,000,000 unless otherwise requested by the Paying Agent in writing, it will use its commercial good faith efforts to maintain all Deposit Accounts only with the Collateral Trustee or with banks (the “ Pledged Account Banks ”) that have agreed, in a record authenticated by such Debtor, the Collateral Trustee and the Pledged Account Banks, to (i) upon the occurrence and during the continuance of an Event of Default, comply with instructions originated by the Collateral Trustee directing the disposition of funds in the Deposit Accounts without the further consent of such Debtor and (ii) waive or subordinate in favor of the Collateral Trustee all claims of the Pledged Account Banks (including, without limitation, claims by way of a security interest, lien or right of setoff or right of recoupment) to the Deposit Accounts, which authenticated record shall be substantially in the form of Exhibit A hereto, or shall otherwise be in form and substance reasonably satisfactory to the Collateral Trustee;

(n) it will maintain exclusive possession and control of its Equipment and Inventory at the locations specified set forth on Schedule A hereto, as such Schedule A may be amended from time to time hereunder, unless ten (10) days’ prior notice has been given to the Collateral Trustee (upon which notice Schedule A will be automatically amended as set forth in such notice), except with respect to (i) any material Equipment and Inventory stored at any leased premises or warehouse so indicated by an asterisk on Schedule A hereto as to which such Debtor will use its commercial good faith efforts to cause a landlord’s or warehouseman’s agreement, in form and substance reasonably satisfactory to the Collateral Trustee, to be in effect within fifteen (15) Business Days after the date such Equipment or Inventory is located on such premises or warehouse, (ii) Inventory in transit in the ordinary course of business to its customers, (iii) Equipment under repair (with respect to which such Debtor will give notice to the Collateral Trustee if the fair market value of such Equipment exceeds $20,000,000), or (iv) other Equipment and Inventory that has an aggregate value no greater than $20,000,000 at any one time;

(o) it will maintain (i) all Electronic Chattel Paper so that the Collateral Trustee has control of the Electronic Chattel Paper in the manner specified in Section 9-105 of the Code and (ii) all transferable records so that the Collateral Trustee has control of the transferable records in the manner specified in Section 16 of the Uniform Electronic Transactions Act, as in effect in the jurisdiction governing such transferable record;

(p) it will deliver to the Collateral Trustee all certificates or Instruments representing or evidencing Collateral (representing, or having a fair market value of, more than $1,000,000 individually or $10,000,000 in the aggregate (such aggregate amount shall exclude all such Accounts in existence on or prior to the Closing Date), specifically excluding, however, any such Instrument payable by an individual in an amount not in excess of $100,000) other than Intercompany Notes, which certificates or Instruments shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Collateral Trustee;

- 8 -

(q) with respect to any Collateral in which any Debtor has any right, title or interest and that constitutes an uncertificated security, such Debtor will cause the issuer thereof either (i) to note or register the security interest created hereby in the appropriate company records or (ii) to agree in an authenticated record with such Debtor and the Collateral Trustee that upon the occurrence and during the continuance of an Event of Default such issuer will comply with instructions with respect to such security originated by the Collateral Trustee without further consent of such Debtor, such authenticated record to be in form and substance reasonably satisfactory to the Collateral Trustee and such Debtor;

(r) except with respect to any security entitlements in any account for which the average daily balance does not exceed $5,000,000, with respect to any Collateral in which any Debtor has any right, title or interest and that constitutes a security entitlement in which the Collateral Trustee is not the entitlement holder, such Debtor will use its commercial good faith efforts to cause the securities intermediary with respect to such security entitlement to either (i) to identify in its records the Collateral Trustee as the entitlement holder of such security entitlement against such securities intermediary or (ii) agree in an authenticated record with such Debtor and the Collateral Trustee that, upon the occurrence and during the continuance of an Event of Default, such securities intermediary will comply with entitlement orders (that is, notifications communicated to such securities intermediary directing transfer or redemption of the financial asset to which such Debtor has a security entitlement) originated by the Collateral Trustee without further consent of such Debtor, such authenticated record to be in substantially the form of Exhibit B hereto or otherwise in form and substance reasonably satisfactory to the Collateral Trustee;

(s) except with respect to any commodity contract the average daily balance of which does not exceed $5,000,000, with respect to any Collateral in which any Debtor has any right, title or interest and that constitutes a commodity contract, such Debtor will use its commercial good faith efforts to cause the commodity intermediary with respect to such commodity contract to agree in an authenticated record with such Debtor and the Collateral Trustee that, upon the occurrence and during the continuance of an Event of Default, such commodity intermediary will apply any value distributed on account of such commodity contract as directed by the Collateral Trustee without further consent of such Debtor, such authenticated record to be in the form of Exhibit C hereto or otherwise in form and substance reasonably satisfactory to the Collateral Trustee;

(t) upon the request of the Collateral Trustee upon the occurrence and during the continuance of an Event of Default, such Debtor will notify each issuer of debt that is part of the Collateral that such debt is subject to the security interest herein granted.

5. The Collateral Trustee shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral Trustee takes any action for that purpose as any Debtor shall request in writing, provided that such requested action will not, in the judgment of the Collateral Trustee, impair the security interest in the Collateral created hereby or the Collateral Trustee’s and the Secured Parties’ rights in, or the value of, the Collateral, and provided further that such written request is received by the Collateral Trustee in sufficient time to permit the Collateral Trustee to take the requested action.

- 9 -

6. The pledge, security interests, and other Liens and the obligations of each Debtor hereunder shall not be discharged or impaired or otherwise diminished by any failure, default, omission, or delay, willful or otherwise, by the Collateral Trustee, or any other obligor on any of the Secured Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Debtor or which would otherwise operate as a discharge of such Debtor as a matter of law or equity, except for, and to the extent of, payment and performance of the Secured Obligations. Without limiting the generality of the foregoing, each Debtor hereby consents to, and the pledge, security interests, and other Liens given by such Debtor hereunder shall not be diminished, terminated, or otherwise similarly affected by any of the following at any time and from time to time:

(b) Any increase, decrease, or change in the amount, nature, type or purpose of any of the Secured Obligations (whether or not contemplated by the Debt Instruments as presently constituted); any change in the time, manner, method, or place of payment or performance of, or in any other term of, any of the Secured Obligations; any execution or delivery of any additional Debt Instruments or documents evidencing or related to the Secured Obligations or any of them; or any amendment, modification or supplement to, or refinancing or refunding of, any Debt Instrument or any of the Secured Obligations;

(c) Any failure to assert any breach of or default under any Debt Instrument or any of the Secured Obligations; any extensions of credit in excess of the amount committed under or contemplated by any Debt Instrument, or in circumstances in which any condition to such extensions of credit has not been satisfied; any other exercise or non-exercise, or any other failure, omission, breach, default, delay, or wrongful action in connection with any exercise or non-exercise, of any right or remedy against such Debtor or any other Person under or in connection with any Debt Instrument or any of the Secured Obligations; any refusal of payment or performance of any of the Secured Obligations, whether or not with any reservation of rights against any Debtor; or any application of collections (including collections resulting from realization upon any direct or indirect security for the Secured Obligations) to other obligations, if any, not entitled to the benefits of this Agreement, in preference to Secured Obligations or, if any collections are applied to Secured Obligations, any application to particular Secured Obligations;

- 10 -

Collateral Trustee or any other Person in respect of, any direct or indirect security for any of the Secured Obligations (including the Collateral). As used in this Agreement, “direct or indirect security” for the Secured Obligations, and similar phrases, includes any collateral security, guaranty, suretyship, letter of credit, capital maintenance agreement, put option, subordination agreement, or other right or arrangement of any nature providing direct or indirect assurance of payment or performance of any of the Secured Obligations, made by or on behalf of any Person;

(e) Any merger, consolidation, liquidation, dissolution, winding-up, charter revocation, or forfeiture, or other change in, restructuring or termination of the corporate structure or existence of, any Debtor or the Borrower or any other Person; any bankruptcy, insolvency, reorganization or similar proceeding with respect to any Debtor or the Borrower or any other Person; or any action taken or election (including any election under Section 1111(b)(2) of the United States Bankruptcy Code or any comparable law of any jurisdiction) made by the Collateral Trustee or any Debtor or the Borrower or by any other Person in connection with any such proceeding;

(f) Any defense, setoff, or counterclaim which may at any time be available to or be asserted by any Debtor or the Borrower or any other Person with respect to any Debt Instrument or any of the Secured Obligations, other than, and to the extent of, payment and performance of the Secured Obligations; or any discharge by operation of law or release of any Debtor or the Borrower or any other Person from the performance or observance of any Debt Instrument or any of the Secured Obligations; and

(g) Any other event or circumstance, whether similar or dissimilar to the foregoing, and whether known or unknown, which might otherwise constitute a defense available to, or limit the liability of a guarantor or a surety, including any Debtor, excepting only full, strict, and indefeasible payment and performance of the Secured Obligations in full.

7. Each Debtor hereby waives any and all defenses which any Debtor may now or hereafter have based on principles of suretyship, impairment of collateral, or the like, other than, and to the extent of, the defense of prior payment of the Secured Obligations, and each Debtor hereby waives any defense to or limitation on its obligations under this Agreement arising out of or based on any event or circumstance referred to in the immediately preceding section hereof, other than, and to the extent of, the defense of prior payment of the Secured Obligations. Without limiting the generality of the foregoing and to the fullest extent permitted by applicable law, each Debtor hereby further waives each of the following:

(a) Except as may be expressly provided in the Credit Agreement or the other Debt Instruments, all notices, disclosures and demands of any nature which otherwise might be required from time to time to preserve intact any rights against such Debtor, including the following: any notice of any event or circumstance described in the immediately preceding section hereof; any notice required by any law, regulation or order now or hereafter in effect in any jurisdiction; any notice of nonpayment, nonperformance, dishonor, or protest under any Debt Instrument or any of the Secured Obligations; any notice of the incurrence of any Secured Obligations; any notice of any default or any failure on the part of such Debtor or the Borrower or any other Person to comply with any Debt Instrument or any of the Secured Obligations or any

- 11 -

requirement pertaining to any direct or indirect security for any of the Secured Obligations; and any notice or other information pertaining to the business, operations, condition (financial or otherwise), or prospects of the Borrower or any other Person;

(b) Any right to any marshalling of assets, to the filing of any claim against such Debtor or the Borrower or any other Person in the event of any bankruptcy, insolvency, reorganization, or similar proceeding, or to the exercise against such Debtor or the Borrower, or any other Person of any other right or remedy under or in connection with any Debt Instrument or any of the Secured Obligations or any direct or indirect security for any of the Secured Obligations; any requirement of promptness or diligence on the part of the Collateral Trustee or any other Person; any requirement to exhaust any remedies under or in connection with, or to mitigate the damages resulting from default under, any Debt Instrument or any of the Secured Obligations or any direct or indirect security for any of the Secured Obligations; any benefit of any statute of limitations; and any requirement of acceptance of this Agreement or any other Debt Instrument, and any requirement that any Debtor receive notice of any such acceptance; and

8. The Secured Obligations and additional liabilities of the Debtors under this Agreement are joint and several obligations of the Debtors, and each Debtor hereby waives to the full extent permitted by law any defense it may otherwise have to the payment and performance of the Secured Obligations that its liability hereunder is limited and not joint and several. Each Debtor acknowledges and agrees that the foregoing waivers serve as a material inducement to the agreement of the Lenders to make the Loans, and that the Lenders are relying on each specific waiver and all such waivers in entering into this Agreement. The undertakings of each Debtor hereunder secure the obligations of itself and the other Debtors. The Collateral Trustee may, in its sole discretion, elect to enforce this Agreement against any Debtor without any duty or responsibility to pursue any other Debtor and such an election by the Collateral Trustee shall not be a defense to any action the Collateral Trustee and the Secured Parties, or any of them, may elect to take against any Debtor. Each of the Secured Parties and the Collateral Trustee hereby reserve all rights against each Debtor.

9. (a) At any time and from time to time whether or not an Event of Default then exists and without prior notice to or consent of any Debtor, the Collateral Trustee may at its option take such actions as the Collateral Trustee deems reasonably necessary or appropriate (i) to attach, perfect, continue, preserve and protect the Collateral Trustee’s and the Secured Parties’ first priority security interest in or lien on the Collateral, other than with respect to those items of Collateral for which perfection is not required pursuant to Section 4 hereof, and/or (ii) to inspect, audit and verify the Collateral, including reviewing all of such Debtor’s books and

- 12 -

records and copying and making excerpts therefrom, provided that prior to an Event of Default, the same is done with reasonable advance notice during normal business hours to the extent access to such Debtor’s premises is required and in accordance with such Debtor’s standard safety, visit and inspection procedures and no such visit, or inspection shall interfere with such Debtor’s normal business operation; and

(a) At any time and from time to time after an Event of Default exists and is continuing and without prior notice to or consent of any Debtor, the Collateral Trustee may at its option take such action as the Collateral Trustee deems reasonably necessary or appropriate (i) to maintain, repair, protect and insure the Collateral, and/or (ii) to perform, keep, observe and render true and correct any and all covenants, agreements, representations and warranties of any Debtor hereunder.

10. Upon the occurrence and during the continuation of any Event of Default under the Credit Agreement:

(a) The Collateral Trustee shall have and may exercise all the rights and remedies available to a secured party under the Code in effect at the time, and such other rights and remedies as may be provided by Law and as set forth below, including without limitation to take over and collect all of any Debtor’s Receivables and all other Collateral, and to this end, upon and during the continuation of an Event of Default, each Debtor hereby appoints the Collateral Trustee, its officers, employees and agents, as its irrevocable, true and lawful attorneys-in-fact with all necessary power and authority to: (i) take possession immediately, with or without notice, demand, or legal process, of any of or all of the Collateral wherever found, and for such purposes, enter upon any premises upon which the Collateral may be found and remove the Collateral therefrom, (ii) require any Debtor to assemble the Collateral and deliver it to the Collateral Trustee or to any place designated by the Collateral Trustee at such Debtor’s expense, (iii) receive, open and dispose of all mail addressed to any Debtor and notify postal authorities to change the address for delivery thereof to such address as the Collateral Trustee may designate, (iv) demand payment of the Receivables, as applicable, (v) enforce payment of the Receivables, as applicable, by legal proceedings or otherwise, (vi) exercise all of any Debtor’s rights and remedies with respect to the collection of the Receivables, as applicable, (vii) settle, adjust, compromise, extend or renew the Receivables, (viii) settle, adjust or compromise any legal proceedings brought to collect the Receivables, as applicable, (ix) to the extent permitted by applicable Law, sell or assign the Receivables upon such terms, for such amounts and at such time or times as the Collateral Trustee deems advisable, (x) discharge and release the Receivables, (xi) take control, in any manner, of any item of payment or proceeds from any account debtor, (xii) prepare, file and sign any Debtor’s name on any proof of claim in Bankruptcy or similar document against any account debtor, (xiii) prepare, file and sign any Debtor’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables, (xiv) do all acts and things necessary, in the Collateral Trustee’s sole discretion, to fulfill any Debtor’s obligations to the Collateral Trustee or the Secured Parties under the Credit Agreement, any other Debt Instrument or otherwise, (xv) endorse the name of any Debtor upon any check, Chattel Paper, Document, Instrument, invoice, freight bill, bill of lading or similar document or agreement relating to the Receivables or Inventory; (xvi) use any Debtor’s stationery and sign such Debtor’s name to verifications of the Receivables and notices

- 13 -

thereof to account debtors; (xvii) access and use the information recorded on or contained in any data processing equipment or computer hardware or software relating to the Receivables, Inventory, or other Collateral or proceeds thereof to which any Debtor has access, (xviii) demand, sue for, collect, compromise and give acquittances for any and all Collateral, (xix) prosecute, defend or compromise any action, claim or proceeding with respect to any of the Collateral, and (xx) take such other action as the Collateral Trustee may deem appropriate, including extending or modifying the terms of payment of any Debtor’s debtors. This power of attorney, being coupled with an interest, shall be irrevocable for the life of this Agreement. To the extent permitted by Law, each Debtor hereby waives all claims of damages due to or arising from or connected with any of the rights or remedies exercised by the Collateral Trustee pursuant to this Agreement, except claims for physical damage to the Collateral arising from gross negligence or willful misconduct by the Collateral Trustee.

(b) The Collateral Trustee shall have the right to lease, sell or otherwise dispose of all or any of the Collateral at public or private sale or sales for cash, credit or any combination thereof, with such notice as may be required by Law (it being agreed by each Debtor that, in the absence of any contrary requirement of Law, ten (10) days’ prior notice of a public or private sale of Collateral shall be deemed reasonable notice), in lots or in bulk, for cash or on credit, all as the Collateral Trustee, in its sole discretion, may deem advisable. Such sales may be adjourned from time to time with or without notice. The Collateral Trustee shall have the right to conduct such sales on any Debtor’s premises or elsewhere and shall have the right to use any Debtor’s premises without charge for such sales for such time or times as the Collateral Trustee may see fit.

(c) Each Debtor, at its cost and expense (including the cost and expense of any of the following referenced consents, approvals, etc.), will promptly execute and deliver or cause the execution and delivery of all applications, certificates, instruments, registration statements, and all other documents and papers the Collateral Trustee may request in connection with the obtaining of any consent, approval, registration, qualification, permit, license, accreditation, or authorization of any other Official Body or other Person necessary or appropriate for the effective exercise of any rights hereunder or under the other Debt Instruments. Without limiting the generality of the foregoing, each Debtor agrees that in the event the Collateral Trustee, on behalf of the Secured Parties shall exercise its rights hereunder or pursuant to the other Loan Documents to which it is a party, to sell, transfer, or otherwise dispose of, or vote, consent, operate, or take any other action in connection with any of the Collateral, such Debtor shall execute and deliver (or cause to be executed and delivered) all applications, certificates, assignments and other documents that the Collateral Trustee requests to facilitate such actions and shall otherwise promptly, fully, and diligently cooperate with the Collateral Trustee and any other Persons in making any application for the prior consent or approval of any Official Body or any other Person to the exercise by the Collateral Trustee on behalf of the Secured Parties or any such rights relating to all or any of the Collateral. Furthermore, because each Debtor agrees that the remedies at law, of the Collateral Trustee, on behalf of the Secured Parties, for failure of such Debtor to comply with this Subsection (c) would be inadequate, and that any such failure would not be adequately compensable in damages, each Debtor agrees that this Subsection (c) may be specifically enforced.

- 14 -

(d) The Collateral Trustee may request, without limiting the rights and remedies of the Collateral Trustee on behalf of the Secured Parties otherwise provided hereunder and under the other Loan Document to which it is a party, that each Debtor do any of the following: (i) give the Collateral Trustee on behalf of the Secured Parties specific assignments of the accounts receivable of such Debtor after such accounts receivable come into existence, and schedules of such accounts receivable, the form and content of such assignment and schedules to be satisfactory to the Collateral Trustee, and (ii) in order to better secure the Collateral Trustee on behalf of the Secured Parties, to the extent permitted by Law, enter into such lockbox agreements and establish such lockbox accounts as the Collateral Trustee may require, all at the sole expense of such Debtor and shall direct all payments from all payors due to such Debtor, to such lockbox accounts.

11. The lien on and security interest in each Debtor’s Collateral granted to and created in favor of the Collateral Trustee by this Agreement shall be for the equal and ratable benefit of the Secured Parties. Each of the rights, privileges, and remedies provided to the Collateral Trustee hereunder or otherwise by Law with respect to any Debtor’s Collateral shall be exercised by the Collateral Trustee only for the equal and ratable benefit of the Secured Parties, and any of such Debtor’s Collateral or proceeds thereof held or realized upon at any time by the Collateral Trustee shall be applied as set forth in Section 3 of the Collateral Trust Agreement. Each Debtor shall remain liable to the Secured Parties for and shall pay to the Collateral Trustee for the equal and ratable benefit of the Secured Parties any deficiency which may remain after such sale or collection.

12. If the Collateral Trustee repossesses or seeks to repossess any of the Collateral pursuant to the terms hereof because of the occurrence of an Event of Default, then to the extent it is commercially reasonable for the Collateral Trustee to store any Collateral on any of any Debtor’s premises, each Debtor hereby agrees to lease to the Collateral Trustee on a month-to-month tenancy for a period not to exceed one hundred twenty (120) days at the Collateral Trustee’s election, at a rental of One Dollar ($1.00) per month, the premises on which the Collateral is located, provided it is located on premises owned or leased by such Debtor.

13. This Agreement shall terminate upon the satisfaction of the conditions set forth in, and in accordance with the provisions of, Section 6 of the Collateral Trust Agreement. All or any portion of the Collateral shall be released upon the satisfaction of the conditions set forth in, and in accordance with the provisions of, Section 6 of the Collateral Trust Agreement. Until such time, however, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

14. No failure or delay on the part of the Collateral Trustee in exercising any right, remedy, power or privilege hereunder shall operate as a waiver thereof or of any other right, remedy, power or privilege of the Collateral Trustee hereunder; nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. No waiver of a single Event of Default shall be deemed a waiver of a subsequent Event of Default. All waivers under this Agreement must be in writing. The rights and remedies of the Collateral Trustee under this Agreement are cumulative and in addition to any rights or remedies which it may otherwise have, and the Collateral Trustee may enforce any one or more remedies hereunder successively or concurrently at its option.

- 15 -

15. All notices, statements, requests and demands given to or made upon either party hereto in accordance with the provisions of this Agreement shall be given or made as provided in Section 11.6 [Notices] of the Credit Agreement in the case of the Debtors and as set forth in Section 7.2 of the Collateral Trust Agreement in the case of the Collateral Trustee.

16. Each Debtor agrees that as of the date hereof, all information contained on the Security Interest Data Schedule attached hereto as Schedule A is accurate and complete and contains no omission or misrepresentation.

17. Each Debtor acknowledges that the provisions hereof giving the Collateral Trustee rights of access to books, records and information concerning the Collateral and such Debtor’s operations and providing the Collateral Trustee access to such Debtor’s premises are intended to afford the Collateral Trustee with immediate access to current information concerning such Debtor and its activities, including without limitation, the value, nature and location of the Collateral so that the Collateral Trustee can, among other things, make an appropriate determination after the occurrence of an Event of Default, whether and when to exercise its other remedies hereunder and at Law, including without limitation, instituting a replevin action should any Debtor refuse to turn over any Collateral to the Collateral Trustee. Each Debtor further acknowledges that should such Debtor at any time fail to promptly provide such information and give the Collateral Trustee the rights of access to books, records and information concerning the Collateral and such Debtor’s operations as provided in this Agreement, each Debtor acknowledges that the Collateral Trustee would have no adequate remedy at Law to promptly obtain the same. Each Debtor agrees that the provisions hereof may be specifically enforced by the Collateral Trustee and waives any claim or defense in any such action or proceeding that the Collateral Trustee has an adequate remedy at Law. The Collateral Trustee shall have the absolute right to share any information which it gains from the foregoing with any Secured Party.

18. It is anticipated that additional Persons may from time to time become Subsidiaries of the Borrower or a Guarantor, each of whom may be required to join in this Agreement as a Debtor to the extent required by the Credit Agreement. It is acknowledged and agreed that new Subsidiaries of the Borrower or a Guarantor may become parties hereunder and will be bound hereby simply by executing and delivering to the Collateral Trustee a Guarantor Joinder in the form of Exhibit 1.1(G)(1) to the Credit Agreement. In addition, a new Schedule A hereto shall be provided to Collateral Trustee showing accurate and complete information regarding the information contained in the Security Interest Data Schedule attached hereto as Schedule A .

19. (a) This Agreement shall be binding upon and inure to the benefit of the Collateral Trustee, the Secured Parties and their respective successors and assigns, and each Debtor and each of its respective successors and assigns, except that no Debtor may assign or transfer such Debtor’s obligations hereunder or any interest herein other than assignments and transfers permitted by the Credit Agreement.

- 16 -

(a) The Collateral Trustee may resign and a successor Collateral Trustee may be appointed in the manner provided in the Collateral Trust Agreement. Upon the acceptance of any appointment as a collateral trustee by a successor collateral trustee, that successor collateral trustee shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring collateral trustee, as secured party under this Agreement and the retiring collateral trustee shall thereupon be discharged from its duties and obligations under this Agreement. After any retiring collateral trustee’s resignation, the provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement while it was Collateral Trustee.

20. This Agreement shall be deemed to be a contract under the laws of the Commonwealth of Pennsylvania and for all purposes shall be governed by and construed in accordance with the laws of said Commonwealth without regard to its conflict of laws principles, except to the extent that the validity or perfection of the Lien and the security interest hereunder, or remedies hereunder, in respect of any particular Collateral are governed by the laws of a jurisdiction other than the Commonwealth of Pennsylvania.

21. The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.

22. EACH DEBTOR AND THE COLLATERAL TRUSTEE HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA AND THE DELAWARE STATE AND UNITED STATES DISTRICT COURTS LOCATED IN WILMINGTON, DELAWARE, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH DEBTOR OR THE COLLATERAL TRUSTEE AT THE ADDRESSES PROVIDED FOR IN SECTION 15 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH DEBTOR AND THE COLLATERAL TRUSTEE WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE.

23. EACH DEBTOR AND THE COLLATERAL TRUSTEE HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.

- 17 -

24. This Agreement may be executed by different parties hereto on any number of separate counterparts, each of which, when so executed and delivered, shall be an original, and all such counterparts shall together constitute one and the same instrument. Delivery of an executed signature page by telecopy or electronic signature delivery system (in either case in a form acceptable to the Collateral Trustee) shall be effective as delivery of a manually executed signature page to this Agreement.

25. In the event that any of the Collateral hereunder is also subject to a valid and enforceable Lien under the terms of any Mortgage and the terms of such Mortgage are inconsistent with the terms of this Agreement, then with respect to such Collateral, the terms of such Mortgage shall be controlling in the case of fixtures and real estate leases, letting and licenses of, and contracts and agreements relating to the lease of, real property, and the terms of this Agreement shall be controlling in the case of all other Collateral.

26. Notwithstanding anything to the contrary contained herein, to the extent that the granting of a Lien by any Debtor to the Collateral Trustee under this Agreement in any instrument, permit, contract or agreement constituting part of the Collateral is prohibited by the terms of the instrument, permit, contract or agreement evidencing or creating such Collateral and thereby results in a breach or default by such Debtor thereunder or the termination thereof (in either case, except to the extent that such prohibitions or terminations are rendered ineffective by the Code), the Collateral shall not include, and shall exclude, such instrument, permit, contract or agreement. The Collateral Trustee on behalf of the Secured Parties acknowledges that consents may be required under certain of the instruments, permits, contracts, and agreements constituting a part of the Collateral in connection with any attempt to assign such instruments, permits, contracts or agreements pursuant to the assertion of remedies hereunder.

27. The parties agree that in the event of any conflict between the provisions of this Agreement and the provisions of the Collateral Trust Agreement, the provisions of the Collateral Trust Agreement shall control. Notwithstanding any provision in this Agreement to the contrary, the parties and signatories hereto acknowledge and agree that any and all rights, powers, privileges, duties, responsibilities, liabilities and/or obligations (including but not limited to the right to grant or withhold consent and the right to act or refrain from acting), whether discretionary or mandatory, are and shall be exercised by the Collateral Trustee solely in accordance with the terms and conditions of the Collateral Trust Agreement, at the direction of the Credit Facility Agent (as defined in the Collateral Trust Agreement) or other entity specified in the Collateral Trust Agreement as having the right to give direction to the Collateral Trustee, and subject further to the rights of the Collateral Trustee to require officers’ certificate(s), opinion(s) and advice from counsel, accountants, appraisers and other third parties, advancement of expenses and/or assurances of indemnity satisfactory to the Collateral Trustee.

28. The Original Security Agreement is hereby amended and restated in its entirety, and this Agreement is not intended to constitute and does not constitute an interruption, suspension of continuity, satisfaction, discharge of prior duties, novation or termination of the liens, security interests, indebtedness, loans, liabilities, expenses or obligations under the Original Credit Agreement, the Original Collateral Trust Agreement or the Original Security Agreement. Each Debtor acknowledges and agrees that the Original Security Agreement has

- 18 -

continued to secure the indebtedness, loans, liabilities, expenses, and obligations under the Original Credit Agreement, as amended and restated by the Original Amended and Restated Credit Agreement, as amended and restated by the Credit Agreement, and the Original Collateral Trust Agreement, as amended and restated by the Collateral Trust Agreement, since the date of execution of the Original Security Agreement, and that this Agreement is entitled to all rights and benefits originally pertaining to the Original Security Agreement.

[SIGNATURE PAGE FOLLOWS]

- 19 -

[SIGNATURE PAGE - AMENDED AND RESTATED SECURITY AGREEMENT]

IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed and delivered this Agreement as of the day and year first above written.


DEBTORS:

CONSOL ENERGY INC.

By
Name: John M. Reilly
Title: Vice President and Treasurer

[SIGNATURE PAGE - AMENDED AND RESTATED SECURITY AGREEMENT]


DEBTORS:

CNX MARINE TERMINALS INC.
CONSOL OF CANADA INC.
CONSOL OF CENTRAL PENNSYLVANIA LLC
CONSOL OF KENTUCKY INC.
CONSOL OF OHIO LLC
CONSOL OF WYOMING LLC
CONSOL PENNSYLVANIA COAL COMPANY LLC
J.A.R. BARGE LINES, LLC
LEATHERWOOD, INC.
MON RIVER TOWING, INC.
ROCHESTER & PITTSBURGH COAL COMPANY
WOLFPEN KNOB DEVELOPMENT COMPANY

By:
		John M. Reilly, Treasurer of each Guarantor
		listed above on behalf of each such Guarantor

[SIGNATURE PAGE - AMENDED AND RESTATED SECURITY AGREEMENT]


DEBTORS :

CENTRAL OHIO COAL COMPANY
CONSOLIDATION COAL COMPANY
EIGHTY-FOUR MINING COMPANY
HELVETIA COAL COMPANY
ISLAND CREEK COAL COMPANY
KEYSTONE COAL MINING CORPORATION
LAUREL RUN MINING COMPANY
McELROY COAL COMPANY
SOUTHERN OHIO COAL COMPANY
TWIN RIVERS TOWING COMPANY
WINDSOR COAL COMPANY

By:
		Daniel S. Cangilla, Treasurer of each
		Guarantor listed above on behalf of each such Guarantor

[SIGNATURE PAGE - AMENDED AND RESTATED SECURITY AGREEMENT]


DEBTORS :

CONSOL FINANCIAL INC.

By:
Name: Christopher C. Jones
Title: Treasurer and Assistant Secretary

CNX LAND RESOURCES INC. MTB INC.
TERRA FIRMA COMPANY

By:
Name: Robert P. King
Title: President of each Debtor listed above on behalf of each such entity

CONSOL ENERGY SALES COMPANY

By:
Name: Robert F. Pusateri
Title: President and CEO

RESERVE COAL PROPERTIES
COMPANY

By:
Name: Dennis R. McCracken
Title: Vice President

[SIGNATURE PAGE - AMENDED AND RESTATED SECURITY AGREEMENT]


DEBTORS:
CONSOL DOCKS INC.

By:
Name: James C. Grech
Title: President

CONRHEIN COAL COMPANY

By:	CONSOLIDATION COAL COMPANY, a general partner

	By:
	Name: Daniel S. Cangilla
	Title: Treasurer

CONSOL OF WV LLC

By:
Name:		Guy J. Dreskler
Title:		Manager

[SIGNATURE PAGE - AMENDED AND RESTATED SECURITY AGREEMENT]


WILMINGTON TRUST COMPANY , as Collateral Trustee

By:


Name:


Title:

SCHEDULE A

SECURITY AGREEMENT

DEBTOR

PRINCIPAL PLACE OF
BUSINESS ADDRESS

FEIN

ORG ID
NUMBER

STATE
OF
FORMATION

FORM OF
ORGANIZATION

MINING AND DRILLING
OPERATIONS

CONSOL Energy Inc.
(Delaware corporation)

Consol Plaza

1800 Washington Rd

Pittsburgh, PA 15241

51-0337383

2277631

Delaware

Corporation

Central Ohio Coal

Company
(Ohio corporation)

Consol Plaza

1800 Washington Rd

Pittsburgh, PA 15241

31-4356096

192806

Ohio

Corporation

CNX Land Resources

Inc.
(Delaware corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1871851

3289727

Delaware

Corporation

1)Marshall County Reserve in Marshall County, WV

2) Wetzel County Reserve - Wetzel County, WV ¹

CNX Marine

Terminals Inc.
(Delaware corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1385259

0896003

Delaware

Corporation

1) Baltimore Terminal – Baltimore County, MD

2) Danville Reserve – Vermilion County, IL; Edgar County, IL

3) Fallowfield Reserve – Washington County, PA

CNX Land Resources Inc. holds mineral rights relating to coal reserves and does not actually have any active mining operations. These locations are listed in the interests of completeness only to the extent that CNX Land Resources Inc. has granted a Mortgage or Deed of Trust in favor of the Collateral Trustee for the benefit of the Secured Parties.

DEBTOR

PRINCIPAL PLACE OF
BUSINESS ADDRESS

FEIN

ORG ID
NUMBER

STATE
OF
FORMATION

FORM OF
ORGANIZATION

MINING AND DRILLING
OPERATIONS

Conrhein Coal Company
(Pennsylvania general partnership)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1406541

2148694

Pennsylvania

General
Partnership

1) Bailey Mine and Associated Facilities – Marshall County, WV; Greene County, PA; Washington County, PA

2) Berkshire Reserve – Washington County, PA

3) Enlow Fork Mine and Associated Facilities – Marshall County, WV; Greene County, PA

Washington country, PA

Consol Docks Inc.

(Delaware corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1693670

2311445

Delaware

Corporation

1) Alicia Dock Facility – Fayette County, PA

CONSOL Energy

Sales Company
(Delaware corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1670342

2277880

Delaware

Corporation

CONSOL Financial

Inc.
(Delaware corporation)

300 Delaware Avenue
Suite 567
Wilmington, DE 19801-1622

51-0395375

3131765

Delaware

Corporation

CONSOL of Canada

Inc.

(Delaware corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

98-0013773

0678608

Delaware

Corporation

DEBTOR

PRINCIPAL PLACE
OF BUSINESS
ADDRESS

FEIN

ORG ID NUMBER

STATE
OF
FORMATION

FORM OF
ORGANIZATION

MINING AND
DRILLING
OPERATIONS

CONSOL of Central Pennsylvania LLC

Consol Plaza

1800 Washington Rd.

Pittsburgh, PA 15241

20-5105698

3657377

Pennsylvania

Limited
Liability
Company

CONSOL of Kentucky Inc.
(Delaware corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

94-2524120

0860789

Delaware

Corporation

1) Jones Fork Mine and Associated Facilities – Breathitt County, KY; Floyd County, KY; Knott County, KY; Magoffin County, KY;

2) Mill Creek Mine and Associated Facilities – Knott County, KY; Letcher County, KY; Pike County, KY

3) Miller Creek Mine and Associated Facilities – Mingo County, WV

CONSOL of Ohio LLC (Ohio limited liability company)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

20-8338255

1674572

Ohio

Limited
Liability
Company

CONSOL of WV LLC

(West Virginia limited liability company)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

20-2471235

WV does

not issue org

West
Virginia

Limited
Liability
Company

CONSOL of Wyoming LLC (Delaware limited liability company)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

20-8779722

4328949

Delaware

Limited
Liability
Company

DEBTOR

PRINCIPAL PLACE OF
BUSINESS ADDRESS

FEIN

ORG ID
NUMBER

STATE
OF
FORMATION

FORM OF
ORGANIZATION

MINING AND
DRILLING
OPERATIONS

Consol Pennsylvania Coal Company LLC
(Delaware limited liability company)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

20-8732852

0916505

Delaware

Limited Liability
Company

1) Alexander Reserve – Marshall County, WV

2) Bailey Mine and Associated Facilities – Marshall County, WV; Greene County, PA; Washington County, PA

3) Berkshire Reserve – Washington County, PA

4) Danville Reserve – Vermilion County, IL; Edgar County, IL

5) Enlow Fork Mine and Associated Facilities – Marshall County, WV; Greene County, PA; Washington County, PA

6) Greene Hill Reserve – Greene County, PA

7) Marshall County Reserve – Marshall County, WV

CONSOLIDATION COAL COMPANY

(Delaware corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

13-2566594

0633910

Delaware

Corporation

1) Amonate Mine and Associated Facilities – Tazewell County, VA; McDowell County, WV

2) Bailey Mine and Associated Facilities – Marshall County, WV; Greene County, PA; Washington County, PA

DEBTOR

PRINCIPAL
PLACE OF
BUSINESS
ADDRESS

FEIN

ORG ID
NUMBER

STATE
OF
FORMATION

FORM OF
ORGANIZATION

MINING AND DRILLING
OPERATIONS

3) Blacksville #2 Mine and Associated Facilities – Greene County, PA; Monongalia County, WV

4) Blacksville #3 Reserve – Greene County, PA; Monongalia County, WV

5) Berkshire Reserve – Washington County, PA

6) Buchanan Mine and Associated Facilities – Buchanan County, VA

7) Emery Mine and Associated Facilities – Emery County, UT

8) Enlow Fork Mine and Associated Facilities – Marshall County, WV; Greene County, PA; Washington County, PA

9) Fallowfield Reserve – Washington County, PA

10) Hurricane Branch Reserve – Buchanan County, VA; Russell County, VA; Tazewell County, VA

11) Loveridge Mine and Associated Facilities – Marion County, WV; Monongalia County, WV; Wetzel County, WV

DEBTOR

PRINCIPAL
PLACE OF
BUSINESS
ADDRESS

FEIN

ORG ID
NUMBER

STATE
OF
FORMATION

FORM OF
ORGANIZATION

MINING AND DRILLING
OPERATIONS

12) Mahoning Valley Mine and Associated Facilities – Harrison County, OH; Belmont County, OH

13) Marshall County Reserve – Marshall County, WV

14) McElroy Mine and Associated Facilities – Marshall County, WV

15) Nailer Reserve – Marion County, WV

16) Otter Creek Reserve – Powder River County, MT

17) Rend Lake Mine and Associated Facilities – Jefferson County, IL

18) Robinson Run Mine and Associated Facilities – Marion County, WV; Harrison County, WV; Wetzel County, WV

19) Shoemaker Mine and Associated Facilities – Marshall County, WV; Ohio County, WV; Washington County, PA

20) St. Cloud Reserve – Monongalia County, WV; Wetzel County, WV

DEBTOR

PRINCIPAL PLACE OF
BUSINESS ADDRESS

FEIN

ORG ID
NUMBER

STATE
OF
FORMATION

FORM OF
ORGANIZATION

MINING AND
DRILLING
OPERATIONS

21) St. Leo Reserve – Marion County, WV; Monongalia County, WV; Wetzel County, WV

22) Tetrick Reserve – Doddridge County, WV; Harrison County, WV; Marion County, WV

23) Mid-Allegheny Reserve - Marion, Marshall and Wetzel Counties, WV

Eighty-Four Mining Company
(Pennsylvania corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1695903

2159331

Pennsylvania

Corporation

1) Mine 84 and Associated Facilities – Washington County, PA

Helvetia Coal Company
(Pennsylvania corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1180531

158191

Pennsylvania

Corporation

ISLAND CREEK COAL COMPANY
(Delaware corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

55-0479426

0666523

Delaware

Corporation

1) Holden Reserve – Logan County, WV; Mingo County, WV

2) Mine 84 and Associated Facilities – Washington County, PA

3) VP3 Mine and Associated Facilities – Buchanan County, VA

4) VP8 Mine and Associated Facilities – Buchanan County, VA

DEBTOR

PRINCIPAL PLACE OF
BUSINESS ADDRESS

FEIN

ORG ID
NUMBER

STATE
OF
FORMATION

FORM OF
ORGANIZATION

MINING AND
DRILLING
OPERATIONS

J.A.R. Barge Lines, LLC

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

20-4133546

571231

Pennsylvania

Limited
Liability
Company

Keystone Coal Mining Corporation
(Pennsylvania corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1323822

654874

Pennsylvania

Corporation

Laurel Run Mining Company
(Virginia corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

54-0892422

130315

Virginia

Corporation

1) Holden Reserve – Logan County, WV; Mingo County, WV

2) Mine 84 and Associated Facilities – Washington County, PA

Leatherwood, Inc.
(Pennsylvania corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1604505

1504884

Pennsylvania

Corporation

McELROY COAL COMPANY
(Delaware corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1553551

2129034

Delaware

Corporation

1) McElroy Mine and Associated Facilities – Marshall County, WV

Mon River Towing, Inc.

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1087222

236357

Pennsylvania

Corporation

MTB Inc.
(Delaware corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1674211

2283880

Delaware

Corporation

RESERVE COAL PROPERTIES COMPANY
(Delaware corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1582519

2170386

Delaware

Corporation

1) Alexander Reserve – Marshall County, WV

2) Amonate Mine and Associated Facilities – Tazewell County, VA; McDowell County, WV

DEBTOR

PRINCIPAL
PLACE OF
BUSINESS
ADDRESS

FEIN

ORG ID
NUMBER

STATE
OF
FORMATION

FORM OF
ORGANIZATION

MINING AND DRILLING
OPERATIONS

3) Bailey Mine and Associated Facilities – Marshall County, WV; Greene County, PA; Washington County, PA

4) Blacksville #3 Reserve – Greene County, PA; Monongalia County, WV

5) Buchanan Mine and Associated Facilities – Buchanan County, VA

6) Clark County Reserve – Clark County, IL

7) Danville Reserve – Vermilion County, IL; Edgar County, IL

8) Enlow Fork Mine and Associated Facilities – Marshall County, WV; Greene County, PA; Washington County, PA

9) Fallowfield Reserve – Washington County, PA

10) Hamilton County Reserve – Hamilton County, IL; Saline County, IL; Franklin County, IL

11) Hurricane Branch Reserve – Buchanan County, VA; Russell County, VA; Tazewell County, VA

DEBTOR

PRINCIPAL PLACE OF
BUSINESS ADDRESS

FEIN

ORG ID
NUMBER

STATE
OF
FORMATION

FORM OF
ORGANIZATION

MINING AND
DRILLING
OPERATIONS

12) Loveridge Mine and Associated Facilities – Marion County, WV; Monongalia County, WV; Wetzel County, WV

13) Mine 84 and Associated Facilities – Washington County, PA

14) Otter Creek Reserve – Powder River County, MT

15) Robinson Run Mine and Associated Facilities – Marion County, WV; Harrison County, WV; Wetzel County, WV

16) St. Cloud Reserve – Monongalia County, WV; Wetzel County, WV

17) Shaner Reserve – Allegheny County, PA; Westmoreland County, PA

18) Tetrick Reserve – Doddridge County, WV; Harrison County, WV; Marion County, WV

19) Youngs Creek Reserve – Sheridan County, WY

20) Wetzel County Reserve - Wetzel County, WV ²

Rochester & Pittsburgh Coal Company
(Pennsylvania corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-0761480

307678

Pennsylvania

Corporation

SOUTHERN OHIO COAL COMPANY
(West Virginia corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

55-0403282

WV
does not
issue
org. ID

West
Virginia

Corporation

Terra Firma Company

(West Virginia corporation)

1000 Hampton Center

Morgantown, WV 26505

20-0869908

WV
does not
issue
org ID

West
Virginia

Corporation

TWIN RIVERS TOWING COMPANY
(Delaware corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1181155

0650101

Delaware

Corporation

Windsor Coal Company
(West Virginia corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

13-5488703

WV
does not
issue
org. ID

West
Virginia

Corporation

WOLFPEN KNOB DEVELOPMENT COMPANY
(Virginia corporation)

Consol Plaza
1800 Washington Rd
Pittsburgh, PA 15241

25-1391218

0211000

Virginia

Corporation

1) Birch Reserve – Braxton County, WV; Clay County, WV; Nicholas County, WV

Reserve Coal Properties Company holds mineral rights relating to coal reserves and does not actually have any active mining operations. These locations are listed in the interests of completeness only to the extent that Reserve Coal Properties Company has granted a Mortgage or Deed of Trust in favor of the Collateral Trustee for the benefit of the Secured Parties.

SCHEDULE B

SECURITY AGREEMENT

COMMERCIAL TORT CLAIMS

CONSOL Energy Inc. and Eighty-Four Mining Company v. Berkshire Hathaway, et al: Suit for insurance coverage of $1.2 MM and bad faith claim for underwriter’s refusal to pay for damages resulting from the fire at Mine No. 84.

Exhibit A to the

Security Agreement

EXHIBIT A

SECURITY AGREEMENT

FORM OF ACCOUNT CONTROL AGREEMENT

(Deposit Account/Securities Account)

ACCOUNT CONTROL AGREEMENT (this “ Agreement ”) dated as of , , among (i) , a (the “ Grantor ”), (ii) Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity, but solely as Collateral Trustee under that certain Amended and Restated Collateral Trust Agreement dated as of June 27, 2007 (the “ Collateral Trust Agreement ”), among Wilmington Trust Company, as corporate trustee, David A. Vanaskey, as individual trustee, CONSOL Energy Inc. and certain of its subsidiaries party thereto, as secured party for the equal and ratable benefit of the Secured Parties (as such term is defined in the Collateral Trust Agreement) (the “ Collateral Trustee ”), and (iii) , a , as securities intermediary and depository bank (the “ Account Holder ”).

PRELIMINARY STATEMENTS:

(1) The Grantor has granted the Collateral Trustee a security interest (the “ Security Interest ”) in the following accounts maintained by the Account Holder for the Grantor (each an “ Account ” and collectively, the “ Accounts ”):

[Insert account numbers and other identifying information.]

NOW, THEREFORE, in consideration of the premises and of the mutual agreements contained herein, the parties hereto hereby agree as follows:

SECTION 1. The Accounts . The Grantor and Account Holder represent and warrant to, and agree with, the Collateral Trustee that:

(a) The Account Holder maintains each Account for the Grantor, and all property (including, without limitation, all funds and financial assets) held by the Account Holder for the account of the Grantor are, and will continue to be, credited to an Account in accordance with instructions given by the Grantor (unless otherwise provided herein).

(b) To the extent that funds are credited to any Account, such Account is a deposit account; and to the extent that financial assets are credited to any Account, such Account is a securities account. The Account Holder is (i) the bank with which each Account that is a deposit account is maintained and (ii) the securities intermediary with respect to financial assets held in any Account that is a securities account. The Grantor is (x) the Account Holder’s customer with respect to the Accounts and (y) the entitlement holder with respect to financial assets credited from time to time to any Account.

(c) Notwithstanding any other agreement to the contrary, the Account Holder’s jurisdiction with respect to each Account for purposes of the PA Uniform Commercial Code is, and will continue to be for so long as the Security Interest shall be in effect, the Commonwealth of Pennsylvania.

(d) Attached as Exhibit A hereto are statements of the respective Accounts on the most recent date practicable showing the property credited to each Account.

(e) The Grantor and Account Holder do not know of any claim to or interest in any Account or any property (including, without limitation, funds and financial assets) credited to any Account, except for claims and interests of the parties referred to in this Agreement.

SECTION 2. Control by Collateral Trustee . Upon receipt of a Notice of Exclusive Control (as defined below) and thereafter until receipt of a Notice of Release (as defined below), the Account Holder will comply with (i) all instructions directing disposition of the funds in any and all of the Accounts, (ii) all notifications and entitlement orders that the Account Holder receives directing it to transfer or redeem any financial asset in any and all of the Accounts, and (iii) all other directions concerning any and all of the Accounts, including, without limitation, directions to distribute to the Collateral Trustee proceeds of any such transfer or redemption or interest or dividends on property in any and all of the Accounts (any such instruction, notification or direction referred to in clause (i), (ii) or (iii) above being an “ Account Direction ”), in each case of clauses (i), (ii) and (iii) above originated by the Collateral Trustee without further consent by the Grantor or any other Person.

SECTION 3. Grantor’s Rights in Accounts .

(f) Until the Account Holder receives a notice from the Collateral Trustee certifying that an Event of Default (as defined in the security documents between the Collateral Trustee and the Grantor) has occurred and is continuing and stating that the Collateral Trustee will exercise exclusive control over any Account (a “ Notice of Exclusive Control ” with respect to such Account), the Account Holder will comply with Account Directions and other directions concerning each Account originated by the Grantor without further consent by the Collateral Trustee.

(g) If the Account Holder receives from the Collateral Trustee a Notice of Exclusive Control with respect to any Account, the Account Holder will, until a Notice of Release (as

A-2

defined below) is received by the Account Holder, comply only with Account Directions originated by the Collateral Trustee and will cease:

(i) complying with Account Directions or other directions concerning such Account originated by the Grantor and

(ii) distributing to the Grantor interest and dividends on property (including, without limitation, funds and financial assets) in such Account.

(h) In the event a Notice of Exclusive Control is delivered by the Collateral Trustee to the Account Holder, and subsequently the Event of Default triggering such notice is cured, the Collateral Trustee agrees promptly to send a notice to the Account Holder directing the Account Holder to comply with Account Directions and other directions concerning each Account originated by the Grantor (a “ Notice of Release ”) and, at such time, the Account Holder will comply with Account Directions as contemplated by clause (a).

SECTION 4. Priority of Collateral Trustee’s Security Interest .

(a) The Account Holder (i) subordinates to the Security Interest and in favor of the Collateral Trustee any security interest, lien, or right of recoupment or setoff that it may have, now or in the future, against any Account or property (including, without limitation, any funds and financial assets) credited to any Account, and (ii) agrees that it will not exercise any right in respect of any such security interest or lien or any such right of recoupment or setoff until the Security Interest is terminated, except that the Account Holder (A) will retain its prior security interest and lien on property credited to any Account, (B) may exercise any right in respect of such security interest or lien, and (C) may exercise any right of recoupment or setoff against any Account, in the case of clauses (A), (B) and (C) above, to secure or to satisfy, and only to secure and satisfy, payment (x) for such property, (y) for its customary fees and expenses for the routine maintenance and operation of such Account, and (z) if such Account is a deposit account, for the face amount of any items that have been credited to such Account but are subsequently returned unpaid because of uncollected or insufficient funds.

(i) The Account Holder will not enter into any other agreement with any Person relating to Account Directions or other directions with respect to any Account.

SECTION 5. Statements, Confirmations, and Notices of Adverse Claims .

(a) The Account Holder will send copies of all statements and confirmations for each Account simultaneously to the Collateral Trustee and the Grantor.

(j) When the Account Holder knows of any claim or interest in any Account or any property (including, without limitation, funds and financial assets) credited to any Account other than the claims and interests of the parties referred to in this Agreement, the Account Holder will promptly notify the Collateral Trustee and the Grantor of such claim or interest.

A-3

SECTION 6. The Account Holder’s Responsibility .

(a) Except for permitting a withdrawal, delivery, or payment in violation of Section 3, the Account Holder will not be liable to the Collateral Trustee for complying with Account Directions or other directions concerning any Account from the Grantor that are received by the Account Holder before the Account Holder receives and has a reasonable opportunity to act on a Notice of Exclusive Control.

(k) The Account Holder will not be liable to the Grantor or the Collateral Trustee for complying with a Notice of Exclusive Control or with an Account Direction or other direction concerning any Account originated by the Collateral Trustee, even if the Grantor notifies the Account Holder that the Collateral Trustee is not legally entitled to issue the Notice of Exclusive Control or Account Direction or such other direction unless the Account Holder takes the action after it is served with an injunction, restraining order, or other legal process enjoining it from doing so, issued by a court of competent jurisdiction, and had a reasonable opportunity to act on the injunction, restraining order or other legal process.

(l) This Agreement does not create any obligation of the Account Holder except for those expressly set forth in this Agreement and, in the case of any Account that is a securities account, in Part 5 of Article 8 of the PA Uniform Commercial Code and, in the case of any Account that is a deposit account, in Article 4 of the PA Uniform Commercial Code. In particular, the Account Holder need not investigate whether the Collateral Trustee is entitled under the Collateral Trustee’s agreements with the Grantor to give an Account Direction or other direction concerning any Account or a Notice of Exclusive Control. The Account Holder may rely on notices and communications it believes given by the appropriate party.

SECTION 7. Indemnity . The Grantor will indemnify the Account Holder, its officers, directors, employees and agents against claims, liabilities and expenses arising out of this Agreement (including, without limitation, reasonable attorney’s fees and disbursements), except to the extent the claims, liabilities or expenses are caused by the Account Holder’s gross negligence of willful misconduct as found by a court of competent jurisdiction in a final, non-appealable judgment.

SECTION 8. Termination; Survival .

(a) The Collateral Trustee may terminate this Agreement by notice to the Account Holder and the Grantor. If the Collateral Trustee notifies the Account Holder that the Security Interest has terminated, this Agreement will immediately terminate.

(m) The Account Holder may terminate this Agreement on 60 days’ prior notice to the Collateral Trustee and the Grantor, provided that before such termination the Account Holder and the Grantor shall make arrangements to transfer the property (including, without limitation, all funds and financial assets) credited to each Account to another Account Holder that shall have executed, together with the Grantor, a control agreement in favor of the Collateral Trustee in respect of such property in substantially the form of this Agreement or otherwise in form and substance satisfactory to the Collateral Trustee.

A-4

(n) This Agreement shall terminate upon the satisfaction of the conditions set forth in, and in accordance with the provisions of, Section 6 of the Collateral Trust Agreement. The Collateral Trustee agrees to promptly give notice to the Account Holder releasing all or any portion of the property (including, without limitation, all or any portion of the funds and financial assets) held by the Account Holder for the account of Grantor upon the satisfaction of the conditions set forth in, and in accordance with the provisions of, Section 6 of the Collateral Trust Agreement.

(o) Sections 6 and 7 will survive termination of this Agreement.

SECTION 8. Governing Law . This Agreement shall be deemed to be a contract under the laws of the Commonwealth of Pennsylvania and this Agreement and each Account for all purposes shall be governed by and construed in accordance with the laws of said Commonwealth without regard to its conflict of laws principles. The Account Holder and the Grantor may not change the law governing any Account without the Collateral Trustee’s express prior written agreement.

SECTION 9. Entire Agreement . This Agreement supersedes all prior understandings and agreements, whether written or oral, between the parties hereto relating to the transactions provided for herein.

SECTION 10. Amendments . No amendment of, or waiver of a right under, this Agreement will be binding unless it is in writing and signed by the party to be charged.

SECTION 11. Financial Assets . The Account Holder agrees with the Collateral Trustee and the Grantor that, to the fullest extent permitted by applicable law, all property (other than funds) credited from time to time to any Account will be treated as financial assets under Article 8 of the PA Uniform Commercial Code.

SECTION 12. Notices . A notice or other communication to a party under this Agreement will be in writing (except that Account Directions may be given orally), will be sent to the party’s address set forth under its name below or to such other address as the party may notify the other parties. Any notice or other communication shall be effective:

(i) In the case of hand-delivery, when delivered;

(ii) If given by mail, four days after such notice or other communication is deposited with the United States Postal Service, with first-class postage prepaid, return receipt requested;

(iii) In the case of a facsimile transmission, when sent to the applicable party’s facsimile machine’s telephone number if the party sending such notice or other communication receives confirmation of the delivery thereof from its own facsimile machine;

(iv) In the case of electronic transmission, when actually received; and

A-5

(v) If given by any other means (including by overnight courier), when actually received.

SECTION 13. Binding Effect . This Agreement shall be binding upon and inure to the benefit of the Grantor, the Collateral Trustee and the Account Holder except that the Grantor may not assign or transfer the Grantor’s obligations hereunder or any interest herein other than assignments and transfers permitted by the Amended and Restated Credit Agreement dated as of June 27, 2007 among CONSOL Energy Inc., the Guarantors party thereto, the Lenders party thereto, LaSalle Bank National Association, Société Générale, New York Branch and SunTrust Bank, each in its capacity as a co-documentation agent, and Citicorp North America, Inc. and PNC Bank, National Association as co-administrative agents.

SECTION 14. Execution in Counterparts . This Agreement may be executed by different parties hereto on any number of separate counterparts, each of which, when so executed and delivered, shall be an original, and all such counterparts shall together constitute one and the same instrument. Delivery of an executed signature page by telecopy or electronic signature delivery system (in either case in a form acceptable to the Collateral Trustee) shall be effective as delivery of a manually executed signature page to this Agreement.

A-6

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.


[NAME OF GRANTOR]

By
		Name:
		Title:

Address:


Facsimile:
Email:


WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Collateral Trustee

By
		Name:
		Title:

Address:
		Wilmington Trust Company, as Collateral Trustee Rodney Square North 1100 North Market Street Wilmington, DE 19890
Attn:		Corporate Trust Administration
Telephone:		(302) 636-6043
Facsimile:		(302) 636-4143
Email:


[NAME OF ACCOUNT HOLDER]

By
		Name:
		Title:

Address:


Facsimile:
Email:

EXHIBIT A

[Statements of the various Accounts showing the property credited to each Account]

Exhibit B to the

Security Agreement

EXHIBIT B

SECURITY AGREEMENT

FORM OF SECURITIES ACCOUNT CONTROL AGREEMENT

PRELIMINARY STATEMENTS:

NOW, THEREFORE, in consideration of the premises and of the mutual agreements contained herein, the parties hereto hereby agree as follows:

SECTION 1. The Account . The Grantor and Securities Intermediary represent and warrant to, and agree with, the Grantor and the Collateral Trustee that:

(p) The Securities Intermediary maintains the Account for the Grantor, and all property held by the Securities Intermediary for the account of the Grantor is, and will continue to be, credited to the Account.

(q) The Account is a securities account. The Securities Intermediary is the securities intermediary with respect to the property credited from time to time to the Account. The Grantor is the entitlement holder with respect to the property credited from time to time to the Account.

(r) The Commonwealth of Pennsylvania is, and will continue to be, the Securities Intermediary’s jurisdiction of organization for purposes of Section 8-110(e) of the UCC so long as the Security Interest shall remain in effect.

(s) Exhibit A attached hereto is a statement of the property credited to the Account on the most recent date practicable.

(t) The Grantor and Securities Intermediary do not know of any claim to or interest in the Account or any property credited to the Account, except for claims and interests of the parties referred to in this Agreement.

SECTION 2. Control by Collateral Trustee . Upon receipt of a Notice of Exclusive Control (as defined below) and thereafter until receipt of a Notice of Release (as defined below), the Securities Intermediary will comply with all notifications it receives directing it to transfer or redeem any property in the Account (each, and “ Entitlement Order ”) or other directions concerning the Account (including, without limitation, directions to distribute to the Collateral Trustee proceeds of any such transfer or redemption or interest or dividends on property in the Account) originated by the Collateral Trustee without further consent by the Grantor or any other person.

SECTION 3. Grantor’s Rights in Account .

(u) Until the Securities Intermediary receives a notice from the Collateral Trustee certifying that an Event of Default (as defined in the security documents between the Collateral Trustee and the Grantor) has occurred and is continuing and stating that the Collateral Trustee will exercise exclusive control over the Account (a “ Notice of Exclusive Control ” with respect to such Account), the Securities Intermediary will comply with Entitlement Orders originated by the Grantor without further consent by the Collateral Trustee.

(v) If the Securities Intermediary receives from the Collateral Trustee a Notice of Exclusive Control, the Securities Intermediary, until it has received a Notice of Release, will cease:

(i) complying with Entitlement Orders or other directions concerning the Account originated by the Grantor and

(ii) distributing to the Grantor interest and dividends on property in the Account.

(w) In the event a Notice of Exclusive Control is delivered by the Collateral Trustee to the Securities Intermediary, and subsequently the Event of Default triggering such notice is cured, the Collateral Trustee agrees promptly to send a notice to the Securities Intermediary directing the Securities Intermediary to comply with Entitlement Orders and other directions concerning each Account originated by the Grantor (a “ Notice of Release ”) and, at such time, the Account Holder will comply with Entitlement Orders as contemplated by clause (a).

SECTION 4. Priority of Collateral Trustee’s Security Interest .

(a) The Securities Intermediary subordinates in favor of the Collateral Trustee any security interest, lien, or right of setoff it may have, now or in the future, against the Account or property in the Account, except that the Securities Intermediary will retain its prior lien on property in the Account to secure payment for property purchased for the Account and normal commissions and fees for the Account.

B-2

(x) The Securities Intermediary will not agree with any Person not party to this Agreement that the Securities Intermediary will comply with Entitlement Orders originated by such Person.

SECTION 5. Statements, Confirmations, and Notices of Adverse Claims .

(a) The Securities Intermediary will send copies of all statements and confirmations for the Account simultaneously to the Grantor and the Collateral Trustee.

(y) When the Securities Intermediary knows of any claim or interest in the Account or any property credited to the Account other than the claims and interests of the parties referred to in this Agreement, the Securities Intermediary will promptly notify the Collateral Trustee and the Grantor of such claim or interest.

SECTION 6. The Securities Intermediary’s Responsibility .

(a) Except for permitting a withdrawal, delivery, or payment in violation of Section 3, the Securities Intermediary will not be liable to the Collateral Trustee for complying with Entitlement Orders or other directions concerning the Account from the Grantor that are received by the Securities Intermediary before the Securities Intermediary receives and has a reasonable opportunity to act on a Notice of Exclusive Control.

(z) The Securities Intermediary will not be liable to the Grantor or the Collateral Trustee for complying with a Notice of Exclusive Control or with an Entitlement Order or other direction concerning the Account originated by the Collateral Trustee, even if the Grantor notifies the Securities Intermediary that the Collateral Trustee is not legally entitled to issue the Notice of Exclusive Control or Entitlement Order or such other direction unless the Securities Intermediary takes the action after it is served with an injunction, restraining order, or other legal process enjoining it from doing so, issued by a court of competent jurisdiction, and had a reasonable opportunity to act on the injunction, restraining order or other legal process.

(aa) This Agreement does not create any obligation of the Securities Intermediary except for those expressly set forth in this Agreement and in Part 5 of Article 8 of the PA Uniform Commercial Code. In particular, the Securities Intermediary need not investigate whether the Collateral Trustee is entitled under the Collateral Trustee’s agreements with the Grantor to give an Entitlement Order or other direction concerning the Account or a Notice of Exclusive Control. The Securities Intermediary may rely on notices and communications it believes given by the appropriate party.

B-3

SECTION 8. Termination; Survival .

(a) The Collateral Trustee may terminate this Agreement by notice to the Securities Intermediary and the Grantor. If the Collateral Trustee notifies the Securities Intermediary that the Security Interest has terminated, this Agreement will immediately terminate.

(bb) The Securities Intermediary may terminate this Agreement on 60 days’ prior notice to the Collateral Trustee and the Grantor, provided that before such termination the Securities Intermediary and the Grantor shall make arrangements to transfer the property in the Account to another securities intermediary that shall have executed, together with the Grantor, a control agreement in favor of the Collateral Trustee in respect of such property in substantially the form of this Agreement or otherwise in form and substance satisfactory to the Collateral Trustee.

(cc) This Agreement shall terminate upon the satisfaction of the conditions set forth in, and in accordance with the provisions of, Section 6 of the Collateral Trust Agreement. The Collateral Trustee agrees to promptly give notice to the Securities Intermediary releasing all or any portion of the property (including, without limitation, all or any portion of the funds and financial assets) held by the Securities Intermediary for the account of Grantor upon the satisfaction of the conditions set forth in, and in accordance with the provisions of, Section 6 of the Collateral Trust Agreement.

(dd) Sections 6 and 7 will survive termination of this Agreement.

SECTION 10. Entire Agreement . This Agreement supersedes all prior understandings and agreements, whether written or oral, between the parties hereto relating to the transactions provided for herein.

SECTION 11. Amendments . No amendment of, or waiver of a right under, this Agreement will be binding unless it is in writing and signed by the party to be charged.

B-4

(i) In the case of hand-delivery, when delivered;

(ii) If given by mail, four days after such notice or other communication is deposited with the United States Postal Service, with first-class postage prepaid, return receipt requested;

(iv) In the case of electronic transmission, when actually received; and

(v) If given by any other means (including by overnight courier), when actually received.

B-5

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.


[NAME OF GRANTOR]

By
		Title:

Address:

Facsimile:
Email:


WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Collateral Trustee

By
		Name:
		Title:
Address:
		Wilmington Trust Company, as Collateral Trustee Rodney Square North 1100 North Market Street Wilmington, DE 19890
Attn:		Corporate Trust Administration
Telephone:		(302) 636-6043
Facsimile:		(302) 636-4143
Email:


[NAME OF SECURITIES INTERMEDIARY]

By
		Title:

Address:

Facsimile:
Email:

EXHIBIT A

[Statements of the various Accounts showing the property credited to each Account]

Exhibit C to the

Security Agreement

EXHIBIT C

SECURITY AGREEMENT

FORM OF COMMODITY ACCOUNT CONTROL AGREEMENT

COMMODITY ACCOUNT CONTROL AGREEMENT (this “ Agreement ”) dated as of , , among (i) , a (the “ Grantor ”), (ii) Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity, but solely as Collateral Trustee under that certain Amended and Restated Collateral Trust Agreement dated as of June 27, 2007 (the “ Collateral Trust Agreement ”), among Wilmington Trust Company, as corporate trustee, David A. Vanaskey, as individual trustee, CONSOL Energy Inc. and certain of its subsidiaries party thereto, as secured party for the equal and ratable benefit of the Secured Parties (as such term is defined in the Collateral Trust Agreement) (the “ Collateral Trustee ”), and (iii) , a , as commodity intermediary (the “ Commodity Intermediary ”).

PRELIMINARY STATEMENTS:

(1) The Grantor has granted the Collateral Trustee a security interest (the “ Security Interest ”) in account no. maintained by the Commodity Intermediary for the Grantor (the “ Account ”).

NOW, THEREFORE, in consideration of the premises and of the mutual agreements contained herein, the parties hereto hereby agree as follows:

SECTION 1. The Account . The Grantor and Commodity Intermediary represent and warrant to, and agree with, the Grantor and the Collateral Trustee that:

(ee) The Commodity Intermediary maintains the Account for the Grantor, and all commodity contracts held by the Commodity Intermediary for the account of the Grantor is, and will continue to be, carried in the Account.

(ff) The Account is a commodity account. The Commodity Intermediary is the commodity intermediary with respect to the commodity contracts credited from time to time in the Account. The Grantor is the commodity customer with respect to the commodity contracts credited from time to time in the Account.

(gg) The Commonwealth of Pennsylvania is, and will continue to be, the Commodity Intermediary’s jurisdiction of organization for purposes of Section 9-305(b) of the UCC so long as the Security Interest shall remain in effect.

(hh) Exhibit A attached hereto is a statement of the commodity contracts credited in the Account on the most recent date practicable.

(ii) The Grantor and Commodity Intermediary do not know of any claim to or interest in the Account or any commodity contracts carried in the Account, except for claims and interests of the parties referred to in this Agreement.

SECTION 2. Control by Collateral Trustee . Upon receipt of a Notice of Exclusive Control (as defined below) and thereafter until receipt of a Notice of Release (as defined below), the Commodity Intermediary will comply with all notifications it receives directing it to apply any value distributed on account of any commodity contract or contracts carried in the Account (each, and “ Entitlement Order ”) or other directions concerning the Account originated by the Collateral Trustee without further consent by the Grantor or any other person.

SECTION 3. Grantor’s Rights in Account .

(jj) Until the Commodity Intermediary receives a notice from the Collateral Trustee certifying that an Event of Default (as defined in the security documents between the Collateral Trustee and the Grantor) has occurred and is continuing and stating that the Collateral Trustee will exercise exclusive control over the Account (a “ Notice of Exclusive Control ” with respect to such Account), the Commodity Intermediary will comply with Entitlement Orders originated by the Grantor without further consent by the Collateral Trustee.

(kk) If the Commodity Intermediary receives from the Collateral Trustee a Notice of Exclusive Control, the Commodity Intermediary, until it has received a Notice of Release, will cease:

(i) complying with Entitlement Orders or other directions concerning the Account originated by the Grantor and

(ii) distributing to the Grantor any value distributed on account of any commodity contract in the Account.

(ll) In the event a Notice of Exclusive Control is delivered by the Collateral Trustee to the Commodity Intermediary, and subsequently the Event of Default triggering such notice is cured, the Collateral Trustee agrees promptly to send a notice to the Commodity Intermediary directing the Commodity Intermediary to comply with Entitlement Orders and other directions concerning each Account originated by the Grantor (a “ Notice of Release ”) and, at such time, the Account Holder will comply with Entitlement Orders as contemplated by clause (a).

SECTION 4. Priority of Collateral Trustee’s Security Interest .

(a) The Commodity Intermediary subordinates in favor of the Collateral Trustee any security interest, lien, or right of setoff it may have, now or in the future, against the Account or

C-2

commodity contracts carried in the Account, except that the Commodity Intermediary will retain its prior lien on commodity contracts in the Account to secure payment for commodity contracts purchased for the Account and normal commissions and fees for the Account.

(mm) The Commodity Intermediary will not agree with any third party that the Commodity Intermediary will comply with Entitlement Orders originated by such Person.

SECTION 5. Statements, Confirmations, and Notices of Adverse Claims .

(a) The Commodity Intermediary will send copies of all statements and confirmations for the Account simultaneously to the Grantor and the Collateral Trustee.

(nn) When the Commodity Intermediary knows of any claim or interest in the Account or any commodity contracts credited in the Account other than the claims and interests of the parties referred to in this Agreement, the Commodity Intermediary will promptly notify the Collateral Trustee and the Grantor of such claim or interest.

SECTION 6. The Commodity Intermediary’s Responsibility .

(a) The Commodity Intermediary will not be liable to the Collateral Trustee for complying with Entitlement Orders or other directions concerning the Account from the Grantor that are received by the Commodity Intermediary before the Commodity Intermediary receives and has a reasonable opportunity to act on a Notice of Exclusive Control.

(oo) The Commodity Intermediary will not be liable to the Grantor for complying with a Notice of Exclusive Control or with an Entitlement Order or other direction concerning the Account originated by the Collateral Trustee, even if the Grantor notifies the Commodity Intermediary that the Collateral Trustee is not legally entitled to issue the Notice of Exclusive Control or Entitlement Order or such other direction unless the Commodity Intermediary takes the action after it is served with an injunction, restraining order, or other legal process enjoining it from doing so, issued by a court of competent jurisdiction, and had a reasonable opportunity to act on the injunction, restraining order or other legal process.

(pp) This Agreement does not create any obligation of the Commodity Intermediary except for those expressly set forth in this Agreement. In particular, the Commodity Intermediary need not investigate whether the Collateral Trustee is entitled under the Collateral Trustee’s agreements with the Grantor to give an Entitlement Order or other direction concerning the Account or a Notice of Exclusive Control. The Commodity Intermediary may rely on notices and communications it believes given by the appropriate party.

SECTION 7. Indemnity . The Grantor will indemnify the Commodity Intermediary, its officers, directors, employees and agents against claims, liabilities and expenses arising out of this Agreement (including, without limitation, reasonable attorney’s fees and disbursements), except to the extent the claims, liabilities or expenses are caused by the Commodity Intermediary’s gross negligence of willful misconduct as found by a court of competent jurisdiction in a final, non-appealable judgment.

C-3

SECTION 8. Termination; Survival .

(a) The Collateral Trustee may terminate this Agreement by notice to the Commodity Intermediary and the Grantor. If the Collateral Trustee notifies the Commodity Intermediary that the Security Interest has terminated, this Agreement will immediately terminate.

(qq) The Commodity Intermediary may terminate this Agreement on 60 days’ prior notice to the Collateral Trustee and the Grantor, provided that before such termination the Commodity Intermediary and the Grantor shall make arrangements to transfer the commodity contracts carried in the Account to another commodity intermediary that shall have executed, together with the Grantor, a control agreement in favor of the Collateral Trustee in respect of such commodity contracts in substantially the form of this Agreement or otherwise in form and substance satisfactory to the Collateral Trustee.

(rr) This Agreement shall terminate upon the satisfaction of the conditions set forth in, and in accordance with the provisions of, Section 6 of the Collateral Trust Agreement. The Collateral Trustee agrees to promptly give notice to the Commodity Intermediary releasing all or any portion of the property (including, without limitation, all or any portion of the funds and financial assets) held by the Commodity Intermediary for the account of Grantor upon the satisfaction of the conditions set forth in, and in accordance with the provisions of, Section 6 of the Collateral Trust Agreement.

(ss) Sections 6 and 7 will survive termination of this Agreement.

SECTION 9. Governing Law . This Agreement shall be deemed to be a contract under the laws of the Commonwealth of Pennsylvania and this Agreement and the Account for all purposes shall be governed by and construed in accordance with the laws of said Commonwealth without regard to its conflict of laws principles. The Commodity Intermediary and the Grantor may not change the law governing the Account without the Collateral Trustee’s express prior written agreement.

SECTION 10. Entire Agreement . This Agreement supersedes all prior understandings and agreements, whether written or oral, between the parties hereto relating to the transactions provided for herein.

SECTION 11. Amendments . No amendment of, or waiver of a right under, this Agreement will be binding unless it is in writing and signed by the party to be charged.

SECTION 12. Commodity Contracts . The Commodity Intermediary agrees with the Collateral Trustee and the Grantor that, to the fullest extent permitted by applicable law, all property carried from time to time in the Account will be treated as commodity contracts under Article 8 of the PA Uniform Commercial Code.

(i) In the case of hand-delivery, when delivered;

C-4

(ii) If given by mail, four days after such notice or other communication is deposited with the United States Postal Service, with first-class postage prepaid, return receipt requested;

(iv) In the case of electronic transmission, when actually received; and

(v) If given by any other means (including by overnight courier), when actually received.

SECTION 14. Binding Effect . This Agreement shall be binding upon and inure to the benefit of the Grantor, the Collateral Trustee and the Commodity Intermediary and their respective successors and assigns, except that the Grantor may not assign or transfer the Grantor’s Obligations hereunder or any interest herein other than assignments and transfers permitted by the Amended and Restated Credit Agreement dated as of June 27, 2007 among CONSOL Energy Inc., the Guarantors party thereto, the Lenders party thereto, LaSalle Bank National Association, Société Générale, New York Branch and SunTrust Bank, each in its capacity as a co-documentation agent, and Citicorp North America, Inc. and PNC Bank, National Association as co-administrative agents.

C-5

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.


[NAME OF GRANTOR]

By
		Title:

Address:
Facsimile:
Email:


WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Collateral Trustee

By
		Name:
		Title:

Address:
		Wilmington Trust Company, as Collateral Trustee Rodney Square North 1100 North Market Street Wilmington, DE 19890
Attn:		Corporate Trust Administration
Telephone:		(302) 636-6043
Facsimile:		(302) 636-4143
Email:


[NAME OF COMMODITY INTERMEDIARY]

By
		Title:

Address:
Facsimile:
Email:

EXHIBIT A

[Statements of the various Accounts showing the property credited to each Account]

Exhibit 10.43

CONSOL ENERGY INC.

AMENDED AND RESTATED LONG-TERM INCENTIVE PROGRAM

CONSOL ENERGY INC., a Delaware corporation (the “ Company ”), hereby establishes this CONSOL ENERGY INC. AMENDED AND RESTATED LONG-TERM INCENTIVE PROGRAM (the “ Program ”), in accordance with the provisions of the CONSOL Energy Inc. Equity Incentive Plan, as amended (the “ Plan ”), and the terms provided herein.

WHEREAS, the Compensation Committee of the Company’s Board of Directors (including any successor to its duties, the “ Committee ”) adopted the Long-Term Incentive Program on February 19, 2007, as amended on June 20, 2007; and

WHEREAS, the Committee wishes to hereby amend and restate the Long-Term Incentive Program; and

WHEREAS, the Company maintains the Plan and the Program for the benefit of its key employees and that of its Affiliates and wishes to further align the interests of key employees with the interests of the stockholders by providing long-term incentive compensation; and

WHEREAS, the Program is intended to enhance the Company’s ability to retain the employment of participants in the Program, and also to protect the Company’s legitimate business interests, including its confidential information, customer relationships, and goodwill, through the use of restrictive covenants; and

WHEREAS, Section 8 of the Plan authorizes the Company to make performance-based awards.

NOW, THEREFORE, the Compensation Committee hereby adopts the Program on the following terms and conditions:

1. Purpose . The purposes of the Program are to: (i) provide long-term incentive compensation to key employees to further align their interests with those of the Company’s stockholders; and (ii) protect the Company’s legitimate business interests, including its confidential information, customer relationships, and goodwill, through the use of restrictive covenants. In addition to the terms and conditions set forth herein, awards under the Program are subject to, and governed by, the terms and conditions set forth in the Plan, which are hereby incorporated by reference. Unless the context otherwise requires, capitalized terms used in this Program and not otherwise defined herein shall have the meanings set forth in the Plan. In the event of any conflict between the provisions of the Program and the Plan, the Plan shall control.

2. Effective Date . The effective date of this Program is February 19, 2007. The Program will remain in effect until the earlier of December 31, 2009 or the closing date of a Change in Control event as defined in the Plan, unless otherwise terminated sooner as provided herein.

3. Eligibility . The Chief Executive Officer of the Company (the “ CEO ”) shall nominate the employees of the Company and its Affiliates (other than the CEO) who shall be eligible to participate in the Program. The Committee shall select from a group consisting of the CEO and the nominated employees those individuals who shall participate in the Program (each a “Participant” and collectively the “ Participants ”), subject to the Board’s ratification of awards to the CEO. In the event that an employee is hired by the Company or an Affiliate during the Performance Period, upon nomination by the CEO and

to the extent consistent with Section 162(m) of the Code, the Committee shall determine whether such employee will become a Participant in the Program.

4. Performance Share Unit Awards .

4.1 The Committee shall determine the number of performance share units (the “ Performance Share Units ”) to be awarded to each Participant. Each Performance Share Unit awarded under the Program shall represent a contingent right to receive one share of the Company’s common stock as described more fully herein, to the extent such Performance Share Unit is earned and becomes payable pursuant to the terms of this Program. Notwithstanding, Performance Share Units as initially awarded have no independent economic value, but rather are mere units of measurement used for purpose of calculating the value of benefits, if any, to be paid under the Program.

4.2 Performance Share Units shall be increased and/or decreased in accordance with the terms of the Program as described more fully herein. Notwithstanding any provision of this Plan to the contrary, the Committee shall not use its discretionary authority to increase the number of Performance Share Units that would otherwise be earned upon attainment of the Performance Condition (as defined below) with respect to any award that is intended to be performance-based compensation under Section 162(m) of the Code.

5. Performance Condition of the Performance Share Units . Subject to Section 9, fifty percent (50%) of the total number of Performance Share Units that may be earned by a Participant will be based on the Company’s total stockholder return relative to the total stockholder return of each company in the peer group (as set forth on Attachment A), and fifty percent (50%) of the total number of Performance Share Units that may be earned by a Participant will be based on the absolute growth in the Company’s earnings before income, taxes, depreciation and amortization (EBITDA), each as approved by (and in accordance with the procedures established by) the Committee on March 12, 2007 and on file with the Committee (collectively the “Performance Condition”), for the performance period of January 1, 2007 to December 31, 2009 (the “ Performance Period ”); provided, however, that (other than in the event of a Change in Control) the ability to earn Performance Share Units and to receive payment thereon under the Program is expressly contingent upon achievement of the threshold for the Performance Condition and otherwise satisfying all other terms and conditions of the Program; provided, further, that in the event of a Change in Control the Performance Condition will be deemed to have been achieved at target levels of performance.

6. Issuance and Distribution .

6.1 After the end of the Performance Period, the Committee shall certify in writing prior to payment the extent to which the applicable Performance Condition and any other material terms of the Program have been achieved. For purposes of this provision, and for so long as the Code permits, the approved minutes of the Committee meeting in which the certification is made may be treated as written certification.

6.2 Subject to the terms and conditions of this Program, Performance Share Units earned by a Participant will be settled and paid in shares of the Company’s common stock in calendar year 2010, on or before March 15th (the “ Payment Date ”); provided, however, in the event of a Change in Control, the value of such units will be settled on the closing date of the Change in Control transaction (the “ CiC Payment Date ”) in accordance with the provisions of Section 5 herein; provided, further, in the event of a Change in Control, Performance Share Units may, in the Committee’s discretion, be settled in cash and/or securities or other property. Notwithstanding the foregoing, no award intended to qualify as

performance-based compensation within the meaning of Section 162(m) of the Code shall be become payable or paid prior to approval of the Plan’s material terms by the Company’s stockholders.

7. Dividends . Each Performance Share Unit will be cumulatively credited with dividends that are paid on the Company’s common stock in the form of additional units. These additional units shall be deemed to have been purchased on the record date for the dividend using the closing stock price of the Company’s common stock as reported in The Wall Street Journal and shall be subject to all the same conditions and restrictions as provided in this Program applicable to Performance Share Units.

8. Change in Participant’s Status.

8.1 In the event a Participant Separates from Service (i) on or after the date the Participant has reached the age of 55 by reason of an “Early Retirement” or “Incapacity Retirement,” (ii) by reason of a “Normal Retirement,” (iii) on account of death or Disability (other than an Incapacity Retirement), or (iv) by reason of a reduction in force as specified and implemented by the Company, prior to the Payment Date or the CiC Payment Date, as applicable, the Participant shall be entitled to retain the Performance Share Units and receive payment therefore to the extent earned and payable pursuant to the provisions of this Program; provided, however, that in the case of a Separation from Service on account of Disability, the Participant shall only be entitled to retain a prorated portion of the Performance Share Units determined at the end of the Performance Period and based on the ratio of the number of complete months the Participant is employed or serves during the Performance Period to the total number of months in the Performance Period (or the number of remaining months in the Performance Period if the Participant is admitted after the start of the Performance Period). In the event a Participant Separates from Service for any other reason, including, but not limited to, by the Participant voluntarily, or by the Company with Cause or without Cause (other than in connection with a reduction in force as specified above), prior to the Payment Date or the CiC Payment Date, as applicable, the Performance Share Units awarded to the Participant shall be cancelled and forfeited, whether payable or not, without payment by the Company or any Affiliate. Any payments due a deceased Participant shall be paid to his estate as provided herein after the end of the Performance Period.

8.2 For purposes of the Program: (i) the terms “Early Retirement,” “Incapacity Retirement” and “Normal Retirement,” shall have the meaning ascribed thereto under the CONSOL Energy Inc. Employee Retirement Plan, as amended, or any successor thereto applicable to the Participant; and (ii) the term “Separation from Service” shall mean the Participant’s death, retirement or other termination of employment with the Company and all of its controlled group members within the meaning of Section 409A of the Code. For purposes of the Program, the determination of controlled group members shall be made pursuant to the provisions of Section 414(b) and 414(c) of the Code; provided that the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Section 1563(a)(1),(2) and (3) of the Code and Treas. Reg. § 1.414(c)-2; provided, further, where legitimate business reasons exist (within the meaning of Treas. Reg. § 1.409A-1(h)(3)), the language “at least 20 percent” shall be used instead of “at least 80 percent” in each place it appears. Whether a Participant has a Separation from Service will be determined based on all of the facts and circumstances and in accordance with the guidance issued under Section 409A, as applicable.

9. Responsibilities of the Committee . In addition to the authority granted to the Committee under the Plan, the Committee has responsibility for all aspects of the Program’s administration, including but not limited to: ensuring that the Program is administered in accordance with the provisions of the Program and the Plan; approving Participants; authorizing Performance Share Unit awards to Participants; and adjusting Performance Share Units as authorized hereunder consistent with the terms of the Program. The ministerial responsibility of the Program (e.g., management of day-to-day matters) is a function that has been delegated to the Company’s officers as permitted by the terms of the Plan and in

compliance with applicable law and regulation. All decisions of the Committee under the Program shall be final, conclusive and binding on all interest parties. No member of the Committee shall be liable for any action or determination made in good faith on the Program or any Performance Share Units awarded thereunder.

10. Tax Consequences/Withholding .

10.1 It is intended that: (i) a Participant’s Performance Share Units shall be considered to be subject to a substantial risk of forfeiture in accordance with those terms as defined in Section 409A and 3121(v)(2) of the Code; and (ii) a Participant shall have merely an unfunded, unsecured promise to be paid a benefit, and such unfunded promise shall not consist of a transfer of “ property ” within the meaning of Code Section 83.

10.2 A Participant shall timely remit to the Company all applicable federal, state and local income and employment taxes (including taxes of any foreign jurisdiction) which the Company is required to withhold at any time with respect to the Performance Share Units. Such payment shall be made to the Company in full, in cash or check, or as otherwise authorized under the terms of the Plan.

10.3 This Program is intended to be excepted from coverage under Section 409A of the Code and the regulations promulgated thereunder and shall be construed accordingly. Notwithstanding any provision of this Program to the contrary, if any benefit provided under this Program is subject to the provisions of Section 409A of the Code and the regulations issued thereunder (and not excepted therefrom), the provisions of the Program shall be administered, interpreted and construed in a manner necessary to comply with Section 409A, the regulations issued thereunder (or disregarded to the extent such provision cannot be so administered, interpreted, or construed). The Company reserves the right to accelerate, delay or modify distributions to the extent permitted under Section 409A, the regulations and other binding guidance promulgated thereunder. Notwithstanding, Section 409A of the Code may impose upon the Participant certain taxes or other charges for which the Participant is and shall remain solely responsible, and nothing contained in this Program or the Plan shall be construed to obligate the Company or any Affiliate for any such taxes or other charges.

10.4 Notwithstanding any provision of the Program to the contrary, if an award of Performance Share Units under this Program is intended to qualify as performance-based compensation under Section 162(m) of the Code and the regulations issued thereunder and a provision of this Program would prevent such award from so qualifying, such provision shall be administered, interpreted and construed to carry out such intention (or disregarded to the extent such provision cannot be so administered, interpreted or construed).

11. Non-Competition .

11.1 The Participants hereunder agree that this Section 11 is reasonable and necessary in order to protect the legitimate business interests and goodwill of the Company, including the Company’s trade secrets, valuable confidential business and professional information, substantial relationships with prospective and existing customers and clients, and specialized training provided to Participants and other employees of the Company. The Participants acknowledge and recognize the highly competitive nature of the business of the Company and its Affiliates and accordingly agree that during the term of each of their employment and for a period of two (2) years after the termination thereof:

(a) The Participants will not directly or indirectly engage in any business substantially similar to any line of business conducted by the Company or any of its Affiliates, including, but not limited to, where such engagement is as an officer, director, proprietor, employee, partner, investor (other than as a holder of less than 1% of the outstanding capital stock of a publicly traded corporation), consultant, advisor, agent or sales representative, in any geographic region in which the Company or any of its Affiliates conducted business;

(b) The Participants will not contact, solicit, perform services for, or accept business from any customer or prospective customer of the Company or any of its Affiliates;

(c) The Participants will not directly or indirectly induce any employee of the Company or any of its Affiliates to: (1) engage in any activity or conduct which is prohibited pursuant to subparagraph 11.1(a); or (2) terminate such employee’s employment with the Company or any of its Affiliates. Moreover, the Participants will not directly or indirectly employ or offer employment (in connection with any business substantially similar to any line of business conducted by the Company or any of its Affiliates) to any person who was employed by the Company or any of its Affiliates unless such person shall have ceased to be employed by the Company or any of its Affiliates for a period of at least 12 months; and

(d) The Participants will not directly or indirectly assist others in engaging in any of the activities, which are prohibited under subparagraphs (a) — (c) above.

11.2 It is expressly understood and agreed that although the Participants and the Company consider the restrictions contained in this Section 11 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Program is an unenforceable restriction against any Participant, the provisions of this Program shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable against such Participant. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Program is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. The restrictive covenants set forth in this Section 11 shall be extended by any amount of time that a Participant is in breach of such covenants, such that the Company receives the full benefit of the time duration set forth above.

12. Confidential Information and Trade Secrets . The Participants and the Company agree that certain materials, including, but not limited to, information, data and other materials relating to customers, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, manufacturing processes, financing methods, plans or the business and affairs of the Company and its Affiliates, constitute proprietary confidential information and trade secrets. Accordingly, the Participants will not at any time during or after a Participant’s employment with the Company (including any Affiliate) disclose or use for such Participant’s own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its Affiliates, any proprietary confidential information or trade secrets, provided that the foregoing shall not apply to information which is not unique to the Company or any of its Affiliates or which is generally known to the industry or the public other than as a result of such Participant’s breach of this covenant. The Participants agree that upon termination of employment with the Company (including any Affiliate) for any reason, the Participants will immediately return to the Company all memoranda, books, papers, plans, information, letters and other data, and all copies thereof or therefrom, which in any way relate to the business of the Company and its Affiliates, except that the Participants may retain personal notes, notebooks and diaries. The Participants further agree that the Participants will not retain or use for their own account at any time any trade names, trademark or other proprietary business designation used or owned in connection with the business of the Company or any of its Affiliates.

13. Remedies/Forfeiture .

13.1 The Participants acknowledge that a violation or attempted violation on a Participant’s part of Sections 11 and 12 will cause irreparable damage to the Company and its Affiliates, and the Participants therefore agree that the Company and its Affiliates shall be entitled as a matter of right to an injunction, out of any court of competent jurisdiction, restraining any violation or further violation of such promises by the Participants or a Participant’s employees, partners or agents. The Participants agree that such right to an injunction is cumulative and in addition to whatever other remedies the Company (including any Affiliate) may have under law or equity. Specifically, the Participants agree that such right to an injunction is cumulative and in addition to the Participants’ obligations to make timely payment to the Company as set forth in Section 13.2 of this Program. The Participants further acknowledge and agree that a Participant’s Performance Share Units shall be cancelled and forfeited without payment by the Company if such Participant breaches any of his or her obligations set forth in Section 12 and 13 herein.

13.2 At any point after becoming aware of a breach of any obligation set forth in Sections 11 and 12 of this Program, the Company shall provide notice of such breach to a Participant. By agreeing to participate in this Program, the Participants agree that within ten (10) days after the date the Company provides such notice, a Participant shall pay to the Company in cash an amount equal to any and all distributions paid to or on behalf of such Participant under of this Program within the six (6) months prior to the date of the earliest breach. The Participants agree that failure to make such timely payment to the Company constitutes an independent and material breach of the terms and conditions of this Program, for which the Company may seek recovery of the unpaid amount as liquidated damages, in addition to all other rights and remedies the Company may have resulting from a Participant’s breach of the obligations set forth in Sections 11 and 12. The Participants agree that timely payment to the Company as set forth in this provision of the Program is reasonable and necessary because the compensatory damages that will result from breaches of Sections 11 and/or 12 cannot readily be ascertained. Further, the Participants agree that timely payment to the Company as set forth in this provision of the Program is not a penalty, and it does not preclude the Company from seeking all other remedies that may be available to the Company, including without limitation those set forth in this Section 13.

14. Assignment/Nonassignment .

14.1 The Company shall have the right to assign this Program, including without limitation Sections 11 and 12, and the Participants agree to remain obligated by all provisions of this Program that are assigned to any successor, assign or surviving entity. Any successor to the Company is an intended third party beneficiary of this Program.

14.2 The Performance Share Units shall not be sold, pledged, assigned, hypothecated, transferred or disposed of (a “ Transfer ”) in any manner, other than by will or the laws of descent and distribution. Any attempt by a Participant to Transfer the Performance Share Units in violation of the terms of the Program shall render the Performance Share Units null and void, and result in the immediate forfeiture of such Performance Share Units, without payment by the Company.

15. Impact on Benefit Plans . Payments under the Program shall not be considered as earnings for purposes of the Company’s and/or Affiliate’s qualified retirement plans or any such retirement or benefit plan unless specifically provided for therein. Nothing herein shall prevent the Company or any Affiliate from maintaining additional compensation plans and arrangements for its employees.

16. Successors; Changes in Stock . The obligation of the Company under the Program shall be binding upon the successors and assigns of the Company. If a dividend or other distribution shall be declared upon the Company’s common stock payable in shares of Company common stock, the Performance Share Units and the shares of Company common stock on which the Performance Condition is based shall be adjusted by adding thereto the number of shares of Company common stock which would have been distributable thereon if such shares and Performance Share Units had been actual Company shares and outstanding on the date fixed for determining the stockholders entitled to receive such stock dividend or distribution. In the event of any spin-off, split-off or split-up, dividend in property other than cash, recapitalization or other change in the capital structure of the Company, or any merger, consolidation, reorganization, partial or complete liquidation or other distribution of assets (other than a normal cash dividend), or any other corporate transaction or event having an effect similar to any of the foregoing, or extraordinary distribution to stockholders of the Company’s common stock, the Performance Share Units and the shares of Company common stock on which the Performance Condition is based shall be appropriately adjusted to prevent dilution or enlargement of the rights of Participants which would otherwise result from any such transaction, provided such adjustment shall be consistent with Code Section 162(m) and Section 409A, as applicable.

In the case of a Change in Control, any obligation under the Program shall be handled in accordance with the terms of Sections 6 hereof. In any case not constituting a Change in Control in which the Company’s common stock is changed into or becomes exchangeable for a different number or kind of shares of stock or other securities of the Company or another corporation, or cash or other property, whether through reorganization, reclassification, recapitalization, stock split-up, combination of shares, merger or consolidation, then (i) the value of the Performance Share Units constituting an award shall be calculated based on the closing price of such common stock on the closing date of the transaction on the principal market on which such common stock is traded, (ii) there shall be substituted for each Performance Share Unit constituting an award, the number and kind of shares of stock or other securities (or cash or other property) into which each outstanding share of the Company’s common stock shall be so changed or for which each such share shall be exchangeable, and (iii) the share of Company common stock on which the Performance Condition is based shall be appropriately and equitably adjusted provided any such adjustments shall be consistent with Code Section 162(m) and Section 409A, as applicable. In the case of any such adjustment, the Units shall remain subject to the terms of the Program.

17. Governing Law, Jurisdiction, and Venue .

17.1 This Program shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law.

17.2 Participant hereby irrevocably submits to the personal and exclusive jurisdiction of the United States District Court for the Western District of Pennsylvania or the Court of Common Pleas of Allegheny County, Pennsylvania in any action or proceeding arising out of, or relating to, this Program (whether such action or proceeding arises under contract, tort, equity or otherwise). Participant hereby irrevocably waives any objection which Participant now or hereafter may have to the laying of venue or personal jurisdiction of any such action or proceeding brought in said courts.

17.3 Jurisdiction over, and venue of, any such action or proceeding shall be exclusively vested in the United States District Court for the Western District of Pennsylvania or the Court of Common Pleas of Allegheny County, Pennsylvania.

17.4 Provided that the Company commences any such action or proceeding in the courts identified in Section 17(c), Participant irrevocably waives Participant’s right to object to or challenge the above selected forum on the basis of inconvenience or unfairness under 28 U.S.C. § 1404, 42 Pa. C.S. § 5322 or similar state or federal statutes. Participant agrees to reimburse the Company for all of the attorneys fees and costs it incurs to oppose Participant’s efforts to challenge or object to litigation proceeding in the courts identified in Section 17(c) with respect to actions arising out of or relating to this Program (whether such actions arise under contract, tort, equity or otherwise).

18. Failure to Enforce Not a Waiver . The failure of the Company to enforce at any time any provision of this Program shall in no way be construed to be a waiver of such provision or of any other provision hereof.

19. Severability . In the event that any one or more of the provisions of this Program shall be held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

20. Funding . The Program is not funded and all amounts payable hereunder, if any, shall be paid from the general assets of the Company or its Affiliate, as applicable. No provision contained in this Program or the Plan and no action taken pursuant to the provisions of this Program or the Plan shall create a trust of any kind or require the Company to maintain or set aside any specific funds to pay benefits hereunder. To the extent a Participant acquires a right to receive payments from the Company under the Program, such right shall be no greater than the right of any unsecured general creditor of the Company.

21. Headings . The descriptive headings of the Sections of this Program are inserted for convenience of reference only and shall not constitute a part of this Program.

22. Amendment or Termination of this Program . This Program may be modified, amended, suspended or terminated by the Committee at any time; provided, however, that no modification, amendment, suspension or termination of this Plan shall adversely affect the rights of a Participant under the Program without the consent of such Participant. Notwithstanding the foregoing or any provision of this Program to the contrary, that the Company may, in its sole discretion and without the Participant’s consent, modify or amend the terms of the Plan or a Performance Share Unit award, or take any other action it deems necessary or advisable, to cause the Plan to comply with Section 409A (or an exception thereto). Any modification, amendment, suspension or termination shall only be effective upon a writing issued by the Company, and a Participant shall not offer evidence of any purported oral modifications or amendments to vary or contradict the terms of this Program document.

IN WITNESS WHEREOF , the undersigned have executed this Program on the day and year indicated below. This Program may be executed in more than one counterpart, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.



Dated: January __, 2008
				John Whitmire, Chairman, on behalf of the Board of Directors

Dated: January __, 2008
				William Powell, Chairman, on behalf of the Compensation Committee

ATTACHMENT A

Peer group:

Alliance Resource Partners LP

Alpha Natural Resources Inc.

Anadarko Petroleum Corp.

Apache Corp.

Arch Coal Inc.

Cabot Oil & Gas Corp.

Callon Petroleum CO/DE

Chesapeake Energy Corp.

Cimarex Energy Co.

Comstock Resources Inc. Denbury Resources Inc.

Devon Energy Corp.

Encana Corp.

EOG Resources Inc.

Foundation Coal Holdings Inc.

Houston Exploration Co.

International Coal Group Inc.

James River Coal Co.

Massey Energy Co.

Newfield Exploration Co.

Nexen Inc.

Nobel Energy Inc.

Peabody Energy Corp.

Penn Virginia Corp.

Pioneer Natural Resources Co.

Pogo Producing Co.

Rio Tinto Group (GBR)-ADR

St. Mary Land & Exploration Co.

Stone Energy Corp.

Ultra Petroleum Corp.

Westmoreland Coal Co.

Exhibit 10.49

CONSOL ENERGY INC.

DIRECTORS’ DEFERRED FEE PLAN

(2004 PLAN)

(Amended and Restated on December 4, 2007)

ARTICLE I

GENERAL

1.1 Purpose . This Plan is established and maintained by the Company to allow non-employee Directors to defer payment of all or a portion of their annual Board Retainer Fees and/or Director Meeting Fees.

1.2 Definitions . Unless a different meaning is plainly implied by the context, the following terms as used in this Plan shall have the following meanings:

(a) “ Account ” shall mean the bookkeeping account established and maintained for each Participant for recording amounts deferred pursuant to Section 3.1.

(b) “ Administrator ” shall mean the Board or any person, group or entity designated by the Board in accordance with the provisions of Article V to administer the Plan.

(c) “ Beneficiary ” shall mean the person or persons designated to receive benefits after the death of the Participant as provided in Section 4.3.

(d) “ Board ” shall mean the Board of Directors of the Company.

(e) “ Board Retainer Fees ” shall mean the annual retainer fees payable to members of the Board in cash (e.g. the Annual Board Retainer, Annual Committee Chair Retainer, Annual Audit Committee Chair Retainer, Annual and Audit Committee Member Retainer).

(f) “ Change in Control ” shall have the same meaning ascribed to it under the CONSOL Energy Inc. Equity Incentive Plan.

(g) “ Code ” shall mean the Internal Revenue Code of 1986, or any provision or section thereof herein specifically referred to, as such provision or section may from time to time be amended or replaced.

(h) “ Deferral Agreement ” shall mean a written agreement, in the form attached hereto as Exhibit 1 , entered into between the Company and a Participant pursuant to Section 2.3 of the Plan.

(i) “ Company ” shall mean CONSOL Energy Inc.

(j) “ Director ” shall mean a member of the Board who is not an employee of the Company or any of its affiliates.

(k) “ Director Meeting Fees ” shall mean attendance fees, if any, payable in cash for each meeting of the Board attended by the Director or any committee meeting the Director attends for a committee on which such Director serves.

(l) “ Effective Date ” shall mean the effective date of the Plan, which shall be July 20, 2004.

(m) “ Interest Rate ” shall mean the ten year Moody AAA Bond Rate.

(n) “ Participant ” shall mean a Director who is eligible to participate in the Plan and has elected to do so pursuant to Section 2.3.

(o) “ Plan ” shall mean the CONSOL Energy Inc. Directors’ Deferred Fee Plan.

(p) “ Plan Year ” shall mean the one-year period between the annual stockholders’ meeting and the next following annual stockholders’ meeting; [ provided, however, for the year in which the Plan becomes effective, “Plan Year” shall mean the period beginning on the Effective Date and ending on the next following annual stockholders’ meeting. ]

(q) “ Section 409A ” shall mean Section 409A of the Code, the regulations and other binding guidance promulgated thereunder.

(r) “ Separation from Service ” shall mean the Director’s death, retirement or other termination of service with the Company and all of its controlled group members within the meaning of Section 409A of the Code. For purposes hereof, the determination of controlled group members shall be made pursuant to the provisions of Section 414(b) and 414(c) of the Code; provided that the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Section 1563(a)(1),(2) and (3) of the Code and Treas. Reg. § 1.414(c)-2; provided, further, where legitimate business reasons exist (within the meaning of Treas. Reg. § 1.409A-1(h)(3)), the language “at least 20 percent” shall be used instead of “at least 80 percent” in each place it appears. Whether the Director has a Separation from Service will be determined based on all of the facts and circumstances and in accordance with the guidance issued under Section 409A.

1.3 Plurals and Gender . Where appearing in the Plan, the masculine gender shall include the feminine and neuter genders, and the singular shall include the plural and vice versa, unless the context clearly indicates a different meaning.

1.4 Headings . The headings and subheadings in this Plan are inserted for the convenience of reference only and are to be ignored in any construction of the provisions thereof.

1.5 Severability . In case any provision or portion of this Plan shall be held illegal or void, such provision or portion shall not affect the remainder of this Plan, but shall be fully severable, and the Plan shall be construed and enforced as if said provision had never been inserted herein.

ARTICLE II

ELIGIBILITY AND PARTICIPATION

2.1 Eligibility . Each member of the Board who is a Director on the Effective Date shall be eligible to participate in the Plan beginning on the Effective Date. Any person who becomes a Director

-2-

after the Effective Date shall be eligible to participate in the Plan on the day such person becomes a Director.

2.2 Participation . Each Director shall become a Participant in the Plan as of the date on which such Director completes and submits an irrevocable Deferral Agreement in accordance with Section 2.3.

2.3 Election Procedure . A Director may file a Deferral Agreement at any time during the 30-day period following the date on which the Director initially becomes eligible to participate in the Plan. Any such initial Deferral Agreement must be filed with the Company within the 30-day election period; provided, however, that any such Deferral Agreement shall only apply to fees earned and payable for services rendered after the date on which the Deferral Agreement is delivered to the Company. Accordingly, if a Deferral Agreement is made in the first-year of eligibility but after the beginning of the Plan Year, the Deferral Agreement shall only apply to the total amount of such fees multiplied by the ratio of (i) the number of days remaining in the Plan Year after the election to (ii) the total number of days in the Plan Year.

A Director shall also be permitted to submit an annual election for each Plan Year by filing a new Deferral Agreement in relation to the fees to be deferred during such Plan Year. Any such annual election must be filed with the Company on or before December 31st of the calendar year preceding the beginning of the Plan Year to which the Deferral Agreement relates (or such other date as permitted by the Administrator to the extent consistent with Section 409A). If a Director fails to timely file a completed Deferral Agreement for a Plan Year, none of such Director’s Board Retainer Fees or Director Meeting Fees will be deferred for that Plan Year.

To be valid, the Deferral Agreement must indicate the portion of Board Retainer Fees and/or Director Meeting Fees to be deferred and the timing of Plan distribution. A deferral is effective upon receipt by the Company, within the applicable election period, of the correctly completed Deferral Agreement. A Deferral Agreement is irrevocable during the Plan Year to which it applies; provided, however, if the Director suffers a disability or dies, the Director’s deferral election shall be cancelled. For purposes of this Section, a disability refers to any medically determinable physical or mental impairment resulting in the Director’s inability to perform the duties of his or her position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months.

ARTICLE III

DEFERRED FEES

3.1 Accounts . The Company shall establish an Account on behalf of each Participant which shall be credited with deferred fees as provided in Section 3.2 and Earnings as provided in Section 3.3, and debited to reflect payments made to such Participant pursuant to Article IV. A Participant shall have no right to receive any amounts credited to his Account except as expressly provided in Article IV of the Plan.

3.2 Board Retainer and Director Meeting Fees . To the extent provided in the Deferral Agreement in effect for any Plan Year, a Participant may elect to defer the right to receive: (i) Board Retainer Fees stated as a whole percentage or a dollar amount of such fees; and/or (ii) Director Meeting Fees on an all or nothing basis. The minimum deferral amount with respect to Board Retainer Fees is $10,000 per Plan Year. The amount of any fees deferred with respect to any Plan Year shall reduce the

-3-

amount of such fees otherwise payable to the Participant for such Plan Year on a ratable basis over the period in which such amounts would otherwise be paid, and the amount of each such reduction shall be credited to the Participant’s Account as of the date of such reduction.

3.3 Earnings . The Participant’s Account shall be adjusted by an amount equal to the amount that would have been earned (or lost) if the amounts deferred under the Plan had been invested in hypothetical investments designated by the Participant, based on a list of hypothetical investments provided by the Administrator from time to time (such hypothetical earnings or losses shall be referred to as “Earnings”). The Participant shall designate the investments used to measure Earnings from the list of authorized investments provided by the Administrator by completing the appropriate form or in such other manner as the Administrator may designate. The Participant may change such designations at such times as are permitted by the Administrator, provided that the Participant shall be entitled to change such designations at least annually. Earnings shall be credited to the Participant’s Account quarterly and shall be credited to a Participant’s Account until all payments with respect to such Account have been made under the Plan. Neither the Company nor the Administrator shall act as a guarantor, or be liable or otherwise responsible for the investment performance of the designated investments (including any losses sustained by a Participant) with respect to a Participant’s Account.

If a Participant fails to designate the investment of his or her Account, the Account shall be credited, on a quarterly basis, with interest based on the Interest Rate in effect on the last day of the applicable quarter. In the event any such Participant terminates service during a Plan Year, such Participant’s interest credit for the quarter in which the termination occurs will be based on the Interest Rate in effect on the day of the Participant’s termination and shall be pro-rated based on the Participant’s service during such quarter. No interest will accrue for periods after a Participant’s termination of service during the quarter.

3.4 Vesting . Amounts credited to a Participant’s Account shall be fully vested at all times.

ARTICLE IV

PAYMENT OF DEFERRED FEES

4.1 Method of Distribution . Unless a Participant has selected a different payment option as set forth below, the amount payable to a Participant or his Beneficiary under the Plan shall be paid in cash in a single sum as provided in Section 4.2. Alternatively, a Participant may elect, in his or her initial Deferral Agreement, to receive payment of his or her Account in a single payment upon Separation from Service or in annual installments (not to exceed five). A Participant may modify any such distribution election by a subsequent written distribution election (on a form approved and provided by the Company); provided, however, an initial election can only be changed if the following requirements are satisfied: (i) the change will not take effect until twelve (12) months after the election is made; (ii) with respect to a payment on a specified distribution date, the change must be made at least twelve (12) months prior to the previously scheduled payment date (or initial scheduled payment date in the case of installment payments); and (iii) the payment with respect to which the change is made must be deferred for at least five (5) years from the date the payment would otherwise have been made (or initial scheduled payment date in the case of installment payments); provided, further, the Administrator may, in its discretion, authorize a Participant to change a distribution election under any applicable transition rule authorized under Section 409A to the extent consistent therewith.

4.2 Timing of Distribution . A Participant’s Account will be paid (or commence payment) upon the earlier of the following designated payment dates: (i) the Participant’s Separation from Service,

-4-

or (ii) the date elected by the Participant which must be at least two years after the end of the Plan Year for which the fees are deferred. For purposes of Section 409A and the Plan: (i) the right to installment payments shall be treated as the right to a single payment; and (ii) a payment shall be treated as made on the scheduled payment date if such payment is made at such date or a later date in the same calendar year or, if later, by the 15th day of the third calendar month following the scheduled payment date. Except as specified in Section 4.1, a Participant shall have no right to designate the date of any payment under the Plan. Notwithstanding any provision herein to the contrary, if the Director is a “specified employee” for purposes of Section 409A, any payment to the Director due upon Separation from Service will be delayed and paid on the six (6) month anniversary of the date the Director Separates from Service (or, if earlier, the death of the Director). Any payment that would otherwise have been due or owing during such six-month period will be paid on the first business day following the end of the six-month period.

4.3 Designation of Beneficiary .

(a) Notwithstanding the provisions of Section 4.1 or 4.2, in the event of the death of a Participant, whether before or after Separation from Service, any amounts remaining in the Account to which he or she was entitled shall be distributed in a single sum on the first business day after the end of the calendar quarter in which the death of the Participant occurred. Each Participant shall have the right to designate a Beneficiary or Beneficiaries to receive any amount which may be payable under the Plan after his death. Such designation of Beneficiary shall be in writing in the form attached as Exhibit 2 , and shall be effective when received by the Company. The Company shall keep records in writing of all such designations. The Participant shall have the right to change such designation by filing a new designation form with the Company. Such change of Beneficiary shall become effective upon its receipt by the Company, and any such change shall be deemed to revoke all prior designations.

(b) If a Participant fails to properly designate a Beneficiary or if no designated Beneficiary survives the Participant, his undistributed Account shall be paid to the person or persons in the first of the following classes of successive preference beneficiaries surviving at the death of the Participant: (1) his widow or widower, or (2) his estate. The Administrator shall decide which Beneficiary, if any, shall be validly designated, and the Administrator’s decision shall be binding and conclusive of all persons.

4.4 Incapacity . If the Company shall receive evidence satisfactory to it that a Participant or Beneficiary entitled to receive any benefit under the Plan is, at the time when such benefit becomes payable, a minor, or is physically or mentally incompetent to receive such benefit and to give a valid release thereof, and that another person or an institution is then maintaining or has custody of such Participant or Beneficiary, and that no guardian, committee or other representative of the estate of such Participant or Beneficiary shall have been duly appointed, payment of such benefit otherwise payable to such Participant or Beneficiary may be made to such other person or institution, including a custodian under a Uniform Gifts to Minors Act, or corresponding legislation (who shall be an adult, a guardian of the minor or a trust company), and the release of such other person or institution shall be a valid and complete discharge for such payment.

ARTICLE V

ADMINISTRATION

5.1 Administrative Authority . Except as provided herein, the Board shall be the Administrator and shall have the sole responsibility for the control, operation and administration of the Plan, and shall have the power, authority and discretion to take all actions and to make all decisions and

-5-

interpretations which it shall determine to be necessary or appropriate in order to administer and operate the Plan, including the power to (i) resolve and determine all disputes or questions arising under the Plan, including the power to determine the rights of Participants and Beneficiaries, and their respective benefits, and to remedy any ambiguities, inconsistencies or omissions in the Plan; (ii) adopt such rules and regulations which, in its sole and absolute discretion, may be necessary or appropriate for the proper and efficient administration of the Plan; (iii) implement the Plan in accordance with its terms and such rules and regulations as may be adopted; (iv) notify the Participants of any amendment or termination of, or change in, any benefits available under the Plan; and (v) prescribe such forms as may be required for Directors to make elections under, and otherwise participate in, the Plan. The Administrator shall have the sole and absolute discretion to interpret and construe the terms of the Plan.

5.2 Conclusive Decisions . The determination of the Administrator on any matter pertaining to the Plan within the powers and discretion granted to it shall be final, binding and conclusive on all Participants, Beneficiaries and all other persons dealing in any way or capacity with the Plan; provided, however, in relation to any action involving the interpretation or application of the terms of the Plan for claims arising in connection with or following a Change in Control, the court or other reviewing entity shall review the interpretations, decisions and actions of the Administrator de novo.

5.3 Duties of Administrator .

(a) The Administrator may appoint persons or firms, or otherwise act to secure specialized advice or assistance as it deems necessary or desirable in connection with the administration and operation of the Plan, and the Administrator shall be entitled to rely conclusively upon, and shall be fully protected in any action or omission taken by it in good faith reliance upon the advice or opinion of such firms or persons.

(b) The Administrator shall have the power and authority to delegate from time to time by written instrument all or any part its duties, powers or responsibilities under the Plan, both ministerial and discretionary, as it deems appropriate, to any person, and in the same manner to revoke any such delegation of duties, powers or responsibilities. Any action of such person in the exercise of such delegated duties, powers or responsibilities shall have the same force and effect for all purposes hereunder as if such action had been taken by the Administrator. Further, the Administrator may authorize one or more persons to execute any certificate or document on behalf of the Administrator, in which event any person notified by the Administrator of such authorization shall be entitled to accept and conclusively rely upon any such certificate or document executed by such person as representing action by the Administrator until such third person shall have been notified of the revocation of such authority. The Administrator shall not be liable for any act or omission of any person to whom the Administrator’s duties, powers or responsibilities have been delegated, nor shall any person to whom any duties, powers or responsibilities have been delegated have any liabilities with respect to any duties, powers or responsibilities not delegated to him.

5.4 Standard of Care . All representatives of the Board and the Administrator shall use ordinary care and diligence in the performance of their duties pertaining to the Plan, but no such individual shall incur any liability: (i) by virtue of any contract, agreement, bond or other instrument made or executed by him or on his behalf in his official capacity with respect to the Plan; (ii) for any act or failure to act, or any mistake or judgment made, in his official capacity with respect to the Plan, unless it is the result of his gross negligence or willful misconduct; or (iii) for the neglect, omission or wrongdoing of any other person involved with the Plan. The Company shall indemnify and hold harmless each such individual who is an employee or Director of the Company from the effects and consequences of his acts, or from omissions and conduct in his official capacity with respect to the Plan, except to the extent that such effects and consequences shall result from his own willful misconduct or

-6-

gross negligence. If any matter arises as to which an individual is entitled to indemnity hereunder, the individual shall give the Company prompt written notice thereof. The Company, at its own expense, shall then take charge of the disposition of the asserted liability, including the compromise or the conduct of litigation. The indemnitee may, at his own expense, retain his own counsel and share in the conduct of any such litigation, but the failure to do so shall not adversely affect his right to indemnity.

5.5 Expenses . Expenses incurred in the administration and operation of the Plan shall be paid by the Company.

5.6 Attorney Fees . If a Participant’s service as a Director for the Company terminates on or after a Change in Control and the Company does not pay deferred amounts credited to such Participant’s Account when they are due, the Company shall pay the Participant’s reasonable attorneys’ fees to enforce such Participant’s rights under the Plan if the deferred amounts are not paid within 60 days after the Participant’s written demand for payment.

5.7 Section 409A . The provisions of this Plan and all deferral elections made hereunder shall be administered, interpreted and construed in a manner necessary in order to comply with Section 409A or an exception thereto (or disregarded to the extent such provision cannot be so administered, interpreted or construed). It is intended that distribution events authorized under this Plan qualify as a permissible distribution events for purposes of Section 409A, and this Plan shall be interpreted and construed accordingly in order to comply with Section 409A. The Company reserves the right to accelerate, delay or modify distributions to the extent permitted under Section 409A.

ARTICLE VI

AMENDMENTS, TERMINATION AND MERGER

6.1 Amendments and Termination .

(a) The Board reserves the right to modify, amend, discontinue or terminate the Plan either retroactively or prospectively at any time; provided , however , that no modification, amendment, discontinuance or termination shall adversely affect the rights of a Participant to vested amounts credited to his Account before such modification, amendment, discontinuance or termination; provided , further , termination of the Plan shall not be a distribution event under the Plan unless otherwise permitted under Section 409A or other applicable law. Notwithstanding the foregoing or any provision of this Plan to the contrary, that the Company may, in its sole discretion and without the Director’s consent, modify or amend the terms of the Plan or a Deferral Agreement, or take any other action it deems necessary or advisable, to cause the Plan to comply with Section 409A (or an exception thereto). Notice of every such modification, amendment, discontinuance or termination shall be given in writing to each affected Participant. In the case of a termination of the Plan, any vested amounts credited to the Account of a Participant shall be distributed in full in the form of a single lump sum payment as soon as reasonably practicable following such termination.

6.2 Consolidation, Merger or Other Transactions of Company . Nothing in this Plan shall prevent the consolidation, merger, reorganization or liquidation of the Company, or prevent the sale by the Company of any or all of its property. Any successor corporation or other entity formed and resulting from any such transaction shall have the right to become a party to this Plan by adopting the same. If, within 180 days from the effective date of such transaction, such new entity does not become a party to this Plan as above provided, this Plan shall be terminated automatically; provided, however, termination of the Plan shall not be a distribution event under the Plan unless otherwise permitted under Section 409A or other applicable law.

-7-

ARTICLE VII

MISCELLANEOUS

7.1 Limitations on Liability of Company . None of the establishment of the Plan, any modification thereof, the creation of any Account, or the payment of any benefits, shall be construed as giving to any Participant, Beneficiary or other person any legal or equitable right against the Company, or any person connected therewith, except as provided by law or by a specific Plan provision.

7.2 Governing Law . The laws of the State of Delaware shall govern, control and determine a questions arising with respect to the Plan and the interpretation and validity of its respective provisions.

7.3 No Guarantee of Service . Participation in the Plan does not give any person any right to continue as a Director of the Company.

7.4 Spendthrift Provision .

(a) No amount payable under the Plan shall be subject in any manner to anticipation, alienation, attachment, garnishment, sale, transfer, assignment (either at law or in equity), levy, execution, pledge, encumbrance, charge or any other legal or equitable process, and any attempt to do so shall be void; nor shall any benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled thereto. The foregoing shall not preclude any arrangement for the recovery by the Plan of overpayments of benefits previously made to a Participant or Beneficiary, or the direct deposit of benefit payments to an account in a banking institution (if not part of an arrangement constituting an assignment or alienation).

(b) In the event that any Participant’s benefits are garnished or attached by order of court, the Company may bring an action for a declaratory judgment in a court of competent jurisdiction to determine the proper recipient of the benefits to be paid by the Plan. During the pendency of said action, any benefits that become payable shall be paid into the court as they become payable, to be distributed by the court to the recipient it deems proper at the close of said action.

7.5 Tax Treatment . Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create any right or expectation of any Participant, Beneficiary or any other person entitled to any benefit under this Plan to any particular tax consequences with respect to any amounts deferred, credited to an Account or paid under this Plan. Notwithstanding any provision of the Plan to the contrary, in no event shall the Administrator (or any member thereof) or the Company or its affiliates (or the employees, officers or directors of the Company or its affiliates) have any liability to any Participant (or any other person) due to the failure of the Plan to satisfy the requirements of Section 409A or any other applicable law.

7.6 Funding .

(a) The obligation of the Company to pay benefits under this Plan shall be interpreted solely as an unsecured, unfunded, contractual obligation to pay only those amounts described in Article III in the manner, at the times and under the conditions prescribed under the terms of the Plan, and the Company shall have no obligation to fund, secure or obtain any third-party guarantee of those

-8-

benefits. If any assets are set aside to provide for benefits payable under the Plan, such assets shall be subject to the claims of the Company’s general creditors, and no person other than the Company shall, by virtue of the provisions of the Plan or any other agreement, have any interest in such assets.

(b) The Company may, in its discretion, make contributions to a trust to be invested and utilized to pay benefits under the Plan. If a trust (the “Trust”) is created by the Company, the following provisions of this Section 7.6 shall apply.

(c) An amount equal to each Participant’s deferred fees and any Earnings thereon, determined under Article III, may, in the discretion of the Company and subject to the terms of the Trust, be transferred to the Trust to be held pursuant to the terms thereof. The assets of the Trust shall be subject to the claims of the Company’s creditors and shall be maintained pursuant to a separate trust document (“Trust Agreement”) conforming to the terms of the model trust described in Revenue Procedure 92-64.

(d) Any payment required to be made under this Plan to a Participant or a Beneficiary shall be paid by the trustee of the Trust (the “Trustee”) to the extent of the assets held in the Trust by the Trustee, and by the Company to the extent the assets in the Trust are insufficient to pay such amount.

(e) The Company may direct the Trustee to invest the Trust assets in any investment that it deems appropriate, including common stock of the Company, subject to the terms of the Trust Agreement.

7.7 Account Statements . Periodically, as determined by the Company in its sole and absolute discretion, each Participant shall receive a statement indicating the amounts credited to and distributed from his Account.

IN WITNESS WHEREOF, this Plan amended and restated this 4th day of December, 2007.


ATTEST:	CONSOL ENERGY INC.

	By:
Signature of Corporate Secretary		Signature of Authorized Officer

	Its:	President and Chief Executive Officer
		Title of Authorized Officer

-9-

EXHIBIT 1

CONSOL ENERGY INC.

DIRECTORS’ DEFERRED FEE PLAN

DEFERRAL AGREEMENT

Pursuant to the CONSOL Energy Inc. Directors’ Deferred Fee Plan (the “Plan”), I hereby elect to defer receipt of the fees noted below which, absent this Deferral Agreement, I would become entitled to receive in the future. (Check Only One Box for Each Section Below:)

ANNUAL RETAINER FEE ELECTION (CHOOSE ONLY ONE) :

I hereby elect to defer [ %] [$ ] of my annual retainer fees for the Plan Year. The minimum election amount is $10,000 per Plan Year.

I hereby elect NOT to defer any of my annual retainer fees for the Plan Year.

DISTRIBUTION ELECTION:

I understand that my deferral account will be distributed (or commence distribution), subject to the terms of the Plan, following the earlier of: (i) my Separation from Service, or (ii) the date I elect below which must be at least two (2) years after the end of the Plan Year for which the fees are deferred.

( Check a Box Below If You Choose to Specify a Distribution Date and Select the Date You Want to Elect.)

I hereby elect to the following distribution date ( CHOOSE ONLY ONE ):

[ , 20 ]; OR

[ years after the date of this Deferral Agreement].

I understand that my election is subject to all the terms and conditions of the Plan and that my election hereunder is irrevocable with respect to any payments due for a Plan Year. Capitalized terms not otherwise defined herein shall have the meaning ascribed thereto under the Plan.


Received and agreed to by CONSOL Energy Inc.:						DIRECTOR:

By:						By:

Date:						Date:

NON-COMMUNITY PROPERTY STATES

EXHIBIT 2

CONSOL ENERGY INC.

DIRECTORS’ DEFERRED FEE PLAN

BENEFICIARY DESIGNATION FORM

Name of Participant:____________________________________________________________________________________

Please complete this form, as indicated below. Unless you indicate otherwise, all benefits will be payable in equal shares if more than one primary or secondary beneficiary is listed.

PRIMARY BENEFICIARIES : I hereby designate the following as my primary beneficiary(ies) to receive any benefits payable on account of my death under the Plan:


Full Name		Birthdate		Relationship		Percent of Distribution

I understand that if at the time of my death the sum of the percentages payable as indicated above does not equal 100%, the percentage share of each designated person who survives me will be proportionately adjusted so that the sum of their percentages will equal 100%.

SECONDARY BENEFICIARIES : If all the primary beneficiaries designated by me above die before the complete payment of my benefits, or, if not natural persons, no longer legally exist at my death, I hereby designate the following as my secondary beneficiary(ies) to receive any benefits payable on account of my death under the Plan:


Full Name		Birthdate		Relationship		Percent of Distribution

VALIDITY

I understand that this designation is valid only if it is filed with the Administrator before my death and that, if this designation is valid under the Plan, all designations that I filed before this one will be REVOKED. This designation will remain in full force and effect unless and until a new Beneficiary Designation Form is filed with the Administrator in writing and duly dated and signed.



Date:
								Participant’s Signature

Exhibit 10.50

CONSOL ENERGY INC.

2004 DIRECTORS’ DEFERRED FEE PLAN

HYPOTHETICAL INVESTMENT ELECTION FORM

Investment Election:

Pursuant to the CONSOL Energy Inc. Directors Deferred Fee Plan (the “Plan”), I hereby elect that the amounts I have deferred under the Plan be deemed to be invested among such hypothetical investments as specified on Appendix A attached hereto.

Acknowledgments:

•

I understand that the amounts I have deferred under the Plan represent an unfunded, unsecured obligation of the Company to pay me benefits in the future in accordance with the terms of the Plan, and that the elections I have made hereunder are for Plan recordkeeping purposes only and do not represent actual investments.

•

I understand that in the event the Company sets aside funds to satisfy its obligations under the Plan, the Company is under no obligation to actually invest such monies in accordance with the elections I have made hereunder.

•

I understand that the earnings credited to the amounts I have deferred under the Plan will be based on the hypothetical investments I have elected, and acknowledge and agree that neither the Company nor the Administrator shall act as a guarantor, or be liable or otherwise responsible for the investment performance (including losses) of such hypothetical investments.

•

I understand that the Administrator shall establish reasonable procedures for crediting earnings (and losses) under the Plan, and acknowledge and agree that the Administrator has full authority and discretion to decide all matters relating to the implementation, administration and interpretation of such procedures, which determinations shall be final, conclusive, and binding upon all interested parties.

•

I understand that the investment elections made hereunder will be governed by the terms of the Plan, and apply to all deferrals that I have made, or will make in the future, under the Plan, and that my investment elections will remain in effect from year to year unless an until I change such investment elections by filing a new investment election form.

This form must be returned to George Witkowksy, to be effective on or about the next succeeding January 1st or July 1st.



Signature:



Printed Name:



Dated:		, 20

CONSOL ENERGY INC.

2004 DIRECTORS’ DEFERRED FEE PLAN

APPENDIX A

HYPOTHETICAL INVESTMENT ELECTION FORM

I hereby elect that the amounts I have deferred under the Directors Deferred Fee Plan be deemed to be invested among the following hypothetical investments in one of the elections as specified below:


INVESTMENT ¹		ELECTION

CONSERVATIVE (20% stock, 80% bond)


BALANCED INCOME (40% stock, 60% bond)


BALANCED (60% stock, 40% bond)


BALANCED GROWTH (80% stock, 20% bond)


AGGRESSIVE GROWTH (100% stock)


MONEY MARKET FUND

TOTAL		100% ²

¹	The foregoing investment options have been established by National City.

²	Allocations among hypothetical investment options must total to 100%.

Exhibit 10.53

CONSOL ENERGY INC.

1999 DIRECTORS DEFERRED COMPENSATION PLAN

HYPOTHETICAL INVESTMENT ELECTION FORM

Investment Election:

Pursuant to the CONSOL Energy Inc. (the “Company”) Directors Deferred Compensation Plan (the “Plan”), I hereby elect that the amounts I have deferred under the Plan be deemed to be invested among such hypothetical investments as specified on Appendix A and/or B attached hereto.

Acknowledgments :

•

I understand that the earnings credited to the amounts I have deferred under the Plan will be based on the hypothetical investments I have elected, and acknowledge and agree that neither the Company nor the Administrator (as defined in the Plan) shall act as a guarantor, or be liable or otherwise responsible for the investment performance (including losses) of such hypothetical investments.

•

I understand that the investment elections made hereunder will apply to all deferrals that I have made, or will make in the future, under the Plan, and that my investment elections will remain in effect from year to year unless an until I change such investment elections by filing a new investment election form.

•

I understand that if prior approval of my elections (and or receipt or disposition of phantom stock) by the Company’s Compensation Committee and/or Board of Directors is required for the purposes of securing any exemptions under Rule 16b-3(d) and/or (e) under the Securities Exchange Act of 1934, as amended or otherwise, the elections I have made herein will not be effective until the approval of the Company’s Compensation Committee and/or Board of Directors has been obtained. The Administrator has full authority and discretion to decide all matters relating to the approval requirements, which determinations shall be final, conclusive, and binding upon all interested parties.

This form must be returned to George Witkowsky to be effective on or about the next succeeding January 1st or July 31st.



Signature:



Printed Name:



Dated:		, 20

CONSOL ENERGY INC.

1999 DIRECTORS DEFERRED COMPENSATION PLAN

APPENDIX A

HYPOTHETICAL INVESTMENT ELECTION FORM ¹

Please Check Appropriate Box and Complete as Necessary :

I am making no change to my current elections. All the amounts I have deferred under the Directors Deferred Compensation Plan should continue to be deemed to be invested in accordance with the current investment elections I have on file with the Plan (See Schedule 1 for a statement of your current elections).

¨	I hereby elect that % of the amounts I have deferred under the Directors Deferred Compensation Plan be deemed to be invested entirely in Company common stock and any balance of deferrals will be invested among the hypothetical investments specified on page 2 of this Appendix A . ²

In addition, I irrevocably elect to make no intraplan transfers ( i.e. , change my hypothetical investment elections deemed to be invested entirely in Company common stock) during the entire deferral period. [Check this box only if you intend never to change your election option related to the hypothetical investments in common stock made in this election form]

¨	I hereby elect that the amounts I have deferred under the Directors Deferred Compensation Plan be deemed to be invested as specified on Appendix B .

[Remainder of Page Intentionally Left Blank]

¹	Any election that is made will have the effect of rebalancing all deferrals made to date, except for those deemed to be in Company common stock which have been designated as irrevocable by the participant.

Any phantom stock “granted” under a deferral will be treated as though it were the equivalent of a Deferred Stock Unit (as the term is used under CONSOL Energy Inc. Equity Incentive Plan as amended and restated, effective as of May 3, 2005, as may be amended from time to time) that is settled solely in cash. Such phantom stock will be treated for the purposes of dividends and other matters as a Deferred Stock Unit. The Administrator has full authority and discretion to decide all matters relating to the implementation, administration and interpretation of the treatment of such phantom stock, which determinations shall be final, conclusive, and binding upon all interested parties.

1999 DIRECTORS DEFERRED COMPENSATION PLAN

APPENDIX B

HYPOTHETICAL INVESTMENT ELECTION FORM

I hereby elect that the amounts I have deferred under the Directors Deferred Compensation Plan be deemed to be hypothetically invested in one of the elections as specified below:


INVESTMENT ³		ELECTION

CONSERVATIVE (20% stock, 80% bond)


BALANCED INCOME (40% stock, 60% bond)


BALANCED (60% stock, 40% bond)


BALANCED GROWTH (80% stock, 20% bond)


AGGRESSIVE GROWTH (100% stock)


MONEY MARKET FUND

³	The foregoing investment options are coordinated through National City.

Exhibit 10.54

Plan Document

of the

CONSOL Energy Inc.

Supplemental Retirement Plan

Effective January 1, 2007

(As Amended and Restated December 4, 2007)

CONSOL Energy Inc. Supplemental Retirement Plan

Article I. – General Provisions

1.1

Establishment and Purpose

Effective January 1, 2007, CONSOL Energy Inc. established the CONSOL Energy Inc. Supplemental Retirement Plan (the “Plan”) on the terms and conditions hereinafter set forth. The Plan is designed primarily for the purpose of providing benefits for a select group of management and highly compensated employees of the Company and its Subsidiaries and is intended to qualify as a “top hat” plan under Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Plan is intended to comply with the provisions of Section 409A of the Internal Revenue Code.

This Plan document reflects all amendments made through December 4, 2007.

1.2 Definitions

“Actuarial Equivalent” means the actuarial present value of a specified benefit as determined on an applicable date using the mortality, interest rate and other assumptions as defined in the Qualified Plan.

“Annual Compensation” means annual base salary plus amounts received under the Company’s Short Term Incentive Compensation Plan. All other forms of remuneration are excluded, including but not limited to all long-term incentive compensation, bonuses, fringe benefits and stock-based awards.

“Beneficiary” means the person or persons designated by a Participant as his beneficiary hereunder in accordance with the provisions of Article V.

“Board” means the Board of Directors of the Company.

“Cause” means (i) a charge, indictment or conviction of, or a plea of guilty or nolo contendere to, a misdemeanor involving moral turpitude or a felony, whether or not in connection with the performance by a Participant of his or her duties or obligations to the Company or any Subsidiary; (ii) theft relating to the business of the Company or any Subsidiary or dishonesty with respect to a material aspect of the business of the Company or any Subsidiary; (iii) gross negligence or willful misconduct in the performance of the Participant’s duties or obligations to the Company or any Subsidiary, or engaging in illegal activity in connection therewith, including, without limitation, a Participant’s engagement in any act or course of conduct that would result in the termination or revocation of, or jeopardize the renewal of, any licenses, permits, consents, authorization, approvals or material agreements necessary for the Company or any Subsidiary to conduct its business or that would have an adverse effect on the Company or any Subsidiary; (iv) violation of any provision of any nonsolicitation, noncompetition or nondisclosure contained in any agreement entered into by and between a Participant and the Company and/or any Subsidiary; or (v) “cause” as defined in the

Participant’s employment and/or change of control agreement, if any, with the Company or any Subsidiary. The determination as to whether or not Cause exists will be made by the Retirement Board and the CEO of the Company (“CEO”) in accordance with its discretionary powers under Section 1.3; provided, however, that the Board shall make the determination as to whether or not Cause exists with respect to the CEO. The Retirement Board and the CEO shall periodically report to the Board as to its determinations, if any, with respect to determinations of Cause.

“Change in Control” means the occurrence of any of the following events:

(i) the acquisition after the date hereof by any individual, entity or group (within the meaning of section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 35% of the combined voting power of the then outstanding voting stock of the Company; provided, however, that for purposes of this subsection (i), the following acquisitions will not constitute a Change in Control: (A) any issuance of voting stock of the Company directly from the Company that is approved by the Incumbent Board (as defined in subsection (ii), below), (B) any acquisition by the Company of voting stock of the Company, (C) any acquisition of voting stock of the Company by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, (D) any acquisition of voting stock of the Company by an underwriter holding securities of the Company in connection with a public offering thereof, or (E) any acquisition of voting stock of the Company by any Person pursuant to a Business Combination that complies with clauses (A), (B) and (C) of subsection (iii), below; or

(ii) individuals who constitute the Board as of the Effective Date (the “Incumbent Board,” as modified by this subsection (ii)), cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a Director subsequent to such date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least two-thirds of the Directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) will be deemed to have then been a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii) consummation of a reorganization, merger or consolidation of the Company or a direct or indirect wholly owned subsidiary thereof, a sale or other disposition (whether by sale, taxable or nontaxable exchange, formation of a joint venture or otherwise) of all or substantially all of the assets of the Company, or other transaction involving the Company (each, a “Business Combination”), unless, in each case, immediately following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners of voting stock of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the

then outstanding shares of voting stock of the entity resulting from such Business Combination or any direct or indirect parent corporation thereof (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), (B) no Person other than the Company beneficially owns 25% or more of the combined voting power of the then outstanding shares of voting stock of the entity resulting from such Business Combination or any direct or indirect parent corporation thereof (disregarding all “acquisitions” described in clauses (A)—(C) of subsection (i)), and (C) at least a majority of the members of the Board of Directors of the entity resulting from such Business Combination or any direct or indirect parent corporation thereof were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or (iv) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a Business Combination that complies with clauses (A), (B) and (C) of subsection (iii).

Notwithstanding the foregoing or any provision of this Agreement to the contrary, it is intended that the forgoing definition of Change in Control qualify as a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation, within the meaning of Treas. Reg. § 1.409A-3(i)(5), and this Agreement shall be interpreted and construed to effectuate such intent.

“Code” means the Internal Revenue Code of 1986, as amended, and any successor code or law.

“Committee” means the Compensation Committee of the Board, or such other committee designated by the Board to discharge the duties of the Committee hereunder.

“Company” means CONSOL Energy Inc. or any successor thereto.

“Disability” means a Participant: (1) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to last for a continuous period of not less than 12 months; or (2) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan of the Company or its Subsidiaries.

“Final Average Compensation” means, subject to Section 1.4(c), the average of a Participant’s five highest consecutive Annual Compensation amounts while employed by the Company and its Subsidiaries.

“Normal Retirement Date” means the date such Participant attains age sixty five (65).

“Participant” means any employee who has satisfied the eligibility requirements set forth in Section 1.4 of the Plan.

“ Person ” means any individual, corporation, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Plan Year” means the twelve-month period beginning each January 1 and ending on the following December 31.

“Qualified Plan” means CONSOL Energy Inc. Employee Retirement Plan, as amended, and/or such other plan(s) as designated by the Retirement Board.

“Section 409A” shall mean Section 409A of the Code, the regulations and other binding guidance promulgated thereunder.

“Separation From Service” shall mean a Participant’s death, retirement or other termination of employment with the Company and all of its controlled group members within the meaning of Section 409A of the Code. For purposes hereof, the determination of controlled group members shall be made pursuant to the provisions of Section 414(b) and 414(c) of the Code; provided that the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Section 1563(a)(1),(2) and (3) of the Code and Treas. Reg. § 1.414(c)-2; provided, further, where legitimate business reasons exist (within the meaning of Treas. Reg. § 1.409A-1(h)(3)), the language “at least 20 percent” shall be used instead of “at least 80 percent” in each place it appears. Whether a Participant has a Separation from Service will be determined based on all of the facts and circumstances and in accordance with the guidance issued under Section 409A.

“Service Fraction” means the fraction determined hereunder with a numerator that is the Participant’s number of full Years of Service and with a denominator of 20. The Service Fraction can never exceed one (1).

“Specified Employee” means a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) of the Company and its Subsidiaries, as defined in the regulations issued under Code Section 409A, as determined in accordance with the procedures established by the Company.

“Subsidiary” means, unless specifically excluded by the Committee, any entity in which the Company owns or otherwise controls, directly or indirectly, stock or other ownership interests having the voting power to elect a majority of the board of directors, or other governing group having functions similar to a board of directors, as determined by the Committee. For purposes of this Plan, the term “Subsidiary” shall not include, and specifically excludes CNX Gas Corporation or any of its subsidiaries. An entity shall be considered to be a “Subsidiary” only for the period of time in which the ownership test and the Committee approval set forth above have been met.

“Year of Service” means, subject to Section 1.4(c), each full twelve-month period of active, full-time employment with the Company following the Participant’s most recent hire date, as determined pursuant to the Company’s regular personnel records and policies. The Committee may, but is not required to, recognize employment with prior employers for purposes of this Plan. Any such recognition shall be in writing and shall state the purposes for which service will be recognized under

this Plan. In addition, the Plan will recognize service for periods of prior employment with the Company; it will also recognize periods of employment with any Subsidiary, but only for periods of time while that entity meets the definition of Subsidiary (e.g. is owned by the Company).

1.3

Administration.

(a) The Retirement Board as defined in Section 1.17 of the Qualified Plan (the “Retirement Board”) (and the Committee, where the Committee exercises powers hereunder, or the CEO with respects to determinations of Cause as specified herein) shall administer the Plan and have sole and absolute authority and discretion to decide all matters relating to the administration of the Plan, including, without limitation: determining the rights and status of Participants or their beneficiaries under the Plan; interpreting the Plan; adopting administrative rules, regulations, and guidelines for the Plan; making factual determinations (including determinations as to the designation of beneficiaries); and correcting any defect, supplying any omission or reconciling any inconsistency or conflict in the Plan. In general, the Retirement Board will utilize and follow the administrative rules and practices that are utilized under the Qualified Plan. The Retirement Board’s determinations under the Plan (and the Committee’s determinations under the Plan where the Committee exercises powers hereunder) need not be uniform among all Participants, or classes or categories of Participants, and may be applied to such Participants, or classes or categories of Participants, as the Retirement Board (or the Committee, where applicable), in its sole and absolute discretion, considers necessary, appropriate or desirable. All determinations by the Retirement Board (and the Committee, where applicable) shall be final, conclusive and binding on the Company, the Participant and any and all interested parties.

(b) The Retirement Board (and the Committee, where applicable) may delegate such of its powers and authority under the Plan to the Company’s officers as it deems necessary or appropriate. In the event of such delegation, all references to the Retirement Board in this Plan (and the Committee, where applicable) shall be deemed references to such officers as it relates to those aspects of the Plan that have been delegated.

(c) Any action taken by the Retirement Board (and the Committee, where applicable) with respect to the rights or benefits under the Plan of any Participant shall be revocable by the Retirement Board (and the Committee, where applicable) as to payments not yet made to such person, and acceptance of any deferred compensation benefits under the Plan constitutes acceptance of and agreement to the Retirement Board’s (or the Committee, where applicable) or the Company’s making any appropriate adjustments in future payments to such person (or to recover from such person) any excess payment or underpayment previously made to him.

(d) The provisions of the Plan shall be administered, interpreted and construed in a manner intended to comply with Section 409A or an exception thereto (or disregarded to the extent such provision cannot be so administered, interpreted or construed). It is intended that distribution events authorized under the Plan qualify as permissible distribution events for purposes of Section 409A of the Code, and the Plan shall be interpreted and construed accordingly in order to comply with Section 409A. The Company reserves the right to accelerate, delay or modify distributions to the extent permitted under Section 409A. Notwithstanding any provision of the Plan to the contrary, in no

event shall the Committee or Retirement Board (or any member thereof), or the Company, its Subsidiaries or affiliates (or the employees, officers or directors of the Company, its Subsidiaries or affiliates) have any liability to any Participant (or any other person) due to the failure of the Plan to satisfy the requirements of Section 409A or any other applicable law.

1.4

Eligibility and Participation.

(a) Participation in the Plan is limited to officers and key management employees of the Company and its Subsidiaries who are designated by the Committee as eligible to participate in the Plan and who are within the category of a select group of management and highly compensated employees as referred to in Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Until changed by the Committee, only employees of the Company (and those Subsidiaries which are not specifically excluded for participation in the Plan by the Committee or the terms of the Plan) with a salary grade of 104 or above are eligible to participate hereunder. The Plan is being implemented in connection with the ceasing of accruals under prior non-qualified plans.

(b) A Participant shall cease to be a Participant upon receiving payment for the full amount of benefits to which the Participant is entitled under the Plan.

(c) Notwithstanding the foregoing, the Committee may terminate a Participant’s participation in the Plan at any time, in its sole and absolute discretion. A termination of Participant’s employment with the Company and any Subsidiary, or if the Participant no longer meets the basic eligibility standards (such as salary grade) shall automatically, with no further act on the part of the Committee, Company, Retirement Board, or any Subsidiary, terminate any right of such Participant to continue to participate in, and accrue benefits under, this Plan. When the Participant terminates or no longer meets the basic eligibility standards, Final Average Compensation and Years of Service will be fixed at that time. Appendix A, entitled Retirement Scenarios Under the SERP, contains examples that illustrate these principles. Appendix A is explicitly made a part of this Plan.

(d) In the event of a Change in Control, additional service credits will be provided for the term of any payments under a Participant’s change of control agreement, if any, with the Company.

(e) A Subsidiary may affirmatively elect to not participate in this Plan. In addition, as set forth in subsection (b) above, the participation of the Subsidiary may also be prohibited or nullified by the Committee. Should a Subsidiary participate in this Plan, Annual Compensation and Years of Service shall be calculated by excluding compensation earned and periods of service with a Subsidiary while the entity did not meet the definition of Subsidiary hereunder. For example, if the Company acquires another entity, the eligible employees of that entity will receive no service credits for the time spent with the entity prior to the acquisition, nor will the employees’ compensation history be relevant.

Article II. – Supplemental Retirement Benefits

2.1

Amount of Benefit.

The amount of each Participant’s benefit as of age 65 (expressed as an annual amount) will be 50% of Final Average Compensation, multiplied by the Service Fraction, as calculated on the Participant’s date of Separation From Service.

2.2

Reduction.

The age 65 benefit determined under Section 2.1 will be reduced (offset) by the Participant’s vested benefits (including benefits which have been paid or are payable in the future, converted to an annual amount) under: (a) the age 65 Qualified Plan benefit ; (b) the age 65 Retirement Restoration Plan of CONSOL Energy Inc. benefit; and (c) any other plan or arrangement providing retirement type benefits, including arrangements with prior employers, to the extent service with such other employer or under such arrangement is credited under this Plan.

2.3

Vesting.

No benefit will be vested until a Participant has five Years of Service, and the Participant has satisfied the eligibility standards hereof during these five Years of Service. Any benefits accrued prior to such vesting are subject to forfeiture in the event the Participant ceases to be an employee or eligible to participate in the Plan. Notwithstanding the foregoing, benefits will immediately vest upon the death or Disability of the Participant, or upon a Change in Control.

2.4

Cause.

(a) Notwithstanding anything in this Plan to the contrary, if a Participant’s employment with the Company or any Subsidiary terminates on account of Cause (which includes voluntary resignation in lieu of involuntary termination on account of Cause or if Cause otherwise exists by reason of a violation of Subsection (iv) of the definition of Cause), no benefits will be payable hereunder. All benefits of any nature, whether vested or unvested, shall be forfeited without payment by the Plan, the Company or any Subsidiary and the Participant shall have no further rights under the Plan.

(b) In addition to the rights set forth in section 2.4(a), and in addition to any other rights at law or in equity, if a Participant’s employment with the Company or any Subsidiary terminates on account of Cause (which includes voluntary resignation in lieu of involuntary termination on account of Cause or if Cause otherwise exists by reason of a violation of Subsection (ii) or (iv) of the definition of Cause), each Participant agrees to the following by agreeing to participate in this Program. Each Participant agrees that within ten (10) days after the date the Company provides such Participant of a notice that there has occurred a termination on account of Cause (which includes voluntary resignation in lieu of involuntary termination on account of Cause or if Cause otherwise exists by reason of a violation of Subsection (ii) or (iv) of the definition of Cause), a Participant shall pay to the Company in cash an amount equal to any and all distributions paid to or on behalf of such Participant under this

Plan within the six (6) months prior to the date of earliest breach. Each Participant agrees that failure to make such timely payment to the Company constitutes an independent and material breach of the terms and conditions of this Plan, for which the Company may seek recovery of the unpaid amount as liquidated damages, in addition to all other rights and remedies the Company may have resulting from a determination that Cause exists. The Participants agree that timely payment to the Company, as set forth in this provision of the Plan, is reasonable and necessary because the compensatory damages that will result from a Cause determination cannot readily be ascertained. Further, the Participants agree that timely payment to the Company as set forth in this provision of the Plan is not a penalty, and it does not preclude the Company from seeking all other remedies that may be available to the Company, including without limitation those set forth in this Section 2.4 and in any employment or other agreement between the Participant and the Company.

(c) For purposes of this section 2.4, a forfeiture of benefits under subsection (a) will occur and the rights under subsection (b) will also arise if Cause (but only as defined in subsections (ii) or (iv) of the Cause definition) arises or is discovered following a termination of employment, regardless of the reason for such termination.

Article III. – Distributions

3.1

Distribution Dates.

(a) Benefits shall be paid in the form of a life annuity with a guaranteed term of twenty years (which shall be the Actuarial Equivalent of a single life annuity) commencing in the month immediately following the later to occur of: (i) the end of the month following the month in which Participant turns age 50, or (ii) the end of the month following the month in which Participant incurs a Separation From Service. The benefit will be actuarially reduced, as necessary (using assumptions specified in the Qualified Plan), from the Participant’s Normal Retirement Date in the event benefits commence earlier than that date. Benefits shall be paid in monthly installments, with each subsequent distribution being made on each succeeding monthly anniversary of the initial distribution.

(b) A Participant may designate a Beneficiary as provided under Article V hereunder. The Beneficiary will be eligible to receive the balance of the guaranteed twenty year payments that the Participant does not receive on account of the death of the Participant. Said balance shall be paid in the same monthly amount, and at the same time and manner as the Participant was receiving prior to his or her death for the remainder of the twenty year term.

(c) Notwithstanding the foregoing or any Plan provision to the contrary, distributions to Specified Employees upon Separation From Service shall not be made before the date that is 6 months after the date of Separation From Service (or, if earlier, the date of death of the Participant). Any benefits payable to a Specified Employee prior to such date will be accumulated and paid with the initial distribution. The initial distribution shall be paid in the month following the month containing the 6-month anniversary of the date of Separation from Service, and subsequent distributions shall be made on each succeeding monthly anniversary of the initial distribution.

3.2

Change in Control.

In the event a Participant’s Separates from Service after, or in connection with, a Change in Control, on account of (i) an involuntary termination associated with a Change in Control within the two year period after the Change in Control, or (ii) a termination by the Company other than for Cause or due to the Participant’s death or Disability that (A) occurs not more than three (3) months prior to the date on which a Change in Control occurs, or (B) is requested by a third party who initiates a Change in Control, the Participant shall be entitled to the vested benefits provided in Article II. For purposes of subsection (B) above, to be eligible to receive amounts described in Article II, a Change in Control must be consummated within the twelve (12) month period following the Participant’s Separation From Service, except in circumstances pursuant to which the consummation of the Change in Control is delayed, through no failure of the Company or the third person, by a governmental or regulatory authority or agency with jurisdiction over the matter, or as a result of other similar circumstances. In such a circumstance, the remainder of the twelve (12) month period shall be tolled and shall recommence upon termination of the delaying event.

Notwithstanding the provisions in Section 3.1, a Participant will receive a lump sum payment of the Participant’s accrued and vested benefits calculated in accordance with Article II. Such payment will be paid in a lump sum: (i) contemporaneously with the Change in Control if the Participant Separates from Service prior to the Change in Control date, or (ii) on the Participant’s Separation From Service, if the separation takes place following the Change in Control date. Notwithstanding the foregoing or any Plan provision to the contrary, a distribution to a Specified Employee shall not be made before the date that is 6 months after the date of Separation From Service (or, if earlier, the date of death of the Participant). Any distribution payable to a Specified Employee that is delayed shall be paid in the month following the month containing the 6-month anniversary of the date of Separation from Service. Such benefit will be calculated as if the Participant terminated on the Change in Control date, and the benefit will be reduced, as necessary, based on the early retirement reduction Schedule III from the Qualified Plan, calculated as if the Participant had a minimum of 75 points.

3.3

Death or Disability.

In the event of a Participant’s death prior to commencement of benefits in accordance with Section 3.1 or 3.2, the Participant’s vested benefits calculated under Article II will be paid to the Participant’s Beneficiary for the guaranteed twenty year term (which shall be the Actuarial Equivalent of a single life annuity), commencing within 60 days following the Participant’s death (regardless of whether the Participant obtained age 50 or the Participant’s Normal Retirement Date). The benefit will be determined as if the Participant had separated from service immediately prior to his death, meaning that, for example, the Age 65 benefits under the Qualified Plan and the Restoration Plan will be offset, even though there might be no death benefits under one or both of those plans.

In the event of a Participant Separates from Service on account of Disability prior to commencement of benefits in accordance with Section 3.1 or 3.2, the value of the Participant’s benefits calculated under Article II will be paid to the Participant in the life annuity form with the guaranteed twenty year term (which shall be the Actuarial Equivalent of a single life annuity), commencing within 60 days following the Participant Separation from Service, except as otherwise provided under Section 3.1(c).

Article IV. – Funding By Company

4.1

Unsecured Obligation of Company.

(a) Any benefit payable pursuant to this Plan shall be paid from the general assets of the Company or a Subsidiary. Nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall create a trust of any kind or a fiduciary relationship between any Participant (or any other interested person) and the Company, a Subsidiary or the Committee, or require the Company or a Subsidiary to maintain or set aside any specific funds for the purpose of paying any benefit hereunder. To the extent that a Participant or any other person acquires a right to receive payments from the Company or a Subsidiary under this Plan, such right shall be no greater than the right of any unsecured general creditor of the Company or a Subsidiary.

(b) If the Company or a Subsidiary maintains a separate fund or makes specific investments, including the purchase of insurance insuring the life of the a Participant, to assure its ability to pay any benefits due under this Plan, neither the Participant nor the Participant’s Beneficiary shall have any legal or equitable ownership interest in, or lien on, such fund, policy, investment or any other asset of the Company or a Subsidiary. The Company and each Subsidiary in its sole discretion, may determine the exact nature and method of informal funding (if any) of the obligations under this Plan. If the Company or a Subsidiary elects to maintain a separate fund or makes specific investments to fund its obligations under this Plan, the Company and each Subsidiary reserves the right, in its sole discretion, to terminate such method of funding at any time, in whole or in part.

Article V. – Beneficiaries

5.1

Beneficiary Designations.

A designation of a Beneficiary hereunder may be made only by a written instrument (in form acceptable to the Retirement Board) signed by the Participant and filed with the Retirement Board prior to the Participant’s death. In the absence of such a designation and at any other time when there is no existing Beneficiary designated hereunder, the unpaid value of the Participant’s benefits to which a Beneficiary was entitled shall be distributed to the Participant’s estate. A Beneficiary who dies or which ceases to exist shall not be entitled to any part of any payment thereafter to be made to the Participant’s Beneficiary unless the Participant’s designation specifically provides to the contrary. If two or more persons designated as a Participant’s Beneficiary are in existence, the amount of any payment to the Beneficiary under this Plan shall be divided equally among such persons, unless the Participant’s designation specifically provides to the contrary. Designation of a Beneficiary is subject to further restrictions imposed by the Retirement Board for administrative convenience.

5.2

Change in Beneficiary.

A Participant may, at any time and from time to time, change a Beneficiary designation hereunder without the consent of any existing Beneficiary or any other person. Any change in Beneficiary shall be made only by an instrument (in form acceptable to the Retirement Board) signed by the Participant, and any change shall be effective only if signed by the Participant and received by the Retirement Board prior to the death of the Participant.

Article VI. – Claims Procedures

6.1

Claims for Benefits.

The Retirement Board shall determine the rights of any Participant to any benefits hereunder. Any Participant who believes that he has not received the benefits to which he is entitled under the Plan may file a claim in writing with the Retirement Board. The Retirement Board shall, no later than 90 days after the receipt of a claim (plus an additional period of 90 days if required for processing, provided that notice of the extension of time is given to the claimant within the first 90-day period), either allow or deny the claim in writing. If a claimant does not receive written notice of the Retirement Board’s decision on his or her claim within the above-mentioned period, the claim shall be deemed to have been denied in full.

A denial of a claim by the Retirement Board, wholly or partially, shall be written in a manner calculated to be understood by the claimant and shall include:

(a) the specific reasons for the denial;

(b) specific reference to pertinent Plan provisions on which the denial is based;

(c) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

(d) an explanation of the claim review procedure and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA.

6.2

Appeal Provisions.

A claimant whose claim is denied (or his duly authorized representative) may within 60 days after receipt of denial of a claim file with the Retirement Board a written request for a review of such claim. If the claimant does not file a request for review of his claim within such 60-day period, the claimant shall be deemed to have acquiesced in the original decision of the Retirement Board on his claim, the decision shall become final and the claimant will not be entitled to bring a civil action under Section 502(a) of ERISA. If such an appeal is so filed within such 60-day period, the Company (or its delegate) shall conduct a full and fair review of such claim. During such review, the claimant (or the claimant’s authorized representative) shall be given the opportunity to review all documents that are pertinent to his claim and to submit issues and comments in writing.

The Company shall mail or deliver to the claimant a written decision on the matter based on the facts and the pertinent provisions of the Plan within 60 days after the receipt of the request for review (unless special circumstances require an extension of up to 60 additional days, in which case written notice of such extension shall be given to the claimant prior to the commencement of such extension). Such decision shall be written in a manner calculated to be understood by the claimant, shall state the specific reasons for the decision and the specific Plan provisions on which the decision was based and shall, to the extent permitted by law, be final and binding on all interested persons. If the decision on review is not furnished to the claimant within the above-mentioned time period, the claim shall be deemed to have been denied on review.

6.3

Further Proceedings

If a Participant’s claim for benefits is denied in whole or in part, such Participant may file suit only in a state or federal court located in Allegheny County, Pennsylvania. Notwithstanding, before such Participant may file suit in a state or federal court, Participant must exhaust the Plan’s administrative claims procedures. If any such judicial or administrative proceeding is undertaken, the evidence presented will be strictly limited to the evidence timely presented to the Plan Administrator and the Company. In addition, any such judicial or administrative proceeding must be filed within 6 months after the Company’s final decision under section 6.2.

Article VII.—Miscellaneous

7.1

Withholding.

The Company and each Subsidiary shall have the right to withhold from any benefits payable under the Plan or other wages payable to a Participant an amount sufficient to satisfy all federal, state and local tax withholding requirements, if any, arising from or in connection with the Participant’s receipt or vesting of benefits under the Plan.

7.2

No Guarantee of Employment.

Nothing in this Plan shall be construed as guaranteeing future employment to any Participant. Without limiting the generality of the preceding sentence, except as otherwise set forth in a written agreement, a Participant continues to be an employee of the Company or a Subsidiary, as applicable, solely at the will of the Company or such Subsidiary, as applicable, subject to discharge at any time, with or without cause. The benefits provided for herein for a Participant shall not be deemed to modify, affect or limit any salary or salary increases, bonuses, profit sharing or any other type of compensation of a Participant in any manner whatsoever. Nothing contained in this Plan shall affect the right of a Participant to participate in or be covered by or under any qualified or nonqualified pension, profit sharing, group, bonus or other supplemental compensation, retirement or fringe benefit Plan constituting any part of the Company’s or applicable Subsidiary’s compensation structure whether now or hereinafter existing.

7.3

Payment to Guardian.

If a benefit payable hereunder is payable to a minor, to a person declared incompetent or to a person incapable of handling the disposition of his property, the Retirement Board may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or person. The Retirement Board may require such proof of incompetence, minority, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Plan, the Company and each Subsidiary from all liability with respect to such benefit.

7.4

Assignment.

No right or interest under this Plan of any Participant or Beneficiary shall be assignable or transferable in any manner or be subject to alienation, anticipation, sale, pledge, encumbrance or other legal process or in any manner be liable for or subject to the debts or liabilities of the Participant or Beneficiary.

7.5

Severability.

If any provision of this Plan or the application thereof to any circumstance(s) or person(s) is held to be invalid by a court of competent jurisdiction, the remainder of the Plan and the application of such provision to other circumstances or persons shall not be affected thereby.

7.6

Amendment and Termination.

(a) The Company may at any time (without the consent of any Participant) modify, amend or terminate any or all of the provisions of this Plan; provided, however, that no modification, amendment or termination of this Plan shall adversely affect the rights of a Participant under the Plan without the consent of such Participant. Notwithstanding the foregoing or any provision of the Plan to the contrary, the Company may at any time (in its sole discretion and without the consent of any Participant) modify, amend or terminate any or all of the provisions of this Plan or take any other action, to the extent necessary or advisable to conform the provisions of the Plan with Section 409A of the Code, the regulations issued thereunder or an exception thereto, regardless of whether such modification, amendment or termination of this Plan or other action shall adversely affect the rights of a Participant under the Plan. Termination of this Plan shall not be a distribution event under the Plan unless otherwise permitted under Section 409A.

(b) Without limiting the generality of subsection (a), the Vice President—Human Resources of the Company, subject to the consent of the President of the Company, may amend, modify or restate the Plan to: (i) effectuate compliance with legal requirements or changes in applicable laws or regulations (including 409A as set forth above in subsection (a)); and (ii) effectuate other changes which the Vice President—Human Resources believes to be desirable, including, but not limited to, amendments to facilitate the proper and efficient management and administration of the Plan; provided , that except for amendments to the Plan to effectuate compliance with legal requirements or changes in applicable laws or regulations, no amendments shall be made by the Vice

President - Human Resources pursuant to this authority which would materially increase or decrease benefits, or which would materially increase the costs of such Plans, including the cost of maintenance or administration.

7.7

Exculpation and Indemnification

The Company shall indemnify and hold harmless the members of the Committee and the Retirement Board from and against any and all liabilities, costs and expenses incurred by such persons as a result of any act, or omission to act, in connection with the performance of such person’s duties, responsibilities and obligations under the Plan, other than such liabilities, costs and expenses as may result from the gross negligence, willful misconduct, and/or criminal acts of such persons.

7.8

Leave of Absence.

The Company may, in its sole discretion, permit a Participant to take a leave of absence for a period not to exceed 12 months. Any such leave of absence must be approved by the Company. During this time, the Participant will still be considered to be in the employ of the Company for purposes of this Plan.

7.9

Gender and Number.

For purposes of interpreting the provisions of this Plan, the masculine gender shall be deemed to include the feminine, the feminine gender shall be deemed to include the masculine, and the singular shall include the plural unless otherwise clearly required by the context.

7.10

Governing Law.

Except as otherwise preempted by the laws of the United States, this Plan shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to its conflict of law provisions.

Article VIII - SUMMARY INFORMATION

Name of Plan : The name of the plan under which benefits are provided is the CONSOL Energy Inc. Supplemental Retirement Plan

Plan Sponsor : The Sponsor of the Plan is:

CONSOL Energy Inc.

Consol Plaza - 1800 Washington Road

Pittsburgh, PA 15241

Telephone: 412-831-4000

Plan Administrator : The Plan Administrator of the Plan is:

Retirement Board

CONSOL Energy Inc.

Consol Plaza - 1800 Washington Road

Pittsburgh, PA 15241

Telephone: 412-831-4000

Employer Identification Number and Plan Number : The Employer Identification Number (EIN) assigned to the Plan Sponsor by the Internal Revenue Service is 51-0337383.

Type of Plan : Nonqualified deferred compensation plan (top hat).

Type of Administration : The Plan is self-administered.

Funding : Benefits payable under the Plan are provided from the general assets of the Company.

Agent for Service of Legal Process : For disputes arising under the Plan, service of legal process may be made upon the General Counsel of Plan Sponsor.

Plan Year : The Plan’s fiscal records are kept on a calendar year basis (January 1 to December 31.

APPENDIX A

Retirement Scenarios Under the SERP

EMPLOYMENT

HISTORY

Example 1

Example 2

Example 3

Example 4

Example 5

Years (Status)

15 (103)

5 (103)

12 (103)

5 (103)

Years (Status)

5 (104)

2 (104)

5 (104)

14 (104)

Years (Status)

10 (103)

3 (103)

5 (separation)

1(103)

Years (Status )

3(104)

10 (104)

Separation from Service

SERP CALCULATED AS FOLLOWS:

Service Fraction:

20/20

10/20

20/20

19/20

Final Average Pay as of:

Separation
from Service

Frozen as of
Final month
as a (104)

Separation from
Service

Final Separation
from Service

Frozen as of
Final month as
a (104)

Exhibit 12

Computation of Ratio of Earnings to Fixed Charges

(In thousands)


	Twelve Months Ended December 31,
	2007			2006			2005			2004		2003
Earnings:
Income from continuing operations before income taxes	$	428,957		$	550,920		$	654,684		$	82,563	$	(33,507	)
Fixed charges, as shown below		61,336			50,227			42,979			49,349		47,845
Equity in income of investees		(6,551	)		(1,201	)		(2,850	)		4,317		8,851
Minority Interest – Gas		(25,038	)		(29,608	)		(9,484	)		—		—

Adjusted Earnings (Loss)	$	458,704		$	570,338		$	685,329		$	136,229	$	23,189	⁽¹⁾

Fixed charges:
Interest on indebtedness, expensed or capitalized	$	45,414		$	35,818		$	31,903		$	40,180	$	41,212
Interest within rent expense		15,922			14,409			11,076			9,169		6,633

Total Fixed Charges	$	61,336		$	50,227		$	42,979		$	49,349	$	47,845	⁽¹⁾

Ratio of Earnings to Fixed Charges		7.48			11.36			15.95			2.76		—

(1)	The deficiency of earnings to cover fixed charges was $24,656 for the year period ended December 31, 2003.

Exhibit 21

CONSOL Energy Inc.

CORPORATE DIRECTORY

As of January 31, 2008

(In alphabetical order reflecting correct capitalization)


AMVEST Coal & Rail, LLC.		Fairmont Supply Company
AMVEST Coal Sales, Inc.		Fola Coal Company, LLC.
AMVEST Corporation		FutureGen Industrial Alliance, Inc.
AMVEST Gas Resources, Inc.		Glamorgan Coal Company, LLC.
AMVEST Mineral Services, Inc.		Harrison Resources, LLC
AMVEST Minerals Company, LLC.		Helvetia Coal Company
AMVEST Oil & Gas, Inc.		Island Creek Coal Company
AMVEST West Virginia Coal, LLC.		Keystone Coal Mining Corporation
Braxton-Clay Land & Mineral, Inc.		Knox Energy, LLC.
Buchanan Generation, LLC		Laurel Run Mining Company
Cardinal States Gathering Company		Leatherwood, Inc.
Cargo Dockers Ltd.		Little Eagle Coal Company, LLC.
Central Ohio Coal Company		McElroy Coal Company
CNX Funding Corporation		Mon River Towing, Inc.
CNX Gas Company LLC		Mon-View, LLC
CNX Gas Corporation		MTB, Inc.
CNX Land Resources Inc.		Nicholas-Clay Land & Mineral, Inc.
CNX Marine Terminals Inc. (formerly Consolidation Coal Sales		Peters Creek Mineral Services, Inc.
Company)		Piping and Equipment, Inc.
Coalfield Pipeline Company		Reserve Coal Properties Company
Conrhein Coal Company		Rochester & Pittsburgh Coal Company
CONSOL Docks Inc.		Southern Ohio Coal Company
CONSOL Energy Canada Ltd.		Southern West Virginia Energy, LLC
CONSOL Energy Inc.		Southern West Virginia Resources, LLC
CONSOL Energy Sales Company (formerly CONSOL Sales		Supply Chain Management LLC
Company)		TEAGLE Company, LLC.
CONSOL Financial Inc.		TECPART Corporation
CONSOL Godefroid Europe S.A.		Terra Firma Company
CONSOL of Canada Inc.		Terry Eagle Coal Company, LLC.
CONSOL of Central Pennsylvania LLC		Terry Eagle Limited Partnership
CONSOL of Kentucky Inc.		Twin Rivers Towing Company
CONSOL of Ohio LLC		Vaughan Railroad Company
CONSOL of WV LLC		Western Allegheny Energy, LLC
CONSOL of Wyoming LLC		Windsor Coal Company
Consol Pennsylvania Coal Company LLC (formerly Consol		Wolfpen Knob Development Company
Pennsylvania Coal Company)		Youngs Creek Mining Company, LLC
Consolidation Coal Company
Eighty-Four Mining Company

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File No. 333-126057, File No. 333-126056, File No. 333-113973 and File No. 333-87545) of CONSOL Energy Inc. of our report dated February 18, 2008 relating to the financial statements, financial statement schedule, and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Pittsburgh, Pennsylvania

February 19, 2008

Exhibit 23.2

LOGO

CONSENT OF RALPH E. DAVIS ASSOCIATES, INC.

As independent petroleum engineers, we hereby consent to (a) the use of our reserve reports relating to the proved reserves of gas and oil (including coalbed methane) of CONSOL Energy Inc. as of December 31, 2004 and 2003, and (b) the references to us as experts, in each case, in (x) CONSOL Energy Inc.’s Annual Report on Form 10-K for the year ended December 31, 2007, and (y) all of CONSOL Energy Inc.’s current and future registration statements filed with the U.S. Securities and Exchange Commission (including all pre-effective and post-effective amendments thereto), including without limitation Registration Statements on Form S-8 (file no. 333-126057, file no. 333-126056, file no. 333-113973 and file no. 333-87545), Form S-3 and Form S-4, that incorporate by reference such Form 10-K.

We further wish to advise that we are not employed on a contingent basis and that at the time of the preparation of our report, as well as at present, neither Ralph E. Davis Associates, Inc. nor any of its employees had, or now has, a substantial interest in CONSOL Energy Inc. or any of its subsidiaries, as a holder of its securities, promoter, underwriter, voting trustee, director, officer or employee.


RALPH E. DAVIS ASSOCIATES, INC.

By:		/s/ Allen C. Barron, P.E.
		Allen C. Barron, P.E. President

Date: February 19, 2008

1717 St. James Place, Suite 460 Houston, Texas 77056

Office 713-622-8955 Fax 713-626-36642 www.ralphedavis.com

Worldwide Energy Consultants Since 1924

Exhibit 23.3

Data & Consulting Services

Division of Schlumberger Technology Corporation

1310 Commerce Drive

Park Ridge 1

Pittsburgh, PA 15275-1011

Tel: 412-787-5403

Fax: 412-787-2906

CONSENT OF DATA & CONSULTING SERVICES DIVISION OF SCHLUMBERGER TECHNOLOGY CORPORATION

As independent petroleum engineers, we hereby consent to (a) the use of our reserve reports relating to the proved reserves of gas and oil (including coalbed methane) of CONSOL Energy Inc. as of December 31, 2007, 2006, 2005, 2004, and 2003 and as of March 31, 2005, and (b) the references to us as experts, in each case, in (x) CONSOL Energy Inc.’s Annual Report on Form 10-K for the year ended December 31, 2007, and (y) all of CONSOL Energy Inc.’s current and future registration statements filed with the U.S. Securities and Exchange Commission (including all pre-effective and post-effective amendments thereto), including without limitation Registration Statements on Form S-8 (file no. 333-126057, file no. 333-126056, file no. 333-113973 and file no. 333-87545), Form S-3 and Form S-4, that incorporate by reference such Form 10-K.

We further wish to advise that we are not employed on a contingent basis and that at the time of the preparation of our report, as well as at present, neither Data & Consulting Services Division of Schlumberger Technology Corporation nor any of its employees had, or now has, a substantial interest in CONSOL Energy Inc. or any of its subsidiaries, as a holder of its securities, promoter, underwriter, voting trustee, director, officer or employee.

DATA & CONSULTING SERVICES

DIVISION OF SCHLUMBERGER TECHNOLOGY CORPORATION

By:

/s/ Charles M. Boyer II

Charles M. Boyer II, PG

Operations Manager

Date: February 19, 2008

Exhibit 31.1

CERTIFICATIONS

I, J. Brett Harvey, certify that:

(1) I have reviewed this annual report on Form 10-K of CONSOL Energy Inc.;

(2) Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

(3) Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange of Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and

d. Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 19, 2008

/s/ J. B RETT H ARVEY

J. Brett Harvey

President, Chief Executive Officer and Director

Exhibit 31.2

CERTIFICATIONS

I, William J. Lyons, certify that:

(1) I have reviewed this annual report on Form 10-K of CONSOL Energy Inc.;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 19, 2008

/s/ W ILLIAM J. L YONS

William J. Lyons

Chief Financial Officer and Executive Vice President

Exhibit 32.1

CERTIFICATIONS

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,

18 U.S.C. Section 1350

I, J. Brett Harvey, President and Chief Executive Officer (principal executive officer) of CONSOL Energy Inc. (the “Registrant”), certify that to my knowledge, based upon a review of the Annual Report on Form 10-K for the period ended December 31, 2007, of the Registrant (the “Report”):

(i) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: February 19, 2008

/s/ J. B RETT H ARVEY

J. Brett Harvey

President, Chief Executive Officer and Director

Exhibit 32.2

CERTIFICATIONS

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,

18 U.S.C. Section 1350

I, William J. Lyons, Chief Financial Officer (principal financial officer) of CONSOL Energy Inc. (the “Registrant”), certify that to my knowledge, based upon a review of the Annual Report on Form 10-K for the period ended December 31, 2007, of the Registrant (the “Report”):

(i) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: February 19, 2008

/s/ W ILLIAM J. L YONS

William J. Lyons

Chief Financial Officer and Executive Vice President