COST: 85 $MM
VOLUMES: 54 Mmcfe/d
COST: 265 $MM
COST: 88.8 $MM
PITTSBURGH, Jan. 28, 2021 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or "the company") today released financial and operational results for the fourth quarter and full fiscal year 2020 by posting those results on its website as detailed below.
Fourth quarter earnings results and supplemental information regarding quarterly E&P data such as production volumes and hedging information, financial statements, and non-GAAP reconciliations can be accessed by clicking here.
A company presentation to accompany the CNX earnings conference call can be accessed by clicking here.
The company earnings results and supplemental information, and presentation materials are also available on the Investor Relations page of the company's website at www.cnx.com.
As previously disclosed, the CNX earnings conference call details are as follows:
A brief Q&A session for securities analysts will immediately follow the discussion. A replay of the conference call and webcast will be maintained on the Investor Relations page on CNX's website.
About CNX
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
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SOURCE CNX Resources Corporation
PITTSBURGH, Nov. 30, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced the closing of its private placement of $500.0 million aggregate principal amount of its 6.00% senior notes due 2029 (the "Notes"). The Notes were offered under an indenture, dated November 30, 2020 (the "Indenture"), among CNX, the subsidiary guarantors party thereto and UMB Bank, N.A., as trustee. The Notes are guaranteed by all of CNX's wholly-owned domestic restricted subsidiaries that guarantee its revolving credit facility.
CNX intends to use the net proceeds of the sale of the Notes for general corporate purposes, including to repay existing indebtedness under CNX's revolving credit facility.
The Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.
This press release does not and shall not constitute an offer to sell or the solicitation of an offer to buy any notes, nor shall there be any offer, solicitation or sale of notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The offering may be made only by means of an offering memorandum.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index.
Cautionary Statements:
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Without limiting the generality of the foregoing, forward-looking statements contained in this communication specifically include statements regarding the terms of the Notes, the size of the offering, and the expected use of proceeds from the sale of the Notes. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q for the three months ended March 31, 2020, June 30, 2020 and September 30, 2020, in each case, as filed with the Securities and Exchange Commission, and any subsequent reports filed with the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, Nov. 24, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced the pricing of $500 million of its 6.00% senior notes due 2029 (the "Notes"). The offering is expected to close on November 30, 2020, subject to the satisfaction of customary closing conditions. The Notes will be guaranteed by all of CNX's wholly-owned domestic restricted subsidiaries that guarantee its revolving credit facility.
CNX intends to use the net proceeds of the sale of the Notes for general corporate purposes, including to repay existing indebtedness under CNX's revolving credit facility.
Upon the closing of the offering and the use of proceeds therefrom, CNX anticipates having no maturities of indebtedness through 2025 other than CNX's credit facility, under which less than $186 million (or approximately 10% of the upstream borrowing capacity) will be drawn, and CNX Midstream Partners LP's credit facility (which CNX does not guarantee). CNX continues to anticipate using future free cash flow to repay indebtedness to target a leverage ratio of 1.5 to 1.0 and for share repurchases.
The Notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.
This press release does not and shall not constitute an offer to sell or the solicitation of an offer to buy any notes, nor shall there be any offer, solicitation or sale of notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The offering may be made only by means of an offering memorandum.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index.
Cautionary Statements:
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Without limiting the generality of the foregoing, forward-looking statements contained in this communication specifically include statements regarding the proposed terms of the Notes, the size of the proposed offering, the expected use of proceeds from the sale of the Notes and the anticipated effect of the offering of the Notes on the Company's future performance. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q for the three months ended March 31, 2020, June 30, 2020, and September 30, 2020, in each case, as filed with the Securities and Exchange Commission, and any subsequent reports filed with the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, Nov. 24, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced that it intends, subject to market and other conditions, to offer and sell to eligible purchasers $400.0 million of senior notes due 2029 (the "Notes"). The Notes will be guaranteed by all of CNX's wholly-owned domestic restricted subsidiaries that guarantee its revolving credit facility. CNX intends to use the net proceeds of the sale of the Notes for general corporate purposes, including to repay existing indebtedness under CNX's revolving credit facility.
The Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.
This press release does not and shall not constitute an offer to sell or the solicitation of an offer to buy any notes, nor shall there be any offer, solicitation or sale of notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The offering may be made only by means of an offering memorandum.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index.
Cautionary Statements:
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Without limiting the generality of the foregoing, forward-looking statements contained in this communication specifically include statements regarding the proposed terms of the Notes, the size of the proposed offering, and the expected use of proceeds from the sale of the Notes. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q for the three months ended March 31, 2020, June 30, 2020, and September 30, 2020, in each case, as filed with the Securities and Exchange Commission, and any subsequent reports filed with the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, Oct. 29, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or "the company") today released financial and operational results for the third quarter 2020 by posting those results on its website as detailed below.
Third quarter earnings results and supplemental information regarding quarterly E&P data such as production volumes and hedging information, financial statements, and non-GAAP reconciliations can be accessed by clicking here.
A company presentation to accompany the CNX earnings conference call can be accessed by clicking here.
The company earnings results and supplemental information, and presentation materials are also available on the Investor Relations page of the company's website at www.cnx.com.
As previously disclosed, the CNX earnings conference call details are as follows:
A brief Q&A session for securities analysts will immediately follow the discussion. A replay of the conference call and webcast will be maintained on the Investor Relations page on CNX's website.
About CNX
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
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SOURCE CNX Resources Corporation
PITTSBURGH, Oct. 15, 2020 /PRNewswire/ -- CNX Resources Corp. (NYSE: CNX) will announce its financial results for Q3 2020 at 6:45 a.m. Eastern Time on Thursday, October 29. At that time, CNX will issue a brief press release containing a link to presentation materials providing a Q3 2020 update, which will be available on CNX's Investor Relations website. This release will be followed by a conference call and webcast.
Conference Call Information
CNX Resources (NYSE: CNX)
A replay of the conference call and webcast will be maintained on the Investor Relations page on CNX's website.
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
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SOURCE CNX Resources Corporation
PITTSBURGH, Oct. 5, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) announced today that it has released an updated investor presentation and accompanying video featuring CEO Nick DeIuliis and CFO Don Rush.
Watch the video by clicking here.
Access the presentation by clicking here.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Forward-Looking Statements
All statements in this release and the referenced video and presentation (and oral statements made regarding the subjects of this communication, including those in the referenced video), including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended (the "Securities Act")). These forward looking statements involve risks and uncertainties that could cause actual results to differ materially from projected results, including those referenced in the above noted communications. Without limiting the generality of the foregoing, forward-looking statements contained or referenced in this communication include statements relying on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside the control of CNX, which could cause actual results to differ materially from such statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include, but are not limited to, statements regarding: the expected future performance of the company; the company's generation and anticipated use of free cash flow, including any tax refund proceeds; and plans and objectives of management for future operations. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "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. While CNX believes that the assumptions concerning future events are reasonable, they caution that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of their businesses.
Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: the failure to realize the anticipated costs savings, synergies and other benefits of our completed merger with CNX Midstream Partners LP; local, regional and national economic conditions and the impact they may have on CNX and its customers; the impact of outbreaks of communicable diseases, such as the novel COVID-19 virus, on business activity, the Company's operations and national and global economic conditions, generally; conditions in the oil and gas industry, including an overabundance in the level of supply of, or sustained decrease in demand for or price of, oil or natural gas; the financial condition of CNX's customers; any non-performance by customers of their contractual obligations; changes in safety, health, environmental and other regulations; the results of any reviews, investigations or other proceedings by government authorities; and the performance of CNX.
The forward-looking statements in this release and the referenced presentation and video speak only as of the date of this release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019, and Quarterly Reports on Form 10-Q for the three month periods ended March 31, 2020 and June 30, 2020, as filed with the Securities and Exchange Commission (the "SEC"), and any subsequent reports filed with the SEC.
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SOURCE CNX Resources Corporation
PITTSBURGH, Sept. 28, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") and CNX Midstream Partners LP (NYSE: CNXM) ("CNX Midstream" or the "Partnership") today announced that CNX has completed the acquisition of all of the outstanding common units of CNX Midstream ("CNX Midstream common units") that it did not already own. As a result of the transaction, CNX Midstream common units have been suspended from trading on the New York Stock Exchange.
About CNX Resources and CNX Midstream
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com. CNX is the parent company of CNX Midstream, a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. CNX Midstream's assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on CNX Midstream's website www.cnxmidstream.com.
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Without limiting the generality of the foregoing, forward-looking statements contained in this communication include statements relying on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside the control of CNX and CNX Midstream, which could cause actual results to differ materially from such statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include, but are not limited to, statements regarding the expected future performance of CNX; CNX's anticipated use of tax refund proceeds; and plans and objectives of management for future operations. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "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.
While CNX and CNX Midstream believe that the assumptions concerning future events are reasonable, they caution that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of their businesses. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: the failure to realize the anticipated costs savings, synergies and other benefits of the transaction; the possible diversion of management time on transaction-related issues; local, regional and national economic conditions and the impact they may have on CNX, CNX Midstream and their customers; the impact of outbreaks of communicable diseases such as the novel highly transmissible and pathogenic coronavirus (COVID-19) on business activity, CNX's and CNXM's operations and national and global economic conditions, generally; conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for oil or natural gas or a sustained decrease in the price of oil or natural gas; the financial condition of CNX's or CNX Midstream's customers; any non-performance by customers of their contractual obligations; changes in customer, employee or supplier relationships resulting from the transaction; changes in safety, health, environmental and other regulations; the results of any reviews, investigations or other proceedings by government authorities; and the performance of CNX Midstream.
The forward-looking statements in this release speak only as of the date of this release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019, and Quarterly Reports on Form 10-Q for the three month periods ended March 31, 2020 and June 30, 2020, and CNX Midstream's Annual Report on Form 10-K for the year ended December 31, 2019, and Quarterly Reports on Form 10-Q for the three month periods ended March 31, 2020 and June 30, 2020, each filed with the Securities and Exchange Commission (the "SEC"), and any subsequent reports filed with the SEC.
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SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, Sept. 22, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced the closing of its private placement of $200.0 million aggregate principal amount of its 7.250% senior notes due 2027 (the "New Notes") at a price of 103.5% of par with an effective yield of 6.34%. The New Notes were offered as additional notes under an indenture, dated March 14, 2019 (the "Indenture"), pursuant to which CNX previously issued $500.0 million aggregate principal amount of 7.250% senior notes due 2027 (the "Initial Notes"). The New Notes are guaranteed by all of CNX's wholly-owned domestic restricted subsidiaries that guarantee its revolving credit facility and have identical terms as the Initial Notes, other than the issue date, and the New Notes and the Initial Notes will be treated as a single class of securities under the Indenture.
CNX intends to use the net proceeds of the sale of the New Notes, together with borrowings under its revolving credit facility, to redeem all of its outstanding 5.875% senior notes due 2022 (the "2022 Notes"), eliminating any senior note maturities prior to 2026.
The New Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The New Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.
This press release does not and shall not constitute an offer to sell or the solicitation of an offer to buy any notes, nor shall there be any offer, solicitation or sale of notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The offering may be made only by means of an offering memorandum. This press release does not and shall not constitute a notice of redemption under the optional redemption provisions of the indenture governing the 2022 Notes.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index.
Cautionary Statements:
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Without limiting the generality of the foregoing, forward-looking statements contained in this communication specifically include statements regarding the terms of the New Notes, the size of the offering, and the expected use of proceeds from the sale of the New Notes. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q for the three months ended March 31, 2020 and June 30, 2020, in each case, as filed with the Securities and Exchange Commission, and any subsequent reports filed with the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
DALLAS, Sept. 18, 2020 /PRNewswire/ -- Cushing® Asset Management, LP, and Swank Capital, LLC, announce an upcoming interim change to the constituents of The Cushing® 30 MLP Index (the "Index"). On July 26, 2020, Index constituent CNX Midstream Partners LP (NYSE: CNXM) entered into an Agreement and Plan of Merger ("Merger Agreement") with CNX Resources Corporation (NYSE: CNX) and affiliated companies that would result in CNXM common units ceasing to be publicly traded, subject to the approval of the holders of CNXM common units and Class B units. Entities representing a majority of CNXM common units and Class B units have agreed to deliver written consents approving the Merger Agreement within the unitholder consent period, which may terminate as early as September 25, 2020. Per the Index's methodology guide, this event will result in a constituent replacement. Accordingly, after the market closes on September 25, 2020, and effective on September 28, 2020, Equitrans Midstream Corporation (NYSE: ETRN) will replace CNXM as a constituent of the Index at CNXM's then-current weight.
There will be no changes to the remaining constituents of the Index due to this event.
ABOUT THE CUSHING® 30 MLP INDEX
The Cushing® 30 MLP Index tracks the performance of 30 publicly traded midstream energy infrastructure companies, including master limited partnerships (MLPs) and non-MLP energy midstream corporations (each, a "Midstream Company" and collectively, "Midstream Companies"). Constituents of the Index are selected by using a formula-based proprietary valuation model developed by Cushing® Asset Management, LP to rank Midstream Companies for potential inclusion in the Index. The Index price level is calculated by S&P Dow Jones Indices and reported on a real-time basis under the Bloomberg ticker "MLPX".
ABOUT CUSHING® ASSET MANAGEMENT AND SWANK CAPITAL
Cushing® Asset Management, LP ("Cushing"), a subsidiary of Swank Capital, LLC, is an SEC-registered investment adviser headquartered in Dallas, Texas. Cushing serves as investment adviser to affiliated funds and managed accounts, providing active management in markets where inefficiencies exist.
Cushing is also dedicated to serving the needs of MLP and energy income investors by sponsoring a variety of industry benchmarks, including The Cushing® MLP Market Cap Index (Bloomberg Ticker: CMCI) and The Cushing® MLP High Income Index (Bloomberg Ticker: MLPY). For more information, please visit http://www.cushingasset.com/indices.
Contact:
Jon Abel
214-692-6334
www.cushingasset.com
The Cushing® 30 MLP Index (the "Index") is the exclusive property of Swank Capital, LLC, and Cushing Asset Management, LP, which have contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) ("S&P Dow Jones Indices") to calculate and maintain the Index. S&P® is a registered trademark of Standard & Poor's Financial Services LLC ("SPFS"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and, these trademarks have been licensed to S&P Dow Jones Indices. "Calculated by S&P Dow Jones Indices" and its related stylized mark(s) have been licensed for use by Swank Capital, LLC, and Cushing Asset Management, LP. Neither S&P Dow Jones Indices, SPFS, Dow Jones nor any of their affiliates sponsor and promote the Index and none shall be liable for any errors or omissions in calculating the Index.
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SOURCE Cushing® Asset Management, LP and Swank Capital, LLC
PITTSBURGH, Sept. 8, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced the pricing of $200.0 million aggregate principal amount of its 7.250% senior notes due 2027 (the "New Notes") at a price of 103.5% of par with an effetive yield of 6.34%. The New Notes are being offered as additional notes under an indenture, dated March 14, 2019 (the "Indenture"), pursuant to which CNX previously issued $500.0 million aggregate principal amount of 7.250% senior notes due 2027 (the "Initial Notes"). The offering is expected to close on September 22, 2020, subject to the satisfaction of customary closing conditions. The New Notes will be guaranteed by all of CNX's wholly-owned domestic restricted subsidiaries that guarantee its revolving credit facility and have identical terms as the Initial Notes, other than the issue date, and the New Notes and the Initial Notes will be treated as a single class of securities under the Indenture.
CNX estimates that the net proceeds from the offering will be approximately $204.0 million after deducting the initial purchasers' discount and estimated offering expenses payable by CNX. CNX intends to use the net proceeds of the sale of the New Notes, together with borrowings under its revolving credit facility, to redeem, conditioned upon closing of the offering of the New Notes, all of its outstanding 5.875% senior notes due 2022 (the "2022 Notes"), eliminating any senior note maturities prior to 2026.
The New Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The New Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.
This press release does not and shall not constitute an offer to sell or the solicitation of an offer to buy any notes, nor shall there be any offer, solicitation or sale of notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The offering may be made only by means of an offering memorandum. This press release does not and shall not constitute a notice of redemption under the optional redemption provisions of the indenture governing the 2022 Notes.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index.
Cautionary Statements:
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Without limiting the generality of the foregoing, forward-looking statements contained in this communication specifically include statements regarding the proposed terms of the New Notes, the size of the proposed offering, and the expected use of proceeds from the sale of the New Notes. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q for the three months ended March 31, 2020 and June 30, 2020, in each case, as filed with the Securities and Exchange Commission, and any subsequent reports filed with the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, Sept. 8, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced that it has issued a conditional notice (the "Redemption Notice") to holders of its outstanding 5.875% Senior Notes due 2022 (the "2022 Notes") of CNX's intent to redeem all of its outstanding 2022 Notes on or around October 8, 2020 (the "Redemption Date"). The redemption is conditioned upon the consummation by CNX of an issuance of $200.0 million aggregate principal amount (or such other amount as determined by CNX in its sole discretion) of its 7.250% Senior Notes due 2027. This announcement does not form part of the Redemption Notice or otherwise constitute a notice of redemption with respect to the 2022 Notes.
The redemption price for the 2022 Notes is 100.000% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the Redemption Date. Following the redemption, CNX will not have any senior note maturities prior to 2026.
Additional information concerning the terms and conditions of the redemption are fully described in the Redemption Notice distributed to the holders of the 2022 Notes. Beneficial holders with any questions about the redemption should contact their respective brokerage firm or financial institution.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index.
Cautionary Statements:
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q for the three months ended March 31, 2020 and June 30, 2020, in each case, as filed with the Securities and Exchange Commission, and any subsequent reports filed with the Securities and Exchange Commission.|
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SOURCE CNX Resources Corporation
PITTSBURGH, Sept. 8, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced that it intends, subject to market and other conditions, to offer and sell to eligible purchasers $200.0 million aggregate principal amount of 7.250% senior notes due 2027 (the "New Notes"). The New Notes are being offered as additional notes under an indenture, dated March 14, 2019 (the "Indenture"), pursuant to which CNX previously issued $500.0 million aggregate principal amount of 7.250% senior notes due 2027 (the "Initial Notes"). The New Notes will be guaranteed by all of CNX's wholly-owned domestic restricted subsidiaries that guarantee its revolving credit facility and have identical terms as the Initial Notes, other than the issue date, and the New Notes and the Initial Notes will be treated as a single class of securities under the Indenture. CNX intends to use the net proceeds of the sale of the Notes, together with additional borrowings under its revolving credit facility, to redeem, conditioned upon closing of the offering of the New Notes, all of its outstanding 5.875% senior notes due 2022 (the "2022 Notes"), eliminating any senior note maturities prior to 2026.
The New Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The New Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.
This press release does not and shall not constitute an offer to sell or the solicitation of an offer to buy any notes, nor shall there be any offer, solicitation or sale of notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The offering may be made only by means of an offering memorandum. This press release does not and shall not constitute a notice of redemption under the optional redemption provisions of the indenture governing the 2022 Notes.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index.
Cautionary Statements:
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Without limiting the generality of the foregoing, forward-looking statements contained in this communication specifically include statements regarding the proposed terms of the New Notes, the size of the proposed offering, and the expected use of proceeds from the sale of the New Notes. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q for the three months ended March 31, 2020 and June 30, 2020, in each case, as filed with the Securities and Exchange Commission, and any subsequent reports filed with the Securities and Exchange Commission.|
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SOURCE CNX Resources Corporation
PITTSBURGH, Sept. 8, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or the "company") today announced the following updates:
CNX continues to execute on its commitment to generate long-term intrinsic value per share by generating free cash flow (FCF) per share on a regular basis and reducing its outstanding debt to further strengthen its balance sheet. The following is an update of key drivers in that effort.
Chief Financial Officer Don Rush stated, "These positive developments support the company's continued focus on its unique free cash flow generation plan. Our previously released 7-year plan highlighted our ability to generate over $3.3 billion of free cash flow and creates a non-replicable, best-in-class investment opportunity as we continue to build long-term intrinsic value, and today's announcement demonstrates our continued execution of that plan. While our near-term free cash flow allocation plan will continue to focus on debt reduction until we achieve a 1.5x leverage ratio, we are continuously evaluating our future capital allocation options, including direct shareholder returns in the form of buy backs and dividends, accelerating future development and/or other strategic plans that create value for our shareholders. Our uniquely-positioned company provides the opportunity to create consistent, robust value for our shareholders year after year."
(a) CNX is unable to provide a reconciliation of projected financial results contained in this release, including FCF and EBITDAX to their respective comparable financial measure calculated in accordance with GAAP. This is due to our inability to calculate the comparable GAAP projected metrics, including operating income, given the unknown effect, timing, and potential significance of certain income statement items.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Forward-Looking Statements
All statements in this release (and oral statements made regarding the subjects of this communication), including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended (the "Securities Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Without limiting the generality of the foregoing, forward-looking statements contained in this communication include statements relying on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside the control of CNX and CNX Midstream Partners LP (the "Partnership"), which could cause actual results to differ materially from such statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include, but are not limited to, statements regarding: the expected future performance of the company; the company's anticipated use of tax refund proceeds; and plans and objectives of management for future operations. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "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. While CNX and the Partnership believe that the assumptions concerning future events are reasonable, they caution that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of their businesses. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: the failure to realize the anticipated costs savings, synergies and other benefits of the proposed transaction; the possible diversion of management time on transaction-related issues; the risk that the requisite approvals to complete the proposed transaction are not obtained; local, regional and national economic conditions and the impact they may have on CNX, the Partnership and their customers; the impact of outbreaks of communicable diseases such as the novel highly transmissible and pathogenic coronavirus (COVID-19) on business activity, the Company's operations and national and global economic conditions, generally; changes in tax laws that impact master limited partnerships; conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for oil or natural gas or a sustained decrease in the price of oil or natural gas; the financial condition of CNX's or the Partnership's customers; any non-performance by customers of their contractual obligations; changes in customer, employee or supplier relationships resulting from the proposed transaction; changes in safety, health, environmental and other regulations; the results of any reviews, investigations or other proceedings by government authorities; and the performance of CNX and the Partnership.
The forward-looking statements in this release speak only as of the date of this release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019, and Quarterly Reports on Form 10-Q for the three month periods ended March 31, 2020 and June 30, 2020, and the Partnership's Annual Report on Form 10-K for the year ended December 31, 2019, and Quarterly Reports on Form 10-Q for the three month periods ended March 31, 2020 and June 30, 2020, in each case, as filed with the Securities and Exchange Commission (the "SEC"), and any subsequent reports filed with the SEC.
No Offer or Solicitation
This release is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities pursuant to the proposed transaction or otherwise, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.
Additional Information and Where You Can Find It
In connection with the proposed transaction, CNX has filed a registration statement on Form S-4, including a consent statement/prospectus of CNX and the Partnership, with the SEC and the SEC declared that registration statement effective on August 28, 2020. INVESTORS AND SECURITY HOLDERS OF CNX AND THE PARTNERSHIP ARE ADVISED TO CAREFULLY READ THE REGISTRATION STATEMENT AND CONSENT STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION, THE PARTIES TO THE PROPOSED TRANSACTION AND THE RISKS ASSOCIATED WITH THE PROPOSED TRANSACTION. The consent statement/prospectus will have been sent to security holders of the Partnership in connection with the solicitation of consents from the Partnership's limited partners. Investors and security holders may obtain a free copy of the consent statement/prospectus and other relevant documents filed by CNX and the Partnership with the SEC from the SEC's website at www.sec.gov. Security holders and other interested parties are also be able to obtain, without charge, a copy of the consent statement/prospectus and other relevant documents from www.cnx.com under the tab "Investors" and then under the heading "SEC Filings.
Participants in the Solicitation Relating to the Merger
CNX, the Partnership and their respective directors, executive officers and certain other members of management may be deemed to be participants in the solicitation of consents in respect of the proposed transaction. Information about these persons is set forth in CNX's proxy statement relating to its 2020 Annual Meeting of Stockholders, which was filed with the SEC on March 24, 2020, and the Partnership's Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, 2019, which were filed with the SEC on February 10, 2020 and April 27, 2020, respectively, and subsequent statements of changes in beneficial ownership on file with the SEC. Security holders and investors may obtain additional information regarding the interests of such persons, which may be different than those of the respective companies' security holders generally, by reading the consent statement/prospectus and other relevant documents regarding the proposed transaction, which has been filed with the SEC.
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SOURCE CNX Resources Corporation
DALLAS, Sept. 3, 2020 /PRNewswire/ -- Rising Phoenix Royalties (RPR) announces a 100% natural gas mineral acquisition in the Marcellus Shale, Washington County, PA from a private seller. This acquisition is RPR's second Appalachian Basin transaction in 2020.
CNX Resources Corporation is the well site operator of the producing royalty interest RPR has acquired with its operations based in Appalachian Basin major shale formations. The corporation is one of the United States' most expansive natural gas exploration, production, and development companies with access to 8.43 trillion cubic feet equivalents of natural gas reserves.
"At Rising Phoenix Royalties, we strive to provide the highest possible value to our clients. We recognize the uniqueness of each acquisition and work with landowners, as well as industry professionals to understand their specific targets," says Janie Widman, Vice President of Rising Phoenix Royalties. "With all the changes we have endured this year, RPR has remained committed to providing valuable insight and opportunities to mineral owners."
In May 2020, RPR established Rising Fund IV, the company's fourth royalty fund. The offering was created for investors seeking alternative asset portfolio diversification. It follows a series of three other successful placements from RPR.
Rising Phoenix Royalties is proud to offer free evaluations on your mineral and royalties. Contact Janie Widman at 214.915.9288 or janie@risingphoenix.com.
About Rising Phoenix Royalties
Rising Phoenix Royalties, Dallas, TX, is a privately held independent mineral and royalty interest acquisition company built on four generations of oil and gas expertise. Since 2009, RPR has successfully identified, evaluated, acquired, and managed incoming producing properties of over $140 million in mineral and royalty assets in oil and gas basins nationwide. Learn more at www.risingphoenixroyalties.com.
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Contact:
Janie Widman, Vice President
Rising Phoenix Royalties
214-915-9288
janie@rising-phoenix.com
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SOURCE Rising Phoenix Royalties
PITTSBURGH, Aug. 5, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) today announced the release of its annual Corporate Responsibility Report. The report details Company execution against the Global Reporting Initiative (GRI) Core Option and outlines activities and initiatives undertaken during the past year toward the Company's comprehensive corporate responsibility goals.
CNX President and Chief Executive Officer Nick DeIuliis commented, "With a deepening focus on environmental, social, and governance (ESG) issues by external stakeholders, we continue to highlight the internal, proactive measures we have and continue to adopt that have propelled our status as one of the most innovative and responsible companies in the E&P space. The 2019 CRR builds on our belief that a steadfast, relentless commitment to best-in-class safety and environmental compliance increases efficiencies, reduces costs, improves margins, and, ultimately, drives long-term intrinsic value per share. We heavily favor measurable, tangible performance metrics over abstract, aspirational goals."
Following are key highlights included in the 2019 report:
To learn more, please visit: https://www.cnx.com/responsibility
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. With the benefit of a more than 150-year legacy and a substantial asset base amassed over many generations, the company deploys an organic growth strategy focused on responsibly developing its resources in order to create long term value for its shareholders, employees and the communities where it operates. As of December 31, 2019, CNX had 8.43 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
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SOURCE CNX Resources Corporation
PITTSBURGH, July 30, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or "the company") today announced the following financial and operational results:
Second Quarter Highlights
"The second quarter highlights our philosophy in action with lower quarterly production cash costs, positive free cash flow, a balance sheet strengthening convertible notes offering, and navigating a challenging commodity price environment by efficiently deferring volumes to higher price periods," commented Nicholas J. DeIuliis, president and CEO. "We remain committed to making capital allocation decisions to maximize the long-term intrinsic value per share of the company."
Mr. DeIuliis continued, "There are three main tenets that underlay our plan. First, we generate free cash flow on a day in, and day out basis. Our programmatic hedging helps drive our free cash flow generation and will continue to be a key tactic in the future. There are various other considerations that drive the free cash flow generation of the company such as low lease operating expense and low capital intensity; our blending strategy to avoid expensive processing fees; and our ability to reuse frac water to maintain a healthy water balance, to name a few. Second, we take the organic free cash flow that we generate and roll in a very modest amount of assets sales, which produce our cumulative free cash flow. Over our 7-year plan, we expect to generate over $3 billion of cumulative free cash flow(a), which leads to the third and last tenet: allocate that free cash flow into the right places at the right times. We are constantly evaluating redeploying capital back into the drill-bit, reducing debt, share buybacks, and M&A. We want to allocate capital to the right places, while maintaining great liquidity. Given the continued weakness in gas macro, our focus remains on debt reduction, which we feel is the best way to maximize the long-term intrinsic value per share of the company at this time."
(1) The Non-GAAP financial measures referenced throughout are defined and reconciled under the caption "Non-GAAP Financial Measures" below. |
Second Quarter Financial Results:
The following table represents certain non-GAAP financial measures used by the company:1
Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||||||||||||
(Dollars in millions, except per share data) | Stand-alone | % Increase/ | Consolidated | % Increase/ | ||||||||||||||||||
Adjusted Net (Loss) Income | $ | (7) | $ | 12 | (158.3) | % | $ | 24 | $ | 57 | (57.9) | % | ||||||||||
Adjusted EBITDAX | $ | 166 | $ | 175 | (5.1) | % | $ | 212 | $ | 222 | (4.5) | % | ||||||||||
Capital Expenditures2 | $ | 121 | $ | 226 | (46.5) | % | $ | 135 | $ | 329 | (59.0) | % |
1The Non-GAAP financial measures in the table above are defined and reconciled to GAAP net (loss) income, under the caption "Non-GAAP Financial Measures" below. |
2Capital expenditures exclude $14.0 million and $103.4 million of total capital investment net to CNX Midstream Partners LP ("CNXM") in the second quarter of 2020 and 2019, respectively, as reported in CNXM Second Quarter Results. |
Operations:
During the quarter, CNX used up to two horizontal rigs and drilled eight wells. The company currently has one rig in operation along with one frac crew. During the quarter, the company utilized one all-electric frac crew to complete 11 wells, which included eight Southwest Pennsylvania Marcellus Shale wells and three Monroe County, Ohio, Utica Shale wells. In the first quarter, CNX turned-in-line six wells.
During the quarter, volumes decreased due to the temporary shut-in of a portion of CNX's liquids-rich Shirley-Pennsboro production in May and June of 2020 in response to low NGL prices. Additionally, two new pads of dry gas turn-in-lines from April and May were temporarily shut-in May and June due to low natural gas prices. These decisions were made to take advantage of improved gas prices at the start of winter.
CNX's natural gas and liquids production in the quarter came from the following categories:
Quarter | Quarter | Quarter | |||||||
Ended | Ended | Ended | |||||||
6/30/2020 | 6/30/2019 | 3/31/2020 | |||||||
GAS | |||||||||
Marcellus Sales Volumes (Bcf) | 75.3 | 84.3 | 87.6 | ||||||
Utica Sales Volumes (Bcf) | 21.2 | 28.1 | 24.8 | ||||||
CBM Sales Volumes (Bcf) | 13.1 | 13.9 | 13.2 | ||||||
Other Sales Volumes (Bcf) | — | 0.1 | 0.1 | ||||||
LIQUIDS(1) | |||||||||
NGLs Sales Volumes (Bcfe) | 4.7 | 7.9 | 8.3 | ||||||
Oil Sales Volumes (Bcfe) | — | — | 0.1 | ||||||
Condensate Sales Volumes (Bcfe) | 0.2 | 0.2 | 0.3 | ||||||
TOTAL (Bcfe) | 114.5 | 134.5 | 134.4 | ||||||
Average Daily Production (MMcfe) | 1,258.3 | 1,477.6 | 1,476.5 |
1NGLs, Oil and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. |
The following table highlights operating cash margins and fully burdened cash margins:
Quarter | Quarter | |||||||
Ended | Ended | |||||||
(Per Mcfe) | June 30, 2020 | June 30, 2019 | ||||||
Average Sales Price - E&P | $ | 2.52 | $ | 2.63 | ||||
Total Production Cash Costs1 | 1.05 | 1.18 | ||||||
Operating Cash Margin | $ | 1.47 | $ | 1.45 | ||||
Operating Cash Margin (%) | 58 | % | 55 | % | ||||
Total Fully Burdened Cash Costs2 | $ | 1.75 | $ | 1.70 | ||||
Fully Burdened Cash Margin | $ | 0.77 | $ | 0.93 | ||||
Fully Burdened Cash Margin (%) | 31 | % | 35 | % |
1See the "Price and Cost Data Per Mcfe" table below for reconciliation to Total Production Costs. |
2Fully burdened cash costs include production cash costs, selling, general and administrative (SG&A) cash costs, other operating cash expense, other cash (income) expense, and interest expense. Q2 2020 and Q2 2019 total fully burdened cash costs exclude a gain on asset sales of $0.07 per Mcfe and $0.00 per Mcfe, respectively. Q2 2020 and Q2 2019 also excludes unrealized losses on interest rate swaps of $0.05 per Mcfe and $0.00 per Mcfe, respectively. |
PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison:
Quarter | Quarter | Quarter | ||||||||||
Ended | Ended | Ended | ||||||||||
(Per Mcfe) | June 30, 2020 | June 30, 2019 | March 31, 2020 | |||||||||
Average Sales Price - Gas | $ | 1.54 | $ | 2.51 | $ | 1.83 | ||||||
Average Gain on Commodity Derivative Instruments - Cash Settlement- Gas* | $ | 1.03 | $ | 0.08 | $ | 0.77 | ||||||
Average Sales Price - Oil** | $ | 5.15 | $ | 8.42 | $ | 7.87 | ||||||
Average Sales Price - NGLs** | $ | 1.31 | $ | 3.06 | $ | 2.34 | ||||||
Average Sales Price - Condensate** | $ | 4.20 | $ | 7.56 | $ | 6.28 | ||||||
Average Sales Price - E&P | $ | 2.52 | $ | 2.63 | $ | 2.59 | ||||||
Lease Operating Expense (LOE) | $ | 0.09 | $ | 0.15 | $ | 0.07 | ||||||
Production, Ad Valorem, and Other Fees | 0.05 | 0.05 | 0.05 | |||||||||
Transportation, Gathering and Compression | 0.91 | 0.98 | 0.99 | |||||||||
Depreciation, Depletion and Amortization (DD&A) | 0.87 | 0.89 | 0.87 | |||||||||
Total Production Costs | $ | 1.92 | $ | 2.07 | $ | 1.98 | ||||||
Total Production Cash Costs, before DD&A | $ | 1.05 | $ | 1.18 | $ | 1.11 | ||||||
Cash Margin, before DD&A | $ | 1.47 | $ | 1.45 | $ | 1.48 |
*Excluding gain from hedge monetization in Q2 2020 and Q1 2020. |
**NGLs, Oil, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. |
Note: "Total Production Costs" excludes Selling, General, and Administration and Other Operating Expenses. |
In the second quarter of 2020, total production costs were lower compared to the year-earlier quarter, due to improvements to LOE, transportation, gathering and compression, taxes, and DD&A. The primary driver to the improvement to LOE was a decrease in water disposal costs due to an increase in the reuse of produced water in well completions activity. The primary driver to improvement to transportation, gathering, and compression costs was due to the decline in processing fees due to a drier Marcellus production mix. The full commissioning of the Dry Ridge and Buckland compressor stations throughout the second half of 2019 allowed the majority of the gas produced from the Richhill Marcellus Shale field to avoid processing through blending.
Marketing:
Total hedged natural gas production in the 2020 third quarter is 88.9(1) Bcf. The annual gas hedge position is shown in the table below:
2020 | 2021 | ||||
Volumes Hedged (Bcf), as of 7/8/20 | 437.4(1)(2) | 454.1 |
1Net of purchased swaps. |
2Includes actual settlements of 254.0 Bcf. |
In April 2020, CNX monetized and terminated approximately 39 million MMBtus of NYMEX natural gas hedges and a similar quantity of financial basis hedges that were to settle at various times from May through November of 2020. In connection with these monetizations, CNX received $29 million of net proceeds. In addition, during the second quarter of 2020, CNX purchased financial swaps for May through November of 2020 under which CNX will pay a fixed price to and receive a floating price from its hedge counterparties. These moves gave CNX additional flexibility to move production to higher price periods while immediately taking the monetization proceeds.
CNX's hedged gas volumes include a combination of NYMEX financial hedges, index (NYMEX and basis) financial hedges, and physical fixed price sales. In addition, to protect the NYMEX hedge volumes from basis exposure, CNX enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CNX's gas hedge position through 2024 as of July 8, 2020, excluding the 2020 purchased swaps, is shown in the table immediately below.
Q3 2020 | 2020 | 2021 | 2022 | 2023 | 2024 | |||||||||||||||||||
NYMEX Only Hedges | ||||||||||||||||||||||||
Volumes (Bcf) | 100.2 | 447.3 | 413.6 | 271.7 | 142.6 | 145.4 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.90 | $ | 2.94 | $ | 2.94 | $ | 2.85 | $ | 2.81 | $ | 2.90 | ||||||||||||
Physical Fixed Price Sales and Index Hedges | ||||||||||||||||||||||||
Volumes (Bcf) | 2.8 | 12.4 | 22.3 | 14.2 | 27.7 | 11.0 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.44 | $ | 2.45 | $ | 2.51 | $ | 2.61 | $ | 2.17 | $ | 2.28 | ||||||||||||
Total Volumes Hedged (Bcf)1 | 103.0 | 459.7 | 435.9 | 285.9 | 170.3 | 156.4 | ||||||||||||||||||
NYMEX + Basis (fully-covered volumes)2 | ||||||||||||||||||||||||
Volumes (Bcf) | 103.0 | 459.7 | 435.9 | 285.9 | 170.3 | 156.4 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.47 | $ | 2.55 | $ | 2.46 | $ | 2.32 | $ | 2.25 | $ | 2.32 | ||||||||||||
NYMEX Only Hedges Exposed to Basis | ||||||||||||||||||||||||
Volumes (Bcf) | — | — | — | — | — | — | ||||||||||||||||||
Average Prices ($/Mcf) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Total Volumes Hedged (Bcf)1 | 103.0 | 459.7 | 435.9 | 285.9 | 170.3 | 156.4 |
1Excludes basis hedges in excess of NYMEX hedges in Q3 2020, 2020, 2021, 2022, 2023, and 2024 of 2.1 Bcf, 9.5 Bcf, 18.2 Bcf, 44.2 Bcf, 26.0 Bcf, and 19.1 Bcf, respectively. |
2Includes physical sales with fixed basis in Q3 2020, 2020, 2021, and 2022 of 19.4 Bcf, 85.2 Bcf, 74.2 Bcf, and 4.0 Bcf, respectively. |
During the second quarter of 2020, CNX added (sold) additional NYMEX natural gas swaps of 1.7 Bcf, 20.5 Bcf, 6.7 Bcf, 6.7 Bcf, 6.8 Bcf, and 0.9 Bcf for 2020, 2021, 2022, 2023, 2024, and 2025, respectively and additional index natural gas swaps of 1.0 Bcf and 0.8 Bcf for 2020 and 2021, respectively. To help mitigate basis exposure on NYMEX hedges, in the second quarter CNX added 3.1 Bcf, 11.7 Bcf, 28.6 Bcf, 25.2 Bcf, 25.5 Bcf, and 6.8 Bcf of basis hedges for 2020, 2021, 2022, 2023, 2024, and 2025, respectively.
Finance:
At June 30, 2020, CNX's Stand-alone net debt to trailing-twelve-months (TTM) adjusted Stand-alone EBITDAX (including distributions from CNXM) (a non-GAAP measure)(1) was 2.3x. On a consolidated basis, CNX's net debt to TTM adjusted EBITDAX (a non-GAAP measure)(1) was 2.6x.
At June 30, 2020, CNX's credit facility had $550 million of borrowings outstanding and $205 million of letters of credit outstanding.
During the quarter, the company completed the private offering of $345 million aggregate principal amount of its 2.25% convertible senior notes due 2026. The company used the net proceeds to pay down a portion of its 5.875% notes due in 2022. As of June 30, 2020, the company had an aggregate principal balance of its 5.875% notes due in 2022 of approximately $414 million. The company has paid down the aggregate principal amount of these notes by approximately $482 million year-to-date.
CNX did not repurchase any shares of common stock during the second quarter of 2020.
Guidance Update:(a)
2020 Guidance Update:
CNX reaffirms its 2020 production volumes of 490-530 Bcfe. Due to the pricing contango in 2020, the company shut-in certain wells starting in May to take advantage of anticipated higher price months later in the year. If the current gas price contango continues through the summer, the company expects that these shut-in wells will be back online in early November. Even though this would result in the company being at the lower end of the production range, the company would expect to be at the high-end of the adjusted EBITDAX range under this scenario.
Adjusted EBITDAX(1) | Reaffirmed | |||
2020E | ||||
($ in millions, except per share data) | Low | High | ||
Consolidated | $830 | - | $900 | |
(1) Updated EBITDAX based on NYMEX forward strip as of July 8, 2020. | ||||
Capital Expenditures | Reaffirmed | |||
2020E | ||||
($ in millions) | Low | High | ||
Drilling & Completion (D&C) | $330 | - | $380 | |
Non-D&C | $140 | - | $170 | |
Pro Forma Total Capital | $470 | - | $550 |
In 2020, CNX reaffirms FCF(a) of approximately $300 million.
2021 Guidance Update:
As previously discussed, the company believes that the decision to manage production through well shut-ins during the second quarter in 2020 will positively impact 2021 results. The company continues to expect the following results in 2021: production volumes of approximately 550 Bcfe, total capital expenditures of approximately $440 million, and EBITDAX(a) of approximately $920 million. Due to the recently-announced CNXM transaction, the company expects FCF(a) of approximately $425 million, which is an increase of $25 million from the previous guidance. If 2021 gas prices strengthen further, the company could produce approximately 600 Bcfe, or if gas prices weaken, the company has the flexibility to reduce activity. The company anticipates that the bulk of the FCF in 2021, like 2020, will be used to reduce the company's absolute debt and leverage ratio.
2022-2026 Guidance:
CNX expects to shift to a maintenance of production (MOP) plan in 2022-2026. Over this time period, the company continues to expect average production volumes of approximately 560 Bcfe by turning-in-line 25 wells each year on average. Due to the recently-announced CNXM transaction, CNX expects annual FCF(a) for 2022-2026 to average $515 million each year, compared to the previous guidance of $500 million of consolidated FCF.
2020-2026 Cumulative:
CNX expects cumulative FCF(a) over its 7-year plan to be over $3.0 billion.
(a) CNX is unable to provide a reconciliation of projected financial results contained in this release, including FCF, adjusted EBITDAX, fully burdened cash costs and other metrics to their respective comparable financial measure calculated in accordance with GAAP. This is due to our inability to calculate the comparable GAAP projected metrics, including operating income and total production costs, given the unknown effect, timing, and potential significance of certain income statement items. |
CNX Acquiring All Outstanding Common Units of CNX Midstream Partners LP
On July 27, 2020, CNX and CNXM announced that they have entered into a definitive merger agreement pursuant to which CNX will acquire all of the outstanding common units of CNXM that it does not already own in exchange for CNX common stock valued at approximately $357 million, based on the most recent closing price of CNX common stock.
Video Presentation
CNX has pre-recorded a video presentation that not only thoroughly examines the take-private transaction, but also reviews the CNX investment thesis and why the company believes it is a non-replicable, best-in-class E&P company. The video can be accessed at: https://vimeo.com/441806879, or by visiting the "Investor Relations" page of CNX's website at www.cnx.com, or on the 'News and Events' page of the CNX Midstream website at cnxmidstream.com. Presentation materials are available on each company's website.
Earnings Conference Call Details
As previously disclosed, CNX will hold its earnings call for the second quarter on Thursday, July 30.
CNX Resources (NYSE: CNX)
About CNX
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Non-GAAP Financial Measures
CNX's management uses certain non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful for investors in analyzing the company. Stand-alone results include both CNX's Exploration & Production (E&P) and Unallocated segments (but not the Midstream segment) plus distributions CNX receives from CNXM. CNX believes that providing stand-alone results provides investors with more transparency and a better ability to compare CNX's financial results to those of our peer group. The term "consolidated" includes 100% of the results of CNX, CNX Gathering LLC, and CNXM on a consolidated basis.
Definitions: EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) and income taxes. EBITDAX is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes, depreciation, depletion and amortization, and exploration. Adjusted EBITDAX consolidated is defined as EBITDAX after adjusting for the discrete items listed below. Stand-alone EBITDAX is defined as the adjusted EBITDAX related to both CNX's E&P and Unallocated segments (See Note 24 - Segment Information in CNX's Annual Report on Form 10-K as filed with the Securities and Exchange Commission for more information) plus the distributions CNX receives during the current period from CNXM related to its limited partnership units (including general partner units, and incentive distribution rights (IDRs) prior to the IDR elimination transaction in the first quarter of 2020). Although EBIT, EBITDAX, Stand-alone EBITDAX and adjusted EBITDAX consolidated are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating CNX Resources because they are widely used to evaluate a company's operating performance. We exclude stock-based compensation from adjusted EBITDAX because we do not believe it accurately reflects the actual operating expense incurred during the relevant period and may vary widely from period to period irrespective of operating results. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDAX, Stand-alone EBITDAX or adjusted EBITDAX consolidated identically, the presentation here may not be comparable to similarly titled measures of other companies. Adjusted EBITDAX per outstanding share, adjusted net income per outstanding share, Stand-alone EBITDAX and adjusted EBITDAX consolidated are not measures of performance calculated in accordance with generally accepted accounting principles. Management believes that these financial measures are useful to an investor in evaluating CNX Resources because (i) analysts utilize these metrics when evaluating company performance and, (ii) given that we have an active share repurchase program, analysts have requested this information as of a recent practicable date, and we want to provide updated information to investors.
Reconciliation of EBIT, EBITDAX, adjusted EBITDAX consolidated, Stand-alone EBITDAX, adjusted net income, net debt, organic free cash flow, free cash flow and TTM EBITDAX to the most directly comparable GAAP financial measures is as follows:
Three Months Ended | |||||||||||
June 30, 2020 | |||||||||||
Dollars in thousands | Stand-alone1 | Midstream | Total Company | ||||||||
Net (Loss) Income | $ | (160,781) | $ | 30,295 | $ | (130,486) | |||||
Interest Expense | 37,638 | 8,618 | 46,256 | ||||||||
Interest Income | (322) | (1) | (323) | ||||||||
Income Tax Benefit | (28,646) | — | (28,646) | ||||||||
Earnings Before Interest & Taxes (EBIT) | $ | (152,111) | $ | 38,912 | $ | (113,199) | |||||
Depreciation, Depletion & Amortization | 102,901 | 10,644 | 113,545 | ||||||||
Exploration Expense | 3,093 | 217 | 3,310 | ||||||||
Earnings Before Interest, Taxes, DD&A and Exploration (EBITDAX) | $ | (46,117) | $ | 49,773 | $ | 3,656 | |||||
Adjustments: | |||||||||||
Unrealized Loss on Commodity Derivative Instruments | $ | 205,558 | $ | — | $ | 205,558 | |||||
Loss on Debt Extinguishment | 344 | — | 344 | ||||||||
Stock-Based Compensation | 2,186 | 380 | 2,566 | ||||||||
Severance Expense | 120 | — | 120 | ||||||||
Total Pre-tax Adjustments | $ | 208,208 | $ | 380 | $ | 208,588 | |||||
Adjusted EBITDAX Consolidated | $ | 162,091 | $ | 50,153 | $ | 212,244 | |||||
Midstream Distributions | 3,954 | N/A | N/A | ||||||||
Stand-alone EBITDAX | $ | 166,045 | N/A | N/A |
1 Stand-alone includes both CNX's E&P and Unallocated segments. See Note 24 - Segment Information in CNX's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission, for more information. |
Three Months Ended | |||||||||||
June 30, 2019 | |||||||||||
Dollars in thousands | Stand-alone1 | Midstream | Total Company | ||||||||
Net Income | $ | 148,281 | $ | 44,413 | $ | 192,694 | |||||
Interest Expense | 32,467 | 7,685 | 40,152 | ||||||||
Interest Income | (71) | — | (71) | ||||||||
Income Tax Expense | 40,791 | — | 40,791 | ||||||||
Earnings Before Interest & Taxes (EBIT) | $ | 221,468 | $ | 52,098 | $ | 273,566 | |||||
Depreciation, Depletion & Amortization | 120,705 | 8,294 | 128,999 | ||||||||
Exploration Expense | 5,567 | — | 5,567 | ||||||||
Earnings Before Interest, Taxes, DD&A and Exploration (EBITDAX) | $ | 347,740 | $ | 60,392 | $ | 408,132 | |||||
Adjustments: | |||||||||||
Unrealized Gain on Commodity Derivative Instruments | $ | (210,909) | $ | — | $ | (210,909) | |||||
Severance Expense | 1,182 | — | 1,182 | ||||||||
Loss on Debt Extinguishment | 77 | — | 77 | ||||||||
Stock-Based Compensation | 23,333 | 540 | 23,873 | ||||||||
Total Pre-tax Adjustments | $ | (186,317) | $ | 540 | $ | (185,777) | |||||
Adjusted EBITDAX Consolidated | $ | 161,423 | $ | 60,932 | $ | 222,355 | |||||
Midstream Distributions | 13,251 | N/A | N/A | ||||||||
Stand-alone EBITDAX | $ | 174,674 | N/A | N/A |
1 Stand-alone includes both CNX's E&P and Unallocated segments. See Note 24 - Segment Information in CNX's Annual Report on Form 10-K for fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission, for more information. |
Reconciliation of Adjusted Net Income | |||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Dollars in thousands | Stand-alone1 | Stand-alone1 | Total Company | Total Company | |||||||||||
Net (Loss) Income from EBITDAX Reconciliation | $ | (160,781) | $ | 148,281 | $ | (130,486) | $ | 192,694 | |||||||
Adjustments: | |||||||||||||||
Total Pre-tax Adjustments from EBITDAX Reconciliation | 208,208 | (186,317) | 208,588 | (185,777) | |||||||||||
Tax Effect of Adjustments | (54,409) | 50,530 | (54,508) | 50,383 | |||||||||||
Adjusted Net (Loss) Income | $ | (6,982) | $ | 12,494 | $ | 23,594 | $ | 57,300 |
1 Stand-alone includes both CNX's E&P and Unallocated segments. See Note 24 - Segment Information in CNX's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission, for more information. |
Management uses net debt to determine the company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. Management believes that using net debt attributable to CNX Resources shareholders is useful to investors in determining the company's leverage ratio since the company could choose to use its cash and cash equivalents to retire debt.
Net Debt | June 30, 2020 | ||||||||||
Stand-alone1 | Midstream | Total Company | |||||||||
Total Long-Term Debt (GAAP)2 | $ | 1,849,563 | $ | 713,635 | $ | 2,563,198 | |||||
Less: Cash and Cash Equivalents | 23,725 | 2,196 | 25,921 | ||||||||
Net Debt (Non-GAAP) | $ | 1,825,838 | $ | 711,439 | $ | 2,537,277 |
1Stand-alone includes both CNX's E&P and Unallocated segments. |
2Includes current portion. |
Reconciliation of Trailing-Twelve-Months (TTM) EBITDAX by Quarter | |||||||||||||||||||
Three Months | Twelve Months | ||||||||||||||||||
September 30, | December 31, | March 31, | June 30, | June 30, | |||||||||||||||
Dollars in thousands | 2019 | 2019 | 2020 | 2020 | 2020 | ||||||||||||||
Net Income (Loss) | $ | 143,960 | $ | (240,055) | $ | (305,222) | $ | (130,486) | $ | (531,803) | |||||||||
Interest Expense | 38,405 | 37,051 | 48,995 | 46,256 | 170,707 | ||||||||||||||
Interest Income | (1,078) | (78) | (92) | (323) | (1,571) | ||||||||||||||
Income Tax Expense (Benefit) | 48,902 | (50,398) | (152,582) | (28,646) | (182,724) | ||||||||||||||
Earnings Before Interest & Taxes (EBIT) | $ | 230,189 | $ | (253,480) | $ | (408,901) | $ | (113,199) | $ | (545,391) | |||||||||
Depreciation, Depletion & Amortization | 120,459 | 133,844 | 129,164 | 113,545 | 497,012 | ||||||||||||||
Exploration Expense | 6,075 | 29,480 | 3,888 | 3,310 | 42,753 | ||||||||||||||
Earnings Before Interest, Taxes, DD&A, and Exploration (EBITDAX) | $ | 356,723 | $ | (90,156) | $ | (275,849) | $ | 3,656 | $ | (5,626) | |||||||||
Adjustments: | |||||||||||||||||||
Unrealized (Gain) Loss on Commodity Derivative Instruments | $ | (156,872) | $ | (92,538) | $ | 36,019 | $ | 205,558 | $ | (7,833) | |||||||||
Impairment of Exploration and Production Properties | — | 327,400 | 61,849 | — | 389,249 | ||||||||||||||
Impairment of Unproved Properties and Expirations | — | 119,429 | — | — | 119,429 | ||||||||||||||
Impairment of Goodwill | — | — | 473,045 | — | 473,045 | ||||||||||||||
Severance Expense | 1,999 | 113 | 105 | 120 | 2,337 | ||||||||||||||
Stock Based Compensation | 1,781 | 1,868 | 6,840 | 2,566 | 13,055 | ||||||||||||||
(Gain) Loss on Debt Extinguishment | — | — | (11,263) | 344 | (10,919) | ||||||||||||||
Shaw Insurance Recovery | — | (2,159) | — | — | (2,159) | ||||||||||||||
Total Pre-tax Adjustments | $ | (153,092) | $ | 354,113 | $ | 566,595 | $ | 208,588 | $ | 976,204 | |||||||||
Adjusted EBITDAX Consolidated TTM | $ | 203,631 | $ | 263,957 | $ | 290,746 | $ | 212,244 | $ | 970,578 |
Reconciliation of Stand-alone EBITDAX Trailing-Twelve-Months (TTM) | |||||||||||
Twelve Months Ended June 30, 2020 | |||||||||||
Dollars in thousands | Stand-alone1 | Midstream | Total Company | ||||||||
Net Loss | $ | (222,210) | $ | (309,593) | $ | (531,803) | |||||
Interest Expense | 137,978 | 32,729 | 170,707 | ||||||||
Interest Income | (1,558) | (13) | (1,571) | ||||||||
Income Tax Benefit | (182,724) | — | (182,724) | ||||||||
Earnings Before Interest & Taxes (EBIT) | $ | (268,514) | $ | (276,877) | $ | (545,391) | |||||
Depreciation, Depletion & Amortization | 458,624 | 38,388 | 497,012 | ||||||||
Exploration Expense | 42,423 | 330 | 42,753 | ||||||||
Earnings Before Interest, Taxes, DD&A, and Exploration (EBITDAX) | $ | 232,533 | $ | (238,159) | $ | (5,626) | |||||
Adjustments: | |||||||||||
Unrealized Gain on Commodity Derivative Instruments | $ | (7,833) | $ | — | $ | (7,833) | |||||
Impairment of Exploration and Production Properties | 389,249 | — | 389,249 | ||||||||
Impairment of Unproved Properties and Expirations | 119,429 | — | 119,429 | ||||||||
Impairment of Goodwill | — | 473,045 | 473,045 | ||||||||
Severance Expense | 1,901 | 436 | 2,337 | ||||||||
Stock Based Compensation | 11,444 | 1,611 | 13,055 | ||||||||
Gain on Debt Extinguishment | (10,919) | — | (10,919) | ||||||||
Shaw Insurance Recovery | (2,159) | — | (2,159) | ||||||||
Total Pre-tax Adjustments | $ | 501,112 | $ | 475,092 | $ | 976,204 | |||||
Adjusted EBITDAX Consolidated TTM | $ | 733,645 | $ | 236,933 | $ | 970,578 | |||||
Midstream Distributions | 53,650 | N/A | N/A | ||||||||
Stand-alone EBITDAX TTM | $ | 787,295 | N/A | N/A |
1 Stand-alone includes both CNX's E&P and Unallocated Segments. |
Organic free cash flow is defined as net cash provided by operating activities less capital expenditures. Free cash flow is defined as net cash provided by operating activities less capital expenditures plus proceeds from asset sales. Organic free cash flow and free cash flow are non-GAAP supplemental financial measures that the Company's management and external users of its consolidated financial statements, such as industry analysts, lenders and ratings agencies use to assess the Company's liquidity. The Company believes that the measures provide useful information to management and investors in assessing the Company's ability to generate cash flow in excess of capital requirements and return cash to shareholders. Organic free cash flow and free cash flow should not be considered as alternatives to net cash provided by operating activities or any other measure of liquidity presented in accordance with GAAP.
The tables below reconcile organic free cash flow and free cash flow with net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP, as derived from the Statements of Condensed Consolidated Cash Flows to be included in the Company's report on Form 10-Q for the quarter ended June 30, 2020.
Organic Free Cash Flow | |||||||
Dollars in thousands | Three Months | Three Months | |||||
Net Cash Provided by Operating Activities | $ | 143,798 | $ | 252,021 | |||
Capital Expenditures | (134,852) | (329,227) | |||||
Organic Free Cash Flow | $ | 8,946 | $ | (77,206) | |||
Free Cash Flow | |||||||
Dollars in thousands | Three Months | Three Months | |||||
Net Cash Provided by Operating Activities | $ | 143,798 | $ | 252,021 | |||
Capital Expenditures | (134,852) | (329,227) | |||||
Proceeds from Asset Sales | 12,151 | 1,281 | |||||
Free Cash Flow | $ | 21,097 | $ | (75,925) |
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; 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. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: prices for natural gas and NGLs are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; our dependence on gathering, processing and transportation facilities and other midstream facilities owned by CNX Midstream Partners LP (NYSE: CNXM) (CNXM) and others; uncertainties in estimating our economically recoverable natural gas reserves, and inaccuracies in our estimates; the high-risk nature of drilling, developing and operating natural gas wells; our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their development or drilling; challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; the substantial capital expenditures required for our development and exploration projects, as well as CNXM's midstream system development; the impact of potential, as well as any adopted, environmental regulations, including those relating to greenhouse gas emissions; environmental regulations can increase costs and introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials in sufficient quantities or at reasonable costs to support our operations; if natural gas prices decrease or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties; the availability of storage capacity for refined products such as crude, and refinery inputs including condensate, c5+ and butane; changes in assumptions impacting management's estimates of future financial results as well as other assumptions such as movement in our stock price, weighted-average cost of capital, terminal growth rates and industry multiples, could cause goodwill and other intangible assets we hold to become impaired and result in material non-cash charges to earnings; a loss of our competitive position because of the competitive nature of the natural gas industry, consolidation within the industry or overcapacity in the industry adversely affecting our ability to sell our products and midstream services; deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions; the impact of outbreaks of communicable diseases such as the novel highly transmissible and pathogenic coronavirus ("COVID-19") on business activity, the company's operations and national and global economic conditions, generally; hedging activities may prevent us from benefiting from price increases and may expose us to other risks; existing and future government laws, regulations and other legal requirements and judicial decisions that govern our business may increase our costs of doing business and may restrict our operations; significant costs and liabilities may be incurred as a result of pipeline operations and related increase in the regulation of gas gathering pipelines; our ability to find adequate water sources for our use in shale gas drilling and production operations, or our ability to dispose of, transport or recycle water used or removed in connection with our gas operations at a reasonable cost and within applicable environmental rules; failure to successfully estimate the rate of decline or existing reserves or to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; risks associated with our current long-term debt obligations; a decrease in our borrowing base, which could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, asset sales and lending requirements or regulations; changes in federal or state income tax laws, cyber incidents could have a material adverse effect on our business, financial condition or results of operations; construction of new gathering, compression, dehydration, treating or other midstream assets by CNXM may not result in revenue increases and may be subject to environmental, political, legal and economic risks; our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; terrorist activities could materially adversely affect our business and results of operations; we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; acquisitions and divestitures, we anticipate may not occur or produce anticipated benefits; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; there is no guarantee that we will continue to repurchase shares of our common stock under our current or any future share repurchase program at levels undertaken previously or at all; negative public perception regarding our industry could have an adverse effect on our operations; CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy will be allocated responsibility ; risks associated with the company's issuance of convertible senior notes due 2026 (the "convertible notes"), including the potential impact that the convertible notes may have on our reported financial results, potential dilution, the company's ability to raise funds to repurchase the convertible notes, and that provisions of the convertible notes could delay or prevent a beneficial takeover of the company; the potential impact of the capped call transaction undertaken in tandem with the convertible note issuance, including counterparty risk; the possibility that the market price of the company's common stock will fluctuate prior to the completion of the take-private transaction causing the value of the merger consideration to change; the risk that a condition to the closing of the take-private transaction may not be satisfied on a timely basis, if at all; the timing of the completion of the take-private transaction; the substantial transaction-related costs that may be incurred by the company and CNXM in connection with the take-private transaction; the possibility that the company and CNXM may, under certain specified circumstances, be responsible for the other party's expenses; the possibility that the company and CNXM may be the targets of securities class actions and derivative lawsuits; the limited duties CNXM's partnership agreement places on CNXM's general partner (the "general partner") for actions taken by the general partner; the risk that certain officers and directors of the company and the general partner have interests in the take-private transaction that are different from, or in addition to, the interests they may have as CNXM's unitholders or the company's stockholders, respectively; and the possibility that financial projections by the company and CNXM may not prove to be reflective of actual future results.
Although forward-looking statements reflect the company's good faith beliefs at the time they are made, they involve known and unknown risks, uncertainties and other factors. For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, including, among others, that the company's business plans may change as circumstances warrant, please refer to the "Risk Factors" and "Forward-Looking Statements" sections of the company's Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Commission on February 10, 2020 and subsequent Quarterly Reports on Form 10-Q. The company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.
CNX RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(Dollars in thousands, except per share data) | Three Months Ended | Six Months Ended | |||||||||||||
(Unaudited) | June 30, | June 30, | |||||||||||||
Revenue and Other Operating Income: | 2020 | 2019 | 2020 | 2019 | |||||||||||
Natural Gas, NGL and Oil Revenue | $ | 175,776 | $ | 342,865 | $ | 427,270 | $ | 778,811 | |||||||
(Loss) Gain on Commodity Derivative Instruments | (63,303) | 221,581 | 51,839 | 26,205 | |||||||||||
Purchased Gas Revenue | 20,424 | 18,768 | 46,783 | 34,989 | |||||||||||
Midstream Revenue | 12,191 | 18,895 | 30,597 | 37,338 | |||||||||||
Other Operating Income | 3,753 | 2,923 | 8,711 | 6,120 | |||||||||||
Total Revenue and Other Operating Income | 148,841 | 605,032 | 565,200 | 883,463 | |||||||||||
Costs and Expenses: | |||||||||||||||
Operating Expense | |||||||||||||||
Lease Operating Expense | 10,244 | 19,876 | 20,277 | 38,504 | |||||||||||
Transportation, Gathering and Compression | 60,025 | 84,614 | 143,267 | 164,023 | |||||||||||
Production, Ad Valorem, and Other Fees | 5,384 | 7,030 | 11,546 | 13,976 | |||||||||||
Depreciation, Depletion and Amortization | 113,545 | 128,999 | 242,709 | 254,159 | |||||||||||
Exploration and Production Related Other Costs | 3,310 | 5,567 | 7,197 | 8,825 | |||||||||||
Purchased Gas Costs | 19,989 | 18,772 | 44,987 | 34,986 | |||||||||||
Impairment of Exploration and Production Properties | — | — | 61,849 | — | |||||||||||
Impairment of Goodwill | — | — | 473,045 | — | |||||||||||
Selling, General, and Administrative Costs | 23,419 | 48,970 | 53,657 | 84,709 | |||||||||||
Other Operating Expense | 26,596 | 17,976 | 47,277 | 41,451 | |||||||||||
Total Operating Expense | 262,512 | 331,804 | 1,105,811 | 640,633 | |||||||||||
Other Expense | |||||||||||||||
Other Expense (Income) | 4,799 | (99) | 9,985 | (681) | |||||||||||
(Gain) Loss on Asset Sales and Abandonments | (5,938) | (387) | (17,992) | 2,699 | |||||||||||
Loss (Gain) on Debt Extinguishment | 344 | 77 | (10,919) | 7,614 | |||||||||||
Interest Expense | 46,256 | 40,152 | 95,252 | 75,923 | |||||||||||
Total Other Expense | 45,461 | 39,743 | 76,326 | 85,555 | |||||||||||
Total Costs and Expenses | 307,973 | 371,547 | 1,182,137 | 726,188 | |||||||||||
(Loss) Earnings Before Income Tax | (159,132) | 233,485 | (616,937) | 157,275 | |||||||||||
Income Tax (Benefit) Expense | (28,646) | 40,791 | (181,228) | 29,231 | |||||||||||
Net (Loss) Income | (130,486) | 192,694 | (435,709) | 128,044 | |||||||||||
Less: Net Income Attributable to Noncontrolling Interest | 15,263 | 30,217 | 39,126 | 52,904 | |||||||||||
Net (Loss) Income Attributable to CNX Resources Shareholders | $ | (145,749) | $ | 162,477 | $ | (474,835) | $ | 75,140 | |||||||
(Loss) Earnings per Share | |||||||||||||||
Basic | $ | (0.78) | $ | 0.85 | $ | (2.54) | $ | 0.39 | |||||||
Diluted | $ | (0.78) | $ | 0.84 | $ | (2.54) | $ | 0.38 | |||||||
Dividends Declared | $ | — | $ | — | $ | — | $ | — |
CNX RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(Dollars in thousands) | June 30, | June 30, | |||||||||||||
(Unaudited) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net (Loss) Income | $ | (130,486) | $ | 192,694 | $ | (435,709) | $ | 128,044 | |||||||
Other Comprehensive Income: | |||||||||||||||
Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($39), ($14), ($79), ($29)) | 111 | 41 | 223 | 85 | |||||||||||
Comprehensive (Loss) Income | (130,375) | 192,735 | (435,486) | 128,129 | |||||||||||
Less: Comprehensive Income Attributable to Noncontrolling Interest | 15,263 | 30,217 | 39,126 | 52,904 | |||||||||||
Comprehensive (Loss) Income Attributable to CNX Resources Shareholders | $ | (145,638) | $ | 162,518 | $ | (474,612) | $ | 75,225 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
(Dollars in thousands) | June 30, | December 31, | |||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and Cash Equivalents | $ | 19,607 | $ | 16,283 | |||
Restricted Cash | 738 | — | |||||
Accounts and Notes Receivable: | |||||||
Trade, net | 69,174 | 133,480 | |||||
Other Receivables, net | 7,669 | 13,679 | |||||
Supplies Inventories | 10,317 | 6,984 | |||||
Recoverable Income Taxes | 114,440 | 62,425 | |||||
Derivative Instruments | 197,804 | 247,794 | |||||
Prepaid Expenses | 10,973 | 17,456 | |||||
Total Current Assets | 430,722 | 498,101 | |||||
Property, Plant and Equipment: | |||||||
Property, Plant and Equipment | 10,814,035 | 10,572,006 | |||||
Less—Accumulated Depreciation, Depletion and Amortization | 3,730,232 | 3,435,431 | |||||
Total Property, Plant and Equipment—Net | 7,083,803 | 7,136,575 | |||||
Other Non-Current Assets: | |||||||
Operating Lease Right-of-Use Assets | 141,198 | 187,097 | |||||
Investment in Affiliates | 15,159 | 16,710 | |||||
Derivative Instruments | 212,657 | 314,096 | |||||
Goodwill | 323,314 | 796,359 | |||||
Other Intangible Assets | 93,371 | 96,647 | |||||
Restricted Cash | 5,576 | — | |||||
Other | 13,884 | 15,221 | |||||
Total Other Non-Current Assets | 805,159 | 1,426,130 | |||||
TOTAL ASSETS | $ | 8,319,684 | $ | 9,060,806 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
(Dollars in thousands, except per share data) | June 30, | December 31, | |||||
LIABILITIES AND EQUITY | |||||||
Current Liabilities: | |||||||
Accounts Payable | $ | 148,345 | $ | 202,553 | |||
Derivative Instruments | 83,527 | 41,466 | |||||
Current Portion of Finance Lease Obligations | 7,295 | 7,164 | |||||
Current Portion of Long-Term Debt | 22,430 | — | |||||
Current Portion of Operating Lease Obligations | 52,110 | 61,670 | |||||
Other Accrued Liabilities | 162,817 | 216,086 | |||||
Total Current Liabilities | 476,524 | 528,939 | |||||
Non-Current Liabilities: | |||||||
Long-Term Debt | 2,540,768 | 2,754,443 | |||||
Finance Lease Obligations | 4,225 | 7,706 | |||||
Operating Lease Obligations | 79,701 | 110,466 | |||||
Derivative Instruments | 178,187 | 115,862 | |||||
Deferred Income Taxes | 370,412 | 476,108 | |||||
Asset Retirement Obligations | 62,543 | 63,377 | |||||
Other | 40,370 | 41,596 | |||||
Total Non-Current Liabilities | 3,276,206 | 3,569,558 | |||||
TOTAL LIABILITIES | 3,752,730 | 4,098,497 | |||||
Stockholders' Equity: | |||||||
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 187,431,492 Issued and Outstanding at June 30, 2020; 186,642,962 Issued and Outstanding at December 31, 2019 | 1,878 | 1,870 | |||||
Capital in Excess of Par Value | 2,261,729 | 2,199,605 | |||||
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding | — | — | |||||
Retained Earnings | 1,495,197 | 1,971,676 | |||||
Accumulated Other Comprehensive Loss | (12,382) | (12,605) | |||||
Total CNX Resources Stockholders' Equity | 3,746,422 | 4,160,546 | |||||
Noncontrolling Interest | 820,532 | 801,763 | |||||
TOTAL STOCKHOLDERS' EQUITY | 4,566,954 | 4,962,309 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 8,319,684 | $ | 9,060,806 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||
(Dollars in thousands) | Common | Capital in | Retained | Accumulated | Total CNX | Non- | Total Equity | ||||||||||||||||||||
March 31, 2020 | $ | 1,874 | $ | 2,205,941 | $ | 1,641,009 | $ | (12,493) | $ | 3,836,331 | $ | 808,379 | $ | 4,644,710 | |||||||||||||
Net (Loss) Income | — | — | (145,749) | — | (145,749) | 15,263 | (130,486) | ||||||||||||||||||||
Issuance of Common Stock | 4 | 1,646 | — | — | 1,650 | — | 1,650 | ||||||||||||||||||||
Shares Withheld for Taxes | — | — | (63) | — | (63) | — | (63) | ||||||||||||||||||||
Amortization of Stock-Based Compensation Awards | — | 2,186 | — | — | 2,186 | 380 | 2,566 | ||||||||||||||||||||
Equity Component of Convertible Senior Notes, net of Issuance Costs | — | 78,307 | — | — | 78,307 | — | 78,307 | ||||||||||||||||||||
Purchase of Capped Call | — | (26,351) | — | — | (26,351) | — | (26,351) | ||||||||||||||||||||
Other Comprehensive Income | — | — | — | 111 | 111 | — | 111 | ||||||||||||||||||||
Distributions to CNXM Noncontrolling Interest Holders | — | — | — | — | — | (3,490) | (3,490) | ||||||||||||||||||||
June 30, 2020 | $ | 1,878 | $ | 2,261,729 | $ | 1,495,197 | $ | (12,382) | $ | 3,746,422 | $ | 820,532 | $ | 4,566,954 | |||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||
March 31, 2019 | $ | 1,964 | $ | 2,249,511 | $ | 1,971,898 | $ | (7,860) | $ | 4,215,513 | $ | 759,296 | $ | 4,974,809 | |||||||||||||
Net Income | — | — | 162,477 | — | 162,477 | 30,217 | 192,694 | ||||||||||||||||||||
Issuance of Common Stock | 3 | 59 | — | — | 62 | — | 62 | ||||||||||||||||||||
Purchase and Retirement of Common Stock | (88) | (68,934) | (5,261) | — | (74,283) | — | (74,283) | ||||||||||||||||||||
Shares Withheld for Taxes | — | — | (1,487) | — | (1,487) | (25) | (1,512) | ||||||||||||||||||||
Amortization of Stock-Based Compensation Awards | — | 23,333 | — | — | 23,333 | 540 | 23,873 | ||||||||||||||||||||
Other Comprehensive Income | — | — | — | 41 | 41 | — | 41 | ||||||||||||||||||||
Distributions to CNXM Noncontrolling Interest Holders | — | — | — | — | — | (15,689) | (15,689) | ||||||||||||||||||||
June 30, 2019 | $ | 1,879 | $ | 2,203,969 | $ | 2,127,627 | $ | (7,819) | $ | 4,325,656 | $ | 774,339 | $ | 5,099,995 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||
(Dollars in thousands) | Common | Capital in | Retained | Accumulated | Total CNX | Non- | Total | ||||||||||||||||||||
December 31, 2019 | $ | 1,870 | $ | 2,199,605 | $ | 1,971,676 | $ | (12,605) | $ | 4,160,546 | $ | 801,763 | $ | 4,962,309 | |||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
Net (Loss) Income | — | — | (474,835) | — | (474,835) | 39,126 | (435,709) | ||||||||||||||||||||
Issuance of Common Stock | 8 | 1,646 | — | — | 1,654 | — | 1,654 | ||||||||||||||||||||
Shares Withheld for Taxes | — | — | (1,644) | — | (1,644) | (309) | (1,953) | ||||||||||||||||||||
Amortization of Stock-Based Compensation Awards | — | 8,522 | — | — | 8,522 | 884 | 9,406 | ||||||||||||||||||||
Equity Component of Convertible Senior Notes, net of Issuance Costs | — | 78,307 | — | — | 78,307 | — | 78,307 | ||||||||||||||||||||
Purchase of Capped Call | — | (26,351) | — | — | (26,351) | — | (26,351) | ||||||||||||||||||||
Other Comprehensive Income | — | — | — | 223 | 223 | — | 223 | ||||||||||||||||||||
Distributions to CNXM Noncontrolling Interest Holders | — | — | — | — | — | (20,932) | (20,932) | ||||||||||||||||||||
June 30, 2020 | $ | 1,878 | $ | 2,261,729 | $ | 1,495,197 | $ | (12,382) | $ | 3,746,422 | $ | 820,532 | $ | 4,566,954 | |||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||
December 31, 2018 | $ | 1,990 | $ | 2,264,063 | $ | 2,071,809 | $ | (7,904) | $ | 4,329,958 | $ | 751,785 | $ | 5,081,743 | |||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
Net Income | — | — | 75,140 | — | 75,140 | 52,904 | 128,044 | ||||||||||||||||||||
Issuance of Common Stock | 8 | 153 | — | — | 161 | — | 161 | ||||||||||||||||||||
Purchase and Retirement of Common Stock | (119) | (93,871) | (13,790) | — | (107,780) | — | (107,780) | ||||||||||||||||||||
Shares Withheld for Taxes | — | — | (5,532) | — | (5,532) | (690) | (6,222) | ||||||||||||||||||||
Amortization of Stock-Based Compensation Awards | — | 33,624 | — | — | 33,624 | 1,152 | 34,776 | ||||||||||||||||||||
Other Comprehensive Income | — | — | — | 85 | 85 | — | 85 | ||||||||||||||||||||
Distributions to CNXM Noncontrolling Interest Holders | — | — | — | — | — | (30,812) | (30,812) | ||||||||||||||||||||
June 30, 2019 | $ | 1,879 | $ | 2,203,969 | $ | 2,127,627 | $ | (7,819) | $ | 4,325,656 | $ | 774,339 | $ | 5,099,995 |
CNX RESOURCES AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(Dollars in thousands) | Three Months Ended | Six Months Ended | |||||||||||||
(Unaudited) | June 30, | June 30, | |||||||||||||
Cash Flows from Operating Activities: | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net (Loss) Income | $ | (130,486) | $ | 192,694 | $ | (435,709) | $ | 128,044 | |||||||
Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operating Activities: | |||||||||||||||
Depreciation, Depletion and Amortization | 113,545 | 128,999 | 242,709 | 254,159 | |||||||||||
Amortization of Deferred Financing Costs | 6,348 | 2,701 | 8,795 | 4,408 | |||||||||||
Impairment of Exploration and Production Properties | — | — | 61,849 | — | |||||||||||
Impairment of Goodwill | — | — | 473,045 | — | |||||||||||
Stock-Based Compensation | 2,566 | 23,873 | 9,406 | 34,776 | |||||||||||
(Gain) Loss on Asset Sales and Abandonments | (5,938) | (387) | (17,992) | 2,699 | |||||||||||
Loss (Gain) on Debt Extinguishment | 344 | 77 | (10,919) | 7,614 | |||||||||||
Loss (Gain) on Commodity Derivative Instruments | 63,303 | (221,581) | (51,839) | (26,205) | |||||||||||
Loss on Other Derivative Instruments | 3,598 | — | 14,237 | — | |||||||||||
Net Cash Received (Paid) in Settlement of Commodity Derivative Instruments | 142,256 | 10,672 | 293,417 | (30,710) | |||||||||||
Deferred Income Taxes | (25,683) | 40,790 | (125,429) | 29,231 | |||||||||||
Equity in Loss (Earnings) of Affiliates | 1,260 | (527) | 1,421 | (1,030) | |||||||||||
Return on Equity Investment | 131 | 750 | 131 | 2,056 | |||||||||||
Changes in Operating Assets: | |||||||||||||||
Accounts and Notes Receivable | 24,631 | 31,511 | 68,270 | 125,991 | |||||||||||
Recoverable Income Taxes | 821 | — | (52,015) | 35,888 | |||||||||||
Supplies Inventories | (51) | 5,400 | (3,333) | (1,527) | |||||||||||
Prepaid Expenses | 1,832 | 326 | 6,542 | 4,287 | |||||||||||
Changes in Other Assets | (296) | (98) | 396 | (105) | |||||||||||
Changes in Operating Liabilities: | |||||||||||||||
Accounts Payable | (17,810) | 35,308 | (15,488) | 29,346 | |||||||||||
Accrued Interest | (495) | 2,870 | (5,558) | 5,050 | |||||||||||
Other Operating Liabilities | (35,994) | (1,958) | (49,620) | (36,392) | |||||||||||
Changes in Other Liabilities | (84) | 601 | (1,131) | (6,907) | |||||||||||
Net Cash Provided by Operating Activities | 143,798 | 252,021 | 411,185 | 560,673 | |||||||||||
Cash Flows from Investing Activities: | |||||||||||||||
Capital Expenditures | (134,852) | (329,227) | (286,901) | (628,365) | |||||||||||
Proceeds from Asset Sales | 12,151 | 1,281 | 26,126 | 7,087 | |||||||||||
Net Cash Used in Investing Activities | (122,701) | (327,946) | (260,775) | (621,278) | |||||||||||
Cash Flows from Financing Activities: | |||||||||||||||
Payments on Miscellaneous Borrowings | (1,777) | (1,768) | (3,569) | (3,515) | |||||||||||
Payments on Long-Term Notes | (408,985) | — | (468,865) | (405,876) | |||||||||||
Net (Payments on) Proceeds from CNXM Revolving Credit Facility | (28,000) | 71,350 | 7,250 | 124,000 | |||||||||||
Net Proceeds from (Payments on) CNX Revolving Credit Facility | 113,000 | 116,000 | (111,000) | 18,000 | |||||||||||
Proceeds from Issuance of CNX Senior Notes | — | — | — | 500,000 | |||||||||||
Net (Payments on) Proceeds from CSG Non-Revolving Credit Facilities | (3,667) | — | 169,583 | — | |||||||||||
Proceeds from Issuance of Convertible Senior Notes | 334,650 | — | 334,650 | — | |||||||||||
Purchase of Capped Call Related to Convertible Senior Notes | (35,673) | — | (35,673) | — | |||||||||||
Distributions to CNXM Noncontrolling Interest Holders | (3,489) | (15,689) | (20,932) | (30,812) | |||||||||||
Proceeds from Issuance of Common Stock | 1,650 | 62 | 1,654 | 161 | |||||||||||
Shares Withheld for Taxes | (63) | (1,512) | (1,953) | (6,222) | |||||||||||
Purchases of Common Stock | — | (77,282) | — | (109,780) | |||||||||||
Debt Issuance and Financing Fees | (848) | (6,597) | (11,917) | (9,938) | |||||||||||
Net Cash (Used in) Provided by Financing Activities | (33,202) | 84,564 | (140,772) | 76,018 | |||||||||||
Net (Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash | (12,105) | 8,639 | 9,638 | 15,413 | |||||||||||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 38,026 | 23,972 | 16,283 | 17,198 | |||||||||||
Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 25,921 | $ | 32,611 | $ | 25,921 | $ | 32,611 |
View original content to download multimedia:http://www.prnewswire.com/news-releases/cnx-reports-second-quarter-results-301102668.html
SOURCE CNX Resources Corporation
PITTSBURGH, July 30, 2020 /PRNewswire/ -- CNX Midstream Partners LP (NYSE: CNXM) ("CNXM", "CNX Midstream" or the "Partnership") today reported financial and operational results for the three and six months ended June 30, 2020(1).
Second Quarter Results
The Partnership continued its solid financial performance during the three months ended June 30, 2020 despite a decline in volumes. The net decrease in gathered volumes was the result of temporary production curtailments by our Sponsor and one of our third-party customers due to a decline in both natural gas and natural gas liquids pricing. Although a majority of the wet wells have since come back online due to a rebound in pricing, the concerns over storage capacity and other items could impact future periods. The impact of the lower wet gas volumes was partially offset by well turn-in-line activity that occurred over the past twelve months. Comparative results net to the Partnership, with the exception of net cash provided by operating activities, which is presented on a gross consolidated basis, were as follows:
Three Months Ended | Six Months Ended | ||||||||||||||
(in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net income | $ | 32.6 | $ | 46.7 | $ | 77.8 | $ | 81.9 | |||||||
Net cash provided by operating activities | $ | 45.5 | $ | 74.8 | $ | 85.6 | $ | 124.7 | |||||||
Adjusted EBITDA (non-GAAP)(2) | $ | 49.7 | $ | 59.3 | $ | 110.1 | $ | 113.8 | |||||||
Distributable cash flow (non-GAAP)(2) | $ | 37.1 | $ | 46.9 | $ | 83.9 | $ | 89.9 | |||||||
Distribution coverage ratio - Declared(2) | 0.83x | 1.53x | 1.60x | 1.51x |
The Board of Directors of CNX Midstream GP LLC, recently declared a cash distribution of $0.50 per unit with respect to the second quarter of 2020, which resulted in the distribution coverage ratio declining to 0.83x.
There is no change to previously stated guidance.
Capital Investment and Resources
For the second quarter of 2020, CNX Midstream's total capital investment net to the Partnership was $14.1 million, which includes investment in expansion projects of $8.8 million and maintenance capital of $5.3 million.
As of June 30, 2020, CNX Midstream had outstanding borrowings of $319.0 million under its $600.0 million revolving credit facility.
CNX Acquiring All Outstanding Common Units of CNXM (the "take-private transaction")
On July 27, 2020, CNX Resources Corporation (NYSE: CNX) ("CNX") and CNX Midstream announced that they have entered into a definitive merger agreement pursuant to which CNX will acquire all of the outstanding common units of CNX Midstream that it does not already own in exchange for CNX common stock valued at approximately $357 million, based on the most recent closing price of CNX common stock.
Video Presentation
CNX and the Partnership have pre-recorded a video presentation that not only thoroughly examines the transaction, but also reviews the CNX investment thesis and why the company believes it is a non-replicable, best-in-class E&P company. The video can be accessed at: https://vimeo.com/441806879, or by visiting the "Investor Relations" page of CNX's website at www.cnx.com, or on the 'News and Events' page of the CNX Midstream website at cnxmidstream.com. Presentation materials are available on each company's website.
Second Quarter Financial and Operational Results Conference Call
In light of the take-private transaction, CNX Midstream has cancelled its previously announced earnings call scheduled for July 30.
(1) The Partnership's current financial interests in the development companies are: 100% in the Anchor Systems and 5% in the Additional Systems. Because the Partnership owns a controlling interest in each of these two development companies, it fully consolidates their financial results. CNX Gathering, which is wholly owned by CNX Resources Corporation, owns a 95% noncontrolling interest in the Additional Systems of the Partnership.
(2) Adjusted EBITDA and Distributable Cash Flow are not measures that are recognized under accounting principles generally accepted in the U.S. ("GAAP"). Definitions and reconciliations of these non-GAAP measures to GAAP reporting measures appear in the financial tables which follow.
* * * * *
CNX Midstream is a growth-oriented master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available at our website www.cnxmidstream.com.
* * * * *
This press release is intended to be a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of CNX Midstream's distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business. Accordingly, CNX Midstream's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not CNX Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.
* * * * *
This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words "will," "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. You should not place undue reliance on forward-looking statements. Our forward-looking statements include statements about our business strategy, our industry, our future profitability, our expected capital expenditures and the impact of such expenditures on our performance, the costs of being a publicly traded partnership and our capital programs. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. You are cautioned not to place undue reliance on any forward-looking statements. Although forward-looking statements reflect our good faith beliefs at the time they are made, they involve known and unknown risks, uncertainties and other factors. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: the possibility that the market price of CNX Resource's common stock will fluctuate prior to the completion of the take-private transaction causing the value of the merger consideration to change; the risk that a condition to the closing of the take-private transaction may not be satisfied on a timely basis, if at all; the timing of the completion of the take-private transaction; the substantial transaction-related costs that may be incurred by CNX Resources and CNXM in connection with the take-private transaction; the possibility that CNX Resources and CNXM may, under certain specified circumstances, be responsible for the other party's expenses; the possibility that CNX Resources and CNXM may be the targets of securities class actions and derivative lawsuits; the limited duties CNXM's partnership agreement places on the general partner for actions taken by the general partner; the risk that certain officers and directors of CNX Resources and the general partner have interests in the take-private transaction that are different from, or in addition to, the interests they may have as CNXM's unitholders or the CNX Resources' stockholders, respectively; the possibility that financial projections by CNX Resources and CNXM may not prove to be reflective of actual future results; our ability to grow, or maintain, our current rate of cash distributions; our reliance on our customers, including our Sponsor, CNX Resources Corporation; the effects of changes in market prices of natural gas, NGLs and crude oil on our customers' drilling and development plans on our dedicated acreage and the volumes of natural gas and condensate that are produced on our dedicated acreage because of the natural decline in production from existing wells, our success, in part, depends on our ability to maintain or increase natural gas and condensate throughput volumes on our midstream systems, which depends on the level of development and completion activity on acreage dedicated to us; changes in our customers' drilling and development plans in the Marcellus Shale and Utica Shale, and our customers' ability to meet such plans; our ability to maintain or increase volumes of natural gas and condensate on our midstream systems; the demand for natural gas and condensate gathering services, changes in general economic condition, and competitive conditions in our industry, including competition from the same and alternative energy sources; actions taken by third-party operators, gatherers, processors and transporters; our ability to successfully implement our business plan; our ability to complete internal growth projects on time and on budget; our ability to generate adequate returns on capital; the price and availability of debt and equity financing; the availability and price of oil and natural gas to the consumer compared to the price of alternative and competing fuels; prolonged customer curtailments; the availability of storage capacity for refined products such as crude, and refinery inputs including condensate, c5+ and butane; energy efficiency and technology trends; operating hazards and other risks incidental to our midstream services; natural disasters, weather-related delays, casualty losses and other matters beyond our control; the impact of outbreaks of communicable diseases such as the novel highly transmissible and pathogenic coronavirus (COVID-19) on business activity, the Partnership's operations and national and global economic conditions, generally; interest rates; labor relations; defaults by our customers under our gathering agreements; changes in availability and cost of capital; changes in our tax status; the effect of existing and future laws and government regulations; and the effects of future litigation.
Although forward-looking statements reflect CNXM's good faith beliefs at the time they are made, they involve known and unknown risks, uncertainties and other factors. For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, including, among others, that CNXM's business plans may change as circumstances warrant, please refer to the "Risk Factors" and "Forward-Looking Statements" sections of CNXM's Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Commission on February 10, 2020 and subsequent Quarterly Reports on Form 10-Q. CNXM undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.
CNX MIDSTREAM PARTNERS LP | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(Dollars in thousands, except per unit data) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenue | |||||||||||||||
Gathering revenue — related party | $ | 54,203 | $ | 59,205 | $ | 116,381 | $ | 112,981 | |||||||
Gathering revenue — third party | 11,749 | 18,896 | 29,702 | 37,339 | |||||||||||
Miscellaneous income | 86 | — | 151 | — | |||||||||||
Total Revenue | 66,038 | 78,101 | 146,234 | 150,320 | |||||||||||
Expenses | |||||||||||||||
Operating expense — related party | 4,367 | 6,514 | 8,195 | 12,062 | |||||||||||
Operating expense — third party | 6,049 | 6,188 | 14,645 | 12,162 | |||||||||||
General and administrative expense — related party | 2,748 | 4,027 | 5,605 | 7,994 | |||||||||||
General and administrative expense — third party | 1,585 | 1,364 | 4,350 | 2,900 | |||||||||||
Loss on asset sales and abandonments | 1,663 | — | 1,652 | 7,229 | |||||||||||
Depreciation expense | 8,209 | 5,860 | 15,787 | 11,510 | |||||||||||
Interest expense | 8,617 | 7,685 | 17,410 | 15,024 | |||||||||||
Total Expense | 33,238 | 31,638 | 67,644 | 68,881 | |||||||||||
Net Income | 32,800 | 46,463 | 78,590 | 81,439 | |||||||||||
Less: Net income (loss) attributable to noncontrolling interest | 250 | (282) | 821 | (413) | |||||||||||
Net Income Attributable to General and Limited Partner | $ | 32,550 | $ | 46,745 | $ | 77,769 | $ | 81,852 | |||||||
Calculation of Limited Partner Interest in Net Income: | |||||||||||||||
Net Income Attributable to General and Limited Partner Ownership | $ | 32,550 | $ | 46,745 | $ | 77,769 | $ | 81,852 | |||||||
Less: General partner interest in net income, including incentive | — | 6,325 | — | 11,604 | |||||||||||
Limited partner interest in net income | $ | 32,550 | $ | 40,420 | $ | 77,769 | $ | 70,248 | |||||||
Earnings per limited partner unit: | |||||||||||||||
Basic | $ | 0.36 | $ | 0.63 | $ | 0.87 | $ | 1.10 | |||||||
Diluted | $ | 0.35 | $ | 0.63 | $ | 0.84 | $ | 1.10 | |||||||
Weighted average number of limited partner units outstanding (in | |||||||||||||||
Basic | 89,799 | 63,732 | 89,798 | 63,715 | |||||||||||
Diluted | 92,817 | 63,755 | 92,820 | 63,759 | |||||||||||
Cash distributions declared per unit (*) | $ | 0.5000 | $ | 0.3865 | $ | 0.5829 | $ | 0.7597 | |||||||
(*) Represents the cash distributions declared during the month following the end of each respective quarterly period. |
CNX MIDSTREAM PARTNERS LP | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Dollars in thousands, except number of limited partner units) | |||||||
(Unaudited) | |||||||
June 30, | December 31, | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash | $ | 989 | $ | 31 | |||
Receivables — related party | 16,583 | 21,076 | |||||
Receivables — third party | 8,615 | 7,935 | |||||
Other current assets | 1,672 | 1,976 | |||||
Total Current Assets | 27,859 | 31,018 | |||||
Property and Equipment: | |||||||
Property and equipment | 1,329,543 | 1,302,566 | |||||
Less — accumulated depreciation | 122,804 | 106,975 | |||||
Property and Equipment — Net | 1,206,739 | 1,195,591 | |||||
Other Assets: | |||||||
Operating lease right-of-use assets | 1,594 | 4,731 | |||||
Other assets | 2,698 | 3,262 | |||||
Total Other Assets | 4,292 | 7,993 | |||||
TOTAL ASSETS | $ | 1,238,890 | $ | 1,234,602 | |||
LIABILITIES AND PARTNERS' CAPITAL | |||||||
Current Liabilities: | |||||||
Trade accounts payable | $ | 9,312 | $ | 15,683 | |||
Accrued interest payable | 7,794 | 7,973 | |||||
Accrued liabilities | 14,825 | 43,634 | |||||
Due to related party | 52,191 | 4,787 | |||||
Total Current Liabilities | 84,122 | 72,077 | |||||
Other Liabilities: | |||||||
Long-term liabilities — related party | 85,000 | — | |||||
Long-Term Debt: | |||||||
Revolving credit facility | 319,000 | 311,750 | |||||
Senior Notes | 394,635 | 394,162 | |||||
Total Long-Term Debt | 713,635 | 705,912 | |||||
TOTAL LIABILITIES | 882,757 | 777,989 | |||||
Partners' Capital and Noncontrolling Interest: | |||||||
Limited partner units (89,799,224 issued and outstanding at June 30, 2020 and | 251,862 | 380,473 | |||||
Class B units (3,000,000 issued and outstanding at June 30, 2020 and none issued and | 34,590 | — | |||||
General partner interest | — | 7,280 | |||||
Partners' capital attributable to CNX Midstream Partners LP | 286,452 | 387,753 | |||||
Noncontrolling interest | 69,681 | 68,860 | |||||
Total Partners' Capital and Noncontrolling Interest | 356,133 | 456,613 | |||||
TOTAL LIABILITIES AND PARTNERS' CAPITAL | $ | 1,238,890 | $ | 1,234,602 |
CNX MIDSTREAM PARTNERS LP | |||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(Dollars in thousands) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Cash Flows from Operating Activities: | |||||||||||||||
Net income | $ | 32,800 | $ | 46,463 | $ | 78,590 | $ | 81,439 | |||||||
Adjustments to reconcile net income to net cash provided by | |||||||||||||||
Depreciation expense and amortization of debt issuance costs | 8,680 | 6,328 | 16,730 | 12,449 | |||||||||||
Unit-based compensation | 380 | 541 | 884 | 1,153 | |||||||||||
Loss on asset sales and abandonments | 1,663 | — | 1,652 | 7,229 | |||||||||||
Other | 133 | 30 | 144 | 41 | |||||||||||
Changes in assets and liabilities: | |||||||||||||||
Due to/from affiliate | 5,962 | (1,346) | 2,256 | (3,269) | |||||||||||
Receivables — third party | (3,635) | (101) | (680) | 347 | |||||||||||
Other current and non-current assets | 2,035 | 1,932 | 3,535 | (7,039) | |||||||||||
Accounts payable and other accrued liabilities | (2,523) | 20,906 | (17,493) | 32,316 | |||||||||||
Net Cash Provided by Operating Activities | 45,495 | 74,753 | 85,618 | 124,666 | |||||||||||
Cash Flows from Investing Activities: | |||||||||||||||
Capital expenditures | (14,377) | (104,310) | (47,036) | (182,867) | |||||||||||
Proceeds from sale of assets | 80 | — | 80 | — | |||||||||||
Net Cash Used in Investing Activities | (14,297) | (104,310) | (46,956) | (182,867) | |||||||||||
Cash Flows from Financing Activities: | |||||||||||||||
Contributions from general partner and noncontrolling interest | — | — | — | 30 | |||||||||||
Vested units withheld for unitholders taxes | — | (26) | (309) | (690) | |||||||||||
Quarterly distributions to unitholders | (7,444) | (28,940) | (44,645) | (56,208) | |||||||||||
Net (payments) borrowings on secured $600.0 million credit facility | (28,000) | 71,350 | 7,250 | 124,000 | |||||||||||
Debt issuance costs | — | (1,220) | — | (1,220) | |||||||||||
Net Cash (Used in) Provided by Financing Activities | (35,444) | 41,164 | (37,704) | 65,912 | |||||||||||
Net (Decrease) Increase in Cash | (4,246) | 11,607 | 958 | 7,711 | |||||||||||
Cash at Beginning of Period | 5,235 | 70 | 31 | 3,966 | |||||||||||
Cash at End of Period | $ | 989 | $ | 11,677 | $ | 989 | $ | 11,677 |
CNX MIDSTREAM PARTNERS LP
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW
(Dollars in thousands)
Definition of Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
We define EBITDA as net income (loss) before net interest expense, depreciation and amortization, and Adjusted EBITDA as EBITDA adjusted for gains or losses on asset sales and abandonments and other non-cash items which should not be included in the calculation of Distributable Cash Flow. EBITDA and Adjusted EBITDA are used as supplemental financial measures by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
We believe that the presentation of EBITDA and Adjusted EBITDA provides information that is useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to EBITDA and Adjusted EBITDA are Net Income and Net Cash Provided by Operating Activities. EBITDA and Adjusted EBITDA should not be considered an alternative to Net Income, Net Cash Provided by Operating Activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA and Adjusted EBITDA exclude some, but not all, items that affect Net Income or Net Cash Provided by Operating Activities, and these measures may vary from those of other companies. As a result, EBITDA and Adjusted EBITDA as presented below may not be comparable to similarly titled measures of other companies.
Distributable Cash Flow
We define Distributable Cash Flow as Adjusted EBITDA less net income attributable to noncontrolling interest, cash interest expense and maintenance capital expenditures, each net to the Partnership. Distributable Cash Flow does not reflect changes in working capital balances.
Distributable Cash Flow is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
We believe that the presentation of Distributable Cash Flow in this release provides information that is useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Distributable Cash Flow are Net Income and Net Cash Provided by Operating Activities. Distributable Cash Flow should not be considered an alternative to Net Income, Net Cash Provided by Operating Activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Distributable Cash Flow excludes some, but not all, items that affect Net Income or Net Cash Provided by Operating Activities, and these measures may vary from those of other companies. As a result, our Distributable Cash Flow may not be comparable to similarly titled measures that other companies may use.
Distribution Coverage Ratio
We define Distributable Coverage Ratio as Distributable Cash Flow divided by cash distributions declared or paid.
Free Cash Flow
We define Free Cash Flow as Distributable Cash Flow less expansion capital expenditures, net to the Partnership.
The following table presents a reconciliation of the non-GAAP measures of Adjusted EBITDA and Distributable Cash Flow to the most directly comparable GAAP financial measures of Net Income and Net Cash Provided by Operating Activities.
Three Months Ended | Six Months Ended | |||||||||||||||
(Unaudited) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Net Income | $ | 32,800 | $ | 46,463 | $ | 78,590 | $ | 81,439 | ||||||||
Depreciation expense | 8,209 | 5,860 | 15,787 | 11,510 | ||||||||||||
Interest expense | 8,617 | 7,685 | 17,410 | 15,024 | ||||||||||||
EBITDA | 49,626 | 60,008 | 111,787 | 107,973 | ||||||||||||
Non-cash unit-based compensation expense | 380 | 541 | 884 | 1,153 | ||||||||||||
Loss on asset sales and abandonments | 1,663 | — | 1,652 | 7,229 | ||||||||||||
Adjusted EBITDA | 51,669 | 60,549 | 114,323 | 116,355 | ||||||||||||
Less: | ||||||||||||||||
Net income (loss) attributable to noncontrolling interest | 250 | (282) | 821 | (413) | ||||||||||||
Depreciation expense attributable to noncontrolling interest | 483 | 395 | 963 | 789 | ||||||||||||
Other expenses attributable to noncontrolling interest | 1,154 | 1,098 | 2,327 | 2,218 | ||||||||||||
Loss on asset sales attributable to noncontrolling interest | 110 | — | 110 | — | ||||||||||||
Adjusted EBITDA Attributable to General and Limited Partner | $ | 49,672 | $ | 59,338 | $ | 110,102 | $ | 113,761 | ||||||||
Less: cash interest expense, net to the Partnership | 7,286 | 7,282 | 15,191 | 13,886 | ||||||||||||
Less: maintenance capital expenditures, net to the Partnership | 5,310 | 5,168 | 10,983 | 10,003 | ||||||||||||
Distributable Cash Flow | $ | 37,076 | $ | 46,888 | $ | 83,928 | $ | 89,872 | ||||||||
Net Cash Provided by Operating Activities | $ | 45,495 | $ | 74,753 | $ | 85,618 | $ | 124,666 | ||||||||
Interest expense | 8,617 | 7,685 | 17,410 | 15,024 | ||||||||||||
Loss on asset sales and abandonments | 1,663 | — | 1,652 | 7,229 | ||||||||||||
Other, including changes in working capital | (4,106) | (21,889) | 9,643 | (30,564) | ||||||||||||
Adjusted EBITDA | 51,669 | 60,549 | 114,323 | 116,355 | ||||||||||||
Less: | ||||||||||||||||
Net income (loss) attributable to noncontrolling interest | 250 | (282) | 821 | (413) | ||||||||||||
Depreciation expense attributable to noncontrolling interest | 483 | 395 | 963 | 789 | ||||||||||||
Other expenses attributable to noncontrolling interest | 1,154 | 1,098 | 2,327 | 2,218 | ||||||||||||
Loss on asset sales attributable to noncontrolling interest | 110 | — | 110 | — | ||||||||||||
Adjusted EBITDA Attributable to General and Limited Partner | $ | 49,672 | $ | 59,338 | $ | 110,102 | $ | 113,761 | ||||||||
Less: cash interest expense, net to the Partnership | 7,286 | 7,282 | 15,191 | 13,886 | ||||||||||||
Less: maintenance capital expenditures, net to the Partnership | 5,310 | 5,168 | 10,983 | 10,003 | ||||||||||||
Distributable Cash Flow | $ | 37,076 | $ | 46,888 | $ | 83,928 | $ | 89,872 | ||||||||
Less: expansion capital expenditures, net to the Partnership | 8,755 | 98,204 | $ | 34,458 | $ | 169,306 | ||||||||||
Free Cash Flow | $ | 28,321 | $ | (51,316) | $ | 49,470 | $ | (79,434) |
The following table presents a reconciliation of the non-GAAP measures Adjusted EBITDA and Distributable Cash Flow by quarter and for the most recently completed twelve month period with the most directly comparable GAAP financial measures, which are Net Income and Net Cash Provided by Operating Activities.
(Unaudited) | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Twelve | |||||||||||||||
Net Income | $ | 43,665 | $ | 50,196 | $ | 45,790 | $ | 32,800 | $ | 172,451 | ||||||||||
Depreciation expense | 6,184 | 6,677 | 7,578 | 8,209 | 28,648 | |||||||||||||||
Interest expense | 7,601 | 7,668 | 8,793 | 8,617 | 32,679 | |||||||||||||||
EBITDA | 57,450 | 64,541 | 62,161 | 49,626 | 233,778 | |||||||||||||||
Non-cash unit-based compensation expense | 328 | 399 | 504 | 380 | 1,611 | |||||||||||||||
(Gain) loss on asset sales and abandonments | — | — | (11) | 1,663 | 1,652 | |||||||||||||||
Adjusted EBITDA | 57,778 | 64,940 | 62,654 | 51,669 | 237,041 | |||||||||||||||
Less: | ||||||||||||||||||||
Net (loss) income attributable to noncontrolling interest | (298) | 1,700 | 571 | 250 | 2,223 | |||||||||||||||
Depreciation expense attributable to noncontrolling interest | 392 | 399 | 480 | 483 | 1,754 | |||||||||||||||
Other expenses attributable to noncontrolling interest | 1,152 | 1,136 | 1,173 | 1,154 | 4,615 | |||||||||||||||
Loss on asset sales attributable to noncontrolling interest | — | — | — | 110 | 110 | |||||||||||||||
Adjusted EBITDA Attributable to General and Limited Partner | $ | 56,532 | $ | 61,705 | $ | 60,430 | $ | 49,672 | $ | 228,339 | ||||||||||
Less: cash interest expense, net to the Partnership | 7,528 | 7,812 | 7,905 | 7,286 | 30,531 | |||||||||||||||
Less: maintenance capital expenditures, net to the Partnership | 5,388 | 5,494 | 5,673 | 5,310 | 21,865 | |||||||||||||||
Distributable Cash Flow | $ | 43,616 | $ | 48,399 | $ | 46,852 | $ | 37,076 | $ | 175,943 | ||||||||||
Net Cash Provided by Operating Activities | $ | 51,014 | $ | 41,382 | $ | 40,123 | $ | 45,495 | $ | 178,014 | ||||||||||
Interest expense | 7,601 | 7,668 | 8,793 | 8,617 | 32,679 | |||||||||||||||
(Gain) loss on asset sales and abandonments | — | — | (11) | 1,663 | 1,652 | |||||||||||||||
Other, including changes in working capital | (837) | 15,890 | 13,749 | (4,106) | 24,696 | |||||||||||||||
Adjusted EBITDA | 57,778 | 64,940 | 62,654 | 51,669 | 237,041 | |||||||||||||||
Less: | ||||||||||||||||||||
Net (loss) income attributable to noncontrolling interest | (298) | 1,700 | 571 | 250 | 2,223 | |||||||||||||||
Depreciation expense attributable to noncontrolling interest | 392 | 399 | 480 | 483 | 1,754 | |||||||||||||||
Other expenses attributable to noncontrolling interest | 1,152 | 1,136 | 1,173 | 1,154 | 4,615 | |||||||||||||||
Loss on asset sales attributable to noncontrolling interest | — | — | — | 110 | 110 | |||||||||||||||
Adjusted EBITDA Attributable to General and Limited Partner | $ | 56,532 | $ | 61,705 | $ | 60,430 | $ | 49,672 | $ | 228,339 | ||||||||||
Less: cash interest expense, net to the Partnership | 7,528 | 7,812 | 7,905 | 7,286 | 30,531 | |||||||||||||||
Less: maintenance capital expenditures, net to the Partnership | 5,388 | 5,494 | 5,673 | 5,310 | 21,865 | |||||||||||||||
Distributable Cash Flow | $ | 43,616 | $ | 48,399 | $ | 46,852 | $ | 37,076 | $ | 175,943 | ||||||||||
Distributions Declared | $ | 32,371 | $ | 37,201 | $ | 7,444 | $ | 44,900 | $ | 121,916 | ||||||||||
Distribution Coverage Ratio - Declared | 1.35x | 1.30x | 6.29x | 0.83x | 1.44x | |||||||||||||||
Distributable Cash Flow | $ | 43,616 | $ | 48,399 | $ | 46,852 | $ | 37,076 | $ | 175,943 | ||||||||||
Distributions Paid | $ | 30,637 | $ | 32,371 | $ | 37,201 | $ | 7,444 | $ | 107,653 | ||||||||||
Distribution Coverage Ratio - Paid | 1.42x | 1.50x | 1.26x | 4.98x | 1.63x |
Development Companies Jointly Owned by CNX Gathering LLC and CNX Midstream Partners LP | |||||||||||
Operating Income Summary, Selected Operating Statistics and Capital Investment | |||||||||||
(Dollars in thousands) | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended June 30, 2020 | |||||||||||
Anchor | Additional | Total | |||||||||
Income Summary | |||||||||||
Revenue | $ | 63,060 | $ | 2,978 | $ | 66,038 | |||||
Expenses | 30,524 | 2,714 | 33,238 | ||||||||
Net Income | $ | 32,536 | $ | 264 | $ | 32,800 | |||||
Operating Statistics - Gathered Volumes | |||||||||||
Dry gas (BBtu/d) | 993 | 48 | 1,041 | ||||||||
Wet gas (BBtu/d) | 327 | 46 | 373 | ||||||||
Other (BBtu/d)* | 273 | — | 273 | ||||||||
Total Gathered Volumes | 1,593 | 94 | 1,687 | ||||||||
Capital Investment | |||||||||||
Maintenance capital | $ | 5,294 | $ | 328 | $ | 5,622 | |||||
Expansion capital | 8,755 | — | 8,755 | ||||||||
Total Capital Investment | $ | 14,049 | $ | 328 | $ | 14,377 | |||||
Capital Investment Net to CNX Midstream Partners LP | |||||||||||
Maintenance capital | $ | 5,294 | $ | 16 | $ | 5,310 | |||||
Expansion capital | 8,755 | — | 8,755 | ||||||||
Total Capital Investment Net to CNX Midstream Partners LP | $ | 14,049 | $ | 16 | $ | 14,065 | |||||
*Includes third-party volumes we gather under high-pressure short-haul agreements (271 BBtu/d) as well as condensate handling. |
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SOURCE CNX Midstream Partners LP
PITTSBURGH, July 27, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") and CNX Midstream Partners LP (NYSE: CNXM) ("CNX Midstream" or the "Partnership") today announced that they have entered into a definitive merger agreement pursuant to which CNX will acquire all of the outstanding common units of CNX Midstream that it does not already own in exchange for CNX common stock valued at approximately $357 million, based on the most recent closing price of CNX common stock.
Under the merger agreement, each outstanding common unit of CNX Midstream that CNX does not already own will be converted into 0.88 shares of CNX common stock, representing a 15% premium to the average exchange ratio during the 30 trading days ended July 24, 2020.
"We believe that this take-in transaction of CNX Midstream Partners is the optimal solution for all relevant stakeholders given the near- and long-term view of the MLP market," commented Nicholas J. DeIuliis, president and CEO. "We expect the combined entity to be an even stronger company with a lower cost of capital and increased investable free cash flow."
Don W. Rush, CFO, added, "Following the completion of the transaction, CNX is expected to be the lowest cost producer in the Appalachian Basin, with increased operational flexibility and basin leading operational metrics. Stockholders of CNX and unitholders of CNX Midstream are expected to benefit from a combination of synergies including improved equity trading liquidity, enhanced financial flexibility to optimize cash flows, and an improved credit profile."
Additional Transaction Terms and Details
Pursuant to the terms of the merger agreement, CNX will acquire all of the approximately 42.1 million outstanding common units of CNX Midstream that it does not already own at a fixed exchange ratio of 0.88 shares of CNX common stock for each publicly held common unit of CNX Midstream. CNX Midstream common units will no longer be publicly traded after the transaction. In aggregate, CNX will issue approximately 37 million shares in connection with the proposed transaction, representing approximately 17 percent of the total shares outstanding of the pro forma combined entity.
Following completion of the transaction, all senior notes of CNX Midstream will remain outstanding and no additional payments will be made to CNX in connection with the elimination of the incentive distribution rights transaction from January of this year. The transaction terms were negotiated, reviewed and approved by the Conflicts Committee of the CNXM Board and approved by the CNXM Board. The CNX Midstream Conflicts Committee is composed of the independent members of the CNXM Board. The Board of Directors of CNX also approved the merger agreement.
Conditions to Closing
Subject to customary approvals and conditions, the transaction is expected to close in the fourth quarter of 2020. The transaction is subject to majority approval by CNX Midstream common unitholders and the effectiveness of a registration statement related to the issuance of the new CNX shares to CNX Midstream's unitholders. Pursuant to a support agreement entered into in connection with the transaction, CNX has agreed to vote the CNXM common units that it owns in favor of the transaction. CNX currently owns approximately 53.1% of the outstanding common units.
Advisors
Citi is acting as exclusive financial advisor and Latham & Watkins LLP is acting as legal advisor to CNX. Intrepid Partners, LLC is acting as exclusive financial advisor and Baker Botts L.L.P. is acting as legal advisor to the Conflicts Committee of the CNXM Board.
Distribution Declaration
The Board of Directors of CNX Midstream GP LLC (the "CNXM Board"), which is the general partner of the Partnership, has declared a cash distribution of $0.50 per unit with respect to the second quarter of 2020. The distribution will be made on August 14, 2020 to unitholders of record as of the close of business on August 7, 2020. Pursuant to the merger agreement, CNX Midstream may not make any other distributions on the common units without the consent of CNX.
Video Presentation
CNX and the Partnership have pre-recorded a video presentation that thoroughly examines the transaction and its implications, which will be available at 6:45 a.m. Eastern Time on Monday, July 27. To access the video presentation please click here, or visit the "Investor Relations" page of CNX's website at www.cnx.com, or on the 'News and Events' page of the CNX Midstream website at cnxmidstream.com. Any presentation materials will be available on each company's website.
Conference Call Details
CNX and the Partnership will host a live webcast on July 27, 2020 to discuss the transaction. The call will begin at 9:00am Eastern Time followed by a live Q&A session with management.
To access the webcast, please visit the "Investor Relations" page of CNX's website at www.cnx.com, or on the 'News and Events' page of the CNX Midstream website at cnxmidstream.com. Any presentation materials will be available on each company's website.
Alternatively, the call and Q&A can be accessed as follows:
A replay of the call will be available on CNX's website for approximately seven days.
Earnings Calls
As previously disclosed, CNX will hold its earnings call for the second quarter on Thursday, July 30.
Conference Call Information
CNX Resources (NYSE: CNX)
In light of the transaction announcement, CNX Midstream has cancelled its previously announced earnings call scheduled for July 30.
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. CNXM's assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on CNXM's website www.cnxmidstream.com.
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Without limiting the generality of the foregoing, forward-looking statements contained in this communication include statements relying on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside the control of CNX and CNX Midstream, which could cause actual results to differ materially from such statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include, but are not limited to, statements regarding the expected benefits of the proposed transaction to CNX and CNX Midstream and their stockholders and unitholders, respectively; the anticipated completion of the proposed transaction and the timing thereof; the expectation that CNX votes the CNXM common units that it owns in favor of the proposed transaction; and plans and objectives of management for future operations. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "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.
While CNX and CNX Midstream believe that the assumptions concerning future events are reasonable, they caution that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of their businesses. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: the failure to realize the anticipated costs savings, synergies and other benefits of the transaction; the possible diversion of management time on transaction-related issues; the risk that the requisite approvals to complete the transaction are not obtained; local, regional and national economic conditions and the impact they may have on CNX, CNX Midstream and their customers; the impact of outbreaks of communicable diseases such as the novel highly transmissible and pathogenic coronavirus (COVID-19) on business activity, CNX's and CNXM's operations and national and global economic conditions, generally; conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for oil or natural gas or a sustained decrease in the price of oil or natural gas; the financial condition of CNX's or CNX Midstream's customers; any non-performance by customers of their contractual obligations; changes in customer, employee or supplier relationships resulting from the transaction; changes in safety, health, environmental and other regulations; the results of any reviews, investigations or other proceedings by government authorities; and the performance of CNX Midstream.
The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019, and Quarterly Report on Form 10-Q for the three months ended March 31, 2020, each filed with the Securities and Exchange Commission, and any subsequent reports filed with the Securities and Exchange Commission.
No Offer or Solicitation
This release is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities pursuant to the transaction or otherwise, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Important Additional Information Regarding the Transaction Will Be Filed With the SEC
In connection with the proposed transaction, CNX will file a registration statement on Form S-4, including a consent statement/prospectus of CNX and CNX Midstream, with the SEC. INVESTORS AND SECURITY HOLDERS OF CNX AND CNX MIDSTREAM ARE ADVISED TO CAREFULLY READ THE REGISTRATION STATEMENT AND CONSENT STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION, THE PARTIES TO THE TRANSACTION AND THE RISKS ASSOCIATED WITH THE TRANSACTION. A consent statement/prospectus will be sent to security holders of CNX Midstream in connection with the solicitation of consents of CNX Midstream unitholders. Investors and security holders may obtain a free copy of the consent statement/prospectus (when available) and other relevant documents filed by CNX and CNX Midstream with the SEC from the SEC's website at www.sec.gov. Security holders and other interested parties will also be able to obtain, without charge, a copy of the consent statement/prospectus and other relevant documents (when available) from www.cnx.com under the tab "Investor Relations" and then under the heading "SEC Filings."
Participants in the Solicitation
CNX, CNX Midstream and their respective directors, executive officers and certain other members of management may be deemed to be participants in the solicitation of consents in respect of the transaction. Information about these persons is set forth in CNX's proxy statement relating to its 2020 Annual Meeting of Stockholders, which was filed with the SEC on March 24, 2020, and CNX Midstream's Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, 2019, which were filed with the SEC on February 10, 2020 and April 27, 2020, respectively, and subsequent statements of changes in beneficial ownership on file with the SEC. Security holders and investors may obtain additional information regarding the interests of such persons, which may be different than those of the respective companies' security holders generally, by reading the consent statement/prospectus and other relevant documents regarding the transaction, which will be filed with the SEC.
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SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, July 6, 2020 /PRNewswire/ -- CNX Resources Corp. (NYSE: CNX) and CNX Midstream Partners LP (NYSE: CNXM) will issue their second quarter earnings releases at 6:45 a.m. Eastern Time on Thursday, July 30. These releases will be followed by conference calls and live webcasts, which will be available on the 'Investor Relations' page of the CNX Resources website, and the 'News and Events' page of the CNX Midstream website. Any presentation materials will be available at 6:45 a.m. Eastern Time on Thursday, July 30, on each company's website.
Conference Call Information
CNX Resources (NYSE: CNX)
CNX Midstream Partners (NYSE: CNXM)
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. CNXM's assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on CNXM's website www.cnxmidstream.com.
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SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, June 11, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or the "company") today announced an operational update.
CNX continues to optimize its long-term intrinsic value per share by safely and compliantly generating free cash flow (FCF) per share on a regular basis. The following is an update of key drivers in that effort.
Production Profile Optimization
CNX began sculpting its production profile since May 1st, and the company has shut in as much as 375 MMcf per day of production to take advantage of the large positive spread between summer and winter natural gas prices. The company expects the shut-in amount to decline to approximately 300 MMcf per day of production by July and will adjust as conditions warrant. This production profile optimization would result in over $30 million(a) in incremental FCF over the next few years, assuming the wells are turned back online November 1st and using current forward strip pricing. In a series of related transactions, the company monetized hedges in the summer months of 2020 and added new hedges in the winter months, which locked in a significant portion of this FCF improvement.
SWPA Marcellus Efficiencies
CNX continues to achieve capital efficiency improvements in its core Southwest Pennsylvania (SWPA) Marcellus Shale wells. The company's most recent eight-well Marcellus Shale pad, RHL 99, was stimulated by Evolution Well Services' electric frac fleet and averaged 1,570 lateral feet per day and a peak of 2,600 lateral feet in a 24-hour period. During stimulation of the RHL 99 pad, the company used approximately 140,000 Mcf of CNX's clean burning natural gas to power the fleet in lieu of diesel, which equates to a fuel savings of approximately $2.4 million. Chief Operating Officer Chad Griffith stated, "The company is cruising at high efficiency. Operational results validate our commitment to move to an electric frac fleet over a year ago, which a number of other operators have since adopted. Our operations team continues to be thought leaders in the basin, which will continue to improve capital efficiency. And it is important to note that RHL 99's cost per foot is already lower than the cost per foot assumed in our seven-year FCF plan laid out in our first quarter conference call."
PA Utica Efficiencies
During the quarter, the company also drilled two SWPA Utica Shale wells at a record high pace and a record low cost. When compared to prior Pennsylvania Utica Shale wells drilled, the average drilling costs decreased from $957 per foot to $447 per foot, or a decline of 53%, with drilling times decreased by 22%. When completed, the company expects the total well costs for these two SWPA Utica wells to be approximately $1,375 per lateral foot, far below the $1,800 per lateral foot assumed in the seven-year FCF plan. Also, the company increased its estimated ultimate recovery (EUR) expectations for its most recent Central Pennsylvania (CPA) Utica well, the Bell Point 6, to a range of 4.5–5.0 Bcfe per thousand feet, which makes it the company's most productive Utica well to date.
Core Inventory
Chief Operating Officer Chad Griffith commented, "Bell Point 6's strong production profile illustrates the potential of our over 100,000 acres of CPA Utica. Coupled with the recent cost performance of the SWPA Utica wells, our Pennsylvania Utica offers compelling economic returns on future capital investment opportunities. With our SWPA Marcellus inventory already providing over a decade of inventory at a maintenance of production activity-set, the CPA Utica delivers multiple decades of core inventory and optionality to grow when conditions allow for good rates of return."
Capital Efficiency and Base Decline
During the quarter, the substantial midstream buildout supporting the company's SWPA Marcellus Shale development plan was completed with only incremental compression and well connects needed going forward. This best-in-basin high pressure / low pressure gathering network allows the company's wells to flow at pressures that improve economics, increase ultimate recoveries, and maintain reservoir and completion integrity over the productive lives of the wells. Under the company's maintenance plan, the PDP volume will continue to grow resulting in an average base decline of approximately 20% through the 2022-2026 FCF plan.
Chief Financial Officer Don Rush stated, "These metrics combine to allow the company to be highly efficient and meet or exceed our seven-year, $3 billion consolidated FCF plan(a)."
(a) CNX is unable to provide a reconciliation of projected financial results contained in this release, including FCF to its respective comparable financial measure calculated in accordance with GAAP. This is due to our inability to calculate the comparable GAAP projected metrics, including operating income, given the unknown effect, timing, and potential significance of certain income statement items.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Cautionary Statements:
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Without limiting the generality of the foregoing, forward-looking statements contained in this communication specifically include statements regarding future financial performance, including free cash flow, and the company's plans to turn back online the shut-in production volumes and expected well costs. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019, and Quarterly Report on Form 10-Q for the three months ended March 31, 2020, each filed with the Securities and Exchange Commission, and any subsequent reports filed with the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, June 3, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or the "company") today announced that it intends to redeem $400 million (the "Called Notes") of its $823.795 million aggregate principal amount of outstanding 5.875% senior notes due 2022 (CUSIP No. 20854P AL3) (the "Notes").
The redemption date for the Called Notes is expected to be June 29, 2020 (the "Redemption Date"). The redemption price on the Redemption Date will equal 100% of the principal amount of the Called Notes to be redeemed, plus accrued and unpaid interest prior to, but not including, the Redemption Date.
On May 29, 2020, Wells Fargo Bank, National Association, as trustee and paying agent, distributed a notice of redemption to all registered holders of the Notes.
Finance Update
Following the $400 million redemption of the Called Notes, the company will have a remaining aggregate principal balance of approximately $424 million and the company will have paid down the aggregate principal amount of these notes by approximately $472 million year-to-date.
The company continues to expect its balance sheet to improve, and assuming current forward gas prices and that free cash flow (FCF) generated by the company is used to reduce debt, the company remains on track to have stand-alone E&P leverage drop to below 2.0x in 2021. Also, stand-alone annual interest expense in 2021 is on track to be approximately 40% lower than it was in 2018, which highlights how CNX's balance sheet and capital structure continues to strengthen. The company's long-term FCF plan provides the optionality to pay off all outstanding debt before its due date.
Don Rush, executive vice president and CFO commented, "CNX continues to showcase the strength and depth of its asset base, cost structure, and financial discipline by lowering its leverage ratio, net debt, and annual interest expense even in these challenging times. Also, our 7-year FCF plan provides the optionality to continue to pay off all outstanding debt overtime should we choose to."
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Cautionary Statements:
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Without limiting the generality of the foregoing, forward-looking statements contained in this communication specifically include statements regarding the proposed redemption and the completion of such redemption and the company's plans to turn back online the shut-in production volumes. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019, and Quarterly Report on Form 10-Q for the three months ended March 31, 2020, each filed with the Securities and Exchange Commission, and any subsequent reports filed with the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, May 1, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced the closing of its previously announced private offering of $345.0 million aggregate principal amount of its 2.25% convertible senior notes due 2026 (the "Notes"), including the full exercise of the $45.0 million option to purchase additional Notes granted by CNX to the initial purchasers. The Notes are fully and unconditionally guaranteed, on a senior, unsecured basis, by the Company's subsidiaries that currently or in the future guarantee the Company's existing 5.875% senior notes due 2022 or 7.25% senior notes due 2027.
In connection with the pricing of the Notes, CNX entered into privately negotiated capped call transactions with certain of the initial purchasers or their respective affiliates and/or other financial institutions (the "option counterparties"). The capped call transactions are expected generally to reduce the potential dilution to CNX's common stock upon any conversion of Notes and/or offset any cash payments CNX is required to make in excess of the principal amount of such converted notes, as the case may be, with such reduction and/or offset subject to a cap.
CNX estimates that the net proceeds from the offering will be approximately $333.9 million, after deducting the initial purchasers' discount and estimated offering expenses payable by CNX (giving effect to the full exercise of the initial purchasers' option to purchase additional Notes). CNX intends to use a portion of the net proceeds from the offering to fund the cost of entering into the capped call transactions described above. CNX expects to use the remainder of the net proceeds from the offering for general corporate purposes, including the repayment or redemption of outstanding indebtedness.
The Notes and any shares of CNX's common stock issuable upon conversion of the Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act.
This press release does not and shall not constitute an offer to sell or the solicitation of an offer to buy any Notes or shares of CNX's common stock, nor shall there be any offer, solicitation or sale of notes or such common stock in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The offering may be made only by means of an offering memorandum.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin.
Cautionary Statements:
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Without limiting the generality of the foregoing, forward-looking statements contained in this communication specifically include statements regarding the anticipated use of the net proceeds from the offering, the potential effects of the capped call transactions and actions of the option counterparties and their respective affiliates. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019, and Quarterly Report on Form 10-Q for the three months ended March 31, 2020, each filed with the Securities and Exchange Commission, and any subsequent reports filed with the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, April 28, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced the pricing of $300.0 million aggregate principal amount of its 2.250% convertible senior notes due 2026 (the "Notes"). In connection with the offering of the Notes, CNX granted the initial purchasers of the Notes a 13-day option to purchase up to an additional $45.0 million aggregate principal amount of Notes. The sale of the Notes to the initial purchasers is expected to settle on May 1, 2020, subject to the satisfaction of customary closing conditions.
The Notes will be senior, unsecured obligations of CNX and will accrue interest at a rate of 2.250% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2020. The Notes will mature on May 1, 2026, unless earlier repurchased, redeemed or converted. Before February 1, 2026, noteholders will have the right to convert their Notes only upon the occurrence of certain events. From and after February 1, 2026, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. CNX will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at CNX's election. The initial conversion rate is 77.8816 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $12.84 per share of common stock. The initial conversion price represents a premium of approximately 20.00% over the last reported sale price of CNX's common stock on the New York Stock Exchange of $10.70 per share on April 28, 2020. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events.
The Notes will be redeemable, in whole or in part, for cash at CNX's option at any time, and from time to time, on or after November 1, 2023 and on or before the 40th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of CNX's common stock exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading date immediately preceding the date on which CNX provides notice of redemption, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date on which CNX provides the related notice of redemption, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest.
The Notes will be fully and unconditionally guaranteed, on a senior, unsecured basis, by the Company's subsidiaries that currently or in the future guarantee the Company's existing 5.875% senior notes due 2022 or 7.25% senior notes due 2027.
If a "fundamental change" (as defined in the indenture for the Notes) occurs, then noteholders may require CNX to repurchase their Notes for cash. The repurchase price will be equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.
In connection with the pricing of the Notes, CNX entered into privately negotiated capped call transactions with certain of the initial purchasers or their respective affiliates and/or other financial institutions (the "option counterparties"). The capped call transactions are expected generally to reduce the potential dilution to CNX's common stock upon any conversion of Notes and/or offset any cash payments CNX is required to make in excess of the principal amount of such converted notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the capped call transactions will initially be $18.19 per share of CNX's common stock, which represents a premium of 70.00% over the last reported sale price of CNX's common stock on the New York Stock Exchange of $10.70 per share on April 28, 2020, and is subject to certain adjustments under the terms of the capped call transactions. If the initial purchasers of the Notes exercise their option to purchase additional Notes, CNX expects to enter into additional capped call transactions with the option counterparties.
CNX expects that, in connection with establishing their initial hedges of the capped call transactions, the option counterparties and/or their respective affiliates expect to enter into various derivative transactions with respect to CNX's common stock and/or purchase shares of CNX's common stock concurrently with or shortly after the pricing of the Notes. This activity could increase (or reduce the size of any decrease in) the market price of CNX's common stock or the Notes at that time. In addition, CNX expects that the option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to CNX's common stock and/or purchasing or selling CNX's common stock or other securities of CNX in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and (i) are likely to do so during any observation period related to a conversion of the Notes on or after February 1, 2026 or following any repurchase of Notes by CNX in connection with any fundamental change and (ii) may do so following any repurchase of Notes by CNX other than in connection with any fundamental change). This activity could also cause or avoid an increase or decrease in the value of the Notes or the market price of CNX's common stock, which could affect the ability of noteholders to convert the Notes, and, to the extent the activity occurs following conversion or during any observation period related to a conversion of the Notes, it could affect the number of shares of CNX's common stock and value of the consideration that noteholders will receive upon conversion of the Notes.
CNX estimates that the net proceeds from the offering will be approximately $290.2 million, after deducting the initial purchasers' discount and estimated offering expenses payable by CNX (assuming no exercise of the initial purchasers' option to purchase additional Notes). CNX intends to use a portion of the net proceeds from the offering to fund the cost of entering into the capped call transactions described above. CNX expects to use the remainder of the net proceeds from the offering for general corporate purposes, including the repayment or redemption of outstanding indebtedness. If the initial purchasers exercise their option to purchase additional Notes, CNX expects to use a portion of the net proceeds from the sale of the additional Notes to enter into additional capped call transactions as described above and the remainder for general corporate purposes, including the repayment or redemption of outstanding indebtedness.
The Notes and any shares of CNX's common stock issuable upon conversion of the Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act.
This press release does not and shall not constitute an offer to sell or the solicitation of an offer to buy any Notes or shares of CNX's common stock, nor shall there be any offer, solicitation or sale of notes or such common stock in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The offering may be made only by means of an offering memorandum.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin.
Cautionary Statements:
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Without limiting the generality of the foregoing, forward-looking statements contained in this communication specifically include statements regarding the expected closing of the sale of the Notes, the anticipated use of the net proceeds from the offering, the potential effects of the capped call transactions and actions of the option counterparties and their respective affiliates. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019, and Quarterly Report on Form 10-Q for the three months ended March 31, 2020, each filed with the Securities and Exchange Commission, and any subsequent reports filed with the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, April 28, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced that it intends, subject to market and other conditions, to offer and sell to eligible purchasers $300.0 million aggregate principle amount of convertible senior notes due 2026 (the "Notes"). CNX also expects to grant the initial purchasers of the Notes a 13-day option to purchase up to an additional $45.0 million aggregate principal amount of the Notes.
The Notes will be senior, unsecured obligations of CNX and will accrue interest payable semi-annually in arrears and will mature on May 1, 2026, unless earlier repurchased, redeemed or converted. The Notes will be convertible into cash, shares of CNX's common stock or a combination thereof, at CNX's election. The interest rate, initial conversion rate and other terms of the Notes will be determined at the time of pricing of the offering.
CNX intends to use a portion of the net proceeds of the offering to pay the cost of the capped call transactions described below. CNX expects to use the remainder of the net proceeds from this offering for general corporate purposes, including the repayment or redemption of outstanding indebtedness. If the initial purchasers exercise their option to purchase additional Notes, CNX expects to use a portion of the additional net proceeds to fund the cost of entering into additional capped call transactions as described below and the remainder for general corporate purposes, including the repayment or redemption of outstanding indebtedness.
In connection with the pricing of the Notes, CNX expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers or their respective affiliates and/or other financial institutions (the "option counterparties"). The capped call transactions are expected generally to reduce the potential dilution to CNX's common stock upon any conversion of Notes and/or offset any potential cash payments CNX is required to make in excess of the principal amount of such converted Notes, as the case may be, with such reduction and/or offset subject to a cap. The strike price and cap price of the capped call transactions and the premium paid will be determined at the time of pricing of the Notes. If the initial purchasers exercise their option to purchase additional Notes, CNX expects to enter into additional capped call transactions with the option counterparties.
CNX expects that, in connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to CNX's common stock and/or purchase shares of CNX's common stock concurrently with or shortly after the pricing of the Notes. This activity could increase (or reduce the size of any decrease in) the market price of CNX's common stock or the Notes at that time. In addition, CNX expects that the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to CNX's common stock and/or purchasing or selling CNX's common stock or other securities of CNX in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and (i) are likely to do so during any observation period related to a conversion of Notes after February 1, 2026 or following any repurchase of Notes by CNX in connection with any fundamental change and (ii) may do so following any repurchase of Notes by CNX other than in connection with any fundamental change). This activity could also cause or avoid an increase or decrease in the market price of CNX's common stock or the Notes, which could affect the ability of noteholders to convert the Notes, and, to the extent the activity occurs following conversion or during any observation period related to a conversion of the Notes, it could affect the number of shares of CNX's common stock and value of the consideration that noteholders will receive upon conversion of the Notes.
The Notes and any shares of CNX's common stock issuable upon conversion of the Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act.
This press release does not and shall not constitute an offer to sell or the solicitation of an offer to buy any Notes or shares of CNX's common stock, nor shall there be any offer, solicitation or sale of notes or such common stock in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The offering may be made only by means of an offering memorandum.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin.
Cautionary Statements:
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Without limiting the generality of the foregoing, forward-looking statements contained in this communication specifically include statements regarding the proposed terms of the Notes, the size of the proposed offering, the capped call transactions, expectations regarding actions of the option counterparties and their respective affiliates and the expected use of proceeds from the sale of the Notes. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the risks and uncertainties set forth in the "Risk Factors" section of CNX's Annual Report on Form 10-K for the year ended December 31, 2019, Quarterly Report on Form 10-Q for the three months ended March 31, 2020, each filed with the Securities and Exchange Commission, and any subsequent reports filed with the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, April 27, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or "the company") reports the following financial results, which are in accordance with generally accepted accounting principles (GAAP) in the U.S.:
During the first quarter of 2020:
First Quarter Highlights
"Although the times may be unprecedented, CNX has remained steadfast in its philosophy and approach," commented Nicholas J. DeIuliis, president and CEO. "First and foremost, we focus on optimizing the long-term NAV per share of the company. Second, the best way we optimize NAV per share is to generate free cash flow and then allocate that cash into the best risk-adjusted internal rates of return. Currently, paying down debt across our various tranches looks compelling on the risk-reward spectrum when compared to other capital allocation alternatives."
Mr. DeIuliis continued, "This approach, over the past few years, during Q1, and today is what differentiates CNX. Our hedging, numerous strategic transactions, focus on being a low cost producer, reining in overhead spend and capital allocation have delivered a business model where CNX is a steady, substantial free cash flow generator over the next seven years, year in and year out. Our owners now enjoy the prospects of CNX generating $300 million in consolidated free cash flow(a) in 2020, $400 million in 2021, and over $3 billion cumulatively over the next seven years. Those cash flows, which are driven by a modest maintenance of production plan, will create a fortress balance sheet and allow for exciting capital allocation opportunities for years to come."
(1) The Non-GAAP financial measures referenced throughout are defined and reconciled under the caption "Non-GAAP Financial Measures" below.
Guidance Update:(a)
2020 Guidance Update:
In 2020, CNX is optimizing the production profile due to a combination of low NGL, condensate, and gas pricing this summer and higher pricing this winter, which optimizes NAV per share. CNX is updating 2020 production volumes to 490-530 Bcfe, compared to the previous guidance of 525-555 Bcfe.
Adjusted EBITDAX(1) | Previous | Updated | ||||||
2020E | 2020E | |||||||
($ in millions, except per share data) | Low | High | Low | High | ||||
Stand-Alone (Including Distributions)(2) | $765 | - | $810 | $715 | - | $755 | ||
Consolidated | $885 | - | $950 | $830 | - | $900 | ||
(1) Updated EBITDAX based on NYMEX forward strip as of April 21, 2020. | ||||||||
(2) Includes approximately $32 million of projected distributions from ownership interests in CNXM and a $50 million payment associated with the IDR Elimination Transaction. | ||||||||
Capital Expenditures | Previous | Updated | ||||||
2020E | 2020E | |||||||
($ in millions) | Low | High | Low | High | ||||
Drilling & Completion (D&C) | $360 | - | $410 | $330 | - | $380 | ||
Non-D&C | $90 | - | $100 | $75 | - | $85 | ||
Total Stand-Alone Capital | $450 | - | $510 | $405 | - | $465 | ||
CNX Midstream LP Capital | $80 | - | $100 | $65 | - | $85 | ||
Total Consolidated Capital | $530 | - | $610 | $470 | - | $550 |
In 2020, CNX expects consolidated FCF(a) of approximately $300 million. Due to the CNXM distribution reduction, standalone adjusted EBITDAX(a) guidance decreased by $50 million; however, despite the distribution reduction, CNX was able to increase standalone FCF(a) expectations by $50 million. This FCF will be utilized to pay down debt. By year-end 2020, the company expects to only have approximately $350 million balance remaining on its outstanding 2022 senior notes, of which it will be easily addressed with additional expected future free cash flow before its maturity.
2021 Guidance Update:
The decisions we make in 2020 as we manage production will positively impact 2021 results. We project 2021 to deliver the following results: production volumes of approximately 550 Bcfe, E&P stand-alone capital expenditures of approximately $400 million, consolidated capital expenditures of approximately $440 million, consolidated EBITDAX(a) of approximately $920 million, and consolidated FCF(a) of approximately $400 million. If 2021 gas prices strengthen, the company could produce approximately 600 Bcfe. The company anticipates that the bulk of the FCF in 2021, like 2020, will be used to reduce the company's absolute debt and leverage ratio.
2022-2026 Guidance:
Following 2021, CNX expects to shift to a maintenance of production (MOP) plan in 2022-2026. Over this time period, the company expects average production volumes of approximately 560 Bcfe by turning-in-line 25 wells each year on average. CNX expects total E&P stand-alone capital expenditures in 2022-2026 to average approximately $270 million and consolidated capital expenditures to average approximately $300 million. This should generate expected annual consolidated FCF(a) for 2022-2026 that averages $500 million each year, or about $2.5 billion in total.
2020-2026 Cumulative:
Mr. DeIuliis concluded, "Q1's results and strong free cash flow were a harbinger of things to come. Going-forward activity pace and capital investment, largely driven by a maintenance of production approach, for the next seven years will leave years of core SWPA Marcellus and CPA Utica inventory remaining for post-2026 development. CNX expects to be free cash flow positive in each and every one of those seven years, with cumulative consolidated free cash flow(a) exceeding $3.0 billion. That free cash flow, when coupled with our ownership in the strategic and free cash flow positive CNXM midstream business, creates the basin's low cost producer, a best-in-class balance sheet and a powerful platform for NAV-per-share enhancing capital allocation."
(a) CNX is unable to provide a reconciliation of projected financial results contained in this release, including FCF, adjusted EBITDAX, fully burdened cash costs and other metrics to their respective comparable financial measure calculated in accordance with GAAP. This is due to our inability to calculate the comparable GAAP projected metrics, including operating income and total production costs, given the unknown effect, timing, and potential significance of certain income statement items.
First Quarter Financial Results:
The following table represents certain non-GAAP financial measures used by the company:1
Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||||||||
March 31, | March 31, | March 31, | March 31, | |||||||||||||||||||
(Dollars in millions, | Stand-alone | % | Consolidated | % | ||||||||||||||||||
Adjusted Net Income | $ | 193 | $ | 28 | 589.3 | % | $ | 113 | $ | 67 | 68.7 | % | ||||||||||
Adjusted EBITDAX | $ | 248 | $ | 224 | 10.7 | % | $ | 291 | $ | 268 | 8.6 | % | ||||||||||
Capital Expenditures2 | $ | 121 | $ | 223 | (45.7) | % | — | — | — | % | ||||||||||||
1The Non-GAAP financial measures in the table above are defined and reconciled to GAAP net income, under the caption "Non-GAAP Financial Measures" below. | ||||||||||||||||||||||
2Capital expenditures exclude $31.4 million and $75.9 million of total capital investment net to CNXM in the first quarter of 2020 and 2019, respectively, as reported in CNXM First Quarter Results. |
Operations:
During the quarter, CNX used up to two horizontal rigs and drilled 10 wells. The company currently has two rigs in operation along with one frac crew. During the quarter, the company utilized one all-electric frac crew to complete 13 wells, which included 10 Marcellus Shale wells and three Utica Shale wells. In the first quarter, CNX turned-in-line 14 wells.
The following table highlights operating cash margins and fully burdened cash margins:
Quarter | Quarter | |||||||
Ended | Ended | |||||||
(Per Mcfe) | March 31, 2020 | March 31, 2019 | ||||||
Average Sales Price - E&P | $ | 2.59 | $ | 2.97 | ||||
Total Production Cash Costs1 | 1.11 | 1.11 | ||||||
Operating Cash Margin | $ | 1.48 | $ | 1.86 | ||||
Operating Cash Margin (%) | 57 | % | 63 | % | ||||
Total Fully Burdened Cash Costs2 | $ | 1.66 | $ | 1.61 | ||||
Fully Burdened Cash Margin | $ | 0.93 | $ | 1.36 | ||||
Fully Burdened Cash Margin (%) | 36 | % | 46 | % | ||||
1See the "Price and Cost Data Per Mcfe" table below for reconciliation to Total Production Costs. | ||||||||
2Fully burdened cash costs include production cash costs, selling, general and administrative (SG&A) cash costs, other operating cash expense, other cash (income) expense, and interest expense. Q1 2020 and Q1 2019 total fully burdened cash costs exclude a gain on asset sales of $0.09 per Mcfe and $0.03 per Mcfe, respectively. Q1 2020 also excludes unrealized losses on interest rate swaps of $0.08 per Mcfe. |
PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison: | ||||||||||||
Quarter | Quarter | Quarter | ||||||||||
Ended | Ended | Ended | ||||||||||
(Per Mcfe) | March 31, | March 31, | December 31, | |||||||||
Average Sales Price - Gas | $ | 1.83 | $ | 3.21 | $ | 2.14 | ||||||
Average Gain (Loss) on Commodity Derivative Instruments - | $ | 0.77 | $ | (0.33) | $ | 0.33 | ||||||
Average Sales Price - Oil** | $ | 7.87 | $ | — | $ | — | ||||||
Average Sales Price - NGLs** | $ | 2.34 | $ | 4.46 | $ | 3.20 | ||||||
Average Sales Price - Condensate** | $ | 6.28 | $ | 6.50 | $ | 7.45 | ||||||
Average Sales Price - E&P | $ | 2.59 | $ | 2.97 | $ | 2.54 | ||||||
Lease Operating Expense (LOE) | $ | 0.07 | $ | 0.14 | $ | 0.09 | ||||||
Production, Ad Valorem, and Other Fees | 0.05 | 0.05 | 0.05 | |||||||||
Transportation, Gathering and Compression | 0.99 | 0.92 | 0.97 | |||||||||
Depreciation, Depletion and Amortization (DD&A) | 0.87 | 0.88 | 0.86 | |||||||||
Total Production Costs | $ | 1.98 | $ | 1.99 | $ | 1.97 | ||||||
Total Production Cash Costs, before DD&A | $ | 1.11 | $ | 1.11 | $ | 1.11 | ||||||
Cash Margin, before DD&A | $ | 1.48 | $ | 1.86 | $ | 1.43 | ||||||
*Excluding gain from hedge monetization in Q1 2020. | ||||||||||||
**NGLs, Oil, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. | ||||||||||||
Note: "Total Production Costs" excludes Selling, General, and Administration and Other Operating Expenses. |
In the first quarter of 2020, total production costs were lower compared to the year-earlier quarter, due to improvements to LOE and DD&A, offset in part by increased transportation, gathering, and compression costs. The primary driver to the improvement to LOE was a decrease in water disposal costs due to an increase in the reuse of produced water in well completions activity. The increased transportation, gathering, and compression costs were driven primarily by higher CNXM fees.
Marketing:
Total hedged natural gas production in the 2020 second quarter is 113.5 Bcf. The annual gas hedge position is shown in the table below:
2020 | 2021 | ||||
Volumes Hedged (Bcf), as of 4/21/20 | 451.1* | 433.5 | |||
*Includes actual settlements of 155.5 Bcf. |
In March 2020, CNX monetized and repriced a portion of its 2022, 2023, and 2024 NYMEX natural gas hedge portfolio generating $55.0 million of net proceeds, which are included in Gain (Loss) on Commodity Derivative Instruments in the Consolidated Statements of Income for the three months ended March 31, 2020. Notional quantities were not affected by the transaction.
In April 2020, CNX monetized and terminated approximately 39 million MMBtus of NYMEX natural gas hedges and a similar quantity of financial basis hedges that were to settle at various times from May through November of 2020. In connection with these monetizations, CNX received $29 million of net proceeds. This move gives CNX additional flexibility to move production to higher price periods while immediately taking the proceeds from these hedges.
CNX's hedged gas volumes include a combination of NYMEX financial hedges, index (NYMEX and basis) financial hedges, and physical fixed price sales. In addition, to protect the NYMEX hedge volumes from basis exposure, CNX enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CNX's gas hedge position through 2024 as of April 21, 2020 reflecting the monetization transactions is shown in the table below.
Q2 2020 | 2020 | 2021 | 2022 | 2023 | 2024 | |||||||||||||||||||
NYMEX Only Hedges | ||||||||||||||||||||||||
Volumes (Bcf) | 110.7 | 439.2 | 411.7 | 265.5 | 135.1 | 138.7 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.98 | $ | 2.95 | $ | 2.90 | $ | 2.83 | $ | 2.80 | $ | 2.91 | ||||||||||||
Physical Fixed Price Sales and Index Hedges | ||||||||||||||||||||||||
Volumes (Bcf) | 2.8 | 11.9 | 21.8 | 14.3 | 27.8 | 11.0 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.43 | $ | 2.44 | $ | 2.47 | $ | 2.59 | $ | 2.15 | $ | 2.28 | ||||||||||||
Total Volumes Hedged (Bcf)1 | 113.5 | 451.1 | 433.5 | 279.8 | 162.9 | 149.7 | ||||||||||||||||||
NYMEX + Basis (fully-covered volumes)2 | ||||||||||||||||||||||||
Volumes (Bcf) | 113.5 | 451.1 | 433.5 | 279.8 | 162.9 | 149.7 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.53 | $ | 2.55 | $ | 2.41 | $ | 2.29 | $ | 2.25 | $ | 2.32 | ||||||||||||
NYMEX Only Hedges Exposed to Basis | ||||||||||||||||||||||||
Volumes (Bcf) | — | — | — | — | — | — | ||||||||||||||||||
Average Prices ($/Mcf) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Total Volumes Hedged (Bcf)1 | 113.5 | 451.1 | 433.5 | 279.8 | 162.9 | 149.7 | ||||||||||||||||||
1Excludes basis hedges in excess of NYMEX hedges in Q2 2020, 2020, 2021, 2022, 2023, and 2024 of 1.0 Bcf, 8.1 Bcf, 15.7 Bcf, 25.0 Bcf, 9.3 Bcf, and 0.4 Bcf, respectively. | ||||||||||||||||||||||||
2Includes physical sales with fixed basis in Q2 2020, 2020, 2021, 2022, 2023, and 2024 of 20.3 Bcf, 86.1 Bcf, 75.8 Bcf, 23.6 Bcf, 1.7 Bcf, and 12.3 Bcf, respectively. |
During the first quarter of 2020, CNX added additional NYMEX natural gas hedges of 5.1 Bcf and 23.8 Bcf for 2024 and 2025, respectively and additional index hedges of 13.6 Bcf for 2025. To help mitigate basis exposure on NYMEX hedges, in the first quarter CNX added 0.8 Bcf, 0.9 Bcf, and 37.4 Bcf of basis hedges for 2020, 2021, and 2025, respectively.
Finance:
At March 31, 2020, CNX's Stand-alone net debt to trailing-twelve-months (TTM) adjusted Stand-alone EBITDAX (including distributions from CNXM) (a non-GAAP measure)(1) was 2.4x. On a consolidated basis, CNX's net debt to TTM adjusted EBITDAX (a non-GAAP measure)(1) was 2.7x.
At March 31, 2020, CNX's credit facility had $437 million of borrowings outstanding and $205 million of letters of credit outstanding. In addition, CNX holds 47.7 million CNXM common limited partnership units, with a market value of approximately $550 million as of April 20, 2020. This does not include the additional 3.0 million class B limited partnership units that will convert to CNXM common units on January 1, 2022.
Following the end of the quarter, the company completed its scheduled semi-annual borrowing base redetermination under its revolving credit facility, resulting in the lending group decreasing CNX's borrowing base from $2.3 billion to $1.9 billion. The decrease is related to lowered bank price decks and two significant transactions the company completed during the quarter that reduced the engineering value of the borrowing base: The CSG project financing for approximately $175 million, and the company monetized $55 million in hedges. The lenders' commitments decreased to $1.9 billion, or a 10% reduction from the previous $2.1 billion in commitments.
No shares were repurchased during the first quarter of 2020.
As of March 31, 2020, CNX repurchased $71 million of its senior secured 5.875% notes due in 2022. Following the end of the quarter, the company purchased an additional $8 million of notes. As of April 7, 2020, the company repurchased a total of $79 million notes at an 85% average discount to par value, which has allowed CNX to further de-lever.
Similar to CNX, CNXM is following the same FCF optimization approach and is reducing distributions to pay down debt. This decision ensures the company maintains a best-in-class balance sheet through the COVID 19 pandemic, while de-risking significant and sustainable FCF generation for several years. These prudent actions create substantial capital allocation flexibility and opportunity for years to come.
About CNX
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Non-GAAP Financial Measures
CNX's management uses certain non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful for investors in analyzing the company. Stand-alone results include both CNX's Exploration & Production (E&P) and Unallocated segments (but not the Midstream segment) plus distributions CNX receives from CNXM. CNX believes that providing stand-alone results provides investors with more transparency and a better ability to compare CNX's financial results to those of our peer group. The term "consolidated" includes 100% of the results of CNX, CNX Gathering LLC, and CNXM on a consolidated basis.
Definitions: EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) and income taxes. EBITDAX is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes, depreciation, depletion and amortization, and exploration. Adjusted EBITDAX consolidated is defined as EBITDAX after adjusting for the discrete items listed below. Stand-alone EBITDAX is defined as the adjusted EBITDAX related to both CNX's E&P and Unallocated segments (See Note 24 - Segment Information in CNX's Annual Report on Form 10-K as filed with the Securities and Exchange Commission for more information) plus the distributions CNX receives during the current period from CNXM related to its limited partnership units (including general partner units, and incentive distribution rights (IDRs) prior to the IDR elimination transaction in the first quarter of 2020). Although EBIT, EBITDAX, Stand-alone EBITDAX and adjusted EBITDAX consolidated are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating CNX Resources because they are widely used to evaluate a company's operating performance. We exclude stock-based compensation from adjusted EBITDAX because we do not believe it accurately reflects the actual operating expense incurred during the relevant period and may vary widely from period to period irrespective of operating results. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDAX, Stand-alone EBITDAX or adjusted EBITDAX consolidated identically, the presentation here may not be comparable to similarly titled measures of other companies. Adjusted EBITDAX per outstanding share, adjusted net income per outstanding share, Stand-alone EBITDAX and adjusted EBITDAX consolidated, with shares measured as of April 15, 2020, are not measures of performance calculated in accordance with generally accepted accounting principles. Management believes that these financial measures are useful to an investor in evaluating CNX Resources because (i) analysts utilize these metrics when evaluating company performance and, (ii) given that we have an active share repurchase program, analysts have requested this information as of a recent practicable date, and we want to provide updated information to investors.
Reconciliation of EBIT, EBITDAX, adjusted EBITDAX consolidated, Stand-alone EBITDAX, adjusted net income, net debt, organic free cash flow, free cash flow and TTM EBITDAX to the most directly comparable GAAP financial measures is as follows:
Three Months Ended | |||||||||||
March 31, 2020 | |||||||||||
Dollars in thousands | Stand-alone1 | Midstream | Total Company | ||||||||
Net Income (Loss) | $ | 124,322 | $ | (429,544) | $ | (305,222) | |||||
Interest Expense | 40,186 | 8,809 | 48,995 | ||||||||
Interest Income | (92) | — | (92) | ||||||||
Income Tax Benefit | (152,582) | — | (152,582) | ||||||||
Earnings Before Interest & Taxes (EBIT) | $ | 11,834 | $ | (420,735) | $ | (408,901) | |||||
Depreciation, Depletion & Amortization | 119,152 | 10,012 | 129,164 | ||||||||
Exploration Expense | 3,818 | 70 | 3,888 | ||||||||
Earnings Before Interest, Taxes, DD&A and Exploration (EBITDAX) | $ | 134,804 | $ | (410,653) | $ | (275,849) | |||||
Adjustments: | |||||||||||
Unrealized Loss on Commodity Derivative Instruments | $ | 36,019 | $ | — | $ | 36,019 | |||||
Impairment of Goodwill | — | 473,045 | 473,045 | ||||||||
Impairment of Exploration and Production Properties | 61,849 | — | 61,849 | ||||||||
Gain on Debt Extinguishment | (11,263) | — | (11,263) | ||||||||
Stock-Based Compensation | 6,336 | 504 | 6,840 | ||||||||
Severance Expense | 105 | — | 105 | ||||||||
Total Pre-tax Adjustments | $ | 93,046 | $ | 473,549 | $ | 566,595 | |||||
Adjusted EBITDAX Consolidated | $ | 227,850 | $ | 62,896 | $ | 290,746 | |||||
Midstream Distributions | 19,759 | N/A | N/A | ||||||||
Stand-alone EBITDAX | $ | 247,609 | N/A | N/A | |||||||
1 Stand-alone includes both CNX's E&P and Unallocated segments. See Note 24 - Segment Information in CNX's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission, for more information. |
Three Months Ended | |||||||||||
March 31, 2019 | |||||||||||
Dollars in thousands | Stand-alone1 | Midstream | Total Company | ||||||||
Net (Loss) Income | $ | (97,235) | $ | 32,584 | $ | (64,651) | |||||
Interest Expense | 28,432 | 7,339 | 35,771 | ||||||||
Interest Income | (722) | — | (722) | ||||||||
Income Tax Benefit | (11,559) | — | (11,559) | ||||||||
Earnings Before Interest & Taxes (EBIT) | $ | (81,084) | $ | 39,923 | $ | (41,161) | |||||
Depreciation, Depletion & Amortization | 117,075 | 8,086 | 125,161 | ||||||||
Exploration Expense | 3,258 | — | 3,258 | ||||||||
Earnings Before Interest, Taxes, DD&A and Exploration (EBITDAX) | $ | 39,249 | $ | 48,009 | $ | 87,258 | |||||
Adjustments: | |||||||||||
Unrealized Loss on Commodity Derivative Instruments | $ | 153,994 | $ | — | $ | 153,994 | |||||
(Gain) Loss on Certain Asset Sales and Abandonments | (3,665) | 7,229 | 3,564 | ||||||||
Loss on Debt Extinguishment | 7,537 | — | 7,537 | ||||||||
Stock-Based Compensation | 10,291 | 612 | 10,903 | ||||||||
Shaw Event | 4,305 | — | 4,305 | ||||||||
Total Pre-tax Adjustments | $ | 172,462 | $ | 7,841 | $ | 180,303 | |||||
Adjusted EBITDAX Consolidated | $ | 211,711 | $ | 55,850 | $ | 267,561 | |||||
Midstream Distributions | 12,145 | N/A | N/A | ||||||||
Stand-alone EBITDAX | $ | 223,856 | N/A | N/A | |||||||
1 Stand-alone includes both CNX's E&P and Unallocated segments. See Note 24 - Segment Information in CNX's Annual Report on Form 10-K for fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission, for more information. |
Reconciliation of Adjusted Net Income | |||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||
March 31, | March 31, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Dollars in thousands | Stand-alone1 | Stand-alone1 | Total Company | Total Company | |||||||||||
Net Income (Loss) from EBITDAX Reconciliation | $ | 124,322 | $ | (97,235) | $ | (305,222) | $ | (64,651) | |||||||
Adjustments: | |||||||||||||||
Total Pre-tax Adjustments from EBITDAX Reconciliation | 93,046 | 172,462 | 566,595 | 180,303 | |||||||||||
Tax Effect of Adjustments | (24,315) | (46,810) | (148,063) | (48,899) | |||||||||||
Adjusted Net Income | $ | 193,053 | $ | 28,417 | $ | 113,310 | $ | 66,753 | |||||||
1 Stand-alone includes both CNX's E&P and Unallocated segments. See Note 24 - Segment Information in CNX's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission, for more information. |
Management uses net debt to determine the company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. Management believes that using net debt attributable to CNX Resources shareholders is useful to investors in determining the company's leverage ratio since the company could choose to use its cash and cash equivalents to retire debt.
Net Debt | March 31, 2020 | ||||||||||
Stand-alone1 | Midstream | Total Company | |||||||||
Total Long-Term Debt (GAAP)2 | $ | 1,919,200 | $ | 741,399 | $ | 2,660,599 | |||||
Less: Cash and Cash Equivalents | 31,692 | 6,334 | 38,026 | ||||||||
Net Debt (Non-GAAP) | $ | 1,887,508 | $ | 735,065 | $ | 2,622,573 | |||||
1Stand-alone includes both CNX's E&P and Unallocated segments. | |||||||||||
2Includes current portion. |
Reconciliation of Trailing-Twelve-Months (TTM) EBITDAX by Quarter | |||||||||||||||||||
Three Months Ended | Twelve | ||||||||||||||||||
June 30, | September 30, | December 31, | March 31, | March 31, | |||||||||||||||
Dollars in thousands | 2019 | 2019 | 2019 | 2020 | 2020 | ||||||||||||||
Net Income (Loss) | $ | 192,694 | $ | 143,960 | $ | (240,055) | $ | (305,222) | $ | (208,623) | |||||||||
Interest Expense | 40,152 | 38,405 | 37,051 | 48,995 | 164,603 | ||||||||||||||
Interest Income | (71) | (1,078) | (78) | (92) | (1,319) | ||||||||||||||
Income Tax Expense (Benefit) | 40,791 | 48,902 | (50,398) | (152,582) | (113,287) | ||||||||||||||
Earnings Before Interest & Taxes (EBIT) | $ | 273,566 | $ | 230,189 | $ | (253,480) | $ | (408,901) | $ | (158,626) | |||||||||
Depreciation, Depletion & Amortization | 128,999 | 120,459 | 133,844 | 129,164 | 512,466 | ||||||||||||||
Exploration Expense | 5,567 | 6,075 | 29,480 | 3,888 | 45,010 | ||||||||||||||
Earnings Before Interest, Taxes, DD&A, | $ | 408,132 | $ | 356,723 | $ | (90,156) | $ | (275,849) | $ | 398,850 | |||||||||
Adjustments: | |||||||||||||||||||
Unrealized (Gain) Loss on Commodity | $ | (210,909) | $ | (156,872) | $ | (92,538) | $ | 36,019 | $ | (424,300) | |||||||||
Impairment of Exploration and | — | — | 327,400 | 61,849 | 389,249 | ||||||||||||||
Impairment of Unproved Properties and | — | — | 119,429 | — | 119,429 | ||||||||||||||
Impairment of Goodwill | — | — | — | 473,045 | 473,045 | ||||||||||||||
Severance Expense | 1,182 | 1,999 | 113 | 105 | 3,399 | ||||||||||||||
Stock Based Compensation | 23,873 | 1,781 | 1,868 | 6,840 | 34,362 | ||||||||||||||
Loss (Gain) on Debt Extinguishment | 77 | — | — | (11,263) | (11,186) | ||||||||||||||
Shaw Insurance Recovery | — | — | (2,159) | — | (2,159) | ||||||||||||||
Total Pre-tax Adjustments | $ | (185,777) | $ | (153,092) | $ | 354,113 | $ | 566,595 | $ | 581,839 | |||||||||
Adjusted EBITDAX Consolidated TTM | $ | 222,355 | $ | 203,631 | $ | 263,957 | $ | 290,746 | $ | 980,689 |
Reconciliation of Stand-alone EBITDAX Trailing-Twelve-Months (TTM) | |||||||||||
Twelve Months Ended March 31, 2020 | |||||||||||
Dollars in thousands | Stand-alone1 | Midstream | Total Company | ||||||||
Net Income (Loss) | $ | 86,852 | $ | (295,475) | $ | (208,623) | |||||
Interest Expense | 132,808 | 31,795 | 164,603 | ||||||||
Interest Income | (1,307) | (12) | (1,319) | ||||||||
Income Tax Benefit | (113,287) | — | (113,287) | ||||||||
Earnings Before Interest & Taxes (EBIT) | $ | 105,066 | $ | (263,692) | $ | (158,626) | |||||
Depreciation, Depletion & Amortization | 476,428 | 36,038 | 512,466 | ||||||||
Exploration Expense | 44,897 | 113 | 45,010 | ||||||||
Earnings Before Interest, Taxes, DD&A, and Exploration (EBITDAX) | $ | 626,391 | $ | (227,541) | $ | 398,850 | |||||
Adjustments: | |||||||||||
Unrealized Gain on Commodity Derivative Instruments | $ | (424,300) | $ | — | $ | (424,300) | |||||
Impairment of Exploration and Production Properties | 389,249 | — | 389,249 | ||||||||
Impairment of Unproved Properties and Expirations | 119,429 | — | 119,429 | ||||||||
Impairment of Goodwill | — | 473,045 | 473,045 | ||||||||
Severance Expense | 2,963 | 436 | 3,399 | ||||||||
Stock Based Compensation | 32,590 | 1,772 | 34,362 | ||||||||
Gain on Debt Extinguishment | (11,186) | — | (11,186) | ||||||||
Shaw Insurance Recovery | (2,159) | — | (2,159) | ||||||||
Total Pre-tax Adjustments | $ | 106,586 | $ | 475,253 | $ | 581,839 | |||||
Adjusted EBITDAX Consolidated TTM | $ | 732,977 | $ | 247,712 | $ | 980,689 | |||||
Midstream Distributions | 59,543 | N/A | N/A | ||||||||
Stand-alone EBITDAX TTM | $ | 792,520 | N/A | N/A | |||||||
1 Stand-alone includes both CNX's E&P and Unallocated Segments. |
Organic free cash flow is defined as net cash provided by operating activities less capital expenditures. Free cash flow is defined as net cash provided by operating activities less capital expenditures plus proceeds from asset sales. Organic free cash flow and free cash flow are non-GAAP supplemental financial measures that the Company's management and external users of its consolidated financial statements, such as industry analysts, lenders and ratings agencies use to assess the Company's liquidity. The Company believes that the measures provide useful information to management and investors in assessing the Company's ability to generate cash flow in excess of capital requirements and return cash to shareholders. Organic free cash flow and free cash flow should not be considered as alternatives to net cash provided by operating activities or any other measure of liquidity presented in accordance with GAAP.
The tables below reconcile organic free cash flow and free cash flow with net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP, as derived from the Statements of Condensed Consolidated Cash Flows to be included in the Company's report on Form 10-Q for the quarter ended March 31, 2020.
Organic Free Cash Flow | |||||||
Dollars in thousands | Three Months | Three Months | |||||
Net Cash Provided by Operating Activities | $ | 267,387 | $ | 308,652 | |||
Capital Expenditures | (152,049) | (299,138) | |||||
Organic Free Cash Flow | $ | 115,338 | $ | 9,514 |
Free Cash Flow | |||||||
Dollars in thousands | Three Months | Three Months | |||||
Net Cash Provided by Operating Activities | $ | 267,387 | $ | 308,652 | |||
Capital Expenditures | (152,049) | (299,138) | |||||
Proceeds from Asset Sales | 13,975 | 5,806 | |||||
Free Cash Flow | $ | 129,313 | $ | 15,320 |
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: prices for natural gas and NGLs are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; the impact that the COVID-19 pandemic may have on us, our vendors and customers, including our financial position, operating results and ability to obtain future financing; our dependence on gathering, processing and transportation facilities and other midstream facilities owned by CNX Midstream Partners LP (NYSE: CNXM) (CNXM) and others; uncertainties in estimating our economically recoverable natural gas reserves, and inaccuracies in our estimates; the high-risk nature of drilling, developing and operating natural gas wells; our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their development or drilling; challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; the substantial capital expenditures required for our development and exploration projects, as well as CNXM's midstream system development; the impact of potential, as well as any adopted, environmental regulations, including those relating to greenhouse gas emissions; environmental regulations can increase costs and introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials in sufficient quantities or at reasonable costs to support our operations; if natural gas prices decrease or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties, and; changes in assumptions impacting management's estimates of future financial results as well as other assumptions such as movement in our stock price, weighted-average cost of capital, terminal growth rates and industry multiples, could cause goodwill and other intangible assets we hold to become impaired and result in material non-cash charges to earnings; a loss of our competitive position because of the competitive nature of the natural gas industry, consolidation within the industry or overcapacity in the industry adversely affecting our ability to sell our products and midstream services; deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions; hedging activities may prevent us from benefiting from price increases and may expose us to other risks; existing and future government laws, regulations and other legal requirements and judicial decisions that govern our business may increase our costs of doing business and may restrict our operations; significant costs and liabilities may be incurred as a result of pipeline operations and related increase in the regulation of gas gathering pipelines; our ability to find adequate water sources for our use in shale gas drilling and production operations, or our ability to dispose of, transport or recycle water used or removed in connection with our gas operations at a reasonable cost and within applicable environmental rules; failure to successfully estimate the rate of decline or existing reserves or to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; risks associated with our current long-term debt obligations; a decrease in our borrowing base, which could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, asset sales and lending requirements or regulations; changes in federal or state income tax laws, cyber incidents could have a material adverse effect on our business, financial condition or results of operations; construction of new gathering, compression, dehydration, treating or other midstream assets by CNXM may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks; our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; terrorist activities could materially adversely affect our business and results of operations; we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; acquisitions and divestitures, we anticipate may not occur or produce anticipated benefits; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; there is no guarantee that we will continue to repurchase shares of our common stock under our current or any future share repurchase program at levels undertaken previously or at all; negative public perception regarding our industry could have an adverse effect on our operations; and CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy will be allocated responsibility. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||
(Dollars in thousands, except per share data) | Three Months Ended | ||||||
(Unaudited) | March 31, | ||||||
Revenue and Other Operating Income: | 2020 | 2019 | |||||
Natural Gas, NGL and Oil Revenue | $ | 251,494 | $ | 435,946 | |||
Gain (Loss) on Commodity Derivative Instruments | 115,142 | (195,376) | |||||
Purchased Gas Revenue | 26,359 | 16,221 | |||||
Midstream Revenue | 18,406 | 18,443 | |||||
Other Operating Income | 4,958 | 3,197 | |||||
Total Revenue and Other Operating Income | 416,359 | 278,431 | |||||
Costs and Expenses: | |||||||
Operating Expense | |||||||
Lease Operating Expense | 10,033 | 18,627 | |||||
Transportation, Gathering and Compression | 83,242 | 79,409 | |||||
Production, Ad Valorem, and Other Fees | 6,162 | 6,946 | |||||
Depreciation, Depletion and Amortization | 129,164 | 125,161 | |||||
Exploration and Production Related Other Costs | 3,888 | 3,258 | |||||
Purchased Gas Costs | 24,998 | 16,214 | |||||
Impairment of Exploration and Production Properties | 61,849 | — | |||||
Impairment of Goodwill | 473,045 | — | |||||
Selling, General, and Administrative Costs | 30,238 | 35,738 | |||||
Other Operating Expense | 20,681 | 23,474 | |||||
Total Operating Expense | 843,300 | 308,827 | |||||
Other Expense (Income) | |||||||
Other Expense (Income) | 5,186 | (579) | |||||
(Gain) Loss on Asset Sales and Abandonments | (12,055) | 3,085 | |||||
(Gain) Loss on Debt Extinguishment | (11,263) | 7,537 | |||||
Interest Expense | 48,995 | 35,771 | |||||
Total Other Expense | 30,863 | 45,814 | |||||
Total Costs and Expenses | 874,163 | 354,641 | |||||
Loss Before Income Tax | (457,804) | (76,210) | |||||
Income Tax Benefit | (152,582) | (11,559) | |||||
Net Loss | (305,222) | (64,651) | |||||
Less: Net Income Attributable to Noncontrolling Interest | 23,864 | 22,686 | |||||
Net Loss Attributable to CNX Resources Shareholders | $ | (329,086) | $ | (87,337) | |||
Loss per Share | |||||||
Basic | $ | (1.76) | $ | (0.44) | |||
Diluted | $ | (1.76) | $ | (0.44) | |||
Dividends Declared | $ | — | $ | — |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||
Three Months Ended | |||||||
(Dollars in thousands) | March 31, | ||||||
(Unaudited) | 2020 | 2019 | |||||
Net Loss | $ | (305,222) | $ | (64,651) | |||
Other Comprehensive Income: | |||||||
Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($40), ($15)) | 112 | 44 | |||||
Comprehensive Loss | (305,110) | (64,607) | |||||
Less: Comprehensive Income Attributable to Noncontrolling Interest | 23,864 | 22,686 | |||||
Comprehensive Loss Attributable to CNX Resources Shareholders | $ | (328,974) | $ | (87,293) |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
(Dollars in thousands) | March 31, | December 31, | |||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and Cash Equivalents | $ | 31,833 | $ | 16,283 | |||
Restricted Cash | 853 | — | |||||
Accounts and Notes Receivable: | |||||||
Trade, net | 91,477 | 133,480 | |||||
Other Receivables, net | 10,839 | 13,679 | |||||
Supplies Inventories | 10,266 | 6,984 | |||||
Recoverable Income Taxes | 115,261 | 62,425 | |||||
Derivative Instruments | 312,749 | 247,794 | |||||
Prepaid Expenses | 12,775 | 17,456 | |||||
Total Current Assets | 586,053 | 498,101 | |||||
Property, Plant and Equipment: | |||||||
Property, Plant and Equipment | 10,691,516 | 10,572,006 | |||||
Less—Accumulated Depreciation, Depletion and Amortization | 3,622,413 | 3,435,431 | |||||
Total Property, Plant and Equipment—Net | 7,069,103 | 7,136,575 | |||||
Other Assets: | |||||||
Operating Lease Right-of-Use Assets | 159,521 | 187,097 | |||||
Investment in Affiliates | 16,549 | 16,710 | |||||
Derivative Instruments | 258,111 | 314,096 | |||||
Goodwill | 323,314 | 796,359 | |||||
Other Intangible Assets | 95,009 | 96,647 | |||||
Restricted Cash | 5,340 | — | |||||
Other | 15,950 | 15,221 | |||||
Total Other Assets | 873,794 | 1,426,130 | |||||
TOTAL ASSETS | $ | 8,528,950 | $ | 9,060,806 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
(Dollars in thousands, except per share data) | March 31, | December 31, | |||||
LIABILITIES AND EQUITY | |||||||
Current Liabilities: | |||||||
Accounts Payable | $ | 171,890 | $ | 202,553 | |||
Derivative Instruments | 49,058 | 41,466 | |||||
Current Portion of Finance Lease Obligations | 7,200 | 7,164 | |||||
Current Portion of Long-Term Debt | 20,451 | — | |||||
Current Portion of Operating Lease Obligations | 54,622 | 61,670 | |||||
Other Accrued Liabilities | 197,130 | 216,086 | |||||
Total Current Liabilities | 500,351 | 528,939 | |||||
Non-Current Liabilities: | |||||||
Long-Term Debt | 2,640,148 | 2,754,443 | |||||
Finance Lease Obligations | 6,095 | 7,706 | |||||
Operating Lease Obligations | 92,463 | 110,466 | |||||
Derivative Instruments | 163,898 | 115,862 | |||||
Deferred Income Taxes | 376,401 | 476,108 | |||||
Asset Retirement Obligations | 64,387 | 63,377 | |||||
Other | 40,497 | 41,596 | |||||
Total Non-Current Liabilities | 3,383,889 | 3,569,558 | |||||
TOTAL LIABILITIES | 3,884,240 | 4,098,497 | |||||
Stockholders' Equity: | |||||||
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 187,035,851 | 1,874 | 1,870 | |||||
Capital in Excess of Par Value | 2,205,941 | 2,199,605 | |||||
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding | — | — | |||||
Retained Earnings | 1,641,009 | 1,971,676 | |||||
Accumulated Other Comprehensive Loss | (12,493) | (12,605) | |||||
Total CNX Resources Stockholders' Equity | 3,836,331 | 4,160,546 | |||||
Noncontrolling Interest | 808,379 | 801,763 | |||||
TOTAL STOCKHOLDERS' EQUITY | 4,644,710 | 4,962,309 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 8,528,950 | $ | 9,060,806 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||
Common | Capital in | Retained | Accumulated | Total CNX | Non- | Total | |||||||||||||||||||||
December 31, 2019 | $ | 1,870 | $ | 2,199,605 | $ | 1,971,676 | $ | (12,605) | $ | 4,160,546 | $ | 801,763 | $ | 4,962,309 | |||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
Net (Loss) Income | — | — | (329,086) | — | (329,086) | 23,864 | (305,222) | ||||||||||||||||||||
Issuance of Common Stock | 4 | — | — | — | 4 | — | 4 | ||||||||||||||||||||
Shares Withheld for Taxes | — | — | (1,581) | — | (1,581) | (309) | (1,890) | ||||||||||||||||||||
Amortization of Stock-Based | — | 6,336 | — | — | 6,336 | 504 | 6,840 | ||||||||||||||||||||
Other Comprehensive Income | — | — | — | 112 | 112 | — | 112 | ||||||||||||||||||||
Distributions to CNXM Noncontrolling | — | — | — | — | — | (17,443) | (17,443) | ||||||||||||||||||||
March 31, 2020 | $ | 1,874 | $ | 2,205,941 | $ | 1,641,009 | $ | (12,493) | $ | 3,836,331 | $ | 808,379 | $ | 4,644,710 | |||||||||||||
December 31, 2018 | $ | 1,990 | $ | 2,264,063 | $ | 2,071,809 | $ | (7,904) | $ | 4,329,958 | $ | 751,785 | $ | 5,081,743 | |||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
Net (Loss) Income | — | — | (87,337) | — | (87,337) | 22,686 | (64,651) | ||||||||||||||||||||
Issuance of Common Stock | 5 | 94 | — | — | 99 | — | 99 | ||||||||||||||||||||
Purchase and Retirement of Common | (31) | (24,937) | (8,529) | — | (33,497) | — | (33,497) | ||||||||||||||||||||
Shares Withheld for Taxes | — | — | (4,045) | — | (4,045) | (664) | (4,709) | ||||||||||||||||||||
Amortization of Stock-Based | — | 10,291 | — | — | 10,291 | 612 | 10,903 | ||||||||||||||||||||
Other Comprehensive Income | — | — | — | 44 | 44 | — | 44 | ||||||||||||||||||||
Distributions to CNXM Noncontrolling | — | — | — | — | — | (15,123) | (15,123) | ||||||||||||||||||||
March 31, 2019 | $ | 1,964 | $ | 2,249,511 | $ | 1,971,898 | $ | (7,860) | $ | 4,215,513 | $ | 759,296 | $ | 4,974,809 |
CNX RESOURCES AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Dollars in thousands) | Three Months Ended | ||||||
(Unaudited) | March 31, | ||||||
Cash Flows from Operating Activities: | 2020 | 2019 | |||||
Net Loss | $ | (305,222) | $ | (64,651) | |||
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities: | |||||||
Depreciation, Depletion and Amortization | 129,164 | 125,161 | |||||
Amortization of Deferred Financing Costs | 2,447 | 1,707 | |||||
Impairment of Exploration and Production Properties | 61,849 | — | |||||
Impairment of Goodwill | 473,045 | — | |||||
Stock-Based Compensation | 6,840 | 10,903 | |||||
(Gain) Loss on Asset Sales and Abandonments | (12,055) | 3,085 | |||||
(Gain) Loss on Debt Extinguishment | (11,263) | 7,537 | |||||
(Gain) Loss on Commodity Derivative Instruments | (115,142) | 195,376 | |||||
Loss on Other Derivative Instruments | 10,639 | — | |||||
Net Cash Received (Paid) in Settlement of Commodity Derivative Instruments | 151,161 | (41,382) | |||||
Deferred Income Taxes | (99,746) | (11,559) | |||||
Equity in Loss (Earnings) of Affiliates | 161 | (503) | |||||
Return on Equity Investment | — | 1,306 | |||||
Changes in Operating Assets: | |||||||
Accounts and Notes Receivable | 43,639 | 94,480 | |||||
Recoverable Income Taxes | (52,836) | 35,888 | |||||
Supplies Inventories | (3,282) | (6,927) | |||||
Prepaid Expenses | 4,710 | 3,961 | |||||
Changes in Other Assets | 692 | (6) | |||||
Changes in Operating Liabilities: | |||||||
Accounts Payable | 2,322 | (5,962) | |||||
Accrued Interest | (5,063) | 2,180 | |||||
Other Operating Liabilities | (13,626) | (34,434) | |||||
Changes in Other Liabilities | (1,047) | (7,508) | |||||
Net Cash Provided by Operating Activities | 267,387 | 308,652 | |||||
Cash Flows from Investing Activities: | |||||||
Capital Expenditures | (152,049) | (299,138) | |||||
Proceeds from Asset Sales | 13,975 | 5,806 | |||||
Net Cash Used in Investing Activities | (138,074) | (293,332) | |||||
Cash Flows from Financing Activities: | |||||||
Payments on Miscellaneous Borrowings | (1,792) | (1,747) | |||||
Payments on Long-Term Notes | (59,880) | (405,876) | |||||
Net Proceeds from CNXM Revolving Credit Facility | 35,250 | 52,650 | |||||
Payments on CNX Revolving Credit Facility | (224,000) | (98,000) | |||||
Proceeds from Issuance of CNX Senior Notes | — | 500,000 | |||||
Net Proceeds from CSG Non-Revolving Credit Facilities | 173,250 | — | |||||
Distributions to CNXM Noncontrolling Interest Holders | (17,443) | (15,123) | |||||
Proceeds from Issuance of Common Stock | 4 | 99 | |||||
Shares Withheld for Taxes | (1,890) | (4,709) | |||||
Purchases of Common Stock | — | (32,498) | |||||
Debt Issuance and Financing Fees | (11,069) | (3,342) | |||||
Net Cash Used in Financing Activities | (107,570) | (8,546) | |||||
Net Increase in Cash, Cash Equivalents, and Restricted Cash | 21,743 | 6,774 | |||||
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 16,283 | 17,198 | |||||
Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 38,026 | $ | 23,972 |
View original content to download multimedia:http://www.prnewswire.com/news-releases/cnx-reports-first-quarter-results-and-provides-strategic-long-term-plan-update-301047298.html
SOURCE CNX Resources Corporation
PITTSBURGH, April 22, 2020 /PRNewswire/ -- CNX Resources Corp. (NYSE: CNX) and CNX Midstream Partners LP (NYSE: CNXM) will issue their first quarter earnings releases at 6:45 a.m. Eastern Time on Monday, April 27. These releases will be followed by conference calls and live webcasts, which will be available on the 'Investor Relations' page of the CNX Resources website, and the 'News and Events' page of the CNX Midstream website. Any presentation materials will be available at 6:45 a.m. Eastern Time on Monday, April 27, on each company's website.
Conference Call Information
CNX Resources (NYSE: CNX)
CNX Midstream Partners (NYSE: CNXM)
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.4 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. CNXM's assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on CNXM's website www.cnxmidstream.com.
View original content to download multimedia:http://www.prnewswire.com/news-releases/cnx-resources-corporation-and-cnx-midstream-partners-lp-announce-first-quarter-2020-earnings-release-and-conference-call-schedule-301045560.html
SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, Feb. 10, 2020 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or "the company") announced today total proved reserves of 8.43 Tcfe, as of December 31, 2019, which is a 7% increase, compared to the previous year. CNX organically added 1,648 Bcfe of proved reserves through extensions and discoveries, which resulted in the company replacing over 300% of its 2019 net production of 539 Bcfe. These extensions and discoveries were a result of our continued development within the Marcellus and Utica Shale formations.
In 2019, drilling and completion costs incurred directly attributable to extensions and discoveries were $630 million. When divided by the extensions and discoveries of 1,648 Bcfe, this yields a drill bit F&D cost of $0.38 per Mcfe.
Future development costs for proved undeveloped reserves (PUDs) are estimated to be approximately $942 million, or $0.26 per Mcfe.
The following table shows the summary of changes in reserves:
Summary of Changes in Proved Reserves (Bcfe) | |
Balance at December 31, 2018 | 7,881 |
Extensions and discoveries | 1,648 |
Performance Revisions | 709 |
Price Revisions and other | (97) |
Reclassification to unproved under SEC 5-year rule and Plan Changes | (1,176) |
Production | (539) |
Balance at December 31, 2019 | 8,426 |
Note: The proved reserve estimate as of December 31, 2019, was prepared by CNX Resources and audited by Netherland, Sewell & Associates, Inc. |
During the year, total net revisions were negative 564 Bcfe. The revisions included 709 Bcfe positive revisions due to improved well performance in both proved developed and proved undeveloped reserves, offset by 97 Bcfe negative pricing and other revisions primarily from decreasing natural gas prices compared to year-end 2018, 304 Bcfe of reductions due to the reclassification of PUD's through compliance with the SEC 5-Year rule, and 872 Bcfe negative revisions due to plans changes from our continued focus on portfolio optimization.
Proved developed and undeveloped reserves were 4,839 Bcfe (57%) and 3,587 Bcfe (43%), respectively, for 2019. PUDs at year-end 2019 represent 67% of the total wells the company expects to drill over the next five years. The low PUD to 5-year plan percentage implies meaningful future upside in both the Marcellus and Utica Shales in Pennsylvania and West Virginia.
During 2019, in the Marcellus Shale, CNX turned-in-line (TIL) 41 gross wells with an average completed lateral length of approximately 9,400 feet and expected ultimate recoveries (EURs) averaging 2.6 Bcfe per thousand feet of completed lateral. Completion optimization continues to drive EUR improvements in the Marcellus shale. This is accomplished through our utilization of new technology and refinements to our engineering approaches that allow for decreased cycle times and better recovery of our in-place resources. These improvements have allowed the company to book Marcellus Shale PUDs with average EURs of over 2.7 Bcfe per thousand feet of completed lateral, compared to 2.4 Bcfe per thousand feet booked in 2018.
During 2019, in the Utica Shale, CNX turned-in-line (TIL) 10 gross wells with an average completed lateral length of approximately 6,400 feet. A majority of our proved undeveloped locations exist in our Ohio and CPA operating regions and their EURs are estimated to be 2.7 and 3.5 Bcfe per thousand feet of completed lateral.
As of December 31, 2019, CNX has total proved, probable, and possible reserves (also known as "3P reserves") of 10.3 Tcfe, which are comprised only of reserves expected to be developed in the company's five-year plan. There are an additional 113 Tcfe of recoverable resources in the Other Resource Potential that the company expects to develop beyond the five-year plan. The company continues drilling and completing Marcellus wells and testing dry Utica Shale potential in Pennsylvania and West Virginia and believes that these areas will provide additional opportunities for the company's proved reserves over time. The company's 3P reserves have been determined in accordance with the guidelines of the Society of Petroleum Engineers Petroleum Resources Management System.
The following table shows the breakdown of reserves, in Bcfe, from the company's current development and exploration plays:
Proved | Proved | Proved | Total | Probable | Possible | Total 3P | Other | Total | |
Marcellus | 3,485 | 0 | 2,877 | 6.362 | 835 | 473 | 7,670 | 36,090 | 43,760 |
Coalbed | 851 | 4 | 249 | 1,104 | - | - | 1,104 | 956 | 2,060 |
Utica | 450 | 0 | 461 | 911 | 472 | 92 | 1,475 | 50,036 | 51,511 |
Other (1) | 49 | - | - | 49 | - | - | 49 | 25,624 | 25,673 |
Total | 4,835 | 4 | 3,587 | 8,426 | 1,307 | 565 | 10,298 | 112,706 | 123,004 |
(1) Other includes Conventional, Upper Devonian and Other Shale formations. |
Definition: Total Reserve & Resource includes total 3P and other resource potential outside of 3P. |
The estimates of reserves and future revenue were prepared in accordance with the definitions and guidelines of the SEC Regulation S-X Rule 4.10(a). |
The table below summarizes the Securities and Exchange Commission (SEC) pricing as of December 31, 2019:
SEC | |
Pricing (1) | |
Benchmark Pricing: | |
WTI Oil Price ($/Bbl) | $55.69 |
NYMEX Natural Gas Price ($/MMBtu) | $2.58 |
C2+ Natural Gas Liquids ($/Bbl)(2) | $19.10 |
Condensate ($/Bbl) (3) | $44.22 |
(1) The SEC rules require that the proved reserve calculations be based on the first day of the month unweighted arithmetic average prices over the preceding twelve months. |
(2) NGL Pricing is 34.3% of WTI, which includes regional market differentials. |
(3) Condensate Pricing is 79.4% of WTI, which includes regional market differentials. |
Based on these prices adjusted for quality, hedges, transportation costs, and basis differentials ($2.24 per Mcf, $19.10 per barrel of natural gas liquids, $44.22 per barrel of condensate and $50.69 per barrel of crude oil, respectively), the pre-tax discounted (10%) present value ("PV-10") of the company's proved reserves was $4.18 billion for 2019, compared to $6.17 billion at year-end 2018.
Standardized Measure of Discounted Future Net Cash Flows
The following information was prepared in accordance with the provisions of the Financial Accounting Standards Board's Accounting Standards Update No. 2010-03, "Extractive Activities-Oil and Gas (Topic 932)." This topic requires the standardized measure of discounted future net cash flows to be based on the average, first-day-of-the-month price for the year ended December 31, 2019. Because prices used in the calculation are average prices for that year, the standardized measure could vary significantly from year-to-year based on the market conditions that occurred.
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 CNX. 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. CNX'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 CNX'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.
Reconciliation of PV-10 to Standardized Measure | ||||||
December 31, | ||||||
(Dollars in millions) | 2019 | 2018 | 2017 | |||
Future cash inflows | $ 19,490 | $ 26,610 | $ 19,262 | |||
Future production costs | (7,903) | (7,730) | (7,234) | |||
Future development costs (including abandonments) | (1,121) | (1,600) | (1,711) | |||
Future net cash flows (pre-tax) | 10,466 | 17,280 | 10,317 | |||
10% discount factor | (6,290) | (11,108) | (6,177) | |||
PV-10 (Non-GAAP measure) (1) | 4,176 | 6,172 | 4,140 | |||
Undiscounted income taxes | (2,721) | (4,147) | (2,476) | |||
10% discount factor | 1,615 | 2,630 | 1,467 | |||
Discounted income taxes | (1,106) | (1,516) | (1,009) | |||
Standardized GAAP measure | $ 3,070 | $ 4,655 | $ 3,131 |
(1) | We calculate our present value at 10% (PV-10) in accordance with the following table. Management believes that the presentation of the non-Generally Accepted Accounting Principle (GAAP) financial measure of PV-10 provides useful information to investors because it is widely used by professional analysts and sophisticated investors in evaluating oil and gas companies. Because many factors that are unique to each individual company impact the amount of future income taxes estimated to be paid, the use of a pre-tax measure is valuable when comparing companies based on reserves. PV-10 is not a measure of the financial or operating performance under GAAP. PV-10 should not be considered as an alternative to the standardized measure as defined under GAAP. We have included a reconciliation of the most directly comparable GAAP measure-after-tax discounted future net cash flows. |
About CNX Resources
CNX Resources Corporation is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2019, CNX had 8.43 trillion cubic feet equivalent of proved natural gas, natural gas liquids, condensate and oil reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; our dependence on gathering, processing and transportation facilities and other midstream facilities owned by CNX Midstream Partners LP (CNXM) and others; uncertainties in estimating our economically recoverable natural gas reserves, and inaccuracies in our estimates; the high-risk nature of drilling, developing and operating natural gas wells; our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their development or drilling; challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; the substantial capital expenditures required for our development and exploration projects, as well as CNXM's midstream system development; the impact of potential, as well as any adopted, environmental regulations, including those relating to greenhouse gas emissions; environmental regulations can increase costs and introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials in sufficient quantities or at reasonable costs to support our operations; if natural gas prices decrease or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties, and changes in assumptions impacting management's estimates of future financial results as well as other assumptions such as movement in our stock price, weighted-average cost of capital, terminal growth rates and industry multiples, could cause goodwill and other intangible assets we hold to become impaired and result in material non-cash charges to earnings; a loss of our competitive position because of the competitive nature of the natural gas industry, consolidation within the industry or overcapacity in the industry adversely affecting our ability to sell our products and midstream services; deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions; hedging activities may prevent us from benefiting from price increases and may expose us to other risks; existing and future government laws, regulations and other legal requirements and judicial decisions that govern our business may increase our costs of doing business and may restrict our operations; significant costs and liabilities may be incurred as a result of pipeline operations and related increase in the regulation of gas gathering pipelines; our ability to find adequate water sources for our use in shale gas drilling and production operations, or our ability to dispose of, transport or recycle water used or removed in connection with our gas operations at a reasonable cost and within applicable environmental rules; failure to successfully estimate the rate of decline or existing reserves or to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; risks associated with our current long-term debt obligations; a decrease in our borrowing base, which could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, asset sales and lending requirements or regulations; changes in federal or state income tax laws; cyber-incidents could have a material adverse effect on our business, financial condition or results of operations; construction of new gathering, compression, dehydration, treating or other midstream assets by CNXM may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks; our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; terrorist activities could materially and adversely affect our business and results of operations; we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; there is no guarantee that we will continue to repurchase shares of our common stock under our current or any future share repurchase program at levels undertaken previously or at all; negative public perception regarding our industry could have an adverse effect on our operations; CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy will be allocated responsibility. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
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SOURCE CNX Resources Corporation
PITTSBURGH, Jan. 2, 2020 /PRNewswire/ -- CNX Resources Corp. (NYSE: CNX) and CNX Midstream Partners LP (NYSE: CNXM) will issue their fourth quarter earnings releases at 6:45 a.m. Eastern Time on Thursday, January 30. These releases will be followed by conference calls and live webcasts, which will be available on the 'Investor Relations' page of the CNX Resources website, and the 'News and Events' page of the CNX Midstream website. Also, earnings call slides will be available at 6:45 a.m. Eastern Time on Thursday, January 30, on each company's website.
Conference Call Information
CNX Resources (NYSE: CNX)
CNX Midstream Partners (NYSE: CNXM)
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2018, CNX had 7.9 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. CNXM's assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on CNXM's website www.cnxmidstream.com.
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SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, Oct. 29, 2019 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or "the company") reports the following financial results, which are in accordance with generally accepted accounting principles (GAAP) in the U.S.:
During the third quarter of 2019:
Third Quarter Highlights
CNX's management uses non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful for investors in analyzing the company. Stand-alone results include both CNX's Exploration & Production (E&P) and Unallocated segments (but not the Midstream segment) plus distributions CNX receives from CNX Midstream Partners LP ("CNXM"). CNX believes that providing stand-alone results provides investors with more transparency and a better ability to compare CNX's financial results to those of our peer group. The term "consolidated" includes 100% of the results of CNX, CNX Gathering LLC, and CNXM on a consolidated basis. For the third quarter of 2019, the company:
"CNX accomplished a number of significant items in the third quarter: production costs and capital came in better than expected; we reconfigured our workflows and now expect $25 million in selling, general, and administrative (SG&A) cash cost savings in 2020 compared to the previous guidance; we completed the Richhill waterline to feed the Evolution all-electric frac fleet and drive further efficiencies and cycle time improvements in our core Southwest Pennsylvania development area; and we turned-in-line 24 wells late in the quarter to set the company up for strong production in the fourth quarter," commented Nicholas J. DeIuliis, president and CEO. "These accomplishments create improvement for 2019, and our updated guidance shows lower capital and higher production for the year."
"We continue to follow the rate of return math when allocating capital," continued Mr. DeIuliis. "Macro supply and demand concerns certainly lowered the forward strip during the past quarter, and we are adjusting activity accordingly by lowering our capital and production guidance for 2020. In spite of the price decline, we are increasing our 2020 free cash flow (FCF) guidance to $146 million. Based on this activity we expect to grow production and generate significant FCF in 2021."
"These changes to our 2019 and 2020 guidance reflect our ability to make decisions in a fast-moving world," Mr. DeIuliis continued. "Commodity prices dropped, which meant our capital allocation options adjusted, and our decision making changed with them. Debt capital allocation became more attractive due to the disconnect in the credit markets, and we want to take advantage of it by generating FCF in 2020 and using it to pay down debt. Share buybacks remain very attractive and we see ample time to continue reducing our share count meaningfully. With the 2020 production guidance change, we simply built inventory and an easier path for 2021 and beyond. We designed the company to navigate and do well in the challenging world the industry faces today."
Don Rush, CFO, added, "Following the end of the quarter, the company completed its scheduled semi-annual borrowing base redetermination under its revolving credit facility, resulting in the lending group increasing CNX's borrowing base from $2.1 billion to $2.3 billion."
The following table represents certain non-GAAP financial measures used by the company:1
Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||||||||
September 30, 2019 | September 30, 2018 | September 30, 2019 | September 30, 2018 | |||||||||||||||||||
(Dollars in millions, | Stand-alone | % Increase/(Decrease) | Consolidated | % Increase/ (Decrease) | ||||||||||||||||||
Adjusted Net (Loss) Income | $ | (11) | $ | 26 | (142.3) | % | $ | 31 | $ | 57 | (45.6) | % | ||||||||||
Total Shares Outstanding (in millions)2 | 186.6 | 203.6 | (8.3) | % | — | — | — | % | ||||||||||||||
Adjusted Net (Loss) Income per Outstanding Share2 | $ | (0.06) | $ | 0.13 | (146.2) | % | — | — | — | % | ||||||||||||
Adjusted EBITDAX | $ | 159 | $ | 203 | (21.7) | % | $ | 204 | $ | 239 | (14.6) | % | ||||||||||
Adjusted EBITDAX per Outstanding Share2 | $ | 0.85 | $ | 1.00 | (15.0) | % | $ | 1.09 | $ | 1.17 | (6.8) | % | ||||||||||
Capital Expenditures3 | $ | 272 | $ | 255 | 6.7 | % | — | — | — | % |
1The Non-GAAP financial measures in the table above are defined and reconciled to GAAP net income, under the caption "Non-GAAP Financial Measures" below. | |
2For the quarter ended September 30, 2019, total shares outstanding of 186,586,751 (Non-GAAP) are as of October 15, 2019. For the quarter ended September 30, 2018, total shares outstanding of 203,599,810 (Non-GAAP) are as of October 16, 2018. | |
3Capital expenditures exclude $63.9 million and $42.3 million of total capital investment net to CNXM in the third quarter of 2019 and 2018, respectively, as reported in CNXM Third Quarter Results. |
The following table highlights operating cash margins and fully burdened cash margins:
Quarter | Quarter | |||||||
Ended | Ended | |||||||
(Per Mcfe) | September 30, 2019 | September 30, 2018 | ||||||
Average Sales Price - E&P | $ | 2.51 | $ | 2.92 | ||||
Total Production Cash Costs1 | 1.13 | 1.04 | ||||||
Operating Cash Margin | $ | 1.38 | $ | 1.88 | ||||
Operating Cash Margin (%) | 55 | % | 64 | % | ||||
Total Fully Burdened Cash Costs2 | $ | 1.69 | $ | 1.63 | ||||
Fully Burdened Cash Margin | $ | 0.82 | $ | 1.29 | ||||
Fully Burdened Cash Margin (%) | 33 | % | 44 | % |
1See the "Price and Cost Data Per Mcfe" table below for reconciliation to total Production Costs. | |
2Fully burdened cash costs includes production cash costs, selling, general and administrative (SG&A) cash costs, other operating cash expense, other cash (income) expense, and interest expense. |
Operations:
During the quarter, we used up to three horizontal rigs and drilled 15 wells. The company currently has two rigs in operation, which it expects to run into 2020, along with one frac crew.
During the quarter, the company utilized three frac crews to complete 20 wells, which included 14 Marcellus Shale wells and six Utica Shale wells. CNX has been a first mover in the basin by entering into a long-term contract with Evolution, an all-electric frac crew. The Evolution crew started operations in the second quarter of 2019 and is currently providing fuel savings of approximately $250,000 per well, which is a savings increase of approximately $70,000 per well over the prior expected savings that were highlighted last quarter.
CNX turned-in-line 24 wells in the third quarter, of which 10 were turned-in-line at the end of the third quarter. The 24 wells consisted of the following: 10 Marcellus Shale wells in Greene County, Pennsylvania; five Marcellus Shale wells in Tyler County, West Virginia; four Utica Shale wells in Marshall County, West Virginia; three Utica Shale wells in Greene County, Pennsylvania; and two Utica Shale wells in Monroe County, Ohio.
CNX's natural gas and liquids production in the quarter came from the following categories:
Quarter | Quarter | Quarter | |||||||||||||
Ended | Ended | Ended | |||||||||||||
September 30, 2019 | September 30, 2018 | % Increase/ (Decrease) | June 30, 2019 | % Increase/ (Decrease) | |||||||||||
GAS | |||||||||||||||
Marcellus Sales Volumes (Bcf) | 79.2 | 61.9 | 27.9 | % | 84.3 | (6.0) | % | ||||||||
Utica Sales Volumes (Bcf) | 26.8 | 31.9 | (16.0) | % | 28.1 | (4.6) | % | ||||||||
CBM Sales Volumes (Bcf) | 14.1 | 14.7 | (4.1) | % | 13.9 | 1.4 | % | ||||||||
Other Sales Volumes (Bcf) | 0.1 | — | 100.0 | % | 0.1 | — | % | ||||||||
LIQUIDS1 | |||||||||||||||
NGLs Sales Volumes (Bcfe) | 8.0 | 10.0 | (20.0) | % | 7.9 | 1.3 | % | ||||||||
Oil Sales Volumes (Bcfe) | — | 0.1 | (100.0) | % | — | — | % | ||||||||
Condensate Sales Volumes (Bcfe) | 0.1 | 0.4 | (75.0) | % | 0.2 | (50.0) | % | ||||||||
TOTAL (Bcfe) | 128.3 | 119.0 | 7.8 | % | 134.5 | (4.6) | % | ||||||||
Average Daily Production (MMcfe) | 1,394.6 | 1,293.0 | 1,477.6 |
1NGLs, Oil and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. |
PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison: | ||||||||||||
Quarter | Quarter | Quarter | ||||||||||
Ended | Ended | Ended | ||||||||||
(Per Mcfe) | September 30, 2019 | September 30, 2018 | June 30, 2019 | |||||||||
Average Sales Price - Gas | $ | 2.04 | $ | 2.71 | $ | 2.51 | ||||||
Average Gain on Commodity Derivative Instruments - Cash Settlement- Gas | $ | 0.47 | $ | 0.03 | $ | 0.08 | ||||||
Average Sales Price - Oil* | $ | 9.44 | $ | 10.50 | $ | 8.42 | ||||||
Average Sales Price - NGLs* | $ | 2.28 | $ | 4.68 | $ | 3.06 | ||||||
Average Sales Price - Condensate* | $ | 12.59 | $ | 9.76 | $ | 7.56 | ||||||
Average Sales Price - Total Company | $ | 2.51 | $ | 2.92 | $ | 2.63 | ||||||
Lease Operating Expense (LOE) | $ | 0.11 | $ | 0.14 | $ | 0.15 | ||||||
Production, Ad Valorem, and Other Fees | 0.05 | 0.06 | 0.05 | |||||||||
Transportation, Gathering and Compression | 0.97 | 0.84 | 0.98 | |||||||||
Depreciation, Depletion and Amortization (DD&A) | 0.86 | 0.93 | 0.89 | |||||||||
Total Production Costs | $ | 1.99 | $ | 1.97 | $ | 2.07 | ||||||
Total Production Cash Costs, before DD&A | $ | 1.13 | $ | 1.04 | $ | 1.18 | ||||||
Cash Margin, before DD&A | $ | 1.38 | $ | 1.88 | $ | 1.45 |
*NGLs, Oil, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. | |
Note: "Total Production Costs" excludes Selling, General, and Administration and Other Operating Expenses. |
In the third quarter of 2019, total production costs were higher, compared to the year-earlier quarter, due to increased transportation, gathering, and compression costs, offset in part by improvements to LOE, production taxes, and DD&A. The primary driver to the increased transportation, gathering, and compression costs was due to higher CNXM fees and firm transportation costs associated with new transportation contracts. The improvement to LOE was driven by decreased employee costs and increased production volumes.
Marketing:
For the third quarter of 2019, CNX's average sales price for natural gas, natural gas liquids (NGLs), oil, and condensate was $2.51 per Mcfe. The average realized price for all liquids for the third quarter of 2019 was $14.26 per barrel.
CNX's weighted average differential from NYMEX in the third quarter of 2019 was negative $0.33 per MMBtu. CNX's average sales price for natural gas before hedging decreased 18.7% to $2.04 per Mcf compared with the average sales price of $2.51 per Mcf in the second quarter of 2019. This decrease results primarily from a lower Henry Hub price reflecting current general market conditions coupled with a wider differential. Including the impact of cash settlements from hedging, CNX's average sales price for natural gas was $0.08 per Mcf, or 3.1%, lower than the second quarter and $0.23 per Mcf, or 8.4%, lower than last year's third quarter.
Total hedged natural gas production in the 2019 fourth quarter is 115.7 Bcf. The annual gas hedge position is shown in the table below:
2019 | 2020 | ||||
Volumes Hedged (Bcf), as of 10/9/19 | 405.2* | 489.6 | |||
*Includes actual settlements of 312.5 Bcf. |
CNX's hedged gas volumes include a combination of NYMEX financial hedges, index (NYMEX and basis) financial hedges, and physical fixed price sales. In addition, to protect the NYMEX hedge volumes from basis exposure, CNX enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CNX's gas hedge position through 2023 as of October 9, 2019 is shown in the table below:
Q4 2019 | 2019 | 2020 | 2021 | 2022 | 2023 | |||||||||||||||||||
NYMEX Only Hedges | ||||||||||||||||||||||||
Volumes (Bcf) | 112.3 | 388.4 | 478.3 | 393.2 | 264.7 | 117.5 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.98 | $ | 3.02 | $ | 2.97 | $ | 2.93 | $ | 3.01 | $ | 2.90 | ||||||||||||
Physical Fixed Price Sales and Index Hedges | ||||||||||||||||||||||||
Volumes (Bcf) | 3.4 | 16.8 | 11.3 | 21.0 | 13.4 | 27.1 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.54 | $ | 2.63 | $ | 2.45 | $ | 2.50 | $ | 2.60 | $ | 2.14 | ||||||||||||
Total Volumes Hedged (Bcf)1 | 115.7 | 405.2 | 489.6 | 414.2 | 278.1 | 144.6 | ||||||||||||||||||
NYMEX + Basis (fully-covered volumes)2 | ||||||||||||||||||||||||
Volumes (Bcf) | 112.9 | 403.4 | 484.0 | 414.2 | 268.0 | 142.1 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.65 | $ | 2.68 | $ | 2.54 | $ | 2.40 | $ | 2.42 | $ | 2.27 | ||||||||||||
NYMEX Only Hedges Exposed to Basis | ||||||||||||||||||||||||
Volumes (Bcf) | 2.8 | 1.8 | 5.6 | — | 10.1 | 2.5 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.98 | $ | 3.02 | $ | 2.97 | $ | — | $ | 3.01 | $ | 2.90 | ||||||||||||
Total Volumes Hedged (Bcf)1 | 115.7 | 405.2 | 489.6 | 414.2 | 278.1 | 144.6 |
12021 excludes 8.1 Bcf of physical basis sales not matched with NYMEX hedges. |
2Includes physical sales with fixed basis in Q4 2019, 2019, 2020, 2021, 2022, and 2023 of 31.1 Bcf, 127.8 Bcf, 88.9 Bcf, 75.9 Bcf, 42.0 Bcf, and 3.4 Bcf, respectively. |
During the third quarter of 2019, CNX added additional NYMEX natural gas hedges of 28.0 Bcf, and 24.9 Bcf for 2019, and 2020, respectively. To help mitigate basis exposure on NYMEX hedges, in the third quarter CNX added 27.7 Bcf, 44.1 Bcf, 33.6 Bcf, and 25.2 Bcf, of basis hedges for 2019, 2020, 2021, and 2022, respectively.
Finance:
At September 30, 2019, CNX's Stand-alone net debt to trailing-twelve-months (TTM) adjusted Stand-alone EBITDAX (including distributions from CNXM) was 2.4x. On a consolidated basis, CNX's net debt to TTM adjusted EBITDAX was 2.6x.
At September 30, 2019, CNX's credit facility had $613 million of borrowings outstanding and $199 million of letters of credit outstanding, leaving $1,288 million of unused capacity. In addition, CNX holds 21.7 million CNXM limited partnership units, with a current market value of approximately $283 million as of October 15, 2019, a 2% General Partner interest, and incentive distribution rights.
During the quarter, the company repurchased 1,000,000 shares. Since the October 2017 inception of the current share repurchase program and as of October 15, 2019, CNX has repurchased a total of approximately 45.2 million shares for approximately $602 million, resulting in 186,586,751 shares outstanding, which is an approximate 19% reduction to total shares outstanding. The company has approximately $148 million remaining on its current $750 million share repurchase program, which is not subject to an expiration date.
Guidance and Capital Update:
CNX is updating 2019 production volumes to 530-540 Bcfe, compared to the previous guidance of 510-530 Bcfe. CNX is updating 2020 production volumes to 535-565 Bcfe, compared to the previous guidance of 570-595 Bcfe. The updated guidance equates to an increase of 3% over 2019, based on the midpoints of the updated guidance.
Adjusted EBITDAX(1) | Previous | Updated | Previous | Updated | ||||||||||||
2019E | 2019E | 2020E | 2020E | |||||||||||||
($ in millions, except per share data) | Low | High | Low | High | Low | High | Low | High | ||||||||
Stand-Alone (Including Distributions)(2) | $740 | - | $760 | $745 | - | $765 | $770 | - | $815 | $710 | - | $755 | ||||
Stand-Alone (Including Distributions)(2) per Share | $3.95 | - | $4.05 | $3.99 | - | $4.10 | $4.11 | - | $4.35 | $3.81 | - | $4.05 | ||||
Consolidated | $885 | - | $925 | $910 | - | $940 | $945 | - | $1,010 | $885 | - | $950 |
(1) Updated EBITDAX based on NYMEX forward strip as of October 9, 2019. | |
(2) 2019 and 2020 include approximately $55 million and $75 million, respectively, of projected distributions from ownership interests in CNXM. Per share calculation uses 186.6 million shares outstanding as of October 15, 2019. | |
Note: CNX is unable to provide a reconciliation of projected financial results contained in this release, including FCF, adjusted EBITAX, fully burdened cash costs and other metrics to their respective comparable financial measure calculated in accordance with GAAP. This is due to our inability to calculate the comparable GAAP projected metrics, including operating income and total production costs, given the unknown effect, timing, and potential significance of certain income statement items. |
Despite lower natural gas prices since the previous guidance update, the company expects full-year 2019 adjusted EBITDAX to increase due to higher production volumes and lower costs. The updated guidance assumes 2019 NYMEX gas price in the fourth quarter of $2.37 per MMBtu on open volumes and a basis differential of negative $0.38 per MMBtu. This compares to the previous guidance, using gas prices as of July 8, 2019, which assumed a second half 2019 NYMEX gas price of $2.45 per MMBtu and an average basis differential of negative $0.30 per MMBtu.
The company expects lower 2020 adjusted EBITDAX, compared to the previous guidance update, due to lower volumes and a decline in natural gas prices since July 8, 2019, which is the date used for the previous guidance. The updated guidance assumes 32.5 Bcfe less production volumes in 2020, compared to the previous guidance update; however, 15 Bcfe was accelerated from 2020 into 2019, which is responsible for the production increase in 2019. Also, the updated guidance assumes 2020 NYMEX gas price of $2.40 per MMBtu on open volumes and an average basis differential of negative $0.30 per MMBtu. This compares to the previous guidance, which assumed a 2020 NYMEX gas price of $2.55 per MMBtu and an average basis differential of negative $0.30 per MMBtu.
Despite a lower commodity strip, the company expects to generate $146 million of FCF in 2020, which is an increase compared to the previous guidance of $135 million, as a result of offsetting reductions in capital expenditures and SG&A savings. The updated 2019 guidance is also improved with EBITDAX increasing and capital expenditures declining, compared to the previous update.
Capital Expenditures | Previous | Updated | Previous | Updated | ||||||||||||
2019E | 2019E | 2020E | 2020E | |||||||||||||
($ in millions) | Low | High | Low | High | Low | High | Low | High | ||||||||
Drilling & Completion (D&C) | $695 | - | $745 | $690 | - | $715 | $450 | - | $520 | $400 | - | $450 | ||||
Non-D&C | $200 | - | $200 | $200 | - | $200 | $90 | - | $100 | $90 | - | $100 | ||||
Total Stand-Alone Capital | $895 | - | $945 | $890 | - | $915 | $540 | - | $620 | $490 | - | $550 | ||||
CNX Midstream LP Capital | $310 | - | $330 | $310 | - | $330 | $80 | - | $100 | $80 | - | $100 | ||||
Total Consolidated Capital | $1,205 | - | $1,275 | $1,200 | - | $1,245 | $620 | - | $720 | $570 | - | $650 | ||||
Free Cash Flow (FCF) | — | — | $135 | $146 |
Third quarter 2019 capital expenditure came in lower than expected, and the company is reducing its full-year 2019 capital guidance, while increasing production volumes. For 2020, the company is reducing its full-year capital guidance and production volumes, primarily due to plan changes and associated timing.
For 2019 and 2020 combined, the company expects to spend approximately $80 million less capital than previously announced, resulting in 17.5 Bcfe less production, after accounting for the 15 Bcfe accelerated from 2020 into 2019.
About CNX
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2018, CNX had 7.9 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Non-GAAP Financial Measures
Definitions: EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) and income taxes. EBITDAX is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes, depreciation, depletion and amortization, and exploration. Adjusted EBITDAX consolidated is defined as EBITDAX after adjusting for the discrete items listed below. Stand-alone EBITDAX is defined as the adjusted EBITDAX related to both CNX's E&P and Unallocated segments (See Note 24 - Segment Information in CNX's Annual Report on Form 10-K as filed with the Securities and Exchange Commission for more information) plus the distributions CNX receives during the current period from CNXM related to its limited partnership units, general partner units, and incentive distribution rights (IDRs). Although EBIT, EBITDAX, Stand-alone EBITDAX and adjusted EBITDAX consolidated are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating CNX Resources because they are widely used to evaluate a company's operating performance. We exclude stock-based compensation from adjusted EBITDAX because we do not believe it accurately reflects the actual operating expense incurred during the relevant period and may vary widely from period to period irrespective of operating results. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDAX, Stand-alone EBITDAX or adjusted EBITDAX consolidated identically, the presentation here may not be comparable to similarly titled measures of other companies. Adjusted EBITDAX per outstanding share, adjusted net income per outstanding share, Stand-alone EBITDAX and adjusted EBITDAX consolidated, with shares measured as of October 15, 2019, are not measures of performance calculated in accordance with generally accepted accounting principles. Management believes that these financial measures are useful to an investor in evaluating CNX Resources because (i) analysts utilize these metrics when evaluating company performance and, (ii) given that we have an active share repurchase program, analysts have requested this information as of a recent practicable date, and we want to provide updated information to investors.
Reconciliation of EBIT, EBITDAX, adjusted EBITDAX consolidated, Stand-alone EBITDAX, adjusted net income, net debt and TTM EBITDAX to financial net income is as follows:
Three Months Ended | |||||||||||
September 30, | |||||||||||
2019 | 2019 | 2019 | |||||||||
Dollars in thousands | Stand-alone1 | Midstream | Total Company | ||||||||
Net Income | $ | 102,219 | $ | 41,741 | $ | 143,960 | |||||
Interest Expense | 30,783 | 7,622 | 38,405 | ||||||||
Interest Income | (1,078) | — | (1,078) | ||||||||
Income Tax Expense | 48,902 | — | 48,902 | ||||||||
Earnings Before Interest & Taxes (EBIT) | $ | 180,826 | $ | 49,363 | $ | 230,189 | |||||
Depreciation, Depletion & Amortization | 111,839 | 8,620 | 120,459 | ||||||||
Exploration Expense | 6,075 | — | 6,075 | ||||||||
Earnings Before Interest, Taxes, DD&A and Exploration (EBITDAX) | $ | 298,740 | $ | 57,983 | $ | 356,723 | |||||
Adjustments: | |||||||||||
Unrealized Gain on Commodity Derivative Instruments | $ | (156,872) | $ | — | $ | (156,872) | |||||
Stock-Based Compensation | 1,453 | 328 | 1,781 | ||||||||
Severance Expense | 1,563 | 436 | 1,999 | ||||||||
Total Pre-tax Adjustments | $ | (153,856) | $ | 764 | $ | (153,092) | |||||
Adjusted EBITDAX Consolidated | $ | 144,884 | $ | 58,747 | $ | 203,631 | |||||
Midstream Distributions | 14,388 | N/A | N/A | ||||||||
Stand-alone EBITDAX | $ | 159,272 | N/A | N/A |
1 Stand-alone includes both CNX's E&P and Unallocated segments. See Note 24 - Segment Information in CNX's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission, for more information. |
Three Months Ended | |||||||||||
September 30, | |||||||||||
2018 | 2018 | 2018 | |||||||||
Dollars in thousands | Stand-alone1 | Midstream | Total Company | ||||||||
Net Income | $ | 115,583 | $ | 31,173 | $ | 146,756 | |||||
Interest Expense | 28,467 | 7,256 | 35,723 | ||||||||
Interest Income | (42) | — | (42) | ||||||||
Income Tax Expense | 56,678 | — | 56,678 | ||||||||
Earnings Before Interest & Taxes (EBIT) | $ | 200,686 | $ | 38,429 | $ | 239,115 | |||||
Depreciation, Depletion & Amortization | 111,844 | 7,741 | 119,585 | ||||||||
Exploration Expense | 3,321 | — | 3,321 | ||||||||
Earnings Before Interest, Taxes, DD&A and Exploration (EBITDAX) | $ | 315,851 | $ | 46,170 | $ | 362,021 | |||||
Adjustments: | |||||||||||
Unrealized Gain on Commodity Derivative Instruments | $ | (15,181) | $ | — | $ | (15,181) | |||||
Gain on Certain Asset Sales | (130,849) | — | (130,849) | ||||||||
Severance Expense | 513 | — | 513 | ||||||||
Litigation Settlements | 2,000 | — | 2,000 | ||||||||
Loss on Debt Extinguishment | 15,385 | — | 15,385 | ||||||||
Stock-Based Compensation | 4,737 | 506 | 5,243 | ||||||||
Total Pre-tax Adjustments | $ | (123,395) | $ | 506 | $ | (122,889) | |||||
Adjusted EBITDAX Consolidated | $ | 192,456 | $ | 46,676 | $ | 239,132 | |||||
Midstream Distributions | 10,078 | N/A | N/A | ||||||||
Stand-alone EBITDAX | $ | 202,534 | N/A | N/A |
1 Stand-alone includes both CNX's E&P and Unallocated segments. See Note 24 - Segment Information in CNX's Annual Report on Form 10-K for fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission, for more information. |
Reconciliation of Adjusted Net Income
Three Months Ended | Three Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Dollars in thousands | Stand-alone1 | Stand-alone1 | Total Company | Total Company | |||||||||||
Net Income from EBITDAX Reconciliation | $ | 102,219 | $ | 115,583 | $ | 143,960 | $ | 146,756 | |||||||
Adjustments: | |||||||||||||||
Total Pre-tax Adjustments from EBITDAX Reconciliation | (153,856) | (123,395) | (153,092) | (122,889) | |||||||||||
Tax effect of Adjustments | 40,464 | 33,465 | 40,263 | 33,328 | |||||||||||
Adjusted Net (Loss) Income | $ | (11,173) | $ | 25,653 | $ | 31,131 | $ | 57,195 |
1 Stand-alone includes both CNX's E&P and Unallocated segments. See Note 24 - Segment Information in CNX's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission, for more information. |
Management uses net debt to determine the company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. Management believes that using net debt attributable to CNX Resources shareholders is useful to investors in determining the company's leverage ratio since the company could choose to use its cash and cash equivalents to retire debt.
Net Debt | September 30, 2019 | ||||||||||
Stand-alone1 | Midstream | Total Company | |||||||||
Total Long-Term Debt (GAAP) | $ | 2,000,309 | $ | 639,925 | $ | 2,640,234 | |||||
Less Cash and Cash Equivalents | 2,847 | 2,637 | 5,484 | ||||||||
Net Debt (Non-GAAP) | $ | 1,997,462 | $ | 637,288 | $ | 2,634,750 | |||||
1Stand-alone includes both CNX's E&P and Unallocated segments. |
Reconciliation of Trailing-Twelve-Months (TTM) EBITDAX by Quarter
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, | March 31, | June 30, | September 30, | September 30, | |||||||||||||||
Dollars in thousands | 2018 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||
Net Income (Loss) | $ | 129,415 | $ | (64,651) | $ | 192,694 | $ | 143,960 | $ | 401,418 | |||||||||
Interest Expense | 33,222 | 35,771 | 40,152 | 38,405 | 147,550 | ||||||||||||||
Interest Income | 1 | (722) | (71) | (1,078) | (1,870) | ||||||||||||||
Income Tax (Benefit) Expense | (23,713) | (11,559) | 40,791 | 48,902 | 54,421 | ||||||||||||||
Earnings Before Interest & Taxes (EBIT) | $ | 138,925 | $ | (41,161) | $ | 273,566 | $ | 230,189 | $ | 601,519 | |||||||||
Depreciation, Depletion & Amortization | 130,084 | 125,161 | 128,999 | 120,459 | 504,703 | ||||||||||||||
Exploration Expense | 2,633 | 3,258 | 5,567 | 6,075 | 17,533 | ||||||||||||||
Earnings Before Interest, Taxes, DD&A, and Exploration (EBITDAX) | $ | 271,642 | $ | 87,258 | $ | 408,132 | $ | 356,723 | $ | 1,123,755 | |||||||||
Adjustments: | |||||||||||||||||||
Unrealized Loss (Gain) on Commodity Derivative Instruments | $ | 36,727 | $ | 153,994 | $ | (210,909) | $ | (156,872) | $ | (177,060) | |||||||||
Loss on Certain Asset Sales and Abandonments | 96 | 3,564 | — | — | 3,660 | ||||||||||||||
Severance Expense | (55) | — | 1,182 | 1,999 | 3,126 | ||||||||||||||
Stock Based Compensation | 5,478 | 10,903 | 23,873 | 1,781 | 42,035 | ||||||||||||||
(Gain) Loss on Debt Extinguishment | (315) | 7,537 | 77 | — | 7,299 | ||||||||||||||
Shaw Event | — | 4,305 | — | — | 4,305 | ||||||||||||||
Total Pre-tax Adjustments | $ | 41,931 | $ | 180,303 | $ | (185,777) | $ | (153,092) | $ | (116,635) | |||||||||
Adjusted EBITDAX Consolidated TTM | $ | 313,573 | $ | 267,561 | $ | 222,355 | $ | 203,631 | $ | 1,007,120 |
Reconciliation of Stand-alone EBITDAX Trailing-Twelve-Months (TTM)
Twelve Months Ended September 30, 2019 | |||||||||||
Dollars in thousands | Stand-alone1 | Midstream | Total Company | ||||||||
Net Income | $ | 243,371 | $ | 158,047 | $ | 401,418 | |||||
Interest Expense | 118,153 | 29,397 | 147,550 | ||||||||
Interest Income | (1,870) | — | (1,870) | ||||||||
Income Tax Expense | 54,421 | — | 54,421 | ||||||||
Earnings Before Interest & Taxes (EBIT) | $ | 414,075 | $ | 187,444 | $ | 601,519 | |||||
Depreciation, Depletion & Amortization | 471,933 | 32,770 | 504,703 | ||||||||
Exploration Expense | 17,533 | — | 17,533 | ||||||||
Earnings Before Interest, Taxes, DD&A, and Exploration (EBITDAX) | $ | 903,541 | $ | 220,214 | $ | 1,123,755 | |||||
Adjustments: | |||||||||||
Unrealized Gain on Commodity Derivative Instruments | $ | (177,060) | $ | — | $ | (177,060) | |||||
(Gain) Loss on Certain Asset Sales and Abandonments | (3,569) | 7,229 | 3,660 | ||||||||
Severance Expense | 2,690 | 436 | 3,126 | ||||||||
Stock Based Compensation | 39,919 | 2,116 | 42,035 | ||||||||
Loss on Debt Extinguishment | 7,299 | — | 7,299 | ||||||||
Shaw Event | 4,305 | — | 4,305 | ||||||||
Total Pre-tax Adjustments | $ | (126,416) | $ | 9,781 | $ | (116,635) | |||||
Adjusted EBITDAX Consolidated TTM | $ | 777,125 | $ | 229,995 | $ | 1,007,120 | |||||
Midstream Distributions | 50,869 | N/A | N/A | ||||||||
Stand-alone EBITDAX TTM | $ | 827,994 | N/A | N/A | |||||||
1 Stand-alone includes both CNX's E&P and Unallocated Segments. |
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; our dependence on gathering, processing and transportation facilities and other midstream facilities owned by CNXM and others; disruption of, capacity constraints in, or proximity to pipeline systems that could limit sales of our natural gas and natural gas liquids, and decreases in availability of third-party pipelines or other midstream facilities interconnected to CNXM's gathering systems; uncertainties in estimating our economically recoverable natural gas reserves, and inaccuracies in our estimates; the high-risk nature of drilling natural gas wells; our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; environmental regulations introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials to support our operations; if natural gas prices remain depressed or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties; a loss of our competitive position because of the competitive nature of the natural gas industry or overcapacity in this industry impairing our profitability; deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions; hedging activities may prevent us from benefiting from price increases and may expose us to other risks; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; existing and future government laws, regulations and other legal requirements that govern our business may increase our costs of doing business and may restrict our operations; significant costs and liabilities may be incurred as a result of pipeline and related facility integrity management program testing and any related pipeline repair or preventative or remedial measures; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of or recycle water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; risks associated with our debt; failure to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; decrease in our borrowing base, which could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, and lending requirements or regulations; we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; changes in federal or state income tax laws, particularly in the area of intangible drilling costs; challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; our development and exploration projects, as well as CNXM's midstream system development, require substantial capital expenditures; terrorist attacks or cyber-attacks could have a material adverse effect on our business, financial condition or results of operations; construction of new gathering, compression, dehydration, treating or other midstream assets by CNXM may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks; our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; we may not achieve some or all of the expected benefits of the separation of CONSOL Energy; CONSOL Energy may fail to perform under various transaction agreements that were executed as part of the separation, including with respect to indemnification obligations; CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy has been allocated responsibility; and the separation could result in substantial tax liability; and, with respect to the sale of the Ohio Joint Venture Utica assets, disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||
(Dollars in thousands, except per share data) | Three Months Ended | Nine Months Ended | |||||||||||||
(Unaudited) | September 30, | September 30, | |||||||||||||
Revenues and Other Operating Income: | 2019 | 2018 | 2019 | 2018 | |||||||||||
Natural Gas, NGLs and Oil Revenue | $ | 265,051 | $ | 344,712 | $ | 1,043,862 | $ | 1,084,851 | |||||||
Gain on Commodity Derivative Instruments | 213,913 | 18,005 | 240,118 | 78,752 | |||||||||||
Purchased Gas Revenue | 29,192 | 10,560 | 64,181 | 38,546 | |||||||||||
Midstream Revenue | 18,525 | 19,946 | 55,863 | 69,684 | |||||||||||
Other Operating Income | 3,316 | 3,903 | 9,436 | 23,146 | |||||||||||
Total Revenue and Other Operating Income | 529,997 | 397,126 | 1,413,460 | 1,294,979 | |||||||||||
Costs and Expenses: | |||||||||||||||
Operating Expense | |||||||||||||||
Lease Operating Expense | 14,202 | 16,202 | 52,706 | 78,350 | |||||||||||
Transportation, Gathering and Compression | 80,193 | 68,907 | 244,217 | 230,935 | |||||||||||
Production, Ad Valorem, and Other Fees | 6,127 | 7,342 | 20,103 | 24,277 | |||||||||||
Depreciation, Depletion and Amortization | 120,459 | 119,585 | 374,619 | 363,338 | |||||||||||
Exploration and Production Related Other Costs | 6,075 | 3,321 | 14,900 | 9,401 | |||||||||||
Purchased Gas Costs | 27,490 | 10,602 | 62,476 | 37,404 | |||||||||||
Impairment of Other Intangible Assets | — | — | — | 18,650 | |||||||||||
Selling, General, and Administrative Costs | 24,307 | 32,435 | 109,016 | 98,693 | |||||||||||
Other Operating Expense | 19,746 | 17,405 | 61,197 | 51,238 | |||||||||||
Total Operating Expense | 298,599 | 275,799 | 939,234 | 912,286 | |||||||||||
Other Expense (Income) | |||||||||||||||
Other Expense (Income) | 3,439 | 1,105 | 2,757 | (4,812) | |||||||||||
Gain on Asset Sales and Abandonments | (3,308) | (134,320) | (610) | (148,942) | |||||||||||
Gain on Previously Held Equity Interest | — | — | — | (623,663) | |||||||||||
Loss on Debt Extinguishment | — | 15,385 | 7,614 | 54,433 | |||||||||||
Interest Expense | 38,405 | 35,723 | 114,328 | 112,712 | |||||||||||
Total Other Expense (Income) | 38,536 | (82,107) | 124,089 | (610,272) | |||||||||||
Total Costs and Expenses | 337,135 | 193,692 | 1,063,323 | 302,014 | |||||||||||
Earnings Before Income Tax | 192,862 | 203,434 | 350,137 | 992,965 | |||||||||||
Income Tax Expense | 48,902 | 56,678 | 78,133 | 239,269 | |||||||||||
Net Income | 143,960 | 146,756 | 272,004 | 753,696 | |||||||||||
Less: Net Income Attributable to Noncontrolling Interest | 28,422 | 21,727 | 81,325 | 59,090 | |||||||||||
Net Income Attributable to CNX Resources Shareholders | $ | 115,538 | $ | 125,029 | $ | 190,679 | $ | 694,606 | |||||||
Earnings per Share | |||||||||||||||
Basic | $ | 0.62 | $ | 0.59 | $ | 1.01 | $ | 3.22 | |||||||
Diluted | $ | 0.61 | $ | 0.59 | $ | 1.01 | $ | 3.18 | |||||||
Dividends Declared | $ | — | $ | — | $ | — | $ | — |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(Dollars in thousands) | September 30, | September 30, | |||||||||||||
(Unaudited) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net Income | $ | 143,960 | $ | 146,756 | $ | 272,004 | $ | 753,696 | |||||||
Other Comprehensive Income: | |||||||||||||||
Actuarially Determined Long-Term Liability Adjustments (Net of tax: | 41 | 22 | 126 | 2,004 | |||||||||||
Comprehensive Income | 144,001 | 146,778 | 272,130 | 755,700 | |||||||||||
Less: Comprehensive Income Attributable to Noncontrolling Interest | 28,422 | 21,727 | 81,325 | 59,090 | |||||||||||
Comprehensive Income Attributable to CNX Resources Shareholders | $ | 115,579 | $ | 125,051 | $ | 190,805 | $ | 696,610 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
(Unaudited) | |||||||
(Dollars in thousands) | September 30, | December 31, | |||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and Cash Equivalents | $ | 5,484 | $ | 17,198 | |||
Accounts and Notes Receivable: | |||||||
Trade | 96,997 | 252,424 | |||||
Other Receivables | 11,462 | 11,077 | |||||
Supplies Inventories | 7,527 | 9,715 | |||||
Recoverable Income Taxes | 11,184 | 149,481 | |||||
Prepaid Expenses | 213,072 | 61,791 | |||||
Total Current Assets | 345,726 | 501,686 | |||||
Property, Plant and Equipment: | |||||||
Property, Plant and Equipment | 10,512,298 | 9,567,428 | |||||
Less—Accumulated Depreciation, Depletion and Amortization | 2,981,723 | 2,624,984 | |||||
Total Property, Plant and Equipment—Net | 7,530,575 | 6,942,444 | |||||
Other Assets: | |||||||
Operating Lease Right-of-Use Assets | 205,647 | — | |||||
Investment in Affiliates | 17,110 | 18,663 | |||||
Goodwill | 796,359 | 796,359 | |||||
Other Intangible Assets | 98,285 | 103,200 | |||||
Other | 292,556 | 229,818 | |||||
Total Other Assets | 1,409,957 | 1,148,040 | |||||
TOTAL ASSETS | $ | 9,286,258 | $ | 8,592,170 | |||
(Unaudited) | |||||||
(Dollars in thousands, except per share data) | September 30, | December 31, | |||||
LIABILITIES AND EQUITY | |||||||
Current Liabilities: | |||||||
Accounts Payable | $ | 308,003 | $ | 229,806 | |||
Current Portion of Finance Lease Obligations | 7,203 | 6,997 | |||||
Current Portion of Operating Lease Obligations | 65,061 | — | |||||
Other Accrued Liabilities | 241,357 | 286,172 | |||||
Total Current Liabilities | 621,624 | 522,975 | |||||
Non-Current Liabilities: | |||||||
Long-Term Debt | 2,640,234 | 2,378,205 | |||||
Finance Lease Obligations | 9,400 | 13,299 | |||||
Deferred Income Taxes | 476,968 | 398,682 | |||||
Operating Lease Obligations | 122,514 | — | |||||
Asset Retirement Obligations | 33,123 | 37,479 | |||||
Other | 160,577 | 159,787 | |||||
Total Non-Current Liabilities | 3,442,816 | 2,987,452 | |||||
TOTAL LIABILITIES | 4,064,440 | 3,510,427 | |||||
Stockholders' Equity: | |||||||
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 186,586,751 Issued and Outstanding at September 30, 2019; 198,663,342 Issued and Outstanding at December 31, 2018 | 1,870 | 1,990 | |||||
Capital in Excess of Par Value | 2,197,783 | 2,264,063 | |||||
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding | — | — | |||||
Retained Earnings | 2,243,104 | 2,071,809 | |||||
Accumulated Other Comprehensive Loss | (7,778) | (7,904) | |||||
Total CNX Resources Stockholders' Equity | 4,434,979 | 4,329,958 | |||||
Noncontrolling Interest | 786,839 | 751,785 | |||||
TOTAL STOCKHOLDERS' EQUITY | 5,221,818 | 5,081,743 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 9,286,258 | $ | 8,592,170 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(Dollars in thousands) | September 30, | September 30, | |||||||||||||
(Unaudited) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Total Stockholders' Equity, Beginning Balance | $ | 5,099,995 | $ | 5,038,923 | $ | 5,081,743 | $ | 3,899,899 | |||||||
Common Stock and Capital in Excess of Par Value: | |||||||||||||||
Beginning Balance | 2,205,848 | 2,374,788 | 2,266,053 | 2,452,564 | |||||||||||
Issuance of Common Stock | 49 | 126 | 211 | 1,689 | |||||||||||
Purchase and Retirement of Common Stock | (7,697) | (66,503) | (101,687) | (155,191) | |||||||||||
Amortization of Stock-Based Compensation Awards | 1,453 | 4,737 | 35,076 | 14,086 | |||||||||||
Ending Balance | 2,199,653 | 2,313,148 | 2,199,653 | 2,313,148 | |||||||||||
Retained Earnings: | |||||||||||||||
Beginning Balance | 2,127,627 | 1,940,507 | 2,071,809 | 1,455,811 | |||||||||||
Net Income | 115,538 | 125,029 | 190,679 | 694,606 | |||||||||||
Purchase and Retirement of Common Stock | — | (61,512) | (13,790) | (141,543) | |||||||||||
Shares Withheld for Taxes | (61) | (136) | (5,594) | (4,986) | |||||||||||
Ending Balance | 2,243,104 | 2,003,888 | 2,243,104 | 2,003,888 | |||||||||||
Accumulated Other Comprehensive Loss: | |||||||||||||||
Beginning Balance | (7,819) | (6,494) | (7,904) | (8,476) | |||||||||||
Other Comprehensive Income | 41 | 22 | 126 | 2,004 | |||||||||||
Ending Balance | (7,778) | (6,472) | (7,778) | (6,472) | |||||||||||
Total CNX Resources Corporation Stockholders' Equity | 4,434,979 | 4,310,564 | 4,434,979 | 4,310,564 | |||||||||||
Non-Controlling Interest: | |||||||||||||||
Beginning Balance | 774,339 | 730,122 | 751,785 | — | |||||||||||
Net Income | 28,422 | 21,727 | 81,325 | 59,090 | |||||||||||
Shares Withheld for Taxes | — | (1) | (690) | (348) | |||||||||||
Amortization of Stock-Based Compensation Awards | 328 | 506 | 1,481 | 1,775 | |||||||||||
Distributions to CNXM Noncontrolling Interest Holders | (16,250) | (14,099) | (47,062) | (40,839) | |||||||||||
Acquisition of CNX Gathering, LLC | — | — | — | 718,577 | |||||||||||
Ending Balance | 786,839 | 738,255 | 786,839 | 738,255 | |||||||||||
Total Stockholders' Equity, Ending Balance | $ | 5,221,818 | $ | 5,048,819 | $ | 5,221,818 | $ | 5,048,819 |
CNX RESOURCES AND SUBSIDIARIES | |||||||||||||||
(Dollars in thousands) | Three Months Ended | Nine Months Ended | |||||||||||||
(Unaudited) | September 30, | September 30, | |||||||||||||
Cash Flows from Operating Activities: | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net Income | $ | 143,960 | $ | 146,756 | $ | 272,004 | $ | 753,696 | |||||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | |||||||||||||||
Depreciation, Depletion and Amortization | 120,459 | 119,585 | 374,619 | 363,338 | |||||||||||
Amortization of Deferred Financing Costs | 1,649 | 1,818 | 6,057 | 6,640 | |||||||||||
Impairment of Other Intangible Assets | — | — | — | 18,650 | |||||||||||
Stock-Based Compensation | 1,781 | 5,243 | 36,557 | 15,861 | |||||||||||
Gain on Asset Sales and Abandonments | (3,308) | (134,320) | (610) | (148,942) | |||||||||||
Gain on Previously Held Equity Interest | — | — | — | (623,663) | |||||||||||
Loss on Debt Extinguishment | — | 15,385 | 7,614 | 54,433 | |||||||||||
Gain on Commodity Derivative Instruments | (213,913) | (18,005) | (240,118) | (78,752) | |||||||||||
Net Cash Received in Settlement of Commodity Derivative Instruments | 57,041 | 2,825 | 26,331 | 2,518 | |||||||||||
Deferred Income Taxes | 48,902 | 68,922 | 78,133 | 259,116 | |||||||||||
Equity in Earnings of Affiliates | (673) | (1,241) | (1,703) | (4,688) | |||||||||||
Return on Equity Investment | 1,200 | — | 3,256 | — | |||||||||||
Changes in Operating Assets: | |||||||||||||||
Accounts and Notes Receivable | 28,724 | 5,969 | 154,715 | 50,125 | |||||||||||
Recoverable Income Taxes | 102,518 | (12,244) | 138,406 | (8,501) | |||||||||||
Supplies Inventories | 3,715 | 773 | 2,188 | 1,016 | |||||||||||
Prepaid Expenses | 1,438 | (1,664) | 5,725 | (337) | |||||||||||
Changes in Operating Liabilities: | |||||||||||||||
Accounts Payable | 25,934 | 5,730 | 55,280 | 2,532 | |||||||||||
Accrued Interest | (2,691) | 9,170 | 2,359 | 5,812 | |||||||||||
Other Operating Liabilities | 4,703 | 28,914 | (31,689) | 30,418 | |||||||||||
Changes in Other Liabilities | (16,134) | (4,362) | (23,041) | (9,736) | |||||||||||
Other | 114 | 35 | 9 | 683 | |||||||||||
Net Cash Provided by Operating Activities | 305,419 | 239,289 | 866,092 | 690,219 | |||||||||||
Cash Flows from Investing Activities: | |||||||||||||||
Capital Expenditures | (336,137) | (297,465) | (964,502) | (794,124) | |||||||||||
CNX Gathering LLC Acquisition, Net of Cash Acquired | — | — | — | (299,272) | |||||||||||
Proceeds from Asset Sales | 8,189 | 347,391 | 15,276 | 500,811 | |||||||||||
Net Distributions from Equity Affiliates | — | 4,100 | — | 7,750 | |||||||||||
Net Cash (Used in) Provided by Investing Activities | (327,948) | 54,026 | (949,226) | (584,835) | |||||||||||
Cash Flows from Financing Activities: | |||||||||||||||
Payments on Miscellaneous Borrowings | (1,807) | (1,708) | (5,322) | (5,455) | |||||||||||
Payments on Long-Term Notes | — | (212,000) | (405,876) | (935,419) | |||||||||||
Net Proceeds from (Payments on) CNXM Revolving Credit Facility | 38,000 | 33,000 | 162,000 | (105,500) | |||||||||||
(Payments on) Proceeds from CNX Revolving Credit Facility | (16,800) | 17,000 | 1,200 | 439,000 | |||||||||||
Proceeds from Issuance of CNX Senior Notes | — | — | 500,000 | — | |||||||||||
Proceeds from Issuance of CNXM Senior Notes | — | — | — | 394,000 | |||||||||||
Distributions to CNXM Noncontrolling Interest Holders | (16,250) | (14,099) | (47,062) | (40,839) | |||||||||||
Proceeds from Issuance of Common Stock | 49 | 127 | 210 | 1,689 | |||||||||||
Shares Withheld for Taxes | (62) | (138) | (6,284) | (5,335) | |||||||||||
Purchases of Common Stock | (7,697) | (127,645) | (117,477) | (294,365) | |||||||||||
Debt Repurchase and Financing Fees | (31) | (26) | (9,969) | (19,655) | |||||||||||
Net Cash (Used in) Provided by Financing Activities | (4,598) | (305,489) | 71,420 | (571,879) | |||||||||||
Net Decrease in Cash and Cash Equivalents | (27,127) | (12,174) | (11,714) | (466,495) | |||||||||||
Cash and Cash Equivalents at Beginning of Period | 32,611 | 54,846 | 17,198 | 509,167 | |||||||||||
Cash and Cash Equivalents at End of Period | $ | 5,484 | $ | 42,672 | $ | 5,484 | $ | 42,672 |
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SOURCE CNX Resources Corporation
PITTSBURGH, Oct. 1, 2019 /PRNewswire/ -- CNX Resources Corp. (NYSE: CNX) and CNX Midstream Partners LP (NYSE: CNXM) will issue their third quarter earnings releases at 6:45 a.m. Eastern Time on Tuesday, October 29. These releases will be followed by conference calls and live webcasts, which will be available on the 'Investor Relations' page of the CNX Resources website, and the 'News and Events' page of the CNX Midstream website. Also, earnings call slides will be available at 6:45 a.m. Eastern Time on Tuesday, October 29, on each company's website.
Conference Call Information
CNX Resources (NYSE: CNX)
CNX Midstream Partners (NYSE: CNXM)
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2018, CNX had 7.9 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. CNXM's assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on CNXM's website www.cnxmidstream.com.
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SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, July 30, 2019 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or "the company") reports the following financial results, which are in accordance with generally accepted accounting principles (GAAP) in the U.S.:
During the second quarter of 2019:
Second Quarter Highlights
CNX's management uses non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful for investors in analyzing the company. Stand-alone results include both CNX's Exploration & Production (E&P) and Unallocated segments (but not the Midstream segment) plus distributions CNX receives from CNX Midstream Partners LP ("CNXM"). CNX believes that providing Stand-alone results provides investors with more transparency and a better ability to compare CNX's financial results to those of our peer group. The term "consolidated" includes 100% of the results of CNX, CNX Gathering LLC, and CNXM on a consolidated basis.
"Despite weaker prices, CNX's operational execution drove strong cash margins and well performance, which resulted in modest volume growth in the quarter, when compared to the first quarter of 2019," commented Nicholas J. DeIuliis, president and CEO. "We hit a major milestone in our deep dry Utica program this quarter with the Majorsville 6 pad well costs averaging $12.1 million per well, which is below the targeted well costs for Southwest Pennsylvania Utica. During the quarter, we set a Pennsylvania record for drilling the longest Marcellus lateral at 19,609 feet. Opportunistic share buybacks continued at discounted prices relative to our internal NAV per share views, with a 19% reduction in total share count since the start of our program. Our cash costs, robust hedge book, and asset base continue to drive strong risk-adjusted rates of return, and our focus remains on appropriately allocating capital across our operations, debt reduction, and/or additional share repurchases."
Mr. DeIuliis continued, "CNX is one of the most hedged producers in 2020 with 86% of our gas volumes hedged including NYMEX hedges at $2.94 per Mcf. The hedge program, coupled with the 2020 development plan and capital program, is positioning the company to generate approximately $135 million in free cash flow (FCF) in 2020 at forward strip prices on open volumes, while growing production approximately 12%, when compared to 2019. Based on this activity we expect that 2021 will be FCF positive and have flat production."
The following table represents certain non-GAAP financial measures used by the company:1
Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | |||||||||||||||||||
(Dollars in millions, except per | Stand-alone | % Increase/ | Consolidated | % Increase/ | ||||||||||||||||||
Adjusted Net Income | $ | 12 | $ | 62 | (80.6) | % | $ | 57 | $ | 90 | (36.7) | % | ||||||||||
Total Shares Outstanding (in millions)2 | 187.6 | 213.1 | (12.0) | % | — | — | — | % | ||||||||||||||
Adjusted Net Income per Outstanding Share2 | $ | 0.06 | $ | 0.29 | (79.3) | % | — | — | — | % | ||||||||||||
Adjusted EBITDAX | $ | 175 | $ | 196 | (10.7) | % | $ | 222 | $ | 231 | (3.9) | % | ||||||||||
Adjusted EBITDAX per Outstanding Share2 | $ | 0.93 | $ | 0.92 | 1.1 | % | $ | 1.18 | $ | 1.08 | 9.3 | % | ||||||||||
Capital Expenditures3 | $ | 226 | $ | 239 | (5.4) | % | — | — | — | % |
1The Non-GAAP financial measures in the table above are defined and reconciled to GAAP net income, under the caption "Non-GAAP Financial Measures" below. |
2For the quarter ended June 30, 2019, total shares outstanding of 187,563,388 (Non-GAAP) are as of July 15, 2019. For the quarter ended June 30, 2018, total shares outstanding of 213,059,169 (Non-GAAP) are as of July 17, 2018. |
3Capital expenditures exclude $103.4 million and $24.6 million of total capital investment net to CNXM in the second quarter of 2019 and 2018, respectively, as reported in CNXM Second Quarter Results. |
The following table highlights operating cash margins and fully burdened cash margins:
Quarter | Quarter | |||||||
Ended | Ended | |||||||
(Per Mcfe) | June 30, | June 30, | ||||||
Average Sales Price - E&P | $ | 2.63 | $ | 2.87 | ||||
Total Production Cash Costs1 | 1.18 | 1.09 | ||||||
Operating Cash Margin | $ | 1.45 | $ | 1.78 | ||||
Operating Cash Margin (%) | 55 | % | 62 | % | ||||
Total Fully Burdened Cash Costs2 | $ | 1.70 | $ | 1.66 | ||||
Fully Burdened Cash Margin | $ | 0.93 | $ | 1.21 | ||||
Fully Burdened Cash Margin (%) | 35 | % | 42 | % |
1See the "Price and Cost Data Per Mcfe" table below for reconciliation to total Production Costs. |
2Fully burdened cash costs includes production cash costs, selling, general and administrative (SG&A) cash costs, other operating cash expense, other cash (income) expense, and interest expense. |
Operations:
During the quarter, we used up to five horizontal rigs and drilled 30 wells. Many of the rigs are being utilized in batch drilling on pads that in some cases have stacked pay development. The company currently has three rigs in operation, which are under contract through the end of 2019, and CNX expects to run approximately two rigs and one frac crew in 2020. During the quarter, the company set a Pennsylvania state record for longest lateral by drilling the RHL71B Marcellus Shale well 19,609 feet. The average lateral length for this 6-well pad was 15,744 feet with estimated drilling and completion (D&C) capital of approximately $800 per foot.
During the quarter, the company utilized two frac crews to complete nine wells, which included: five Marcellus Shale wells in Greene County, Pennsylvania; and four Utica Shale wells in Marshall County, West Virginia. CNX has been a first mover in the basin by entering into a long-term contract with Evolution, an all-electric frac crew. The Evolution crew started operations in the second quarter and completed seven wells, which provided fuel savings of approximately $180,000 per well.
CNX turned-in-line four wells in the second quarter, which consisted of four Marcellus Shale wells in Greene County, Pennsylvania.
CNX's natural gas and liquids production in the quarter came from the following categories:
Quarter | Quarter | Quarter | |||||||||||||
Ended | Ended | Ended | |||||||||||||
June 30, | June 30, | % Increase/ | March 31, | % Increase/ | |||||||||||
GAS | |||||||||||||||
Marcellus Sales Volumes (Bcf) | 84.3 | 58.0 | 45.3 | % | 81.6 | 3.3 | % | ||||||||
Utica Sales Volumes (Bcf) | 28.1 | 40.4 | (30.4) | % | 30.6 | (8.2) | % | ||||||||
CBM Sales Volumes (Bcf) | 13.9 | 14.8 | (6.1) | % | 13.7 | 1.5 | % | ||||||||
Other Sales Volumes (Bcf)1 | 0.1 | 0.4 | (75.0) | % | — | — | % | ||||||||
LIQUIDS2 | |||||||||||||||
NGLs Sales Volumes (Bcfe) | 7.9 | 8.4 | (6.0) | % | 6.7 | 17.9 | % | ||||||||
Oil Sales Volumes (Bcfe) | — | 0.1 | (100.0) | % | — | — | % | ||||||||
Condensate Sales Volumes (Bcfe) | 0.2 | 0.5 | (60.0) | % | 0.4 | (50.0) | % | ||||||||
TOTAL (Bcfe) | 134.5 | 122.6 | 9.7 | % | 133.0 | 1.1 | % | ||||||||
Average Daily Production (MMcfe) | 1,477.6 | 1,346.8 | 1,478.0 |
1Other Sales Volumes: primarily related to shallow oil and gas production that was sold at the end of the first quarter of 2018. |
2NGLs, Oil and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. |
PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison: | ||||||||||||||||||||||||
Quarter | Quarter | Quarter | ||||||||||||||||||||||
Ended
| Ended
| Ended
| ||||||||||||||||||||||
(Per Mcfe) | June 30, 2019 | June 30, 2018 | March 31, 2019 | |||||||||||||||||||||
Average Sales Price - Gas | $ | 2.51 | $ | 2.55 | $ | 3.21 | ||||||||||||||||||
Average Gain (Loss) on Commodity Derivative Instruments - | $ | 0.08 | $ | 0.15 | $ | (0.33) | ||||||||||||||||||
Average Sales Price - Oil* | $ | 8.42 | $ | 9.72 | $ | 7.26 | ||||||||||||||||||
Average Sales Price - NGLs* | $ | 3.06 | $ | 4.73 | $ | 4.46 | ||||||||||||||||||
Average Sales Price - Condensate* | $ | 7.56 | $ | 9.47 | $ | 6.50 | ||||||||||||||||||
Average Sales Price - Total Company | $ | 2.63 | $ | 2.87 | $ | 2.97 | ||||||||||||||||||
Lease Operating Expense (LOE) | $ | 0.15 | $ | 0.21 | $ | 0.14 | ||||||||||||||||||
Production, Ad Valorem, and Other Fees | 0.05 | 0.06 | 0.05 | |||||||||||||||||||||
Transportation, Gathering and Compression | 0.98 | 0.82 | 0.92 | |||||||||||||||||||||
Depreciation, Depletion and Amortization (DD&A) | 0.89 | 0.91 | 0.88 | |||||||||||||||||||||
Total Production Costs | $ | 2.07 | $ | 2.00 | $ | 1.99 | ||||||||||||||||||
Total Production Cash Costs, before DD&A | $ | 1.18 | $ | 1.09 | $ | 1.11 | ||||||||||||||||||
Cash Margin, before DD&A | $ | 1.45 | $ | 1.78 | $ | 1.86 |
*NGLs, Oil, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. |
Note: "Total Production Costs" excludes Selling, General, and Administration and Other Operating Expenses. |
In the second quarter of 2019, total production costs were higher, compared to the year-earlier quarter, mainly due to increased transportation, gathering, and compression costs, offset in part by improvements to LOE, production taxes, and DD&A. The primary driver to the increased transportation, gathering, and compression costs was due to higher CNXM fees and firm transportation nominations related to new contracts. The improvement to LOE was driven by decreased water disposal costs.
Marketing:
For the second quarter of 2019, CNX's average sales price for natural gas, natural gas liquids (NGLs), oil, and condensate was $2.63 per Mcfe. The average realized price for all liquids for the second quarter of 2019 was $19.14 per barrel.
CNX's weighted average differential from NYMEX in the second quarter of 2019 was negative $0.31 per MMBtu. CNX's average sales price for natural gas before hedging decreased 21.8% to $2.51 per Mcf compared with the average sales price of $3.21 per Mcf in the first quarter of 2019. This decrease results primarily from a lower Henry Hub price reflecting current general market conditions coupled with a wider differential. Including the impact of cash settlements from hedging, CNX's average sales price for natural gas was $0.11 per Mcf, or 4.1%, lower than last year's second quarter.
Total hedged natural gas production in the 2019 third quarter is 103.9 Bcf. The annual gas hedge position is shown in the table below:
2019 | 2020 | ||||
Volumes Hedged (Bcf), as of 7/8/19 | 396.6* | 470.5 |
*Includes actual settlements of 205.8 Bcf. |
CNX's hedged gas volumes include a combination of NYMEX financial hedges, index (NYMEX and basis) financial hedges, and physical fixed price sales. In addition, to protect the NYMEX hedge volumes from basis exposure, CNX enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CNX's gas hedge position through 2023 as of July 8, 2019 is shown in the table below:
Q3 2019 | 2019 | 2020 | 2021 | 2022 | 2023 | |||||||||||||||||||
NYMEX Only Hedges | ||||||||||||||||||||||||
Volumes (Bcf) | 99.8 | 379.7 | 459.1 | 395.1 | 265.9 | 118.9 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.98 | $ | 3.01 | $ | 2.94 | $ | 2.92 | $ | 3.00 | $ | 2.87 | ||||||||||||
Physical Fixed Price Sales and Index Hedges | ||||||||||||||||||||||||
Volumes (Bcf) | 4.1 | 16.9 | 11.4 | 21.1 | 13.5 | 27.4 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.51 | $ | 2.62 | $ | 2.42 | $ | 2.49 | $ | 2.59 | $ | 2.11 | ||||||||||||
Total Volumes Hedged (Bcf) | 103.9 | 396.6 | 470.5 | 416.2 | 279.4 | 146.3 | ||||||||||||||||||
NYMEX + Basis (fully-covered volumes)1 | ||||||||||||||||||||||||
Volumes (Bcf) | 102.0 | 380.9 | 444.6 | 394.0 | 243.9 | 136.9 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.62 | $ | 2.67 | $ | 2.49 | $ | 2.37 | $ | 2.37 | $ | 2.24 | ||||||||||||
NYMEX Only Hedges Exposed to Basis | ||||||||||||||||||||||||
Volumes (Bcf) | 1.9 | 15.7 | 25.9 | 22.2 | 35.5 | 9.4 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.98 | $ | 3.01 | $ | 2.94 | $ | 2.92 | $ | 3.00 | $ | 2.87 | ||||||||||||
Total Volumes Hedged (Bcf) | 103.9 | 396.6 | 470.5 | 416.2 | 279.4 | 146.3 |
1Includes physical sales with fixed basis in Q3 2019, 2019, 2020, 2021, 2022, and 2023 of 33.8 Bcf, 129.5 Bcf, 77.4 Bcf, 74.3 Bcf, 33.8 Bcf, and 3.4 Bcf, respectively. |
During the second quarter of 2019, CNX added additional NYMEX natural gas hedges of 2.6 Bcf and 53.6 Bcf for 2019 and 2024, respectively. To help mitigate basis exposure on NYMEX hedges, in the second quarter CNX added 3.4 Bcf, 20.3 Bcf, 23.6 Bcf, 24.0 Bcf, and 38.1 Bcf, of basis hedges for 2020, 2021, 2022, 2023, and 2024, respectively.
Finance:
At June 30, 2019, CNX's stand-alone net debt to trailing-twelve-months (TTM) adjusted Stand-alone EBITDAX plus distributions was 2.3x. On a consolidated basis, CNX's net debt to TTM adjusted EBITDAX was 2.5x. During the six months ended June 30, 2019, CNX completed a private offering of $500 million of 7.25% senior notes due in March 2027, of which $400 million was used to purchase its outstanding 5.875% senior notes due in April 2022. The company is evaluating additional options to refinance and extend the maturities of the 2022 senior notes.
At June 30, 2019, CNX's credit facility had $630 million of borrowings outstanding and $199 million of letters of credit outstanding, leaving $1,271 million of unused capacity. In addition, CNX holds 21.7 million CNXM limited partnership units, with a current market value of approximately $315 million as of July 18, 2019, a 2% General Partner interest, and incentive distribution rights.
Since the October 2017 inception of the current repurchase program and as of July 15, 2019, CNX has repurchased a total of approximately 44.2 million shares for approximately $595 million life-to-date, resulting in 187,563,388 shares outstanding, which is an approximately 19% reduction to total shares outstanding. The company has approximately $155 million remaining on its current $750 million share repurchase program, which is not subject to an expiration date.
Guidance and Capital Update:
CNX expects to generate approximately $135 million in FCF in 2020 based on the projected operational and financial results below.
CNX updates 2019 production volumes to 510-530 Bcfe, compared to the previous guidance of 495-515 Bcfe. CNX updates 2020 production volumes to 570-595 Bcfe, which equates to an approximately 12% annual increase, based on the midpoints of guidance.
Adjusted EBITDAX(1) | Previous | Updated | Updated | |||||||||
2019E | 2019E | 2020E | ||||||||||
($ in millions) | Low | High | Low | High | Low | High | ||||||
Stand-Alone (Including Distributions)(2) | $770 | - | $790 | $740 | - | $760 | $770 | - | $815 | |||
Consolidated | $920 | - | $950 | $885 | - | $925 | $945 | - | $1,010 |
(1) Updated EBITDAX based on NYMEX as of July 8, 2019. |
(2) 2019 and 2020 include approximately $55 million and $75 million, respectively, of projected distributions from ownership interests in CNXM. |
Note: CNX is unable to provide a reconciliation of projected financial results contained in this release, including FCF, adjusted EBITAX, fully burdened cash costs and other metrics to their respective comparable financial measure calculated in accordance with GAAP. This is due to our inability to calculate the comparable GAAP projected metrics, including operating income and total production costs, given the unknown effect, timing, and potential significance of certain income statement items. |
The decreases in 2019 adjusted EBITDAX figures are due to a decline in natural gas prices since April 5, 2019, which is the date used for the previous guidance. The updated guidance assumes 2019 NYMEX gas price of $2.45 per MMBtu on open volumes and a basis differential of negative $0.275 per Mcf, based on the midpoint the guidance range. This compares to the previous guidance, which assumed a 2019 NYMEX gas price of $2.88 per MMBtu and a basis differential of negative $0.225 per Mcf, based on the midpoint of the guidance range.
Capital Expenditures | Reaffirmed | Updated | ||||||
2019E | 2020E | |||||||
($ in millions) | Low | High | Low | High | ||||
Drilling & Completion (D&C) | $695 | - | $745 | $450 | - | $520 | ||
Non-D&C | $200 | - | $200 | $90 | - | $100 | ||
Total Stand-Alone Capital | $895 | - | $945 | $540 | - | $620 | ||
CNX Midstream LP Capital | $310 | - | $330 | $80 | - | $100 | ||
Total Consolidated Capital | $1,205 | - | $1,275 | $620 | - | $720 |
Second quarter 2019 capital came in as expected, and the company is reaffirming full-year 2019 capital guidance, while increasing production volumes. CNX expects non-D&C capital expenditures to decrease by over 50% in 2020, when compared to 2019, as the company expects to benefit from these one-time investments that we expect to accrue value over time.
About CNX
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2018, CNX had 7.9 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Non-GAAP Financial Measures
Definitions: EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) and income taxes. EBITDAX is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes, depreciation, depletion and amortization, and exploration. Adjusted EBITDAX consolidated is defined as EBITDAX after adjusting for the discrete items listed below. Stand-alone EBITDAX is defined as the adjusted EBITDAX related to both CNX's E&P and Unallocated segments (See Note 24 - Segment Information in CNX's Annual Report on Form 10-K as filed with the Securities and Exchange Commission for more information) plus the distributions CNX receives during the current period from CNXM related to its limited partnership units, general partner units, and incentive distribution rights (IDRs). Although EBIT, EBITDAX, Stand-alone EBITDAX and adjusted EBITDAX consolidated are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating CNX Resources because they are widely used to evaluate a company's operating performance. We exclude stock-based compensation from adjusted EBITDAX because we do not believe it accurately reflects the actual operating expense incurred during the relevant period and may vary widely from period to period irrespective of operating results. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDAX, Stand-alone EBITDAX or adjusted EBITDAX consolidated identically, the presentation here may not be comparable to similarly titled measures of other companies. Adjusted EBITDAX per outstanding share, adjusted net income per outstanding share, Stand-alone EBITDAX and adjusted EBITDAX consolidated, with shares measured as of July 15, 2019, are not measures of performance calculated in accordance with generally accepted accounting principles. Management believes that these financial measures are useful to an investor in evaluating CNX Resources because (i) analysts utilize these metrics when evaluating company performance and, (ii) given that we have an active share repurchase program, analysts have requested this information as of a recent practicable date, and we want to provide updated information to investors.
Reconciliation of EBIT, EBITDAX, adjusted EBITDAX consolidated, Stand-alone EBITDAX, adjusted net income, net debt and TTM EBITDAX to financial net income is as follows:
Three Months Ended | |||||||||||
June 30, | |||||||||||
2019 | 2019 | 2019 | |||||||||
Dollars in thousands | Stand-alone1 | Midstream | Total Company | ||||||||
Net Income | $ | 148,281 | $ | 44,413 | $ | 192,694 | |||||
Interest Expense | 32,467 | 7,685 | 40,152 | ||||||||
Interest Income | (71) | — | (71) | ||||||||
Income Tax Expense | 40,791 | — | 40,791 | ||||||||
Earnings Before Interest & Taxes (EBIT) | $ | 221,468 | $ | 52,098 | $ | 273,566 | |||||
Depreciation, Depletion & Amortization | 120,705 | 8,294 | 128,999 | ||||||||
Exploration Expense | 5,567 | — | 5,567 | ||||||||
Earnings Before Interest, Taxes, DD&A and Exploration (EBITDAX) | $ | 347,740 | $ | 60,392 | $ | 408,132 | |||||
Adjustments: | |||||||||||
Unrealized Gain on Commodity Derivative Instruments | $ | (210,909) | $ | — | $ | (210,909) | |||||
Loss on Debt Extinguishment | 77 | — | 77 | ||||||||
Stock-Based Compensation | 23,333 | 540 | 23,873 | ||||||||
Severance | 1,182 | — | 1,182 | ||||||||
Total Pre-tax Adjustments | $ | (186,317) | $ | 540 | $ | (185,777) | |||||
Adjusted EBITDAX Consolidated | $ | 161,423 | $ | 60,932 | $ | 222,355 | |||||
Midstream Distributions | 13,251 | N/A | N/A | ||||||||
Stand-alone EBITDAX | $ | 174,674 | N/A | N/A |
1 Stand-alone includes both CNX's E&P and Unallocated segments. See Note 24 - Segment Information in CNX's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission, for more information. |
Three Months Ended | |||||||||||
June 30, | |||||||||||
2018 | 2018 | 2018 | |||||||||
Dollars in thousands | Stand-alone1 | Midstream | Total Company | ||||||||
Net Income | $ | 33,614 | $ | 27,780 | $ | 61,394 | |||||
Interest Expense | 31,320 | 7,118 | 38,438 | ||||||||
Interest Income | — | — | — | ||||||||
Income Tax Benefit | (31,102) | — | (31,102) | ||||||||
Earnings Before Interest & Taxes (EBIT) | $ | 33,832 | $ | 34,898 | $ | 68,730 | |||||
Depreciation, Depletion & Amortization | 111,125 | 7,962 | 119,087 | ||||||||
Exploration Expense | 3,699 | — | 3,699 | ||||||||
Earnings Before Interest, Taxes, DD&A and Exploration (EBITDAX) | $ | 148,656 | $ | 42,860 | $ | 191,516 | |||||
Adjustments: | |||||||||||
Unrealized Gain on Commodity Derivative Instruments | $ | (8,976) | $ | — | $ | (8,976) | |||||
Impairment of Other Intangible Assets | 18,650 | — | 18,650 | ||||||||
Other Transaction Fees | 257 | — | 257 | ||||||||
Loss on Debt Extinguishment | 23,413 | — | 23,413 | ||||||||
Stock-Based Compensation | 5,017 | 691 | 5,708 | ||||||||
Total Pre-tax Adjustments | $ | 38,361 | $ | 691 | $ | 39,052 | |||||
Adjusted EBITDAX Consolidated | $ | 187,017 | $ | 43,551 | $ | 230,568 | |||||
Midstream Distributions | 9,088 | N/A | N/A | ||||||||
Stand-alone EBITDAX | $ | 196,105 | N/A | N/A |
1 Stand-alone includes both CNX's E&P and Unallocated segments. See Note 24 - Segment Information in CNX's Annual Report on Form 10-K for fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission, for more information. |
Reconciliation of Adjusted Net Income
Three Months Ended | Three Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Dollars in thousands | Stand-alone1 | Stand-alone1 | Total Company | Total Company | |||||||||||
Net (Loss) Income from EBITDAX Reconciliation | $ | 148,281 | $ | 33,614 | $ | 192,694 | $ | 61,394 | |||||||
Adjustments: | |||||||||||||||
Total Pre-tax Adjustments from EBITDAX Reconciliation | (186,317) | 38,361 | (185,777) | 39,052 | |||||||||||
Tax effect of Adjustments | 50,530 | (10,405) | 50,383 | (10,592) | |||||||||||
Adjusted Net Income | $ | 12,494 | $ | 61,570 | $ | 57,300 | $ | 89,854 |
1 Stand-alone includes both CNX's E&P and Unallocated segments. See Note 24 - Segment Information in CNX's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission, for more information. |
Management uses net debt to determine the company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. Management believes that using net debt attributable to CNX Resources shareholders is useful to investors in determining the company's leverage ratio since the company could choose to use its cash and cash equivalents to retire debt.
Net Debt | June 30, 2019 | ||||||||||
Stand-alone1 | Midstream | Total Company | |||||||||
Total Long-Term Debt (GAAP) | $ | 2,016,687 | $ | 601,688 | $ | 2,618,375 | |||||
Less Cash and Cash Equivalents | 19,864 | 12,747 | 32,611 | ||||||||
Net Debt (Non-GAAP) | $ | 1,996,823 | $ | 588,941 | $ | 2,585,764 |
1Stand-alone includes both CNX's E&P and Unallocated segments. |
Reconciliation of Trailing-Twelve-Months (TTM) EBITDAX by Quarter
Three Months Ended | Twelve Ended | ||||||||||||||||||
September 30, | December 31, | March 31, | June 30, | June 30, | |||||||||||||||
Dollars in thousands | 2018 | 2018 | 2019 | 2019 | 2019 | ||||||||||||||
Net Income (Loss) | $ | 146,756 | $ | 129,415 | $ | (64,651) | $ | 192,694 | $ | 404,214 | |||||||||
Interest Expense | 35,723 | 33,222 | 35,771 | 40,152 | 144,868 | ||||||||||||||
Interest Income | (42) | 1 | (722) | (71) | (834) | ||||||||||||||
Income Tax Expense (Benefit) | 56,678 | (23,713) | (11,559) | 40,791 | 62,197 | ||||||||||||||
Earnings Before Interest & Taxes (EBIT) | $ | 239,115 | $ | 138,925 | $ | (41,161) | $ | 273,566 | $ | 610,445 | |||||||||
Depreciation, Depletion & Amortization | 119,585 | 130,084 | 125,161 | 128,999 | 503,829 | ||||||||||||||
Exploration Expense | 3,321 | 2,633 | 3,258 | 5,567 | 14,779 | ||||||||||||||
Earnings Before Interest, Taxes, DD&A, and Exploration (EBITDAX) | $ | 362,021 | $ | 271,642 | $ | 87,258 | $ | 408,132 | $ | 1,129,053 | |||||||||
Adjustments: | |||||||||||||||||||
Unrealized (Gain) Loss on Commodity Derivative Instruments | $ | (15,181) | $ | 36,727 | $ | 153,994 | $ | (210,909) | $ | (35,369) | |||||||||
Settlement Expense | 2,000 | — | — | — | 2,000 | ||||||||||||||
(Gain) Loss on Certain Asset Sales and Abandonments | (130,849) | 96 | 3,564 | — | (127,189) | ||||||||||||||
Severance Expense | 513 | (55) | — | 1,182 | 1,640 | ||||||||||||||
Stock Based Compensation | 5,245 | 5,478 | 10,903 | 23,873 | 45,499 | ||||||||||||||
Loss (Gain) on Debt Extinguishment | 15,385 | (315) | 7,537 | 77 | 22,684 | ||||||||||||||
Shaw Event | — | — | 4,305 | — | 4,305 | ||||||||||||||
Total Pre-tax Adjustments | $ | (122,887) | $ | 41,931 | $ | 180,303 | $ | (185,777) | $ | (86,430) | |||||||||
Adjusted EBITDAX Consolidated TTM | $ | 239,134 | $ | 313,573 | $ | 267,561 | $ | 222,355 | $ | 1,042,623 |
Reconciliation of Stand-alone EBITDAX Trailing-Twelve-Months (TTM)
Twelve Months Ended June 30, 2019 | |||||||||||
Dollars in thousands | Stand-alone1 | Midstream | Total Company | ||||||||
Net Income | $ | 256,735 | $ | 147,479 | $ | 404,214 | |||||
Interest Expense | 115,837 | 29,031 | 144,868 | ||||||||
Interest Income | (834) | — | (834) | ||||||||
Income Tax Expense | 62,197 | — | 62,197 | ||||||||
Earnings Before Interest & Taxes (EBIT) | $ | 433,935 | $ | 176,510 | $ | 610,445 | |||||
Depreciation, Depletion & Amortization | 471,938 | 31,891 | 503,829 | ||||||||
Exploration Expense | 14,779 | — | 14,779 | ||||||||
Earnings Before Interest, Taxes, DD&A, and Exploration (EBITDAX) | $ | 920,652 | $ | 208,401 | $ | 1,129,053 | |||||
Adjustments: | |||||||||||
Unrealized Gain on Commodity Derivative Instruments | $ | (35,369) | $ | — | $ | (35,369) | |||||
Settlement Expense | 2,000 | — | 2,000 | ||||||||
(Gain) Loss on Certain Asset Sales and Abandonments | (134,418) | 7,229 | (127,189) | ||||||||
Severance Expense | 1,640 | — | 1,640 | ||||||||
Stock Based Compensation | 43,202 | 2,297 | 45,499 | ||||||||
Loss on Debt Extinguishment | 22,684 | — | 22,684 | ||||||||
Shaw Event | 4,305 | — | 4,305 | ||||||||
Total Pre-tax Adjustments | $ | (95,956) | $ | 9,526 | $ | (86,430) | |||||
Adjusted EBITDAX Consolidated TTM | $ | 824,696 | $ | 217,927 | $ | 1,042,623 | |||||
Midstream Distributions | 46,559 | N/A | N/A | ||||||||
Stand-alone EBITDAX TTM | $ | 871,255 | N/A | N/A |
1 Stand-alone includes both CNX's E&P and Unallocated Segments. |
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; our dependence on gathering, processing and transportation facilities and other midstream facilities owned by CNXM and others; disruption of, capacity constraints in, or proximity to pipeline systems that could limit sales of our natural gas and natural gas liquids, and decreases in availability of third-party pipelines or other midstream facilities interconnected to CNXM's gathering systems; uncertainties in estimating our economically recoverable natural gas reserves, and inaccuracies in our estimates; the high-risk nature of drilling natural gas wells; our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; environmental regulations introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials to support our operations; if natural gas prices remain depressed or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties; a loss of our competitive position because of the competitive nature of the natural gas industry or overcapacity in this industry impairing our profitability; deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions; hedging activities may prevent us from benefiting from price increases and may expose us to other risks; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; existing and future government laws, regulations and other legal requirements that govern our business may increase our costs of doing business and may restrict our operations; significant costs and liabilities may be incurred as a result of pipeline and related facility integrity management program testing and any related pipeline repair or preventative or remedial measures; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of or recycle water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; risks associated with our debt; failure to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; decrease in our borrowing base, which could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, and lending requirements or regulations; we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; changes in federal or state income tax laws, particularly in the area of intangible drilling costs; challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; our development and exploration projects, as well as CNXM's midstream system development, require substantial capital expenditures; terrorist attacks or cyber-attacks could have a material adverse effect on our business, financial condition or results of operations; construction of new gathering, compression, dehydration, treating or other midstream assets by CNXM may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks; our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; we may not achieve some or all of the expected benefits of the separation of CONSOL Energy; CONSOL Energy may fail to perform under various transaction agreements that were executed as part of the separation, including with respect to indemnification obligations; CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy has been allocated responsibility; and the separation could result in substantial tax liability; and, with respect to the sale of the Ohio Joint Venture Utica assets, disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(Dollars in thousands, except per share data) | Three Months Ended | Six Months Ended | |||||||||||||
(Unaudited) | June 30, | June 30, | |||||||||||||
Revenues and Other Operating Income: | 2019 | 2018 | 2019 | 2018 | |||||||||||
Natural Gas, NGLs and Oil Revenue | $ | 342,865 | $ | 334,517 | $ | 778,811 | $ | 740,140 | |||||||
Gain on Commodity Derivative Instruments | 221,581 | 25,660 | 26,205 | 60,747 | |||||||||||
Purchased Gas Revenue | 18,768 | 9,930 | 34,989 | 27,985 | |||||||||||
Midstream Revenue | 18,895 | 23,483 | 37,338 | 49,737 | |||||||||||
Other Operating Income | 2,923 | 8,534 | 6,120 | 19,244 | |||||||||||
Total Revenue and Other Operating Income | 605,032 | 402,124 | 883,463 | 897,853 | |||||||||||
Costs and Expenses: | |||||||||||||||
Operating Expense | |||||||||||||||
Lease Operating Expense | 19,876 | 25,338 | 38,504 | 62,148 | |||||||||||
Transportation, Gathering and Compression | 84,614 | 75,767 | 164,023 | 162,028 | |||||||||||
Production, Ad Valorem, and Other Fees | 7,030 | 7,703 | 13,976 | 16,936 | |||||||||||
Depreciation, Depletion and Amortization | 128,999 | 119,087 | 254,159 | 243,754 | |||||||||||
Exploration and Production Related Other Costs | 5,567 | 3,699 | 8,825 | 6,079 | |||||||||||
Purchased Gas Costs | 18,772 | 9,747 | 34,986 | 26,801 | |||||||||||
Impairment of Other Intangible Assets | — | 18,650 | — | 18,650 | |||||||||||
Selling, General, and Administrative Costs | 48,970 | 34,909 | 84,709 | 66,258 | |||||||||||
Other Operating Expense | 17,976 | 17,786 | 41,451 | 33,832 | |||||||||||
Total Operating Expense | 331,804 | 312,686 | 640,633 | 636,486 | |||||||||||
Other Expense (Income) | |||||||||||||||
Other (Income) Expense | (99) | 575 | (681) | (5,917) | |||||||||||
(Gain) Loss on Asset Sales and Abandonments | (387) | (3,280) | 2,699 | (14,622) | |||||||||||
Gain on Previously Held Equity Interest | — | — | — | (623,663) | |||||||||||
Loss on Debt Extinguishment | 77 | 23,413 | 7,614 | 39,048 | |||||||||||
Interest Expense | 40,152 | 38,438 | 75,923 | 76,989 | |||||||||||
Total Other Expense (Income) | 39,743 | 59,146 | 85,555 | (528,165) | |||||||||||
Total Costs and Expenses | 371,547 | 371,832 | 726,188 | 108,321 | |||||||||||
Earnings Before Income Tax | 233,485 | 30,292 | 157,275 | 789,532 | |||||||||||
Income Tax Expense (Benefit) | 40,791 | (31,102) | 29,231 | 182,592 | |||||||||||
Net Income | 192,694 | 61,394 | 128,044 | 606,940 | |||||||||||
Less: Net Income Attributable to Noncontrolling Interest | 30,217 | 19,380 | 52,904 | 37,363 | |||||||||||
Net Income Attributable to CNX Resources Shareholders | $ | 162,477 | $ | 42,014 | $ | 75,140 | $ | 569,577 | |||||||
Earnings per Share | |||||||||||||||
Basic | $ | 0.85 | $ | 0.19 | $ | 0.39 | $ | 2.60 | |||||||
Diluted | $ | 0.84 | $ | 0.19 | $ | 0.38 | $ | 2.57 | |||||||
Dividends Declared | $ | — | $ | — | $ | — | $ | — |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(Dollars in thousands) | June 30, | June 30, | |||||||||||||
(Unaudited) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net Income | $ | 192,694 | $ | 61,394 | $ | 128,044 | $ | 606,940 | |||||||
Other Comprehensive Income: | |||||||||||||||
Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($14), ($687), ($29), ($781)) | 41 | 1,812 | 85 | 1,982 | |||||||||||
Comprehensive Income | 192,735 | 63,206 | 128,129 | 608,922 | |||||||||||
Less: Comprehensive Income Attributable to Noncontrolling Interest | 30,217 | 19,380 | 52,904 | 37,363 | |||||||||||
Comprehensive Income Attributable to CNX Resources Shareholders | $ | 162,518 | $ | 43,826 | $ | 75,225 | $ | 571,559 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
(Dollars in thousands) | June 30, | December 31, | |||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and Cash Equivalents | $ | 32,611 | $ | 17,198 | |||
Accounts and Notes Receivable: | |||||||
Trade | 125,084 | 252,424 | |||||
Other Receivables | 11,636 | 11,077 | |||||
Supplies Inventories | 11,242 | 9,715 | |||||
Recoverable Income Taxes | 113,592 | 149,481 | |||||
Prepaid Expenses | 165,929 | 61,791 | |||||
Total Current Assets | 460,094 | 501,686 | |||||
Property, Plant and Equipment: | |||||||
Property, Plant and Equipment | 10,203,489 | 9,567,428 | |||||
Less—Accumulated Depreciation, Depletion and Amortization | 2,863,627 | 2,624,984 | |||||
Total Property, Plant and Equipment—Net | 7,339,862 | 6,942,444 | |||||
Other Assets: | |||||||
Operating Lease Right-of-Use Assets | 224,950 | — | |||||
Investment in Affiliates | 17,637 | 18,663 | |||||
Goodwill | 796,359 | 796,359 | |||||
Other Intangible Assets | 99,923 | 103,200 | |||||
Other | 207,872 | 229,818 | |||||
Total Other Assets | 1,346,741 | 1,148,040 | |||||
TOTAL ASSETS | $ | 9,146,697 | $ | 8,592,170 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
(Dollars in thousands, except per share data) | June 30, | December 31, | |||||
LIABILITIES AND EQUITY | |||||||
Current Liabilities: | |||||||
Accounts Payable | $ | 305,070 | $ | 229,806 | |||
Current Portion of Finance Lease Obligations | 7,133 | 6,997 | |||||
Current Portion of Operating Lease Obligations | 66,209 | — | |||||
Other Accrued Liabilities | 244,833 | 286,172 | |||||
Total Current Liabilities | 623,245 | 522,975 | |||||
Non-Current Liabilities: | |||||||
Long-Term Debt | 2,618,375 | 2,378,205 | |||||
Finance Lease Obligations | 10,569 | 13,299 | |||||
Deferred Income Taxes | 427,942 | 398,682 | |||||
Operating Lease Obligations | 137,464 | — | |||||
Asset Retirement Obligations | 32,951 | 37,479 | |||||
Other | 196,156 | 159,787 | |||||
Total Non-Current Liabilities | 3,423,457 | 2,987,452 | |||||
TOTAL LIABILITIES | 4,046,702 | 3,510,427 | |||||
Stockholders' Equity: | |||||||
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 187,559,362 Issued and Outstanding at June 30, 2019; 198,663,342 Issued and Outstanding at December 31, 2018 | 1,879 | 1,990 | |||||
Capital in Excess of Par Value | 2,203,969 | 2,264,063 | |||||
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding | — | — | |||||
Retained Earnings | 2,127,627 | 2,071,809 | |||||
Accumulated Other Comprehensive Loss | (7,819) | (7,904) | |||||
Total CNX Resources Stockholders' Equity | 4,325,656 | 4,329,958 | |||||
Noncontrolling Interest | 774,339 | 751,785 | |||||
TOTAL STOCKHOLDERS' EQUITY | 5,099,995 | 5,081,743 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 9,146,697 | $ | 8,592,170 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(Dollars in thousands) | June 30, | June 30, | |||||||||||||
(Unaudited) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Total Stockholders' Equity, Beginning Balance | $ | 4,974,809 | $ | 5,067,906 | $ | 5,081,743 | $ | 3,899,899 | |||||||
Common Stock and Capital in Excess of Par Value: | |||||||||||||||
Beginning Balance | 2,251,475 | 2,411,665 | 2,266,053 | 2,452,564 | |||||||||||
Issuance of Common Stock | 62 | 507 | 161 | 1,563 | |||||||||||
Purchase and Retirement of Common Stock | (69,022) | (42,402) | (93,990) | (88,688) | |||||||||||
Amortization of Stock-Based Compensation Awards | 23,333 | 5,018 | 33,624 | 9,349 | |||||||||||
Ending Balance | 2,205,848 | 2,374,788 | 2,205,848 | 2,374,788 | |||||||||||
Retained Earnings: | |||||||||||||||
Beginning Balance | 1,971,898 | 1,940,882 | 2,071,809 | 1,455,811 | |||||||||||
Net Income | 162,477 | 42,014 | 75,140 | 569,577 | |||||||||||
Purchase and Retirement of Common Stock | (5,261) | (42,354) | (13,790) | (80,031) | |||||||||||
Shares Withheld for Taxes | (1,487) | (35) | (5,532) | (4,850) | |||||||||||
Ending Balance | 2,127,627 | 1,940,507 | 2,127,627 | 1,940,507 | |||||||||||
Accumulated Other Comprehensive Loss: | |||||||||||||||
Beginning Balance | (7,860) | (8,306) | (7,904) | (8,476) | |||||||||||
Other Comprehensive Income | 41 | 1,812 | 85 | 1,982 | |||||||||||
Ending Balance | (7,819) | (6,494) | (7,819) | (6,494) | |||||||||||
Total CNX Resources Corporation Stockholders' Equity | 4,325,656 | 4,308,801 | 4,325,656 | 4,308,801 | |||||||||||
Non-Controlling Interest: | |||||||||||||||
Beginning Balance | 759,296 | 723,665 | 751,785 | — | |||||||||||
Net Income | 30,217 | 19,380 | 52,904 | 37,363 | |||||||||||
Shares Withheld for Taxes | (25) | — | (690) | (347) | |||||||||||
Amortization of Stock-Based Compensation Awards | 540 | 691 | 1,152 | 1,269 | |||||||||||
Distributions to CNXM Noncontrolling Interest Holders | (15,689) | (13,614) | (30,812) | (26,740) | |||||||||||
Acquisition of CNX Gathering, LLC | — | — | — | 718,577 | |||||||||||
Ending Balance | 774,339 | 730,122 | 774,339 | 730,122 | |||||||||||
Total Stockholders' Equity, Ending Balance | $ | 5,099,995 | $ | 5,038,923 | $ | 5,099,995 | $ | 5,038,923 |
CNX RESOURCES AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(Dollars in thousands) | Three Months Ended | Six Months Ended | |||||||||||||
(Unaudited) | June 30, | June 30, | |||||||||||||
Cash Flows from Operating Activities: | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net Income | $ | 192,694 | $ | 61,394 | $ | 128,044 | $ | 606,940 | |||||||
Adjustments to Reconcile Net Income to Net Cash Provided by | |||||||||||||||
Depreciation, Depletion and Amortization | 128,999 | 119,087 | 254,159 | 243,754 | |||||||||||
Amortization of Deferred Financing Costs | 2,701 | 1,778 | 4,408 | 4,821 | |||||||||||
Impairment of Other Intangible Assets | — | 18,650 | — | 18,650 | |||||||||||
Stock-Based Compensation | 23,873 | 5,708 | 34,776 | 10,618 | |||||||||||
(Gain) Loss on Asset Sales and Abandonments | (387) | (3,280) | 2,699 | (14,622) | |||||||||||
Gain on Previously Held Equity Interest | — | — | — | (623,663) | |||||||||||
Loss on Debt Extinguishment | 77 | 23,413 | 7,614 | 39,048 | |||||||||||
Gain on Commodity Derivative Instruments | (221,581) | (25,660) | (26,205) | (60,747) | |||||||||||
Net Cash Received (Paid) in Settlement of Commodity Derivative | 10,672 | 16,684 | (30,710) | (307) | |||||||||||
Deferred Income Taxes | 40,790 | (23,500) | 29,231 | 190,194 | |||||||||||
Equity in Earnings of Affiliates | (527) | (1,669) | (1,030) | (3,447) | |||||||||||
Return on Equity Investment | 750 | — | 2,056 | — | |||||||||||
Changes in Operating Assets: | |||||||||||||||
Accounts and Notes Receivable | 31,511 | 29,651 | 125,991 | 44,156 | |||||||||||
Recoverable Income Taxes | — | (7,602) | 35,888 | 3,743 | |||||||||||
Supplies Inventories | 5,400 | 177 | (1,527) | 243 | |||||||||||
Prepaid Expenses | 326 | 2,382 | 4,287 | 1,327 | |||||||||||
Changes in Operating Liabilities: | |||||||||||||||
Accounts Payable | 35,308 | (5,350) | 29,346 | (3,198) | |||||||||||
Accrued Interest | 2,870 | (28,263) | 5,050 | (3,358) | |||||||||||
Other Operating Liabilities | (1,958) | 6,755 | (36,392) | 1,504 | |||||||||||
Changes in Other Liabilities | 601 | 126 | (6,907) | (5,374) | |||||||||||
Other | (98) | 1,108 | (105) | 648 | |||||||||||
Net Cash Provided by Operating Activities | 252,021 | 191,589 | 560,673 | 450,930 | |||||||||||
Cash Flows from Investing Activities: | |||||||||||||||
Capital Expenditures | (329,227) | (264,174) | (628,365) | (496,659) | |||||||||||
CNX Gathering LLC Acquisition, Net of Cash Acquired | — | — | — | (299,272) | |||||||||||
Proceeds from Asset Sales | 1,281 | 51,657 | 7,087 | 153,420 | |||||||||||
Net Distributions from Equity Affiliates | — | — | — | 3,650 | |||||||||||
Net Cash Used in Investing Activities | (327,946) | (212,517) | (621,278) | (638,861) | |||||||||||
Cash Flows from Financing Activities: | |||||||||||||||
Payments on Miscellaneous Borrowings | (1,768) | (1,705) | (3,515) | (3,748) | |||||||||||
Payments on Long-Term Notes | — | (318,000) | (405,876) | (723,419) | |||||||||||
Net Proceeds from (Payments on) CNXM Revolving Credit Facility | 71,350 | (9,000) | 124,000 | (138,500) | |||||||||||
Proceeds from CNX Revolving Credit Facility | 116,000 | 422,000 | 18,000 | 422,000 | |||||||||||
Proceeds from Issuance of CNX Senior Notes | — | — | 500,000 | — | |||||||||||
Proceeds from Issuance of CNXM Senior Notes | — | — | — | 394,000 | |||||||||||
Distributions to CNXM Noncontrolling Interest Holders | (15,689) | (13,614) | (30,812) | (26,740) | |||||||||||
Proceeds from Issuance of Common Stock | 62 | 507 | 161 | 1,563 | |||||||||||
Shares Withheld for Taxes | (1,512) | (35) | (6,222) | (5,197) | |||||||||||
Purchases of Common Stock | (77,282) | (85,841) | (109,780) | (166,720) | |||||||||||
Debt Repurchase and Financing Fees | (6,597) | (1,028) | (9,938) | (19,629) | |||||||||||
Net Cash Provided by (Used in) Financing Activities | 84,564 | (6,716) | 76,018 | (266,390) | |||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 8,639 | (27,644) | 15,413 | (454,321) | |||||||||||
Cash and Cash Equivalents at Beginning of Period | 23,972 | 82,490 | 17,198 | 509,167 | |||||||||||
Cash and Cash Equivalents at End of Period | $ | 32,611 | $ | 54,846 | $ | 32,611 | $ | 54,846 |
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SOURCE CNX Resources Corporation
PITTSBURGH, July 19, 2019 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) today announced the release of its annual Corporate Responsibility Report. The report details execution against Key Performance Indicators and outlines activities and initiatives undertaken during the past year toward the Company's comprehensive corporate responsibility goals.
CNX President and Chief Executive Officer Nicholas J. DeIuliis commented, "This report outlines the actions and initiatives we are engaged in to safely and compliantly provide clean-burning natural gas to fulfill today's energy needs and tomorrow's promise. We're proud of what we do and proud to be part of a natural gas revolution that is sweeping the globe—a revolution that is rapidly improving the environment, providing low-cost energy security to billions and fueling a new, natural gas-enabled industrial revolution in the Pittsburgh region and far beyond. This report highlights our belief that natural gas is a cornerstone fuel and a critical element of America's and the world's long-term energy future."
Following are key highlights included in the 2018 report:
To learn more, please visit: https://www.cnx.com/responsibility
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. With the benefit of a more than 150-year legacy and a substantial asset base amassed over many generations, the company deploys an organic growth strategy focused on responsibly developing its resources in order to create long term value for its shareholders, employees and the communities where it operates. As of December 31, 2018, CNX had 7.9 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
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SOURCE CNX Resources Corporation
PITTSBURGH, July 9, 2019 /PRNewswire/ -- CNX Resources Corp. (NYSE: CNX) and CNX Midstream Partners LP (NYSE: CNXM) will issue their second quarter earnings releases at 6:45 a.m. Eastern Time on Tuesday, July 30. These releases will be followed by conference calls and live webcasts, which will be available on the 'Investor Relations' page of the CNX Resources website, and the 'News and Events' page of the CNX Midstream website. Also, earnings call slides will be available at 6:45 a.m. Eastern Time on Tuesday, July 30, on each company's website.
Conference Call Information
CNX Resources (NYSE: CNX)
CNX Midstream Partners (NYSE: CNXM)
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2018, CNX had 7.9 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. CNXM's assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on CNXM's website www.cnxmidstream.com.
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SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, April 4, 2019 /PRNewswire/ -- CNX Resources Corp. (NYSE: CNX) and CNX Midstream Partners LP (NYSE: CNXM) will issue their first quarter earnings releases at 6:45 a.m. Eastern Time on Tuesday, April 30. These releases will be followed by conference calls and live webcasts, which will be available on the 'Investor Relations' page of the CNX Resources website, and the 'News and Events' page of the CNX Midstream website. Also, earnings call slides will be available at 6:45 a.m. Eastern Time on Tuesday, April 30, on each company's website.
Conference Call Information
CNX Resources (NYSE: CNX)
CNX Midstream Partners (NYSE: CNXM)
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2018, CNX had 7.9 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. CNXM's assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on CNXM's website www.cnxmidstream.com.
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SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, March 28, 2019 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced the final results and expiration of its previously announced cash tender offer (the "offer") to purchase up to $400.0 million (the "Tender Cap") aggregate principal amount of the then-approximately $1,294,307,000 aggregate principal amount outstanding of its 5.875% Senior Notes due 2022 (the "Notes"). As of 5:00 p.m., New York City time, on March 27, 2019, the Expiration Time for the offer, CNX had received tenders for an aggregate principal amount of $1,149,251,000 of the outstanding Notes.
The offer was made pursuant to the terms and conditions contained in the Offer to Purchase dated February 28, 2019.
Because the purchase of all validly tendered Notes would cause us to purchase a principal amount greater than the Tender Cap, the offer was oversubscribed and CNX accepted for purchase Notes tendered as of 5:00 p.m., New York City time, on March 13, 2019 (the "Early Tender Deadline") on a prorated basis as described in the Offer to Purchase using a pro ration factor of approximately 34.8%. Payment for any Notes so accepted was made on March 15, 2019. Because the offer was oversubscribed as of the Early Tender Deadline, holders of Notes who validly tendered Notes after the Early Tender Deadline will not have any of their Notes accepted for payment. Any tendered Notes that are not accepted for purchase will be returned or credited without expense to the holders' account.
MUFG Securities Americas Inc. served as the exclusive Dealer Manager for the offer. Questions regarding the terms of the offer may be directed to MUFG Securities Americas Inc., Liability Management Group, at 212-405-7481 (collect) or 877-744-4532 (U.S. toll-free). D.F. King & Co., Inc. served as the tender agent and information agent for the offer.
CNX is one of the largest independent oil and natural gas companies in the United States and is focused on the exploration, development, production, gathering, processing and acquisition of natural gas properties in the Appalachian Basin.
Cautionary Statements:
This press release does not constitute an offer to sell or the solicitation of an offer to buy any notes in the offer. In addition, this press release is not an offer to sell or the solicitation of an offer to buy any securities issued in connection with any contemporaneous notes offering, nor shall there be any sale of the securities issued in such offering in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the factors discussed in the 2018 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, March 14, 2019 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced that it had received tenders for an aggregate principal amount of $1,149,251,000 of its outstanding 5.875% Senior Notes due 2022 (the "Notes") in its previously announced cash tender offer (the "offer") to purchase up to $400.0 million aggregate principal amount of the approximately $1,294,307,000 aggregate principal amount outstanding of the Notes, as of 5:00 p.m., New York City time, on March 13, 2019 (the "Early Tender Deadline"), as well as the anticipated early payment date for the offer on March 15, 2019 (the "Early Payment Date").
The offer is being made pursuant to the terms and conditions contained in the Offer to Purchase dated February 28, 2019, copies of which may be obtained from D.F. King & Co., Inc., the tender agent and information agent for the offer, by calling (800) 967-7510 (toll free) or, for banks and brokers, (212) 269-5550 or by email at cnx@dfking.com.
The offer will expire at 5:00 p.m. New York City Time on March 27, 2019, unless extended or earlier terminated (such time and date as the same may be extended, the "Expiration Time"). The withdrawal deadline for validly tendered Notes was 5:00 p.m., New York City time, on March 13, 2019.
Because the purchase of all validly tendered Notes would cause us to purchase a principal amount greater than the $400.0 million Tender Cap, the offer is oversubscribed and CNX, if it accepts Notes in the offer, will accept for purchase tendered Notes on a prorated basis as described in the offer documents using a pro ration factor of approximately 34.8%. Payment for any Notes so accepted will be made promptly on the Early Payment Date, which is currently expected to occur on or about March 15, 2019, subject to the satisfaction or waiver of the conditions to the offer. Because the offer is oversubscribed as of the Early Tender Deadline, holders of Notes who validly tender Notes after the Early Tender Deadline will not have any of their Notes accepted for payment.
MUFG Securities Americas Inc. is serving as the exclusive Dealer Manager for the offer. Questions regarding the terms of the offer may be directed to MUFG Securities Americas Inc., Liability Management Group, at 212-405-7481 (collect) or 877-744-4532 (U.S. toll-free).
CNX is one of the largest independent oil and natural gas companies in the United States and is focused on the exploration, development, production, gathering, processing and acquisition of natural gas properties in the Appalachian Basin.
Cautionary Statements:
This press release does not constitute an offer to sell or the solicitation of an offer to buy any notes in the offer. In addition, this press release is not an offer to sell or the solicitation of an offer to buy any securities issued in connection with any contemporaneous notes offering, nor shall there be any sale of the securities issued in such offering in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the factors discussed in the 2018 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, March 14, 2019 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced the closing of its private placement of $500.0 million of its 7.25% senior notes due 2027 (the "Notes"). The Notes are guaranteed by all of CNX's wholly-owned domestic restricted subsidiaries that guarantee its revolving credit facility.
CNX intends to use the net proceeds of the sale of the Notes to purchase up to $400.0 million aggregate principal amount of its outstanding 5.875% senior notes due 2022 pursuant to the tender offer that commenced concurrently with the offering of the Notes, with the remainder of the net proceeds to be used to repay existing indebtedness under CNX's revolving credit facility.
The Notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes have been and will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin.
Cautionary Statements:
This press release does not constitute an offer to sell or the solicitation of an offer to buy any notes nor shall there be any sale of notes in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The offering was made only by means of an offering circular.
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the factors discussed in the 2018 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, March 1, 2019 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced the pricing of $500.0 million of its 7.25% senior notes due 2027 (the "Notes"). The offering is expected to close on March 14, 2019, subject to the satisfaction of customary closing conditions. The Notes will be guaranteed by all of CNX's wholly-owned domestic restricted subsidiaries that guarantee its revolving credit facility.
CNX intends to use the net proceeds of the sale of the Notes to purchase up to $400.0 million aggregate principal amount of its outstanding 5.875% senior notes due 2022 pursuant to the tender offer that commenced concurrently with the offering of the Notes, with the remainder of the net proceeds to be used to repay existing indebtedness under CNX's revolving credit facility.
The Notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin.
Cautionary Statements:
This press release does not constitute an offer to sell or the solicitation of an offer to buy any notes nor shall there be any sale of notes in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The offering may be made only by means of an offering circular.
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the factors discussed in the 2018 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, Feb. 28, 2019 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced that it has commenced a cash tender offer (the "offer") to purchase up to $400.0 million aggregate principal amount of the approximately $1,294,307,000 aggregate principal amount outstanding of its 5.875% Senior Notes due 2022 (the "Notes").
The offer is being made pursuant to the terms and conditions contained in the Offer to Purchase dated February 28, 2019, copies of which may be obtained from D.F. King & Co., Inc., the tender agent and information agent for the offer, by calling (800) 967-7510 (toll free) or, for banks and brokers, (212) 269-5550 or by email at cnx@dfking.com.
The offer will expire at 5:00 p.m. New York City Time on March 27, 2019, unless extended or earlier terminated (such time and date as the same may be extended, the "Expiration Time"). Tendered Notes may be withdrawn at any time before the withdrawal deadline.
Certain information regarding the Notes and the terms of the offer is summarized in the table below.
Title of | CUSIP | Principal Amount | Tender Cap | Total | Early | Tender Offer |
5.875% | 20854P AL3 | $1,294,307,000 | $400,000,000 | $1,014.69 | $30 | $984.69 |
(1) Per $1,000 principal amount of Notes that are accepted for purchase.
Each holder who validly tenders its Notes on or prior to 5:00 p.m., New York City time, on March 13, 2019 (the "Early Tender Deadline") will be entitled to an Early Tender Payment, which is included in the Total Consideration above, of $30 for each $1,000 principal amount of Notes validly tendered by such holder, if such Notes are accepted for purchase pursuant to the offer, Holders validly tendering, and not validly withdrawing, Notes after the Early Tender Deadline and on or before the Expiration Time will be eligible to receive only the Tender Offer Consideration, which represents the Total Consideration less the Early Tender Payment.
In addition, holders whose Notes are accepted for payment in the offer will receive accrued and unpaid interest from and including the last interest payment date to, but not including, the applicable payment date for their Notes purchased pursuant to the offer. Notes tendered prior to 5:00 p.m., New York City time, on March 13, 2019 (the "Withdrawal Deadline") may be withdrawn at any time prior to the Withdrawal Deadline. Notes tendered after the Withdrawal Deadline may not be withdrawn.
If the purchase of all validly tendered Notes would cause us to purchase a principal amount greater than the tender cap set forth above, then the offer will be oversubscribed and CNX, if it accepts Notes in the offer, will accept for purchase tendered Notes on a prorated basis as described in the offer documents. At any time after the Early Tender Deadline and prior to the Expiration Time (such time, the "Early Acceptance Time"), CNX may elect to accept for purchase Notes tendered prior to such Early Acceptance Time on the terms and subject to the conditions of the offer, including any required proration. So long as the other terms and conditions described in the Offer to Purchase are satisfied, and subject to the Tender Cap, CNX intends to accept for purchase all Notes validly tendered at or prior to the Early Tender Deadline, and will only prorate such Notes if the aggregate amount of Notes validly tendered and not withdrawn exceeds the Tender Cap. If the Tender Offer is not fully subscribed as of the Early Tender Deadline, Holders who validly tender Notes after the Early Tender Deadline may be subject to proration, whereas Holders who validly tender Notes at or prior to the Early Tender Deadline will not be subject to proration. Furthermore, if the Tender Offer is fully subscribed as of the Early Tender Deadline, Holders who validly tender Notes after the Early Tender Deadline will not have any of their Notes accepted for payment. Payment for any Notes so accepted will be made promptly after the Early Acceptance Time, which is currently expected to occur on or about March 14, 2019, subject to the satisfaction or waiver of the conditions to the offer.
CNX's obligation to accept for purchase, and to pay for, Notes validly tendered and not validly withdrawn pursuant to the offer is subject to the satisfaction or waiver of certain conditions described in the offer documents, including the completion of CNX's recently announced offering of $500.0 million aggregate principal amount of its senior notes due 2027 on terms and conditions satisfactory to CNX. The offer is not conditioned upon any minimum amount of Notes being tendered and the offer may be amended, extended, terminated or withdrawn, subject to applicable law. The complete terms and conditions of the offer are set forth in the offer documents which are being sent to holders of Notes. Holders of Notes are urged to read the offer documents carefully.
CNX has retained MUFG Securities Americas Inc. to serve as the exclusive Dealer Manager for the offer. Questions regarding the terms of the offer may be directed to MUFG Securities Americas Inc., Liability Management Group, at 212-405-7481 (collect) or 877-744-4532 (U.S. toll-free).
CNX is one of the largest independent oil and natural gas companies in the United States and is focused on the exploration, development, production, gathering, processing and acquisition of natural gas properties in the Appalachian Basin.
Cautionary Statements:
This press release does not constitute an offer to sell or the solicitation of an offer to buy any notes in the offer. In addition, this press release is not an offer to sell or the solicitation of an offer to buy any securities issued in connection with any contemporaneous notes offering, nor shall there be any sale of the securities issued in such offering in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the factors discussed in the 2018 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, Feb. 28, 2019 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced that it intends, subject to market and other conditions, to offer and sell to eligible purchasers $500.0 million of senior notes due 2027 (the "Notes"). The Notes will be guaranteed by all of CNX's wholly-owned domestic restricted subsidiaries that guarantee its revolving credit facility. CNX intends to use the net proceeds of the sale of the Notes to purchase up to $400.0 million aggregate principal amount of its outstanding 5.875% senior notes due 2022 pursuant to the cash tender offer that commenced concurrently with the offering of the Notes, with the remainder of the net proceeds to be used to repay existing indebtedness under CNX's revolving credit facility.
The Notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.
About CNX Resources Corporation
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin.
Cautionary Statements:
This press release does not constitute an offer to sell or the solicitation of an offer to buy any notes nor shall there be any sale of notes in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The offering may be made only by means of an offering circular.
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the factors discussed in the 2018 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, Feb. 19, 2019 /PRNewswire/ -- CNX Resources Corp. (NYSE: CNX) provides additional disclosure related to previously announced 2019 guidance. The new presentation is available on the 'Investor Relations' page of the CNX Resources website or through the following link: http://investors.cnx.com/events-and-presentations/presentations/2019.
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2018, CNX had 7.9 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
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SOURCE CNX Resources Corporation
PITTSBURGH, Feb. 7, 2019 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or "the company") announced today total proved reserves of 7.9 Tcfe, as of December 31, 2018, which is a 4% increase, compared to the previous year, despite selling approximately 825 Bcfe in proved reserves in the year through the divestiture of the company's shallow oil and gas and Ohio Utica joint venture assets. Pro forma for asset divestitures in 2018, reserves grew 15% compared to the previous year.
During 2018, CNX added 960 Bcfe of proved reserves through extensions and discoveries, which resulted in the company replacing 189% of its 2018 net production of 507 Bcfe.
In 2018, drilling and completion costs incurred directly attributable to extensions and discoveries were $490 million. When divided by the extensions and discoveries of 960 Bcfe, this yields a drill bit F&D cost of $0.51 per Mcfe.
Future development costs for proved undeveloped reserves (PUDs) are estimated to be approximately $1.434 billion, or $0.42 per Mcfe.
The following table shows the summary of changes in reserves:
Summary of Changes in Proved Reserves (Bcfe) | |
Balance at December 31, 2017 | 7,582 |
Revisions | 349 |
Extensions and discoveries | 960 |
Production | (507) |
Sale of reserves in-place | (825) |
Acquisition of reserves in-place | 322 |
Balance at December 31, 2018 | 7,881 |
Note: The proved reserve estimate as of December 31, 2018, was prepared by CNX Resources and audited by Netherland, Sewell & Associates, Inc. |
During the year, total net revisions were positive 349 Bcfe. The revisions included 151 Bcfe of reductions primarily due to less planned development in the company's Virginia coal-bed methane (CBM) field; 28 Bcfe positive pricing revision from increased natural gas prices compared to year-end 2017, and 472 Bcfe positive revisions due to improved well performance in both proved developed and proved undeveloped reserves. Sales of reserves in-place totaled 825 Bcfe and were partially offset by 322 Bcfe of additions resulting from miscellaneous leasehold acquisitions.
Proved developed reserves of 4,494 Bcfe in 2018 comprised 57% of total proved reserves, compared to 58% in 2017. PUDs were 3,386 Bcfe at December 31, 2018, or 43% of total proved reserves, compared to 42% at year-end 2017. PUDs at year-end 2018 represent 34% of the total wells the company expects to drill over the next five years. The low PUD to five-year plan percentage implies meaningful future upside in both the Marcellus and Utica Shales in Pennsylvania and West Virginia.
During 2018 in the Marcellus Shale, CNX turned-in-line (TIL) 46 gross wells with an average completed lateral length of approximately 8,300 feet and expected ultimate recoveries (EURs) ranging between 1.7 and 3.5 Bcfe per thousand feet of completed lateral. Production and completion optimization initiatives continued to drive performance increases in the Marcellus shale throughout the year. These performance increases have allowed the company to book Marcellus Shale PUDs with average EURs of over 2.4 Bcfe per thousand feet of completed lateral, compared to 2.3 Bcfe per thousand feet booked during the previous year. CNX will continue to explore optimization possibilities with an ongoing review of development processes and employ new technology that could provide EUR uplift relative to current estimates. As of December 31, 2018, the Marcellus Shale proved reserves were 5,595 Bcfe, which included 3,030 Bcfe of proved developed reserves.
During 2018 in the Utica Shale, CNX TIL 17 gross wells with an average completed lateral length of approximately 8,200 feet and EURs averaging over 2.5 Bcfe per thousand feet of completed lateral. In 2018, the company's type curves that were applied to PUDs increased from the previous year due to production and completion optimization initiatives along with performance repeatability, which allowed the company to book Utica Shale PUDs with EURs averaging over 3.2 Bcfe per thousand feet of completed lateral, compared to 2.6 Bcfe per thousand feet of completed lateral during the previous year. In 2018, CNX booked 1,068 Bcfe of Utica Shale proved reserves after accounting for the reduction of 342 Bcfe due to the sale of Ohio Utica joint venture reserves-in-place. The company was able to modestly increase total reserves year-over-year despite the asset divestiture due to continued drilling success in the deep dry Utica Shale in Pennsylvania.
As of December 31, 2018, CNX has total proved, probable, and possible reserves (also known as "3P reserves") of 12.8 Tcfe, which are comprised only of reserves expected to be developed in the company's five-year plan. There are an additional 111 Tcfe of recoverable resources in the Other Resource Potential that the company expects to develop beyond the five-year plan. The company continues drilling and completing Marcellus wells and testing dry Utica Shale potential in Pennsylvania and West Virginia and believes that these areas will provide additional opportunities for the company's proved reserves over time. The company's 3P reserves have been determined in accordance with the guidelines of the Society of Petroleum Engineers Petroleum Resources Management System.
The following table shows the breakdown of reserves, in Bcfe, from the company's current development and exploration plays:
Proved | Proved | Proved | Total | Probable | Possible | Total 3P | Other | Total | |
Marcellus | 2,956 | 74 | 2,565 | 5,595 | 1,193 | - | 6,788 | 58,813 | 65,601 |
Coalbed | 924 | 3 | 282 | 1,209 | - | - | 1,210 | 839 | 2,048 |
Utica | 510 | 18 | 540 | 1,068 | 3,229 | 460 | 4,757 | 44,037 | 48,794 |
Other(2) | 9 | - | - | 9 | - | - | 9 | 7,621 | 7,630 |
Total | 4,399 | 95 | 3,387 | 7,881 | 4,422 | 460 | 12,763 | 111,310 | 124,073 |
(1) Marcellus includes 50 Bcfe of Proved Developed and 26,062 Bcfe of Other Resource Potential attributed to the Upper Devonian formations. | |||||||||
(2) Other includes Conventional and Other Shale formations. | |||||||||
Definition: Total Reserve & Resource includes total 3P and other resource potential outside of 3P. | |||||||||
The estimates of reserves and future revenue were prepared in accordance with the definitions and guidelines of the SEC Regulation S-X Rule 4.10(a). |
The table below summarizes the Securities and Exchange Commission (SEC) pricing as of December 31, 2018:
SEC | |
Pricing (1) | |
Benchmark Pricing: | |
WTI Oil Price ($/Bbl) | $65.56 |
NYMEX Natural Gas Price ($/MMBtu) | $3.10 |
C2+ Natural Gas Liquids ($/Bbl)(2) | $27.58 |
Condensate ($/Bbl) (3) | $51.49 |
(1) The SEC rules require that the proved reserve calculations be based on the first day of the month unweighted arithmetic average prices over the preceding twelve months. | |
(2) NGL Pricing is 42.1% of WTI, which includes regional market differentials. | |
(3) Condensate Pricing is 78.5% of WTI, which includes regional market differentials. |
Based on these prices adjusted for quality, hedges, transportation costs, and basis differentials ($3.28 per Mcf, $27.58 per barrel of natural gas liquids, $51.49 per barrel of condensate and $60.56 per barrel of crude oil, respectively), the pre-tax discounted (10%) present value ("PV-10") of the company's proved reserves was $6.17 billion for 2018, compared to $4.14 billion at year-end 2017.
Standardized Measure of Discounted Future Net Cash Flows
The following information was prepared in accordance with the provisions of the Financial Accounting Standards Board's Accounting Standards Update No. 2010-03, "Extractive Activities-Oil and Gas (Topic 932)." This topic requires the standardized measure of discounted future net cash flows to be based on the average, first-day-of-the-month price for the year ended December 31, 2018. Because prices used in the calculation are average prices for that year, the standardized measure could vary significantly from year-to-year based on the market conditions that occurred.
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 CNX. 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. CNX'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 CNX'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.
Reconciliation of PV-10 to Standardized Measure | ||||||
December 31, | ||||||
(Dollars in millions) | 2018 | 2017 | 2016 | |||
Future cash inflows | $ 26,610 | $ 19,262 | $ 11,303 | |||
Future production costs | (7,730) | (7,234) | (5,851) | |||
Future development costs (including abandonments) | (1,600) | (1,711) | (1,550) | |||
Future net cash flows (pre-tax) | 17,280 | 10,317 | 3,902 | |||
10% discount factor | (11,108) | (6,177) | (2,343) | |||
PV-10 (Non-GAAP measure) (1) | 6,172 | 4,140 | 1,559 | |||
Undiscounted income taxes | (4,147) | (2,476) | (1,483) | |||
10% discount factor | 2,630 | 1,467 | 879 | |||
Discounted income taxes | (1,517) | (1,009) | (604) | |||
Standardized GAAP measure | $ 4,655 | $ 3,131 | $ 955 |
(1) | We calculate our present value at 10% (PV-10) in accordance with the following table. Management believes that the presentation of the non-Generally Accepted Accounting Principle (GAAP) financial measure of PV-10 provides useful information to investors because it is widely used by professional analysts and sophisticated investors in evaluating oil and gas companies. Because many factors that are unique to each individual company impact the amount of future income taxes estimated to be paid, the use of a pre-tax measure is valuable when comparing companies based on reserves. PV-10 is not a measure of the financial or operating performance under GAAP. PV-10 should not be considered as an alternative to the standardized measure as defined under GAAP. We have included a reconciliation of the most directly comparable GAAP measure-after-tax discounted future net cash flows. |
About CNX Resources
CNX Resources Corporation is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2018, CNX had 7.9 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; our dependence on gathering, processing and transportation facilities and other midstream facilities owned by CNXM and others; disruption of, capacity constraints in, or proximity to pipeline systems that could limit sales of our natural gas and natural gas liquids, and decreases in availability of third-party pipelines or other midstream facilities interconnected to CNXM's gathering systems; uncertainties in estimating our economically recoverable natural gas reserves, and inaccuracies in our estimates; the high-risk nature of drilling natural gas wells; our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling; challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; our development and exploration projects, as well as CNXM's midstream system development, require substantial capital expenditures; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; environmental regulations can increase costs and introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; our operations are subject to operating risks that could increase our operating expenses and decrease our production levels which could adversely affect our results of operations. Our operations are also subject to hazards and any losses or liabilities we suffer from hazards, which occur in our operations may not be fully covered by our insurance policies; decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials in sufficient quantities or at reasonable costs to support our operations; if natural gas prices decrease or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties; changes in assumptions impacting management's estimates of future financial results as well as other assumptions such as movement in the Company's stock price, weighted-average cost of capital, terminal growth rates and industry multiples, could cause goodwill and other intangible assets we hold to become impaired and result in material non-cash charges to earnings; a loss of our competitive position because of the competitive nature of the natural gas industry, consolidation within the industry, or overcapacity in the industry adversely affecting our ability to sell our products and midstream services, which could impair our profitability; deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions; hedging activities may prevent us from benefiting from price increases and may expose us to other risks; existing and future government laws, regulations and other legal requirements and judicial decisions that govern our business may increase our costs of doing business and may restrict our operations; significant costs and liabilities may be incurred as a result of pipeline operations and related increase in the regulation of gas gathering pipelines; our ability to find adequate water sources for our use in shale gas drilling and production operations, or our ability to dispose of, transport or recycle water used or removed in connection with our gas operations at a reasonable cost and within applicable environmental rules; failure to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; risks associated with our debt; our borrowing base could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, asset sales and lending requirements or regulations; changes in federal or state income tax laws; cyber-incidents could have a material adverse effect on our business, financial condition or results of operations; construction of new gathering, compression, dehydration, treating or other midstream assets by CNXM may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks; our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; terrorist activities could materially and adversely affect our business and results of operations; we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; there is no guarantee that we will continue to repurchase shares of our common stock under our current or any future share repurchase program at levels undertaken previously or at all; negative public perception regarding our industry could have an adverse effect on our operations; CONSOL Energy may fail to perform under various transaction agreements that were executed as part of the separation, including with respect to indemnification obligations; CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy has been allocated responsibility; and the separation could result in substantial tax liability.. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
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SOURCE CNX Resources Corporation
PITTSBURGH, Feb. 5, 2019 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) today released the following statement regarding its Shaw 1G Utica shale well in Washington Township, Westmoreland County, PA:
Over the weekend, we commenced efforts to remediate the Shaw 1G well in order to arrest the subsurface flow of gas. The remediation process was successful and the well has been contained. There were no injuries and no impact to the environment.
As previously announced, we observed a pressure anomaly during hydraulic fracturing operations on the Shaw 1G well. While we continue to evaluate the cause of the initial pressure anomaly, we believe it is isolated to this well. All frac operations on the 4-well Shaw pad remain suspended while we assess the incident. As a precaution, we will continue to monitor the well for the next several days.
Company personnel and our consultants also continue to monitor existing nearby gas wells and manage any residual gas communication with those wells.
We continue to work in close coordination with the Municipal Authority of Westmoreland County (MAWC) and all appropriate state and local stakeholders to ensure the situation was and continues to be addressed in a safe and environmentally compliant manner.
About CNX Resources Corporation:
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Cautionary Statements
We are including the following cautionary statement in this press release 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 us. Forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) involve risks and uncertainties that could cause actual events to differ materially from anticipated events, and investors should not place undue reliance on forward-looking statements. These forward-looking statements include, without limitation, statements concerning the timing and success of our remediation activities and our efforts to provide updates with respect to future events. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. Factors that could cause actual events to differ materially from anticipated events include those described under "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
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SOURCE CNX Resources Corporation
PITTSBURGH, Feb. 1, 2019 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) tonight released the following information regarding its Shaw 1G Utica shale well in Washington Township, Westmoreland County, PA:
As part of our ongoing investigation into a pressure anomaly that was recently observed on the Shaw 1G well, CNX has begun preparations to remediate the well and arrest the subsurface flow of gas.
We have and continue to work in close coordination with the Municipal Authority of Westmoreland County (MAWC) and all appropriate state and local stakeholders to ensure the situation is addressed in a safe and environmentally compliant manner. There have been no injuries and no impact to the local community or the environment. We immediately activated appropriate resources and continue taking measures to safeguard Beaver Run Reservoir and surrounding communities. Public health and safety are our top priorities.
Company personnel and specialized consultants are monitoring existing nearby gas wells and are continuing to manage any potential gas communication to those wells.
All frac operations on the Shaw pad remain suspended. We will provide further updates as appropriate.
About CNX Resources Corporation:
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Cautionary Statements
We are including the following cautionary statement in this press release 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 us. Forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) involve risks and uncertainties that could cause actual events to differ materially from anticipated events, and investors should not place undue reliance on forward-looking statements. These forward-looking statements include, without limitation, statements concerning the timing and success of our remediation activities and our efforts to provide updates with respect to future events. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. Factors that could cause actual events to differ materially from anticipated events include those described under "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
Contacts:
Media
Brian Aiello
(724) 485-3078
brianaiello@cnx.com
Investors
Tyler Lewis
(724) 485-3157
tylerlewis@cnx.com
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SOURCE CNX Resources Corporation
PITTSBURGH, Jan. 31, 2019 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or "the company") reports fourth quarter and full year 2018 results, share buyback update, and provides updated minimum 2019 guidance. Throughout this release, CNX distinguishes between "attributable to CNX shareholders" and "consolidated" results. The metric "attributable to CNX shareholders" excludes from consolidated results interests in CNX Midstream Partners LP (NYSE: CNXM) ("CNXM") not held by CNX, which were approximately 63.91% during the fourth quarter. The metric "consolidated" includes 100% of the results of CNX, CNX Gathering LLC, and CNXM on a consolidated basis.
GAAP - The following financial results are in accordance with generally accepted accounting principles in the U.S.:
During the fourth quarter, the company reported net income attributable to CNX shareholders of $102 million, or earnings of $0.50 per diluted share, compared to net income attributable to CNX shareholders of $277 million, or earnings of $1.21 per diluted share, in the fourth quarter of 2017. During the fourth quarter, the company reported total production costs of $1.89 per Mcfe, including $0.89 per Mcfe of Depreciation, Depletion, and Amortization ("DD&A"), compared to $2.17 per Mcfe, including $1.01 per Mcfe of DD&A, in the year-earlier quarter. For 2018, the company reported total production costs of $1.98 per Mcfe, including $0.89 per Mcfe of DD&A, compared to $2.23 per Mcfe, including $1.00 per Mcfe of DD&A, in the year-earlier quarter. On a consolidated basis, the company reported net income of $129 million for the 2018 fourth quarter, compared to net income of $277 million in the fourth quarter of 2017. During the fourth quarter, capital expenditures were $322 million, compared to $234 million spent in the year-earlier quarter. Also, for the quarter's ended December 31, 2018 and 2017, total weighted-average diluted shares of common stock outstanding were 203,741,408 and 227,827,425, respectively.
Non-GAAP - CNX's management uses non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful for investors in analyzing the company. The following tables represent these non-GAAP financial measures:1
Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||||||||
December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||||||||||
(Dollars in millions, except per share data) | Attributable to CNX Shareholders | % Increase/ (Decrease) | Consolidated | % Increase/ (Decrease) | ||||||||||||||||||
Adjusted Net Income | $ | 132 | $ | 217 | (39.2) | % | $ | 160 | $ | 217 | (26.3) | % | ||||||||||
Total Shares Outstanding (in millions)2 | 198.3 | 223.8 | (11.4) | % | — | — | ||||||||||||||||
Adjusted Net Income per Outstanding Share2 | $ | 0.67 | $ | 0.97 | (30.9) | % | — | — | ||||||||||||||
Adjusted EBITDAX | $ | 279 | $ | 187 | 49.2 | % | $ | 314 | $ | 187 | 67.9 | % | ||||||||||
Adjusted EBITDAX per Outstanding Share2 | $ | 1.41 | $ | 0.83 | 69.9 | % | $ | 1.58 | $ | 0.83 | 90.4 | % | ||||||||||
Capital Expenditures3 | $ | 266 | $ | 234 | 13.7 | % | — | — | ||||||||||||||
1The Non-GAAP financial measures in the table above are defined and reconciled to GAAP net income, under the caption "Non-GAAP Financial Measures" below. | ||||||||||||||||||||||
2For the quarter's ended December 31, 2018 and 2017, total weighted-average diluted shares of common stock outstanding were 203,741,408 and 227,827,425, respectively. For the quarter ended December 31, 2018, total shares outstanding of 198,335,252 (Non-GAAP) are as of January 18, 2019. For the quarter ended December 31, 2017, total shares outstanding of 223,758,284 (Non-GAAP) are as of January 22, 2018. | ||||||||||||||||||||||
3Capital expenditures exclude $56.2 million of total capital investment net to CNX Midstream Partners LP in the fourth quarter of 2018, as reported in CNX Midstream Partners LP Fourth Quarter and Full Year 2018 Results. |
The following table highlights operating cash and fully burdened cash margins:
Quarter | Quarter | Year | Year | ||||||||||||
Ended | Ended | Ended | Ended | ||||||||||||
(Per Mcfe) | December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||
Average Sales Price - Total Company | $ | 3.09 | $ | 2.80 | $ | 2.97 | $ | 2.66 | |||||||
Total Production Cash Costs | 1.00 | 1.16 | 1.09 | 1.23 | |||||||||||
Operating Cash Margin | $ | 2.09 | $ | 1.64 | $ | 1.88 | $ | 1.43 | |||||||
Operating Cash Margin (%) | 68 | % | 59 | % | 63 | % | 54 | % | |||||||
Total Fully Burdened Cash Costs1 | $ | 1.46 | $ | 1.97 | $ | 1.63 | $ | 2.10 | |||||||
Fully Burdened Cash Margin | $ | 1.63 | $ | 0.83 | $ | 1.34 | $ | 0.56 | |||||||
Fully Burdened Cash Margin (%) | 53 | % | 30 | % | 45 | % | 21 | % | |||||||
1Fully burdened cash costs, includes production cash costs, selling, general and administrative (SG&A) cash costs, other operating cash expense, other cash (income) expense, and interest expense. |
"The fourth quarter and all of 2018 highlighted our philosophy in action: as a low-cost producer, coupled with a robust hedge book, the company has created tremendous, low-risk cash margins and strong rates of return on our capital," commented Nicholas J. DeIuliis, president and CEO. "The margins we are generating drive cash flow growth and a lower leverage ratio, which allows us to execute incremental drilling activity and/or opportunistic share buybacks at high rates of return. That continuous cycle produced powerful results in the fourth quarter and for the full year 2018, and since the inception of our repurchase program in October of 2017, CNX has bought back approximately 14% of our total shares outstanding at prices we believe are substantially below our internal NAV per share, while finishing the year under our 2.5x leverage ceiling. Moving forward, we will continue to invest into areas that have a strong risk-adjusted rate of return."
Operations Summary:
During the fourth quarter of 2018, CNX sold 136 Bcfe of natural gas, or an increase of 14% from the 119 Bcfe sold in the year-earlier quarter, driven primarily from an increase in Marcellus volumes. The company set a new daily production volume record of 1.64 net Bcfe per day in the quarter. Full year 2018 production was 507 Bcfe, or an increase of approximately 25% from the 407 Bcfe produced in 2017. When excluding production associated with assets divested in the year, 2018 production was 480 Bcfe.
In the fourth quarter of 2018, CNX operated four horizontal rigs and drilled 20 wells, which included: 10 Marcellus Shale wells in Greene County, Pennsylvania; nine Marcellus Shale wells in Washington County, Pennsylvania; and one dry Utica Shale well in Westmoreland County, Pennsylvania. During the quarter, the company drilled its longest ever Marcellus Shale lateral, which was over 15,000 feet and located in the Morris field in Greene County, Pennsylvania. Also, in the quarter, the company drilled a six-well Marcellus Shale pad with an average lateral length of over 12,500 feet in Washington County, Pennsylvania.
During the quarter, the company utilized three frac crews to complete 14 wells, which included: 12 Marcellus Shale wells in Greene County, Pennsylvania; and two dry Utica Shale wells in Monroe County, Ohio. Also, in the quarter, the company reached an all-time high frac efficiency on a pad in Pennsylvania of nearly 1,300 feet per day at 2,500 pounds per foot sand loading.
CNX turned-in-line 16 wells in the fourth quarter, which included: 11 Marcellus Shale wells in Greene County, Pennsylvania; four dry Utica Shale wells in Monroe County, Ohio; and one dry Utica Shale well in Westmoreland County, Pennsylvania.
Marcellus Shale volumes, including liquids, in the 2018 fourth quarter were 87.0 Bcfe, approximately 36% higher than the 64.0 Bcfe produced in the 2017 fourth quarter. Marcellus Shale total production costs were $1.98 per Mcfe in the just-ended quarter, which is a $0.34 per Mcfe decrease from the fourth quarter of 2017 of $2.32 per Mcfe. When excluding DD&A, Marcellus Shale total production cash costs were $1.20 per Mcfe in the just-ended quarter, which is a $0.16 per Mcfe decrease from the fourth quarter of 2017 of $1.36 per Mcfe, driven by decreases to lease operating expense ("LOE"), transportation, gathering, and compression costs, and taxes. During the quarter, water disposal costs improved as the company reused more produced water for fracs, avoiding the need to send that water to disposal. Also, DD&A improved due in part to increased capital efficiencies related to the Shirley-Pennsboro wells, and the production mix benefiting from lower West Virginia rates.
Utica Shale volumes, including liquids, in the 2018 fourth quarter were 34.1 Bcfe, approximately 1% higher than the 33.8 Bcfe in the year-earlier quarter, driven primarily from activity in Monroe County, Ohio, and Pennsylvania deep dry Utica Shale, offset by the sale of the Ohio Utica joint venture assets in the third quarter of 2018. The ramp in Pennsylvania deep dry Utica and Monroe County, Ohio, volumes also benefited Utica Shale total production costs, which were $1.43 per Mcfe in the just-ended quarter, or a $0.16 per Mcfe improvement from the fourth quarter of 2017 total production costs of $1.59 per Mcfe. When excluding DD&A, Utica Shale total production cash costs were $0.42 per Mcfe in the just-ended quarter, or a $0.14 per Mcfe improvement from the fourth quarter of 2017 total production cash costs of $0.56 per Mcfe.
CNX's natural gas production in the quarter came from the following categories:
Quarter | Quarter | Quarter | |||||||||||||
Ended | Ended | Ended | |||||||||||||
December 31, 2018 | December 31, 2017 | % Increase/ (Decrease) | September 30, 2018 | % Increase/ (Decrease) | |||||||||||
GAS | |||||||||||||||
Marcellus Sales Volumes (Bcf) | 79.2 | 53.6 | 47.8 | % | 61.9 | 27.9 | % | ||||||||
Utica Sales Volumes (Bcf) | 34.4 | 30.9 | 11.3 | % | 31.9 | 7.8 | % | ||||||||
CBM Sales Volumes (Bcf) | 14.8 | 16.0 | (7.5) | % | 14.7 | 0.7 | % | ||||||||
Other Sales Volumes (Bcf)1 | 0.1 | 5.0 | (98.0) | % | — | — | % | ||||||||
LIQUIDS2 | |||||||||||||||
NGLs Sales Volumes (Bcfe) | 7.1 | 12.2 | (41.8) | % | 10.0 | (29.0) | % | ||||||||
Oil Sales Volumes (Bcfe) | 0.1 | 0.1 | — | % | 0.1 | — | % | ||||||||
Condensate Sales Volumes (Bcfe) | 0.4 | 1.1 | (63.6) | % | 0.4 | — | % | ||||||||
TOTAL | 136.1 | 118.9 | 14.5 | % | 119.0 | 14.4 | % | ||||||||
Average Daily Production (MMcfe) | 1,479.1 | 1,292.3 | 1,293.0 | ||||||||||||
1Other Sales Volumes: primarily related to shallow oil and gas production. | |||||||||||||||
2NGLs, oil and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. |
The following table highlights per Mcfe price and cost data for the quarter:
Quarter | Quarter | Quarter | ||||||||||
Ended | Ended | Ended | ||||||||||
(Per Mcfe) | December 31, 2018 | December 31, 2017 | September 30, 2018 | |||||||||
Average Sales Price - Gas | $ | 3.59 | $ | 2.29 | $ | 2.71 | ||||||
Average (Loss) Gain on Commodity Derivative Instruments - Cash Settlement- Gas | $ | (0.56) | $ | 0.19 | $ | 0.03 | ||||||
Average Sales Price - Oil* | $ | 10.09 | $ | 7.58 | $ | 10.50 | ||||||
Average Sales Price - NGLs* | $ | 4.09 | $ | 5.08 | $ | 4.68 | ||||||
Average Sales Price - Condensate* | $ | 6.39 | $ | 7.68 | $ | 9.76 | ||||||
Average Sales Price - Total Company | $ | 3.09 | $ | 2.80 | $ | 2.92 | ||||||
Average Lease Operating Expense | $ | 0.12 | $ | 0.21 | $ | 0.14 | ||||||
Average Production, Ad Valorem, and Other Fees | 0.06 | 0.08 | 0.06 | |||||||||
Average Transportation, Gathering and Compression | 0.82 | 0.87 | 0.84 | |||||||||
Total Production Cash Costs | $ | 1.00 | $ | 1.16 | $ | 1.04 | ||||||
*Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. | ||||||||||||
Note: "Total Production Costs" excludes Selling, General, and Administration and Other Operating Expenses. |
In the fourth quarter of 2018, total production costs improved, compared to the year-earlier quarter, through reductions in LOE, transportation, gathering, and compression costs, taxes, and DD&A. LOE improved due to reduced well tending, well service jobs and repair and maintenance expenses related to the sale of the company's shallow oil and gas ("SOG") assets in the first quarter of 2018, and a reduction in water disposal costs due to increased reuse in well completions. Transportation, gathering, and compression costs improved due in part to a drier production mix resulting in lower processing fees.
During the past week, a subsurface pressure anomaly was observed during frac operations on the Shaw 1G Utica Shale well in Westmoreland County, Pennsylvania. While the cause of this anomaly is under investigation, frac operations on the Shaw pad have been temporarily suspended. The capital cost to complete and production associated with the delayed 4-well Shaw Utica pad are not currently included in 2019 guidance.
Marketing Update:
For the fourth quarter of 2018, CNX's average sales price for natural gas, natural gas liquids (NGLs), oil, and condensate was $3.09 per Mcfe. CNX's average price for natural gas was $3.59 per Mcf for the quarter and, including cash settlements from hedging, was $3.03 per Mcf. The average realized price for all liquids for the fourth quarter of 2018 was $25.61 per barrel.
CNX's weighted average differential from NYMEX in the fourth quarter of 2018 was negative $0.29 per MMBtu. With an improved Henry Hub price coupled with an improved differential, CNX's average sales price for natural gas before hedging increased 32% to $3.59 per Mcf compared with the average sales price of $2.71 per Mcf in the third quarter of 2018. Including the impact of cash settlements from hedging, CNX's average sales price for natural gas was $0.29 per Mcf, or 11%, higher than the third quarter of 2018 and $0.55 per Mcf, or 22%, higher than last year's fourth quarter.
2019 Capital Budget and Guidance:
CNX expects a minimum base of 2019 production volumes of at least 495-515 Bcfe, which equates to an approximately 5% annual increase, based on the midpoint of the minimum guidance, compared to 2018 volumes from retained assets of 480 Bcfe.
The company expects 2019 drilling and completion ("D&C") capital of at least $575-$625 million and approximately $175 million of capital associated with land, midstream, and water infrastructure. On a consolidated basis, the company expects a 2019 capital budget of $1,000-$1,080 million, which includes $250-$280 million of capital that CNXM is responsible for. The company will evaluate multiple factors to determine incremental activity throughout the year, and CNX would expect to update guidance accordingly.
The company expects stand-alone adjusted EBITDAX, which includes approximately $55 million in distributions received from ownership interests in CNXM, of $790-$825 million, based on NYMEX as of January 15, 2019. The company expects 2019 consolidated adjusted EBITDAX of $945-$985 million.
The total cash production costs will be a function of the final activity set and weighting by segment. Current EBITDAX guidance reflects a more heavily weighted Marcellus activity set, similar to the 2018 development program.
"The company remains committed to our philosophy to maximize the long-term per share value through prudent capital allocation and continuous cost management," continued Mr. DeIuliis. "Our 2019 production and capital guidance highlights our minimum level of activity, and we will continue to evaluate this activity throughout the year under the lens of our share price, forward gas prices, Utica data set, and M&A opportunities, to name a few. Depending on those factors and the risk-adjusted returns impact, we will add activity and incremental D&C capital in the year, which could change the current production mix. We have built a plan that has a considerable amount of flexibility to adjust to these ever-changing market conditions. We believe that this flexibility differentiates CNX, as we do not believe that smart production growth and building value and returning it to our shareholders are mutually exclusive goals."
Note: CNX Resources Corporation is unable to provide a reconciliation of projected stand-alone or consolidated adjusted EBITDAX to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing, and potential significance of certain income statement items.
Total hedged natural gas production in the 2019 first quarter is 88.7 Bcf. The annual gas hedge position is shown in the table below:
2019 | 2020 | ||||
Volumes Hedged (Bcf), as of 1/18/19 | 376.0* | 468.6 | |||
*Includes actual settlements of 28.4 Bcf. |
CNX's hedged gas volumes include a combination of NYMEX financial hedges, index (NYMEX and basis) financial hedges, and physical fixed price sales. In addition, to protect the NYMEX hedge volumes from basis exposure, CNX enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CNX's gas hedge position as of January 18, 2019 is shown in the table below:
Q1 2019 | 2019 | 2020 | 2021 | 2022 | 2023 | |||||||||||||||||||
NYMEX Only Hedges | ||||||||||||||||||||||||
Volumes (Bcf) | 83.5 | 359.2 | 457.2 | 389.1 | 262.9 | 99.3 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 3.07 | $ | 3.05 | $ | 2.96 | $ | 2.91 | $ | 2.96 | $ | 2.84 | ||||||||||||
Physical Fixed Price Sales and Index Hedges | ||||||||||||||||||||||||
Volumes (Bcf) | 5.2 | 16.8 | 11.4 | 21.2 | 13.7 | 27.6 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.84 | $ | 2.63 | $ | 2.43 | $ | 2.48 | $ | 2.56 | $ | 2.10 | ||||||||||||
Total Volumes Hedged (Bcf) | 88.7 | 376.0 | 468.6 | 410.3 | 276.6 | 126.9 | ||||||||||||||||||
NYMEX + Basis (fully-covered volumes)1 | ||||||||||||||||||||||||
Volumes (Bcf) | 87.1 | 369.3 | 424.4 | 351.5 | 216.7 | 101.9 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 2.78 | $ | 2.70 | $ | 2.50 | $ | 2.36 | $ | 2.35 | $ | 2.23 | ||||||||||||
NYMEX Only Hedges Exposed to Basis | ||||||||||||||||||||||||
Volumes (Bcf) | 1.6 | 6.7 | 44.2 | 58.8 | 59.9 | 25.0 | ||||||||||||||||||
Average Prices ($/Mcf) | $ | 3.07 | $ | 3.05 | $ | 2.96 | $ | 2.91 | $ | 2.96 | $ | 2.84 | ||||||||||||
Total Volumes Hedged (Bcf) | 88.7 | 376.0 | 468.6 | 410.3 | 276.6 | 126.9 | ||||||||||||||||||
1Includes physical sales with fixed basis in Q1 2019, 2019, 2020, 2021, 2022, and 2023 of 30.7 Bcf, 119.5 Bcf, 74.4 Bcf, 74.6 Bcf, 34.3 Bcf, and 3.5 Bcf, respectively. |
During the fourth quarter of 2018, CNX added additional NYMEX natural gas hedges of 1.0 Bcf, 10.4 Bcf, 201.4 Bcf, 153.4 Bcf, 63.4 Bcf, and 19.0 for 2018, 2019, 2020, 2021, 2022, and 2023, respectively. To help mitigate basis exposure on NYMEX hedges, in the fourth quarter CNX added 2.2 Bcf, 19.4 Bcf, 157.2 Bcf, 110.2 Bcf, 39.4 Bcf, and 32.8 Bcf of basis hedges for 2018, 2019, 2020, 2021, 2022, and 2023, respectively.
Finance:
At December 31, 2018, CNX's net debt attributable to CNX shareholders to trailing-twelve-months (TTM) adjusted EBITDAX attributable to CNX Shareholders was 2.25x. On a consolidated basis, CNX's net debt to TTM adjusted EBITDAX from continuing operations was 2.29x.
At December 31, 2018, the company's credit facility had $612 million of borrowings outstanding and $198 million of letters of credit outstanding, leaving $1,290 million of unused capacity. In addition, CNX holds 21.7 million CNXM limited partnership units, with a current market value of approximately $381 million as of January 16, 2019, a 2% General Partner interest, and incentive distribution rights.
Since the October 2017 inception of the current repurchase program and as of January 18, 2019, CNX has repurchased a total of approximately 32.6 million shares for approximately $490 million life-to-date, resulting in 198,335,252 shares outstanding, which is an approximately 14% reduction to total shares outstanding. The company has approximately $260 million remaining on its current $750 million share repurchase program, which is not subject to an expiration date.
About CNX
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2018, CNX had 7.9 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Non-GAAP Financial Measures
Definitions: EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) and income taxes. EBITDAX is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes, depreciation, depletion and amortization, and exploration. Adjusted EBITDAX is defined as EBITDAX after adjusting for the discrete items listed below. Although EBIT, EBITDAX, and adjusted EBITDAX are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating CNX Resources because they are widely used to evaluate a company's operating performance. We exclude stock-based compensation from adjusted EBITDAX because we do not believe it accurately reflects the actual operating expense incurred during the relevant period and may vary widely from period to period irrespective of operating results. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDAX, or adjusted EBITDAX identically, the presentation here may not be comparable to similarly titled measures of other companies. Adjusted EBITDAX per outstanding share, adjusted net income per outstanding share, and adjusted EBITDAX attributable to CNX Shareholders per outstanding share, with shares measured as of January 18, 2019, are not measures of performance calculated in accordance with generally accepted accounting principles. Management believes that these financial measures are useful to an investor in evaluating CNX Resources because (i) analysts utilize these metrics when evaluating company performance and, (ii) given that we have an active share repurchase program, analysts have requested this information as of a recent practicable date, and we want to provide updated information to investors.
Reconciliation of EBIT, EBITDAX, adjusted EBITDAX, adjusted net income (loss), adjusted net income (loss) attributable to CNX shareholders, net debt attributable to CNX shareholders, and TTM EBITDAX to financial net income attributable to CNX Resources shareholders is as follows (dollars in 000):
Three Months Ended | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | ||||||||||||||||
Dollars in thousands | E&P | Midstream | Unallocated1 | Total Company | Total Company | |||||||||||||||
Net Income (Loss) | $ | 48,250 | $ | 39,309 | $ | 41,856 | $ | 129,415 | $ | 276,643 | ||||||||||
Less: Income from Discontinued Operations | — | — | — | — | 9,391 | |||||||||||||||
Add: Interest Expense | 26,471 | 6,751 | — | 33,222 | 40,319 | |||||||||||||||
Less: Interest Income | 1 | — | — | 1 | (1,198) | |||||||||||||||
Add: Income Taxes | — | — | (23,713) | (23,713) | 71,566 | |||||||||||||||
Add: Income Tax Reform Benefit | — | — | — | — | (269,090) | |||||||||||||||
Earnings Before Interest & Taxes (EBIT) | 74,722 | 46,060 | 18,143 | 138,925 | 127,631 | |||||||||||||||
Add: Depreciation, Depletion & Amortization | 122,315 | 7,770 | (1) | 130,084 | 122,707 | |||||||||||||||
Add: Exploration Expense | $ | 2,633 | $ | — | $ | — | $ | 2,633 | $ | 14,093 | ||||||||||
Earnings Before Interest, Taxes, DD&A and Exploration (EBITDAX) from Continuing Operations | $ | 199,670 | $ | 53,830 | $ | 18,142 | $ | 271,642 | $ | 264,431 | ||||||||||
Adjustments: | ||||||||||||||||||||
Unrealized Loss (Gain) on Commodity Derivative Instruments | 36,727 | — | — | 36,727 | (105,879) | |||||||||||||||
Loss on Certain Asset Sales | — | — | 96 | 96 | — | |||||||||||||||
Severance Expense | (55) | — | — | (55) | 177 | |||||||||||||||
(Gain) Loss on Debt Extinguishment | — | — | (315) | (315) | 896 | |||||||||||||||
Stock-Based Compensation | 4,842 | 636 | — | 5,478 | 3,907 | |||||||||||||||
Fair Value Put Option | — | — | — | — | 3,500 | |||||||||||||||
Settlement Expense | — | — | — | — | 19,787 | |||||||||||||||
Total Pre-tax Adjustments | 41,514 | 636 | (219) | 41,931 | (77,612) | |||||||||||||||
Adjusted EBITDAX from Continuing Operations | $ | 241,184 | $ | 54,466 | $ | 17,923 | $ | 313,573 | $ | 186,819 | ||||||||||
Less: Adjusted EBITDA Attributable to Noncontrolling Interest2 | — | 34,550 | — | 34,550 | — | |||||||||||||||
Adjusted EBITDAX Attributable to CNX Resources Shareholders | $ | 241,184 | $ | 19,916 | $ | 17,923 | $ | 279,023 | $ | 186,819 | ||||||||||
Note: Income tax effect of Total Pre-tax Adjustments was ($11,371) and $17,850 for the three months ended December 31, 2018 and December 31, 2017, respectively. | ||||||||||||||||||||
Adjusted net income attributable to CNX shareholders for the three months ended December 31, 2018 is calculated as GAAP net income attributable to CNX shareholders of $101,927 plus total pre-tax adjustments from the above table of $41,931, less the associated tax expense of $11,371 equals adjusted net income of $132,487. Adjusted net income attributable to CNX shareholders for the three months ended December 31, 2017 is calculated as GAAP net income attributable to CNX shareholders of $276,643 less total pre-tax adjustments from the above table of $77,612, plus the associated tax benefit of $17,850 equals the adjusted net income attributable to CNX shareholders of $216,881. | ||||||||||||||||||||
Adjusted net income consolidated for the three months ended December 31, 2018 is calculated as GAAP net income of $129,415 plus total pre-tax adjustments from the above table of $41,931, less the associated tax expense of $11,371 equals adjusted net income of $159,975. Adjusted net income consolidated for the three months ended December 31, 2017 is calculated as GAAP net income of $276,643 less total pre-tax adjustments from the above table of $77,612, plus the associated tax benefit of $17,850 equals the adjusted net income of $216,881 | ||||||||||||||||||||
1CNX's unallocated expenses include other expense, gain on sale of assets, loss on debt extinguishment, impairment of other intangible asset and income taxes. | ||||||||||||||||||||
2Adjusted EBITDA Attributable to Noncontrolling Interest for the three months ended December 31, 2018 is Net Income Attributable to Noncontrolling interest of $27,488 plus Depreciation, Depletion and Amortization of $3,189, plus Interest Expense of $3,480, plus Stock-based compensation of $393. Calculated by taking an average noncontrolling interest percentage of 63.91%. |
Management uses net debt to determine the company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. Management believes that using net debt attributable to CNX Resources shareholders is useful to investors in determining the company's leverage ratio since the company could choose to use its cash and cash equivalents to retire debt.
Net Debt Attributable to CNX Shareholders | December 31, 2018 | ||||||||
E&P | Midstream | Total | |||||||
Total Debt (GAAP)1 | $ | 1,921,285 | $ | 477,215 | $ | 2,398,500 | |||
Less Cash and Cash Equivalents | 787 | 16,411 | 17,198 | ||||||
Net Debt (Non-GAAP) | 1,920,498 | 460,804 | 2,381,302 | ||||||
Net Debt Attributable to Noncontrolling Interest2 | — | 294,500 | 294,500 | ||||||
Net Debt Attributable to CNX Shareholders | $ | 1,920,498 | $ | 166,304 | $ | 2,086,802 | |||
1Includes current portion. | |||||||||
2Calculated by taking an average noncontrolling interest percentage of 63.91%. |
Trailing-Twelve-Months (TTM) EBITDAX | Three Months Ended | Twelve Months Ended | |||||||||||||||||
March 31, | June 30, | September 30, | December 31, | December 31, | |||||||||||||||
($ in thousands) | 2018 | 2018 | 2018 | 2018 | 2018 | ||||||||||||||
Net Income | $ | 545,546 | $ | 61,394 | $ | 146,756 | $ | 129,415 | $ | 883,111 | |||||||||
Add: Interest Expense | 38,551 | 38,438 | 35,723 | 33,222 | 145,934 | ||||||||||||||
Less: Interest Income | (76) | — | (42) | 1 | (117) | ||||||||||||||
Add: Income Taxes | 213,694 | (31,102) | 56,678 | (23,713) | 215,557 | ||||||||||||||
Earnings Before Interest & Taxes (EBIT) from Continuing Operations | 797,715 | 68,730 | 239,115 | 138,925 | 1,244,485 | ||||||||||||||
Add: Depreciation, Depletion & Amortization | 124,667 | 119,087 | 119,585 | 130,084 | 493,423 | ||||||||||||||
Add: Exploration Expense | 2,380 | 3,699 | 3,321 | 2,633 | 12,033 | ||||||||||||||
Earnings Before Interest, Taxes, DD&A, and Exploration (EBITDAX) from Continuing Operations | $ | 924,762 | $ | 191,516 | $ | 362,021 | $ | 271,642 | $ | 1,749,941 | |||||||||
Adjustments: | |||||||||||||||||||
Unrealized Loss (Gain) on Commodity Derivative Instruments | (52,078) | (8,975) | (15,181) | 36,727 | (39,507) | ||||||||||||||
Settlement Expense | — | — | 2,000 | — | 2,000 | ||||||||||||||
(Gain) Loss on Certain Asset Sales | (9,487) | — | (130,849) | 96 | (140,240) | ||||||||||||||
Gain on Previously Held Equity Interest | (623,663) | — | — | — | (623,663) | ||||||||||||||
Severance Expense | 814 | 257 | 513 | (55) | 1,529 | ||||||||||||||
Fair Value Put Option | (3,500) | — | — | — | (3,500) | ||||||||||||||
Other Transaction Fees | 1,149 | — | — | — | 1,149 | ||||||||||||||
Stock Based Compensation | 4,909 | 5,709 | 5,245 | 5,478 | 21,341 | ||||||||||||||
Loss (Gain) on Debt Extinguishment | 15,635 | 23,413 | 15,385 | (315) | 54,118 | ||||||||||||||
Impairment of Other Intangible Assets | — | 18,650 | — | — | 18,650 | ||||||||||||||
Total Pre-tax Adjustments | $ | (666,221) | $ | 39,054 | $ | (122,887) | $ | 41,931 | $ | (708,123) | |||||||||
Adjusted EBITDAX from Continuing Operations | $ | 258,541 | $ | 230,570 | $ | 239,134 | $ | 313,573 | $ | 1,041,818 | |||||||||
Less: Adjusted EBITDA Attributable to Noncontrolling Interest1 | 22,388 | 26,711 | 29,083 | 34,550 | 112,732 | ||||||||||||||
Adjusted EBITDAX Attributable to CNX Shareholders | $ | 236,153 | $ | 203,859 | $ | 210,051 | $ | 279,023 | $ | 929,086 | |||||||||
1Adjusted EBITDA Attributable to Noncontrolling Interest for the three months ended March 31, 2018 is Net Income Attributable to Noncontrolling interest of $17,983 plus Depreciation, Depletion and Amortization of $2,707, plus Interest Expense of $1,398, plus Stock-based compensation of $300. Calculated by taking an average noncontrolling interest percentage of 63.91%. | |||||||||||||||||||
Adjusted EBITDA Attributable to Noncontrolling Interest for the three months ended June 30, 2018 is Net Income Attributable to Noncontrolling interest of $19,380 plus Depreciation, Depletion and Amortization of $3,078, plus Interest Expense of $3,836, plus Stock-based compensation of $417. Calculated by taking an average noncontrolling interest percentage of 63.91%. | |||||||||||||||||||
Adjusted EBITDA Attributable to Noncontrolling Interest for the three months ended September 30, 2018 is Net Income Attributable to Noncontrolling interest of $21,727 plus Depreciation, Depletion and Amortization of $3,171, plus Interest Expense of $3,877, plus Stock-based compensation of $308. Calculated by taking an average noncontrolling interest percentage of 63.91%. | |||||||||||||||||||
Adjusted EBITDA Attributable to Noncontrolling Interest for the three months ended December 31, 2018 is reconciled above. |
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; our dependence on gathering, processing and transportation facilities and other midstream facilities owned by CNXM and others; disruption of, capacity constraints in, or proximity to pipeline systems that could limit sales of our natural gas and natural gas liquids, and decreases in availability of third-party pipelines or other midstream facilities interconnected to CNXM's gathering systems; uncertainties in estimating our economically recoverable natural gas reserves, and inaccuracies in our estimates; the high-risk nature of drilling natural gas wells; our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling; challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; our development and exploration projects, as well as CNXM's midstream system development, require substantial capital expenditures; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; environmental regulations can increase costs and introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; our operations are subject to operating risks that could increase our operating expenses and decrease our production levels which could adversely affect our results of operations. Our operations are also subject to hazards and any losses or liabilities we suffer from hazards, which occur in our operations may not be fully covered by our insurance policies; decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials in sufficient quantities or at reasonable costs to support our operations; if natural gas prices decrease or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties; changes in assumptions impacting management's estimates of future financial results as well as other assumptions such as movement in the Company's stock price, weighted-average cost of capital, terminal growth rates and industry multiples, could cause goodwill and other intangible assets we hold to become impaired and result in material non-cash charges to earnings; a loss of our competitive position because of the competitive nature of the natural gas industry, consolidation within the industry, or overcapacity in the industry adversely affecting our ability to sell our products and midstream services, which could impair our profitability; deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions; hedging activities may prevent us from benefiting from price increases and may expose us to other risks; existing and future government laws, regulations and other legal requirements and judicial decisions that govern our business may increase our costs of doing business and may restrict our operations; significant costs and liabilities may be incurred as a result of pipeline operations and related increase in the regulation of gas gathering pipelines; our ability to find adequate water sources for our use in shale gas drilling and production operations, or our ability to dispose of, transport or recycle water used or removed in connection with our gas operations at a reasonable cost and within applicable environmental rules; failure to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; risks associated with our debt; our borrowing base could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, asset sales and lending requirements or regulations; changes in federal or state income tax laws; ; cyber-incidents could have a material adverse effect on our business, financial condition or results of operations; construction of new gathering, compression, dehydration, treating or other midstream assets by CNXM may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks; our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; terrorist activities could materially and adversely affect our business and results of operations; we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; there is no guarantee that we will continue to repurchase shares of our common stock under our current or any future share repurchase program at levels undertaken previously or at all; negative public perception regarding our industry could have an adverse effect on our operations; CONSOL Energy may fail to perform under various transaction agreements that were executed as part of the separation, including with respect to indemnification obligations; CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy has been allocated responsibility; and the separation could result in substantial tax liability.. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
(Dollars in thousands, except per share data) | December 31, | December 31, | |||||||||||||
(Unaudited) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Revenue and Other Operating Income: | |||||||||||||||
Natural Gas, NGLs and Oil Revenue | $ | 493,085 | $ | 312,714 | $ | 1,577,937 | $ | 1,125,224 | |||||||
(Loss) Gain on Commodity Derivative Instruments | (108,964) | 126,422 | (30,212) | 206,930 | |||||||||||
Purchased Gas Revenue | 27,441 | 21,117 | 65,986 | 53,795 | |||||||||||
Midstream Revenue | 20,098 | — | 89,781 | — | |||||||||||
Other Operating Income | 3,795 | 16,698 | 26,942 | 69,182 | |||||||||||
Total Revenue and Other Operating Income | 435,455 | 476,951 | 1,730,434 | 1,455,131 | |||||||||||
Costs and Expenses: | |||||||||||||||
Operating Expense | |||||||||||||||
Lease Operating Expense | 16,789 | 24,473 | 95,139 | 88,932 | |||||||||||
Transportation, Gathering and Compression | 71,998 | 103,165 | 302,933 | 382,865 | |||||||||||
Production, Ad Valorem, and Other Fees | 8,472 | 9,413 | 32,750 | 29,267 | |||||||||||
Depreciation, Depletion and Amortization | 130,084 | 122,707 | 493,423 | 412,036 | |||||||||||
Exploration and Production Related Other Costs | 2,633 | 14,093 | 12,033 | 48,074 | |||||||||||
Purchased Gas Costs | 27,414 | 20,366 | 64,817 | 52,597 | |||||||||||
Impairment of Exploration and Production Properties | — | — | — | 137,865 | |||||||||||
Impairment of Other Intangible Assets | — | — | 18,650 | — | |||||||||||
Selling, General and Administrative Costs | 36,113 | 28,221 | 134,806 | 93,211 | |||||||||||
Other Operating Expense | 21,174 | 42,510 | 72,412 | 112,369 | |||||||||||
Total Operating Expense | 314,677 | 364,948 | 1,226,963 | 1,357,216 | |||||||||||
Other Expense (Income) | |||||||||||||||
Other (Income) Expense | (9,758) | (13,978) | (14,571) | 3,825 | |||||||||||
Gain on Sale of Assets | (8,073) | (3,744) | (157,015) | (188,063) | |||||||||||
Gain on Previously Held Equity Interest | — | — | (623,663) | — | |||||||||||
(Gain) Loss on Debt Extinguishment | (315) | 896 | 54,118 | 2,129 | |||||||||||
Interest Expense | 33,222 | 40,319 | 145,934 | 161,443 | |||||||||||
Total Other Expense (Income) | 15,076 | 23,493 | (595,197) | (20,666) | |||||||||||
Total Costs And Expenses | 329,753 | 388,441 | 631,766 | 1,336,550 | |||||||||||
Income from Continuing Operations Before Income Tax | 105,702 | 88,510 | 1,098,668 | 118,581 | |||||||||||
Income Tax (Benefit) Expense | (23,713) | (197,524) | 215,557 | (176,458) | |||||||||||
Income From Continuing Operations | 129,415 | 286,034 | 883,111 | 295,039 | |||||||||||
(Loss) Income From Discontinued Operations, net | — | (9,391) | — | 85,708 | |||||||||||
Net Income | 129,415 | 276,643 | 883,111 | 380,747 | |||||||||||
Less: Net Income Attributable to Noncontrolling Interests | 27,488 | — | 86,578 | — | |||||||||||
Net Income Attributable to CNX Resources Shareholders | $ | 101,927 | $ | 276,643 | $ | 796,533 | $ | 380,747 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(CONTINUED) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
(Dollars in thousands, except per share data) | December 31, | December 31, | |||||||||||||
(Unaudited) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Earnings Per Share | |||||||||||||||
Basic | |||||||||||||||
Income from Continuing Operations | $ | 0.51 | $ | 1.27 | $ | 3.75 | $ | 1.29 | |||||||
(Loss) Income from Discontinued Operations | — | (0.04) | — | 0.37 | |||||||||||
Total Basic Earnings Per Share | $ | 0.51 | $ | 1.23 | $ | 3.75 | $ | 1.66 | |||||||
Diluted | |||||||||||||||
Income from Continuing Operations | $ | 0.50 | $ | 1.26 | $ | 3.71 | $ | 1.28 | |||||||
(Loss) Income from Discontinued Operations | — | (0.05) | — | 0.37 | |||||||||||
Total Diluted Earnings Per Share | $ | 0.50 | $ | 1.21 | $ | 3.71 | $ | 1.65 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
(Dollars in thousands) | December 31, | December 31, | |||||||||||||
(Unaudited) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net Income | $ | 129,415 | $ | 276,643 | $ | 883,111 | $ | 380,747 | |||||||
Other Comprehensive (Loss) Income: | |||||||||||||||
Actuarially Determined Long-Term Liability Adjustments (Net of tax: $2, ($1,244), ($792), ($7,365)) | (332) | 1,798 | 1,672 | 12,228 | |||||||||||
Comprehensive Income | 129,083 | 278,441 | 884,783 | 392,975 | |||||||||||
Less: Comprehensive Income Attributable to Noncontrolling Interest | 27,488 | — | 86,578 | — | |||||||||||
Comprehensive Income Attributable to CNX Resources Shareholders | $ | 101,595 | $ | 278,441 | $ | 798,205 | $ | 392,975 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
(Dollars in thousands) | December 31, 2018 | December 31, 2017 | |||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and Cash Equivalents | $ | 17,198 | $ | 509,167 | |||
Accounts and Notes Receivable: | |||||||
Trade | 252,424 | 156,817 | |||||
Other Receivables | 11,077 | 48,908 | |||||
Supplies Inventories | 9,715 | 10,742 | |||||
Recoverable Income Taxes | 149,481 | 31,523 | |||||
Prepaid Expenses | 61,791 | 95,347 | |||||
Total Current Assets | 501,686 | 852,504 | |||||
Property, Plant and Equipment: | |||||||
Property, Plant and Equipment | 9,567,428 | 9,316,495 | |||||
Less—Accumulated Depreciation, Depletion and Amortization | 2,624,984 | 3,526,742 | |||||
Total Property, Plant and Equipment—Net | 6,942,444 | 5,789,753 | |||||
Other Assets: | |||||||
Investment in Affiliates | 18,663 | 197,921 | |||||
Goodwill | 796,359 | — | |||||
Other Intangible Assets | 103,200 | — | |||||
Other | 229,818 | 91,735 | |||||
Total Other Assets | 1,148,040 | 289,656 | |||||
TOTAL ASSETS | $ | 8,592,170 | $ | 6,931,913 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
(Dollars in thousands, except per share data) | December 31, 2018 | December 31, 2017 | |||||
LIABILITIES AND EQUITY | |||||||
Current Liabilities: | |||||||
Accounts Payable | $ | 229,806 | $ | 211,161 | |||
Current Portion of Long-Term Debt | 6,997 | 7,111 | |||||
Other Accrued Liabilities | 286,172 | 223,407 | |||||
Total Current Liabilities | 522,975 | 441,679 | |||||
Long-Term Debt: | |||||||
Long-Term Debt | 2,378,205 | 2,187,026 | |||||
Capital Lease Obligations | 13,299 | 20,347 | |||||
Total Long-Term Debt | 2,391,504 | 2,207,373 | |||||
Deferred Credits and Other Liabilities: | |||||||
Deferred Income Taxes | 398,682 | 44,373 | |||||
Asset Retirement Obligations | 37,479 | 198,768 | |||||
Other | 159,787 | 139,821 | |||||
Total Deferred Credits and Other Liabilities | 595,948 | 382,962 | |||||
TOTAL LIABILITIES | 3,510,427 | 3,032,014 | |||||
Stockholders' Equity: | |||||||
Common Stock, $0.01 Par Value; 500,000,000 Shares Authorized, 198,663,342 Issued and Outstanding at December 31, 2018; 223,743,322 Issued and Outstanding at December 31, 2017 | 1,990 | 2,241 | |||||
Capital in Excess of Par Value | 2,264,063 | 2,450,323 | |||||
Preferred Stock, 15,000,000 Shares Authorized, None Issued and Outstanding | — | — | |||||
Retained Earnings | 2,071,809 | 1,455,811 | |||||
Accumulated Other Comprehensive Loss | (7,904) | (8,476) | |||||
Total CNX Resources Stockholders' Equity | 4,329,958 | 3,899,899 | |||||
Noncontrolling Interest | 751,785 | — | |||||
TOTAL STOCKHOLDERS' EQUITY | 5,081,743 | 3,899,899 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 8,592,170 | $ | 6,931,913 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||
(Dollars in thousands) | Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Total CNX Resources Corporation Stockholders' Equity | Non- Controlling Interest | Total Stockholders' Equity | ||||||||||||||||||||
December 31, 2017 | $ | 2,241 | $ | 2,450,323 | $ | 1,455,811 | $ | (8,476) | $ | 3,899,899 | $ | — | $ | 3,899,899 | |||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
Net Income | — | — | 796,533 | — | 796,533 | 86,578 | 883,111 | ||||||||||||||||||||
Actuarially Determined Long-Term Liability Adjustments (Net of ($792) Tax) | — | — | — | 1,672 | 1,672 | — | 1,672 | ||||||||||||||||||||
Comprehensive Income | — | — | 796,533 | 1,672 | 798,205 | 86,578 | 884,783 | ||||||||||||||||||||
Issuance of Common Stock | 8 | 1,705 | — | — | 1,713 | — | 1,713 | ||||||||||||||||||||
Purchase and Retirement of Common Stock (25,894,324 shares) | (259) | (206,895) | (176,598) | — | (383,752) | — | (383,752) | ||||||||||||||||||||
Shares Withheld for Taxes | — | — | (5,037) | — | (5,037) | (348) | (5,385) | ||||||||||||||||||||
Acquisition of CNX Gathering, LLC | — | — | — | — | — | 718,577 | 718,577 | ||||||||||||||||||||
Amortization of Stock-Based Compensation Awards | — | 18,930 | — | — | 18,930 | 2,411 | 21,341 | ||||||||||||||||||||
Distributions to CNXM Noncontrolling Interest Holders | — | — | — | — | — | (55,433) | (55,433) | ||||||||||||||||||||
ASU 2018-02 Reclassification | $ | — | $ | — | $ | 1,100 | $ | (1,100) | $ | — | $ | — | $ | — | |||||||||||||
December 31, 2018 | $ | 1,990 | $ | 2,264,063 | $ | 2,071,809 | $ | (7,904) | $ | 4,329,958 | $ | 751,785 | $ | 5,081,743 |
CNX RESOURCES AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(Dollars in thousands) | Three Months Ended | Year-Ended | |||||||||||||
(Unaudited) | December 31 | December 31 | |||||||||||||
Cash Flows from Operating Activities: | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net Income | $ | 129,416 | $ | 276,643 | $ | 883,111 | $ | 380,747 | |||||||
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By Continuing Operating Activities: | |||||||||||||||
Net Loss (Income) from Discontinued Operations | — | 9,391 | — | (85,708) | |||||||||||
Depreciation, Depletion and Amortization | 130,084 | 122,707 | 493,423 | 412,036 | |||||||||||
Amortization of Deferred Financing Costs | 1,722 | 3,994 | 8,361 | 10,630 | |||||||||||
Impairment of Exploration and Production Properties | — | — | — | 137,865 | |||||||||||
Impairment of Other Intangible Assets | — | — | 18,650 | — | |||||||||||
Stock-Based Compensation | 5,480 | 3,912 | 21,341 | 16,983 | |||||||||||
Gain on Sale of Assets | (8,073) | (3,744) | (157,015) | (188,063) | |||||||||||
Gain on Previously Held Equity Interest | — | — | (623,663) | — | |||||||||||
(Gain) Loss on Debt Extinguishment | (316) | 896 | 54,118 | 2,129 | |||||||||||
Loss (Gain) on Commodity Derivative Instruments | 108,964 | (126,422) | 30,212 | (206,930) | |||||||||||
Net Cash (Paid) Received in Settlement of Commodity Derivative Instruments | (72,237) | 20,543 | (69,720) | (41,174) | |||||||||||
Deferred Income Taxes | 86,444 | (163,895) | 345,560 | (142,829) | |||||||||||
Equity in Earnings of Affiliates | (675) | (15,020) | (5,363) | (49,830) | |||||||||||
Changes in Operating Assets: | |||||||||||||||
Accounts and Notes Receivable | (107,859) | (45,534) | (57,734) | (32,792) | |||||||||||
Supplies Inventories | 11 | 10,418 | 1,027 | 4,254 | |||||||||||
Recoverable Income Tax | (109,997) | 60,288 | (118,498) | 76,196 | |||||||||||
Prepaid Expenses | (1,054) | (5,496) | (1,391) | 631 | |||||||||||
Changes in Other Assets | 4,221 | (10,772) | 4,904 | 22,018 | |||||||||||
Changes in Operating Liabilities: | |||||||||||||||
Accounts Payable | 10,228 | 30,310 | 12,760 | 45,669 | |||||||||||
Accrued Interest | (11,650) | (35,456) | (5,839) | (2,955) | |||||||||||
Other Operating Liabilities | 22,716 | 49,246 | 53,135 | 81,969 | |||||||||||
Changes in Other Liabilities | 8,179 | (24,693) | (1,556) | (7,778) | |||||||||||
Net Cash Provided by Continuing Operating Activities | 195,604 | 157,316 | 885,823 | 433,068 | |||||||||||
Net Cash Provided by Discontinued Operating Activities | — | 9,521 | — | 215,619 | |||||||||||
Net Cash Provided by Operating Activities | 195,604 | 166,837 | 885,823 | 648,687 | |||||||||||
Cash Flows from Investing Activities: | |||||||||||||||
Capital Expenditures | (322,273) | (233,585) | (1,116,397) | (632,846) | |||||||||||
CNX Gathering LLC Acquisition, Net of Cash Acquired | — | — | (299,272) | — | |||||||||||
Proceeds from Asset Sales | 10,956 | 5,228 | 511,767 | 414,185 | |||||||||||
Net Distributions from Equity Affiliates | 1,500 | 7,253 | 9,250 | 42,873 | |||||||||||
Net Cash Used in Continuing Investing Activities | (309,817) | (221,104) | (894,652) | (175,788) | |||||||||||
Net Cash Used in Discontinued Investing Activities | — | (12,695) | — | (46,133) | |||||||||||
Net Cash Used in Investing Activities | (309,817) | (233,799) | (894,652) | (221,921) | |||||||||||
Cash Flows from Financing Activities: | |||||||||||||||
Proceeds from CNX Revolving Credit Facility | 173,000 | — | 612,000 | — | |||||||||||
Payments on Miscellaneous Borrowings | (1,709) | (2,013) | (7,165) | (8,037) | |||||||||||
Payments on Long-Term Notes | (19,600) | (25,988) | (955,019) | (239,716) | |||||||||||
Proceeds from Issuance of CNXM Senior Notes | — | — | 394,000 | — | |||||||||||
Net Proceeds from (Payments on) CNXM Revolving Credit Facility | 40,000 | — | (65,500) | — | |||||||||||
Distributions to CNXM Noncontrolling Interest Holders | (14,594) | — | (55,433) | — | |||||||||||
Proceeds from Spin-Off of CONSOL Energy Inc. | — | 425,000 | — | 425,000 | |||||||||||
Proceeds from Issuance of Common Stock | 23 | 150 | 1,713 | 1,009 | |||||||||||
Shares Withheld for Taxes | (51) | (335) | (5,385) | (6,681) | |||||||||||
Purchases of Common Stock | (87,387) | (103,209) | (381,752) | (103,209) | |||||||||||
Debt Issuance and Financing Fees | (943) | (63) | (20,599) | (361) | |||||||||||
Net Cash Provided by (Used in) Continuing Financing Activities | 88,739 | 293,542 | (483,140) | 68,005 | |||||||||||
Net Cash Provided by (Used in) Discontinued Financing Activities | — | 1,429 | — | (31,903) | |||||||||||
Net Cash Provided by (Used in) Financing Activities | 88,739 | 294,971 | (483,140) | 36,102 | |||||||||||
Net (Decrease) Increase in Cash and Cash Equivalents | (25,474) | 228,009 | (491,969) | 462,868 | |||||||||||
Cash and Cash Equivalents at Beginning of Period | 42,672 | 281,158 | 509,167 | 46,299 | |||||||||||
Cash and Cash Equivalents at End of Period | $ | 17,198 | $ | 509,167 | $ | 17,198 | $ | 509,167 |
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SOURCE CNX Resources Corporation
PITTSBURGH, Jan. 8, 2019 /PRNewswire/ -- CNX Resources Corp. (NYSE: CNX) and CNX Midstream Partners LP (NYSE: CNXM) will issue their fourth quarter earnings releases at 6:45 a.m. Eastern Time on Thursday, January 31. These releases will be followed by conference calls and live webcasts, which will be available on the 'Investor Relations' page of the CNX Resources website, and the 'News and Events' page of the CNX Midstream website. Also, earnings call slides will be available at 6:45 a.m. Eastern Time on Thursday, January 31, on each company's websites.
Conference Call Information
CNX Resources (NYSE: CNX)
CNX Midstream Partners (NYSE: CNXM)
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. CNXM's assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on CNXM's website www.cnxmidstream.com.
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SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, Oct. 8, 2018 /PRNewswire/ -- CNX Resources Corp. (NYSE: CNX) and CNX Midstream Partners LP (NYSE: CNXM) will issue their third quarter earnings releases at 6:45 a.m. Eastern Time on Tuesday, October 30. These releases will be followed by conference calls and live webcasts, which will be available on the 'Investor Relations' page of the CNX Resources website, and the 'News and Events' page of the CNX Midstream website. Also, earnings call slides will be available at 6:45 a.m. Eastern Time on Tuesday, October 30, on each companies' websites.
Conference Call Information
CNX Resources (NYSE: CNX)
CNX Midstream Partners (NYSE: CNXM)
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. CNXM's assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on CNXM's website www.cnxmidstream.com.
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SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, Aug. 31, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or "the company") today announced that it has closed on its previously announced agreement to sell substantially all its Ohio Utica Joint Venture Assets for approximately $400 million. This purchase price is subject to customary adjustments.
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; our dependence on gathering, processing and transportation facilities and other midstream facilities owned by CNX Midstream Partners LP ("CNXM") and others; disruption of, capacity constraints in, or proximity to pipeline systems that could limit sales of our natural gas and natural gas liquids, and decreases in availability of third-party pipelines or other midstream facilities interconnected to CNXM's gathering systems; uncertainties in estimating our economically recoverable natural gas reserves, and inaccuracies in our estimates; the high-risk nature of drilling natural gas wells; our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; environmental regulations introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials to support our operations; if natural gas prices remain depressed or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties; a loss of our competitive position because of the competitive nature of the natural gas industry or overcapacity in this industry impairing our profitability; deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions; hedging activities may prevent us from benefiting from price increases and may expose us to other risks; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; existing and future government laws, regulations and other legal requirements that govern our business may increase our costs of doing business and may restrict our operations; significant costs and liabilities may be incurred as a result of pipeline and related facility integrity management program testing and any related pipeline repair or preventative or remedial measures; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of or recycle water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; risks associated with our debt; failure to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; decrease in our borrowing base, which could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, and lending requirements or regulations; we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; changes in federal or state income tax laws, particularly in the area of intangible drilling costs; challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; our development and exploration projects, as well as CNXM's midstream system development, require substantial capital expenditures; terrorist attacks or cyber-attacks could have a material adverse effect on our business, financial condition or results of operations; construction of new gathering, compression, dehydration, treating or other midstream assets by CNXM may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks; our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; we may not achieve some or all of the expected benefits of the separation of CONSOL Energy Inc. ("CONSOL Energy"); CONSOL Energy may fail to perform under various transaction agreements that were executed as part of the separation, including with respect to indemnification obligations; CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy has been allocated responsibility; the separation could result in substantial tax liability; and, with respect to the sale of the Ohio Joint Venture Utica assets, disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
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SOURCE CNX Resources Corporation
PITTSBURGH, Aug. 2, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or the company) reports second quarter results. Throughout this release, CNX distinguishes between "attributable to CNX shareholders" and "consolidated" results.
Attributable to CNX shareholders: Excludes from consolidated results interests in CNX Midstream Partners LP (NYSE: CNXM) ("CNXM") not held by CNX, which was approximately 63.91% during the second quarter. The following results are reported on an attributable to CNX shareholders basis:
CNX reported net income attributable to CNX shareholders of $42 million, or earnings of $0.19 per diluted share, compared to net income attributable to CNX shareholders of $170 million, or earnings of $0.73 per diluted share, in the second quarter of 2017. Earnings before deducting net interest expense (interest expense less interest income), income taxes, depreciation, depletion and amortization, and exploration (EBITDAX) attributable to CNX shareholders1 was $165 million for the 2018 second quarter, compared to $326 million in the year-earlier quarter.
The company had adjusted net income attributable to CNX shareholders1 in the 2018 second quarter of $70 million, or $0.33 per diluted share, compared to $19 million, or $0.08 in the year-earlier quarter, after adjusting for certain items, which are highlighted in the EBITDAX reconciliation table. Adjusted EBITDAX attributable to CNX shareholders1 was $204 million for the 2018 second quarter, compared to $87 million in the year-earlier quarter.
Consolidated: Includes 100% of the results of CNX, CNX Gathering LLC, and CNXM on a consolidated basis. The following results are reported on a consolidated basis:
The company reported net income of $61 million for the 2018 second quarter, compared to net income of $170 million in the second quarter of 2017. EBITDAX from continuing operations1 was $192 million for the 2018 second quarter, compared to $326 million in the year-earlier quarter.
The company had adjusted net income in the 2018 second quarter of $90 million, or $0.42 per diluted share, compared to $19 million, or $0.08 in the year-earlier quarter, after adjusting for certain items, which are highlighted in the EBITDAX reconciliation table. Adjusted EBITDAX from continuing operations1 was $231 million for the 2018 second quarter, compared to $87 million in the year-earlier quarter.
During the second quarter of 2018, CNX sold 122.6 Bcfe of natural gas, or an increase of 33% from the 92.2 Bcfe sold in the year-earlier quarter, driven primarily from a substantial increase in Utica Shale volumes. Total quarterly production costs decreased to $2.00 per Mcfe, compared to the year-earlier quarter of $2.20 per Mcfe, driven primarily by reductions in transportation, gathering, and compression costs, and depreciation, depletion and amortization (DD&A). On a consolidated basis, capital expenditures were $264 million, compared to $146 million spent in the year-earlier quarter.
"With our continued focus on capital allocation, we had another successful quarter highlighted by the repurchase of an additional 5.3 million shares; redeeming $300 million of the outstanding 8.0% senior notes due in 2023; entering into an agreement to sell approximately $400 million in additional assets, and closing on the previously announced Asset Exchange Agreement with HG Energy," commented Nicholas J. DeIuliis, president and CEO. "Also, the dry Utica delineation program continued to see success with strong ongoing performance of the Richhill 11E well in Southwest Pennsylvania, which is currently flowing above our guided type curve, along with exciting initial drilling cost results of our Shaw 1H well currently underway in Westmoreland County, Pennsylvania. Our internal rate of returns on our core drilling and completion capital program continue to drive our NAV per share."
On May 2, 2018, CNX closed on an Asset Exchange Agreement with HG Energy and received approximately $7 million in cash proceeds and certain undeveloped Marcellus and Utica acreage in its Southwest and Central Pennsylvania operating areas. In connection with the transaction, CNX also agreed to certain transactions with CNXM, including the amendment of the existing gas gathering agreement between CNX and CNXM to include an incremental well commitment of forty wells.
As previously announced, during the quarter, CNX entered into an agreement with Ascent Resources-Utica, LLC to sell substantially all of its Ohio Utica joint venture ("JV") assets for net cash proceeds of approximately $400 million, of which CNX received a deposit from the buyer of approximately $40 million in the second quarter. CNX did not have any additional activity associated with the divested assets in its future development plans. The company continues to evaluate the use of cash proceeds across further reducing debt and share count, investing in drilling and completion activities, and acquiring bolt-on acreage, as it becomes available. CNX will retain all related production and EBITDAX generated prior to closing, which the company expects to be in the third quarter of 2018, subject to customary closing conditions and adjustments.
Also, since the inception of the current repurchase program in October 2017, CNX has repurchased approximately 17.9 million shares, which includes 5.3 million shares repurchased within the second quarter, for $278 million. As of July 17, 2018, CNX's shares outstanding were 213,059,169. The company has approximately $172 million remaining on its $450 million share repurchase program. On July 30, 2018, the Board of Directors extended the share repurchase program to now end on December 31, 2018.
1The terms "adjusted net income attributable to CNX shareholders," "adjusted net income on consolidated basis," "EBITDAX attributable to CNX shareholder," " EBITDAX from continuing operations," "adjusted EBITDAX attributable to CNX shareholders," and " adjusted EBITDAX from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP net income below, under the caption "Non-GAAP Financial Measures."
Second Quarter Operations Summary:
In the second quarter of 2018, CNX continued to operate three horizontal rigs and deployed a fourth in late June. The horizontal rigs drilled 16 wells including three dry Utica Shale wells in Monroe County, Ohio; four Marcellus Shale wells in Greene County, Pennsylvania; six Marcellus Shale wells in Washington County, Pennsylvania; and three Marcellus Shale wells in Tyler County, West Virginia. Drilling efficiencies continued to improve during the quarter, and the company successfully drilled a Marcellus Shale well in Greene County, Pennsylvania, in 10.8 days from spud to rig release.
During the quarter, the company utilized three frac crews to complete 18 wells including eight Marcellus Shale wells in Greene County, Pennsylvania; five Marcellus Shale wells in Washington County, Pennsylvania; and five Utica Shale wells in Harrison County, Ohio. CNX set a company record of completing 78,877 feet, or 394 stages, in the month of May. During the quarter, the company signed a three-year engagement with Evolution Well Services for an all-electric, natural gas-powered frac fleet. The company expects this new technology to provide longer-term visibility for predictive completion costs, while increasing frac efficiency and reducing fuel costs by approximately 30% and 80%, respectively.
CNX turned-in-line three Marcellus Shale wells in Washington County, Pennsylvania. The company expects to turn-in-line (TIL) approximately 30 wells in the third quarter, of which the company expects approximately 10 to get turned-in-line in late September, resulting in production peaking in the fourth quarter of 2018.
Marcellus Shale volumes, including liquids, in the 2018 second quarter were 64.7 Bcfe, approximately 14% higher than the 56.9 Bcfe produced in the 2017 second quarter. Marcellus total production costs were $2.17 per Mcfe in the just-ended quarter, which is a $0.12 per Mcfe increase from the second quarter of 2017 of $2.05 per Mcfe, driven by increases to water disposal costs and processing costs associated with the Shirley-Pennsboro wells that were turned-in-line during the third and fourth quarters of 2017. During the second quarter of 2018 water disposal costs improved, compared to the previous quarter, as the company reused more produced water for fracs, avoiding the need to send that water to disposal.
Utica Shale volumes, including liquids, in the 2018 second quarter were 42.6 Bcfe, approximately 209% higher than the 13.8 Bcfe in the year-earlier quarter, driven primarily from Monroe County, Ohio, volumes. The ramp in Monroe County, Ohio, volumes also benefited overall Utica Shale total production costs, which were $1.57 per Mcfe in the just-ended quarter, or a $0.47 per Mcfe improvement from the second quarter of 2017 total production costs of $2.04 per Mcfe.
CNX's natural gas production in the quarter came from the following categories:
Quarter |
Quarter |
Quarter |
|||||||||||||
Ended |
Ended |
Ended |
|||||||||||||
June 30, 2018 |
June 30, 2017 |
% Increase/ |
March 31, 2018 |
% Increase/ | |||||||||||
GAS |
|||||||||||||||
Marcellus Sales Volumes (Bcf) |
58.0 |
51.1 |
13.5 |
% |
56.1 |
3.4 |
% | ||||||||
Utica Sales Volumes (Bcf) |
40.4 |
10.7 |
277.6 |
% |
41.4 |
(2.4) |
% | ||||||||
CBM Sales Volumes (Bcf) |
14.8 |
16.5 |
(10.3) |
% |
15.9 |
(6.9) |
% | ||||||||
Other Sales Volumes (Bcf)1 |
0.4 |
4.9 |
(91.8) |
% |
4.1 |
(90.2) |
% | ||||||||
LIQUIDS2 |
|||||||||||||||
NGLs Sales Volumes (Bcfe) |
8.4 |
8.1 |
3.7 |
% |
11.1 |
(24.3) |
% | ||||||||
Oil Sales Volumes (Bcfe) |
0.1 |
0.2 |
(50.0) |
% |
0.1 |
— |
% | ||||||||
Condensate Sales Volumes (Bcfe) |
0.5 |
0.7 |
(28.6) |
% |
0.8 |
(37.5) |
% | ||||||||
TOTAL (Bcfe) |
122.6 |
92.2 |
33.0 |
% |
129.5 |
(5.3) |
% | ||||||||
Average Daily Production (MMcfe) |
1,346.8 |
1,013.4 |
1,439.0 |
||||||||||||
1Other Sales Volumes: primarily related to shallow oil and gas production that was sold at the end of the first quarter of 2018. | |||||||||||||||
2NGLs, Oil and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. |
PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison: | ||||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
(Per Mcfe) |
June 30, |
June 30, |
March 31, | |||||||||
Average Sales Price - Gas |
$ |
2.55 |
$ |
2.81 |
$ |
2.96 |
||||||
Average Gain (Loss) on Commodity Derivative Instruments - Cash Settlement- Gas |
$ |
0.15 |
$ |
(0.39) |
$ |
(0.14) |
||||||
Average Sales Price - Oil* |
$ |
9.72 |
$ |
8.03 |
$ |
9.41 |
||||||
Average Sales Price - NGLs* |
$ |
4.73 |
$ |
2.66 |
$ |
4.58 |
||||||
Average Sales Price - Condensate* |
$ |
9.47 |
$ |
5.69 |
$ |
8.22 |
||||||
Average Sales Price - Total Company |
$ |
2.87 |
$ |
2.47 |
$ |
3.00 |
||||||
Lease Operating Expense |
$ |
0.21 |
$ |
0.23 |
$ |
0.28 |
||||||
Production, Ad Valorem, and Other Fees |
0.06 |
0.05 |
0.07 |
|||||||||
Transportation, Gathering and Compression |
0.82 |
0.94 |
0.86 |
|||||||||
Depreciation, Depletion and Amortization (DD&A) |
0.91 |
0.98 |
0.89 |
|||||||||
Total Production Costs |
$ |
2.00 |
$ |
2.20 |
$ |
2.10 |
||||||
Margin |
$ |
0.87 |
$ |
0.27 |
$ |
0.90 |
||||||
Addback: DD&A |
$ |
0.91 |
$ |
0.98 |
$ |
0.89 |
||||||
Margin, before DD&A |
$ |
1.78 |
$ |
1.25 |
$ |
1.79 |
||||||
*NGLs, Oil, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. | ||||||||||||
Note: "Total Production Costs" excludes Selling, General, and Administration and Other Operating Expenses. |
The average sales price of $2.87 per Mcfe, when combined with unit costs of $2.00 per Mcfe, resulted in a margin of $0.87 per Mcfe. This was an increase when compared to the year-earlier quarter, due to improvements in average sales price and total production costs.
Marketing Update:
For the second quarter of 2018, CNX's average sales price for natural gas, natural gas liquids (NGLs), oil, and condensate was $2.87 per Mcfe. CNX's average price for natural gas was $2.55 per Mcf for the quarter and, including cash settlements from hedging, was $2.70 per Mcf. The average realized price for all liquids for the second quarter of 2018 was $30.28 per barrel.
CNX's weighted average differential from NYMEX in the second quarter of 2018 was negative $0.40 per MMBtu. CNX's average sales price for natural gas before hedging decreased 14% to $2.55 per Mcf compared with the average sales price of $2.96 per Mcf in the first quarter of 2018. This decrease results primarily from a lower Henry Hub price coupled with a wider differential. Including the impact of cash settlements from hedging, CNX's average sales price for natural gas was $0.12 per Mcf, or 4%, lower than the first quarter of 2018 and $0.28 per Mcf, or 12%, higher than last year's second quarter.
Guidance Update:
CNX reaffirms 2018 production guidance of 490-515 Bcfe. Due to the increase in gas prices, CNX expects 2018 EBITDAX attributable to CNX shareholders to improve to $835-$860 million, or $945-$970 million on a consolidated basis.
The company expects 2018 net capital expenditures, which is the capital that CNX is responsible for to include midstream capital outside of CNXM, to increase to approximately $900-$950 million, compared to the previous guidance of $790-$915 million. More than half of the total capital increase is driven by well remediations and increased flowback volumes, which resulted in higher percentages of produced water getting trucked to the company's completions operations, versus lower cost fresh water that is piped. The remainder of the capital increase was due to inflation and steel tariffs and a prepayment related to the three-year agreement with Evolution Well Services, which is expected to drive future fuel savings and cycle time reductions.
Note: CNX is unable to provide a reconciliation of projected 2018 EBITDAX to projected net income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing, and potential significance of certain income statement items.
Total hedged natural gas production in the 2018 third quarter is 93.1 Bcf. The annual gas hedge position is shown in the table below:
2018 |
2019 | ||||
Volumes Hedged (Bcf), as of 7/11/18 |
370.9* |
333.7 |
*Includes actual settlements of 206.8 Bcf. |
CNX's hedged gas volumes include a combination of NYMEX financial hedges and physical fixed price sales. In addition, to protect the NYMEX hedge volumes from basis exposure, CNX enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CNX's gas hedge position through 2021 is shown in the table below:
Q3 2018 |
2018 |
2019 |
2020 |
2021 | ||||||||||||||||
NYMEX Only Hedges |
||||||||||||||||||||
Volumes (Bcf) |
88.8 |
353.8 |
320.9 |
223.9 |
172.8 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
3.19 |
$ |
3.18 |
$ |
3.05 |
$ |
3.09 |
$ |
3.02 |
||||||||||
Physical Fixed Price Sales |
||||||||||||||||||||
Volumes (Bcf) |
4.3 |
17.1 |
12.8 |
11.0 |
21.3 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
2.65 |
$ |
2.64 |
$ |
2.51 |
$ |
2.44 |
$ |
2.47 |
||||||||||
Total Volumes Hedged (Bcf)1 |
93.1 |
370.9 |
333.7 |
234.9 |
194.1 |
|||||||||||||||
NYMEX + Basis (fully-covered volumes)2 |
||||||||||||||||||||
Volumes (Bcf) |
93.1 |
370.9 |
326.2 |
224.2 |
194.1 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
2.80 |
$ |
2.79 |
$ |
2.71 |
$ |
2.71 |
$ |
2.55 |
||||||||||
NYMEX Only Hedges Exposed to Basis |
||||||||||||||||||||
Volumes (Bcf) |
— |
— |
7.5 |
10.7 |
— |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
— |
$ |
— |
$ |
3.05 |
$ |
3.09 |
$ |
— |
||||||||||
Total Volumes Hedged (Bcf)1 |
93.1 |
370.9 |
333.7 |
234.9 |
194.1 |
|||||||||||||||
1Q3 2018, 2018, and 2021 exclude 2.3 Bcf, 14.1 Bcf, and 3.9 Bcf, respectively of physical basis sales not matched with NYMEX hedges. | ||||||||||||||||||||
2Includes physical sales with fixed basis in Q3 2018, 2018, 2019, 2020, and 2021 of 23.8 Bcf, 91.7 Bcf, 109.9 Bcf, 67.2 Bcf, and 67.5 Bcf, respectively. |
During the second quarter of 2018, CNX added additional NYMEX natural gas hedges of 15.6 Bcf for 2023. To help mitigate basis exposure on NYMEX hedges, in the second quarter CNX added 14.7 Bcf, 13.6 Bcf, 44.7 Bcf, and 17.3 Bcf of basis hedges for 2019, 2020, 2022, and 2023, respectively.
Finance:
At June 30, 2018, the company's credit facility had $422 million of borrowings outstanding and $251 million of letters of credit outstanding, leaving $1,427 million of unused capacity. In addition, CNX holds 21.7 million CNXM limited partnership units with a current market value of approximately $416 million as of July 17, 2018.
During the second quarter, CNX purchased $300 million of its outstanding 8.0% senior notes due in April 2023. As part of this transaction, a loss of $23 million was included in Loss on Debt Extinguishment on the Consolidated Statements of Income. The company expects the transaction to result in approximately $14 million in annual interest savings.
About CNX
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Non-GAAP Financial Measures
Definitions: EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) and income taxes. EBITDAX is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes, depreciation, depletion and amortization, and exploration. Adjusted EBITDAX is defined as EBITDAX after adjusting for the discrete items listed below. Although EBIT, EBITDAX, and Adjusted EBITDAX are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating CNX Resources because they are widely used to evaluate a company's operating performance. We exclude stock-based compensation from Adjusted EBITDAX because we do not believe it accurately reflects the actual operating expense incurred during the relevant period and may vary widely from period to period irrespective of operating results. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDAX, or Adjusted EBITDAX identically, the presentation here may not be comparable to similarly titled measures of other companies.
Reconciliation of EBIT, EBITDAX, Adjusted EBITDAX and Adjusted Net Income to financial net income attributable to CNX Resources shareholders is as follows (dollars in 000):
Three Months Ended | ||||||||||||||||||||
June 30, | ||||||||||||||||||||
2018 |
2018 |
2018 |
2018 |
2017 | ||||||||||||||||
Dollars in thousands |
E&P |
Midstream |
Unallocated1 |
Total Company |
Total Company | |||||||||||||||
Net Income (Loss) |
$ |
42,124 |
$ |
27,780 |
$ |
(8,510) |
$ |
61,394 |
$ |
169,510 |
||||||||||
Less: Income from Discontinued Operations |
— |
— |
— |
— |
(47,703) |
|||||||||||||||
Add: Interest Expense |
31,320 |
7,118 |
— |
38,438 |
40,683 |
|||||||||||||||
Less: Interest Income |
— |
— |
— |
— |
(6,077) |
|||||||||||||||
Add: Income Taxes (Benefit) |
— |
— |
(31,102) |
(31,102) |
57,958 |
|||||||||||||||
Earnings Before Interest & Taxes (EBIT) |
73,444 |
34,898 |
(39,612) |
68,730 |
214,371 |
|||||||||||||||
Add: Depreciation, Depletion & Amortization |
111,125 |
7,962 |
— |
119,087 |
91,640 |
|||||||||||||||
Add: Exploration Expense |
$ |
3,699 |
$ |
— |
$ |
— |
$ |
3,699 |
$ |
19,717 |
||||||||||
Earnings Before Interest, Taxes, DD&A and Exploration (EBITDAX) from Continuing Operations |
$ |
188,268 |
$ |
42,860 |
$ |
(39,612) |
$ |
191,516 |
$ |
325,728 |
||||||||||
Adjustments: |
||||||||||||||||||||
Unrealized Gain on Commodity Derivative Instruments |
(8,975) |
— |
— |
(8,975) |
(116,073) |
|||||||||||||||
Gain on Certain Asset Sales |
— |
— |
— |
— |
(126,707) |
|||||||||||||||
Severance Expense |
257 |
— |
— |
257 |
73 |
|||||||||||||||
Loss on Debt Extinguishment |
— |
— |
23,413 |
23,413 |
36 |
|||||||||||||||
Stock-Based Compensation |
5,018 |
691 |
— |
5,709 |
4,163 |
|||||||||||||||
Impairment of Other Intangible Assets |
— |
— |
18,650 |
18,650 |
— |
|||||||||||||||
Total Pre-tax Adjustments |
(3,700) |
691 |
42,063 |
39,054 |
(238,508) |
|||||||||||||||
Adjusted EBITDAX from Continuing Operations |
$ |
184,568 |
$ |
43,551 |
$ |
2,451 |
$ |
230,570 |
$ |
87,220 |
||||||||||
Less: Adjusted EBITDA Attributable to Noncontrolling Interest2 |
— |
26,711 |
— |
26,711 |
— |
|||||||||||||||
Adjusted EBITDAX Attributable to CNX Resources Shareholders |
$ |
184,568 |
$ |
16,840 |
$ |
2,451 |
$ |
203,859 |
$ |
87,220 |
||||||||||
Note: Income tax effect of Total Pre-tax Adjustments was $10,592 and ($88,332) for the three months ended June 30, 2018 and June 30, 2017, respectively. | ||||||||||||||||||||
EBITDAX Attributable to CNX Resources shareholders of $165,221 is calculated as EBTIDAX from continuing operations of $191,516 less Adjusted EBITDA Attributable to Noncontrolling interest of $26,711, plus Stock-based compensation of $416. | ||||||||||||||||||||
Adjusted net income for the three months ended June 30, 2018 is calculated as GAAP net income of $61,394 plus total pre-tax adjustments from the above table of $39,054, less the associated tax expense of $10,592 equals adjusted net income of $89,856. Adjusted net income for the three months ended June 30, 2017 is calculated as GAAP net income of $169,510 less total pre-tax adjustments from the above table of $238,508, plus the associated tax expense of $88,332 equals adjusted net income of $19,334 | ||||||||||||||||||||
Adjusted net income attributable to CNX Resources shareholders for the three months ended June 30, 2018 is calculated as GAAP net income attributable to CNX shareholders of $42,014 plus total pre-tax adjustments from the above table of $39,054, less the associated tax expense of $10,592 equals adjusted net income attributable to CNX shareholders of $70,476. Adjusted net income attributable to CNX Resources shareholders for the three months ended June 30, 2017 is calculated as GAAP net income attributable to CNX shareholders of $169,510 less total pre-tax adjustments from the above table of $238,508, plus the associated tax expense of $88,332 equals adjusted net income attributable to CNX shareholders of $19,334. | ||||||||||||||||||||
1CNX's unallocated expenses include other expense, gain on sale of assets, loss on debt extinguishment, impairment of other intangible asset and income taxes. | ||||||||||||||||||||
2Adjusted EBITDA Attributable to Noncontrolling Interest for the three months ended June 30, 2018 is Net Income Attributable to Noncontrolling interest of $19,380 plus Depreciation, Depletion and Amortization of $3,078, plus Interest Expense of $3,835, plus Stock-based compensation of $416. Calculated by taking an average noncontrolling interest percentage of 63.91%. |
Management uses net debt to determine the company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. Management believes that using net debt attributable to CNX Resources shareholders is useful to investors in determining the company's leverage ratio since the company could choose to use its cash and cash equivalents to retire debt.
Net Debt Attributable to CNX Resources Shareholders |
June 30, 2018 | ||||||||
E&P |
Midstream |
Total | |||||||
Total Debt (GAAP)1 |
$ |
1,950,372 |
$ |
404,169 |
$ |
2,354,541 |
|||
Less Cash and Cash Equivalents |
48,620 |
6,226 |
54,846 |
||||||
Net Debt (Non-GAAP) |
1,901,752 |
397,943 |
2,299,695 |
||||||
Net Debt Attributable to Noncontrolling Interest2 |
— |
254,325 |
254,325 |
||||||
Net Debt Attributable to CNX Resources Shareholders |
$ |
1,901,752 |
$ |
143,618 |
$ |
2,045,370 |
|||
1Includes current portion. | |||||||||
2Calculated by taking an average noncontrolling interest percentage of 63.91% |
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; our dependence on gathering, processing and transportation facilities and other midstream facilities owned by CNXM and others; disruption of, capacity constraints in, or proximity to pipeline systems that could limit sales of our natural gas and natural gas liquids, and decreases in availability of third-party pipelines or other midstream facilities interconnected to CNXM's gathering systems; uncertainties in estimating our economically recoverable natural gas reserves, and inaccuracies in our estimates; the high-risk nature of drilling natural gas wells; our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; environmental regulations introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials to support our operations; if natural gas prices remain depressed or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties; a loss of our competitive position because of the competitive nature of the natural gas industry or overcapacity in this industry impairing our profitability; deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions; hedging activities may prevent us from benefiting from price increases and may expose us to other risks; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; existing and future government laws, regulations and other legal requirements that govern our business may increase our costs of doing business and may restrict our operations; significant costs and liabilities may be incurred as a result of pipeline and related facility integrity management program testing and any related pipeline repair or preventative or remedial measures; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of or recycle water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; risks associated with our debt; failure to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; decrease in our borrowing base, which could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, and lending requirements or regulations; we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; changes in federal or state income tax laws, particularly in the area of intangible drilling costs; challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; our development and exploration projects, as well as CNXM's midstream system development, require substantial capital expenditures; terrorist attacks or cyber-attacks could have a material adverse effect on our business, financial condition or results of operations; construction of new gathering, compression, dehydration, treating or other midstream assets by CNXM may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks; our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; we may not achieve some or all of the expected benefits of the separation of CONSOL Energy; CONSOL Energy may fail to perform under various transaction agreements that were executed as part of the separation, including with respect to indemnification obligations; CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy has been allocated responsibility; and the separation could result in substantial tax liability; and, with respect to the sale of the Ohio Joint Venture Utica assets, disruption to our business, including customer, employee and supplier relationships resulting from this transaction, risks that the conditions to closing may not be satisfied and the sale may not occur, and the impact of the transaction on our future operating and financial results. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(Dollars in thousands, except per share data) |
Three Months Ended |
Six Months Ended | |||||||||||||
(Unaudited) |
June 30, |
June 30, | |||||||||||||
Revenues and Other Operating Income: |
2018 |
2017 |
2018 |
2017 | |||||||||||
Natural Gas, NGLs and Oil Revenue |
$ |
334,517 |
$ |
260,306 |
$ |
740,140 |
$ |
578,069 |
|||||||
Gain on Commodity Derivative Instruments |
25,660 |
83,788 |
60,747 |
61,325 |
|||||||||||
Purchased Gas Revenue |
9,930 |
10,316 |
27,985 |
19,294 |
|||||||||||
Midstream Revenue |
23,483 |
— |
49,737 |
— |
|||||||||||
Other Operating Income |
8,534 |
16,658 |
19,244 |
32,308 |
|||||||||||
Total Revenue and Other Operating Income |
402,124 |
371,068 |
897,853 |
690,996 |
|||||||||||
Costs and Expenses: |
|||||||||||||||
Operating Expense |
|||||||||||||||
Lease Operating Expense |
25,338 |
21,074 |
62,148 |
42,705 |
|||||||||||
Transportation, Gathering and Compression |
75,767 |
86,599 |
162,028 |
180,931 |
|||||||||||
Production, Ad Valorem, and Other Fees |
7,703 |
4,606 |
16,936 |
13,935 |
|||||||||||
Depreciation, Depletion and Amortization |
119,087 |
91,640 |
243,754 |
187,318 |
|||||||||||
Exploration and Production Related Other Costs |
3,699 |
19,717 |
6,079 |
29,502 |
|||||||||||
Purchased Gas Costs |
9,747 |
10,194 |
26,801 |
19,089 |
|||||||||||
Impairment of Exploration and Production Properties |
— |
— |
— |
137,865 |
|||||||||||
Impairment of Other Intangible Assets |
18,650 |
— |
18,650 |
— |
|||||||||||
Selling, General, and Administrative Costs |
34,909 |
21,754 |
66,258 |
43,556 |
|||||||||||
Other Operating Expense |
17,786 |
24,106 |
33,832 |
42,282 |
|||||||||||
Total Operating Expense |
312,686 |
279,690 |
636,486 |
697,183 |
|||||||||||
Other (Income) Expense |
|||||||||||||||
Other Expense (Income) |
575 |
5,475 |
(5,917) |
9,550 |
|||||||||||
Gain on Asset Sales |
(3,280) |
(134,581) |
(14,622) |
(138,577) |
|||||||||||
Gain on Previously Held Equity Interest |
— |
— |
(623,663) |
— |
|||||||||||
Loss (Gain) on Debt Extinguishment |
23,413 |
36 |
39,048 |
(786) |
|||||||||||
Interest Expense |
38,438 |
40,683 |
76,989 |
82,289 |
|||||||||||
Total Other Expense (Income) |
59,146 |
(88,387) |
(528,165) |
(47,524) |
|||||||||||
Total Costs And Expenses |
371,832 |
191,303 |
108,321 |
649,659 |
|||||||||||
Earnings From Continuing Operations Before Income Tax |
30,292 |
179,765 |
789,532 |
41,337 |
|||||||||||
Income Tax (Benefit) Expense |
(31,102) |
57,958 |
182,592 |
10,536 |
|||||||||||
Income From Continuing Operations |
61,394 |
121,807 |
606,940 |
30,801 |
|||||||||||
Income From Discontinued Operations, net |
— |
47,703 |
— |
99,743 |
|||||||||||
Net Income |
61,394 |
169,510 |
606,940 |
130,544 |
|||||||||||
Less: Net Income Attributable to Noncontrolling Interest |
19,380 |
— |
37,363 |
— |
|||||||||||
Net Income Attributable to CNX Resources Shareholders |
$ |
42,014 |
$ |
169,510 |
$ |
569,577 |
$ |
130,544 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME (CONTINUED) | |||||||||||||||
(Dollars in thousands, except per share data) |
Three Months Ended |
Six Months Ended | |||||||||||||
(Unaudited) |
June 30, |
June 30, | |||||||||||||
Earnings Per Share |
2018 |
2017 |
2018 |
2017 | |||||||||||
Basic |
|||||||||||||||
Income from Continuing Operations |
$ |
0.19 |
$ |
0.53 |
$ |
2.60 |
$ |
0.13 |
|||||||
Income from Discontinued Operations |
— |
0.21 |
— |
0.44 |
|||||||||||
Total Basic Earnings Per Share |
$ |
0.19 |
$ |
0.74 |
$ |
2.60 |
$ |
0.57 |
|||||||
Dilutive |
|||||||||||||||
Income from Continuing Operations |
$ |
0.19 |
$ |
0.52 |
$ |
2.57 |
$ |
0.13 |
|||||||
Income from Discontinued Operations |
— |
0.21 |
— |
0.43 |
|||||||||||
Total Dilutive Earnings Per Share |
$ |
0.19 |
$ |
0.73 |
$ |
2.57 |
$ |
0.56 |
|||||||
Dividends Declared Per Share |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
(Dollars in thousands) |
June 30, |
June 30, | |||||||||||||
(Unaudited) |
2018 |
2017 |
2018 |
2017 | |||||||||||
Net Income |
$ |
61,394 |
$ |
169,510 |
$ |
606,940 |
$ |
130,544 |
|||||||
Other Comprehensive Income: |
|||||||||||||||
Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($687), ($2,034), ($781), ($4,086)) |
1,812 |
3,464 |
1,982 |
6,966 |
|||||||||||
Comprehensive Income |
63,206 |
172,974 |
608,922 |
137,510 |
|||||||||||
Less: Comprehensive Income Attributable to Noncontrolling Interest |
19,380 |
— |
37,363 |
— |
|||||||||||
Comprehensive Income Attributable to CNX Resources Shareholders |
$ |
43,826 |
$ |
172,974 |
$ |
571,559 |
$ |
137,510 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands) |
June 30, |
December 31, | |||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash and Cash Equivalents |
$ |
54,846 |
$ |
509,167 |
|||
Accounts and Notes Receivable: |
|||||||
Trade |
132,016 |
156,817 |
|||||
Other Receivables |
17,421 |
48,908 |
|||||
Supplies Inventories |
10,499 |
10,742 |
|||||
Recoverable Income Taxes |
27,780 |
31,523 |
|||||
Prepaid Expenses |
56,431 |
95,347 |
|||||
Current Assets Held for Sale |
20,153 |
— |
|||||
Total Current Assets |
319,146 |
852,504 |
|||||
Property, Plant and Equipment: |
|||||||
Property, Plant and Equipment |
8,941,426 |
9,316,495 |
|||||
Less—Accumulated Depreciation, Depletion and Amortization |
2,399,555 |
3,526,742 |
|||||
Property, Plant and Equipment of Assets Held for Sale, Net |
230,593 |
— |
|||||
Total Property, Plant and Equipment—Net |
6,772,464 |
5,789,753 |
|||||
Other Assets: |
|||||||
Investment in Affiliates |
22,347 |
197,921 |
|||||
Goodwill |
796,359 |
— |
|||||
Other Intangible Assets |
106,476 |
— |
|||||
Other |
190,966 |
91,735 |
|||||
Total Other Assets |
1,116,148 |
289,656 |
|||||
TOTAL ASSETS |
$ |
8,207,758 |
$ |
6,931,913 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands, except per share data) |
June 30, |
December 31, | |||||
LIABILITIES AND EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts Payable |
$ |
186,397 |
$ |
211,161 |
|||
Current Portion of Long-Term Debt |
6,915 |
7,111 |
|||||
Other Accrued Liabilities |
227,871 |
223,407 |
|||||
Current Liabilities Held for Sale |
53,808 |
— |
|||||
Total Current Liabilities |
474,991 |
441,679 |
|||||
Long-Term Debt: |
|||||||
Long-Term Debt |
2,330,780 |
2,187,026 |
|||||
Capital Lease Obligations |
16,846 |
20,347 |
|||||
Total Long-Term Debt |
2,347,626 |
2,207,373 |
|||||
Deferred Credits and Other Liabilities: |
|||||||
Deferred Income Taxes |
235,407 |
44,373 |
|||||
Asset Retirement Obligations |
7,606 |
198,768 |
|||||
Other |
103,205 |
139,821 |
|||||
Total Deferred Credits and Other Liabilities |
346,218 |
382,962 |
|||||
TOTAL LIABILITIES |
3,168,835 |
3,032,014 |
|||||
Stockholders' Equity: |
|||||||
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 213,420,535 Issued and Outstanding at June 30, 2018; 223,743,322 Issued and Outstanding at December 31, 2017 |
2,138 |
2,241 |
|||||
Capital in Excess of Par Value |
2,372,650 |
2,450,323 |
|||||
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding |
— |
— |
|||||
Retained Earnings |
1,940,507 |
1,455,811 |
|||||
Accumulated Other Comprehensive Loss |
(6,494) |
(8,476) |
|||||
Total CNX Resources Stockholders' Equity |
4,308,801 |
3,899,899 |
|||||
Noncontrolling Interest |
730,122 |
— |
|||||
TOTAL STOCKHOLDERS' EQUITY |
5,038,923 |
3,899,899 |
|||||
TOTAL LIABILITIES AND EQUITY |
$ |
8,207,758 |
$ |
6,931,913 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||
(Dollars in thousands) |
Common Stock |
Capital in Excess of Par Value |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Total CNX Resources Corporation Stockholders' |
Non- Controlling Interest |
Total Stockholders' Equity | ||||||||||||||||||||
Balance at December 31, 2017 |
$ |
2,241 |
$ |
2,450,323 |
$ |
1,455,811 |
$ |
(8,476) |
$ |
3,899,899 |
$ |
— |
$ |
3,899,899 |
|||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||
Net Income |
— |
— |
569,577 |
— |
569,577 |
37,363 |
606,940 |
||||||||||||||||||||
Other Comprehensive Income (Net of ($781) Tax) |
— |
— |
— |
1,982 |
1,982 |
— |
1,982 |
||||||||||||||||||||
Comprehensive Income |
— |
— |
569,577 |
1,982 |
571,559 |
37,363 |
608,922 |
||||||||||||||||||||
Issuance of Common Stock |
7 |
1,556 |
— |
— |
1,563 |
— |
1,563 |
||||||||||||||||||||
Purchase and Retirement of Common Stock (11,086,082 shares) |
(110) |
(88,578) |
(80,031) |
— |
(168,719) |
— |
(168,719) |
||||||||||||||||||||
Shares Withheld for Taxes |
— |
— |
(4,850) |
— |
(4,850) |
(347) |
(5,197) |
||||||||||||||||||||
Acquisition of CNX Gathering, LLC |
— |
— |
— |
— |
— |
718,577 |
718,577 |
||||||||||||||||||||
Amortization of Stock-Based Compensation Awards |
— |
9,349 |
— |
— |
9,349 |
1,269 |
10,618 |
||||||||||||||||||||
Distributions to CNXM Noncontrolling Interest Holders |
— |
— |
— |
— |
— |
(26,740) |
(26,740) |
||||||||||||||||||||
Balance at June 30, 2018 |
$ |
2,138 |
$ |
2,372,650 |
$ |
1,940,507 |
$ |
(6,494) |
$ |
4,308,801 |
$ |
730,122 |
$ |
5,038,923 |
CNX RESOURCES AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(Dollars in thousands) |
Three Months Ended |
Six Months Ended | |||||||||||||
(Unaudited) |
June 30, |
June 30, | |||||||||||||
Cash Flows from Operating Activities: |
2018 |
2017 |
2018 |
2017 | |||||||||||
Net Income (Loss) |
$ |
61,394 |
$ |
169,510 |
$ |
606,940 |
$ |
130,544 |
|||||||
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By Operating Activities: |
|||||||||||||||
Net Income from Discontinued Operations |
— |
(47,703) |
— |
(99,743) |
|||||||||||
Depreciation, Depletion and Amortization |
119,087 |
91,640 |
243,754 |
187,318 |
|||||||||||
Amortization of Deferred Financing Costs |
1,778 |
— |
4,821 |
— |
|||||||||||
Impairment of Exploration and Production Properties |
— |
— |
— |
137,865 |
|||||||||||
Impairment of Other Intangible Assets |
18,650 |
— |
18,650 |
— |
|||||||||||
Stock-Based Compensation |
5,708 |
4,163 |
10,618 |
7,917 |
|||||||||||
Gain on Sale of Assets |
(3,280) |
(134,581) |
(14,622) |
(138,577) |
|||||||||||
Gain on Previously Held Equity Interest |
— |
— |
(623,663) |
— |
|||||||||||
Loss (Gain) on Debt Extinguishment |
23,413 |
36 |
39,048 |
(786) |
|||||||||||
(Gain) Loss on Commodity Derivative Instruments |
(25,660) |
(83,788) |
(60,747) |
(61,325) |
|||||||||||
Net Cash Received (Paid) in Settlement of Commodity Derivative Instruments |
16,684 |
(32,285) |
(307) |
(79,388) |
|||||||||||
Deferred Income Taxes |
(23,500) |
34,857 |
190,194 |
10,536 |
|||||||||||
Equity in Earnings of Affiliates |
(1,669) |
(10,055) |
(3,447) |
(22,385) |
|||||||||||
Changes in Operating Assets: |
|||||||||||||||
Accounts and Notes Receivable |
29,651 |
(3,308) |
44,156 |
6,661 |
|||||||||||
Recoverable Income Taxes |
(7,602) |
14,196 |
3,743 |
6,492 |
|||||||||||
Supplies Inventories |
177 |
(264) |
243 |
328 |
|||||||||||
Prepaid Expenses |
2,382 |
6,043 |
1,327 |
6,480 |
|||||||||||
Changes in Other Assets |
— |
— |
|||||||||||||
Changes in Operating Liabilities: |
|||||||||||||||
Accounts Payable |
(5,350) |
(4,141) |
(3,198) |
20,813 |
|||||||||||
Accrued Interest |
(28,263) |
(34,974) |
(3,358) |
795 |
|||||||||||
Other Operating Liabilities |
6,755 |
(11,298) |
1,504 |
699 |
|||||||||||
Changes in Other Liabilities |
126 |
17,567 |
(5,374) |
13,516 |
|||||||||||
Other |
1,108 |
33,642 |
648 |
44,572 |
|||||||||||
Net Cash Provided by Continuing Operating Activities |
191,589 |
9,257 |
450,930 |
172,332 |
|||||||||||
Net Cash Provided by Discontinued Operating Activities |
— |
79,420 |
— |
128,140 |
|||||||||||
Net Cash Provided by Operating Activities |
191,589 |
88,677 |
450,930 |
300,472 |
|||||||||||
Cash Flows from Investing Activities: |
|||||||||||||||
Capital Expenditures |
(264,174) |
(145,839) |
(496,659) |
(249,962) |
|||||||||||
CNX Gathering LLC Acquisition, Net of Cash Acquired |
— |
— |
(299,272) |
— |
|||||||||||
Proceeds from Asset Sales |
51,657 |
318,299 |
153,420 |
328,167 |
|||||||||||
Net Distributions from Equity Affiliates |
— |
18,791 |
3,650 |
24,700 |
|||||||||||
Net Cash Provided by Continuing Investing Activities |
(212,517) |
191,251 |
(638,861) |
102,905 |
|||||||||||
Net Cash Provided by Discontinued Investing Activities |
— |
(7,084) |
— |
(6,380) |
|||||||||||
Net Cash Provided by Investing Activities |
(212,517) |
184,167 |
(638,861) |
96,525 |
|||||||||||
Cash Flows from Financing Activities: |
|||||||||||||||
Payments on Short-Term Borrowings |
— |
— |
— |
— |
|||||||||||
Payments on Miscellaneous Borrowings |
(1,705) |
(4,020) |
(3,748) |
(5,973) |
|||||||||||
Payments on Long-Term Notes |
(318,000) |
(18,942) |
(723,419) |
(117,185) |
|||||||||||
Proceeds from CNX Revolving Credit Facility |
422,000 |
422,000 |
|||||||||||||
Net Payments on CNXM Revolving Credit Facility |
(9,000) |
— |
(138,500) |
— |
|||||||||||
Distributions to CNXM Noncontrolling Interest Holders |
(13,614) |
— |
(26,740) |
— |
|||||||||||
Proceeds from Issuance of CNXM Senior Notes |
— |
— |
394,000 |
— |
|||||||||||
Proceeds from Issuance of Common Stock |
507 |
229 |
1,563 |
723 |
|||||||||||
Shares Withheld for Taxes |
(35) |
(815) |
(5,197) |
(7,093) |
|||||||||||
Purchases of Common Stock |
(85,841) |
— |
(166,720) |
— |
|||||||||||
Debt Repurchase and Financing Fees |
(1,028) |
(48) |
(19,629) |
(298) |
|||||||||||
Net Cash Used in Continuing Financing Activities |
(6,716) |
(23,596) |
(266,390) |
(129,826) |
|||||||||||
Net Cash Used in Discontinued Financing Activities |
— |
(11,479) |
— |
(21,935) |
|||||||||||
Net Cash Used in Financing Activities |
(6,716) |
(35,075) |
(266,390) |
(151,761) |
|||||||||||
Net (Decrease) Increase in Cash and Cash Equivalents |
(27,644) |
237,769 |
(454,321) |
245,236 |
|||||||||||
Cash and Cash Equivalents at Beginning of Period |
82,490 |
53,766 |
509,167 |
46,299 |
|||||||||||
Cash and Cash Equivalents at End of Period |
$ |
54,846 |
$ |
291,535 |
$ |
54,846 |
$ |
291,535 |
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SOURCE CNX Resources Corporation
PITTSBURGH, July 11, 2018 /PRNewswire/ -- CNX Resources Corp. (NYSE: CNX) and CNX Midstream Partners LP (NYSE: CNXM) will issue their second quarter earnings releases at 6:45 a.m. Eastern Time on Thursday, August 2. These releases will be followed by conference calls and live webcasts, which will be available on the 'Investor Relations' page of the CNX Resources website, and the 'News and Events' page of the CNX Midstream website. Also, earnings call slides will be available at 6:45 a.m. Eastern Time on Thursday, August 2, on each companies' websites.
Conference Call Information
CNX Resources (NYSE: CNX)
CNX Midstream Partners (NYSE: CNXM)
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. CNXM's assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on CNXM's website www.cnxmidstream.com.
View original content with multimedia:http://www.prnewswire.com/news-releases/cnx-resources-corporation-and-cnx-midstream-partners-lp-announce-second-quarter-2018-earnings-release-and-conference-call-schedule-300679034.html
SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, June 29, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or "the company") today announced that it has reached an agreement to sell its Ohio Utica joint venture ("JV") assets to Ascent Resources-Utica, LLC for net cash proceeds of approximately $400 million. The divestiture includes 50 net producing wells with an average net revenue interest ("NRI") of 48%; five 50% working interest wells the company recently completed and expects to turn-in-line in July; two 50% working interest wells for which the company has drilled the top hole; and approximately 26,000 net undeveloped acres. The divested assets, which are owned in conjunction with Hess Corporation ("Hess"), are located in the wet gas Utica Shale areas of Belmont, Guernsey, Harrison, and Noble counties. The divested acres were not dedicated to CNX Midstream Partners LP (NYSE: CNXM) ("CNXM") and do not impact future dropdown opportunities.
Aside from the five recently completed wells, CNX did not have any additional activity associated with the divested assets in its future development plans. Starting on the effective date of the transaction of April 1, 2018, for the next twelve months, the company expects net production associated with these assets to be approximately 85 MMcfe per day, or 31 Bcfe, resulting in EBITDAX of approximately $50 million. The company expects full-year 2019 EBITDAX of approximately $25-$35 million. CNX will retain all related production and EBITDAX generated between the effective date and closing, which the company expects to be in the third quarter of 2018, subject to customary closing conditions and adjustments.
Cash proceeds from the transaction are expected to be used to:
"The sale of the Ohio Utica JV assets is only the most recent example of the disciplined capital allocation process that CNX has employed over the past several years," commented Nicholas J. DeIuliis, president and CEO. "This transaction is immediately accretive and brings forward the value of assets that were simply outranked by other options in CNX's opportunity set. We will evaluate the use of proceeds through the same capital allocation filter and be methodical in our decision-making. CNX remains committed to the share repurchase program and a healthy balance sheet, both of which we expect to be beneficiaries of this transaction."
As a result of the transaction, CNX expects to record a non-cash gain of approximately $135 million in the third quarter 2018, subject to post-closing adjustments. CNX does not expect to pay taxes on the transaction due to the utilization of existing net operating losses (NOLs).
Guidance Update
The company expects the divestiture to result in a 10 Bcfe reduction to 2018 production guidance based on Ohio wet Utica volumes previously planned between the expected third quarter 2018 close date and the end of the year. As a result, full-year 2018 production guidance is expected to be 490-515 Bcfe, compared to previous guidance of 500-525 Bcfe. Also, CNX expects a reduction of approximately $15 million to 2018 EBITAX attributable to CNX shareholders, or $810-$835 million, compared to the previous guidance of $825-$850 million.
For 2019 and 2020, the divestiture is expected to reduce total production volumes by 20-25 Bcfe and adjusted EBITDAX to CNX shareholders by $25-$35 million, for each year.
Non-GAAP Financial Measures
"EBITDAX," "EBITDAX attributable to CNX shareholders," and "adjusted EBITDAX attributable to CNX shareholders" are non-GAAP financial measures.
EBITDAX is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization and exploration expense. Adjusted EBITDAX is defined as EBITDAX after adjusting for certain discrete, non-recurring items. Adjusted EBITDAX attributable to CNX shareholders is defined as adjusted EBITDAX less adjusted EBITDAX attributable to noncontrolling interests. Although EBITDAX, adjusted EBITDAX, and adjusted EBITDAX attributable to CNX shareholders are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating CNX because they are widely used to evaluate a company's operating performance. We exclude stock-based compensation from adjusted EBITDAX because we do not believe it accurately reflects the actual operating expense incurred during the relevant period and may vary widely from period to period irrespective of operating results. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate these measures identically, the definitions here may not be comparable to similarly titled measures of other companies.
Further, CNX is unable to provide a reconciliation of projected EBITDAX, adjusted EBITDAX or adjusted EBITDAX attributable to CNX shareholders to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing, and potential significance of certain income statement items.
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; our dependence on gathering, processing and transportation facilities and other midstream facilities owned by CNXM and others; disruption of, capacity constraints in, or proximity to pipeline systems that could limit sales of our natural gas and natural gas liquids, and decreases in availability of third-party pipelines or other midstream facilities interconnected to CNXM's gathering systems; uncertainties in estimating our economically recoverable natural gas reserves, and inaccuracies in our estimates; the high-risk nature of drilling natural gas wells; our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; environmental regulations introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials to support our operations; if natural gas prices remain depressed or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties; a loss of our competitive position because of the competitive nature of the natural gas industry or overcapacity in this industry impairing our profitability; deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions; hedging activities may prevent us from benefiting from price increases and may expose us to other risks; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; existing and future government laws, regulations and other legal requirements that govern our business may increase our costs of doing business and may restrict our operations; significant costs and liabilities may be incurred as a result of pipeline and related facility integrity management program testing and any related pipeline repair or preventative or remedial measures; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of or recycle water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; risks associated with our debt; failure to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; decrease in our borrowing base, which could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, and lending requirements or regulations; we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; changes in federal or state income tax laws, particularly in the area of intangible drilling costs; challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; our development and exploration projects, as well as CNXM's midstream system development, require substantial capital expenditures; terrorist attacks or cyber-attacks could have a material adverse effect on our business, financial condition or results of operations; construction of new gathering, compression, dehydration, treating or other midstream assets by CNXM may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks; our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; we may not achieve some or all of the expected benefits of the separation of CONSOL Energy; CONSOL Energy may fail to perform under various transaction agreements that were executed as part of the separation, including with respect to indemnification obligations; CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy has been allocated responsibility; the separation could result in substantial tax liability; and, with respect to the sale of the Ohio Joint Venture Utica assets, disruption to our business, including customer, employee and supplier relationships resulting from this transaction, risks that the conditions to closing may not be satisfied and the sale may not occur, and the impact of the transaction on our future operating and financial results. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
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SOURCE CNX Resources Corporation
PITTSBURGH, May 3, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or the company) reported net income attributable to CNX shareholders of $528 million, or earnings of $2.35 per diluted share, compared to a net loss attributable to CNX shareholders of $39 million, or a loss of $0.17 per diluted share, in the first quarter of 2017.
Prior to the company's previously announced acquisition on January 3, 2018, of the remaining 50% membership interest of CNX Gathering LLC ("CNX Gathering") (the "Midstream Acquisition"), the company accounted for its 50% interest in CNX Gathering LLC as an equity method investment. The Midstream Acquisition gave the company controlling interest in CNX Gathering and, through its ownership of the general partner, CNX Midstream Partners LP (NYSE: CNXM) ("CNXM"). As a result, commencing on January 3, 2018, the company's consolidated results include 100% of the results of CNX, CNX Gathering, CNX Midstream GP LLC, and CNXM.
Throughout this release, CNX distinguishes between these consolidated numbers and what is attributable to CNX shareholders, as follows:
Consolidated: Includes 100% of the results of CNX, CNX Gathering, CNX Midstream GP LLC, and CNXM.
Attributable to CNX shareholders: Subtracts out CNX's noncontrolling interest in CNXM, which is approximately 63.91% and is comprised of the limited partner units in CNXM, which were not acquired by CNX.
On a consolidated basis, earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization (EBITDA) from continuing operations1 were $922 million for the 2018 first quarter, compared to negative $2 million in the year-earlier quarter.
On a GAAP basis, the first quarter earnings included the following pre-tax items attributable to continuing operations:
After adjusting for these and certain other items, which are described in the footnote to the EBITDA reconciliation table, the company had adjusted net income attributable to CNX shareholders1 in the 2018 first quarter of $42 million, or $0.19 per diluted share. Adjusted EBITDAX attributable to CNX shareholders1 was $236 million for the 2018 first quarter, compared to $124 million in the year-earlier quarter. On a consolidated basis, adjusted EBITDAX from continuing operations1 was $259 million for the 2018 first quarter.
During the first quarter of 2018, CNX sold 129.5 Bcfe of natural gas, or an increase of 36% from the 95.0 Bcfe sold in the year-earlier quarter, driven primarily from Utica Shale volumes. Total quarterly production costs decreased to $2.10 per Mcfe, compared to the year-earlier quarter of $2.32 per Mcfe, driven primarily by reductions in transportation, gathering, and compression costs, and depreciation, depletion and amortization (DD&A), offset in part by an increase in lease operating expense (LOE). On a consolidated basis, capital expenditures were $232 million, of which $216 million was related to E&P, compared to $104 million spent in the year-earlier quarter.
"Our first full quarter, post spin, was a successful quarter highlighted by strong operational execution; cash flows growing materially; approximately $102 million in asset sales; closing on the previously announced acquisition of the remaining 50% membership interest in CNX Gathering; selling the West Virginia Shirley-Pennsboro gathering system to CNXM for $265 million; additional stacked pay delineation; and the continuation of the share repurchase program," commented Nicholas J. DeIuliis, president and CEO.
During the quarter, CNX received approximately $102 million in proceeds from the sale of assets, which included approximately $88 million for the sale of CNX's shallow oil and gas (SOG) assets, as well as proceeds for the sale of scattered acreage and other miscellaneous assets. In connection with the SOG sale, the buyer assumed approximately $200 million of liabilities primarily associated with asset retirement obligations, which CNX had on its balance sheet.
Also during the quarter, CNX sold its 95% interest in the Shirley-Pennsboro gathering system to CNXM for total cash consideration of $265 million, which substantially returned the investment the company made in the Midstream Acquisition. A sale under common control doesn't allow for a gain or loss, and as a result this transaction is not reflected under proceeds from asset sales in the cash flow statement due to consolidated accounting rules. In total, however, including the sale of the Shirley-Pennsboro gathering system, CNX sold approximately $367 million of assets during the first quarter of 2018.
The company has continued to utilize cash on the balance sheet to repurchase common stock under its one-year $450 million share repurchase program and has repurchased over 13 million shares for a total price of $200 million since October 2017. The company continues to focus on the capital allocation opportunity to repurchase additional shares using both cash on hand, as well as balance sheet capacity up to its 2.5x leverage ratio target, which the company de-risks through its programmatic hedging strategy incorporating both NYMEX and basis hedges.
1The terms "EBITDA from continuing operations," "adjusted net income attributable to CNX shareholders," "adjusted EBITDAX attributable to CNX shareholders," and " adjusted EBITDAX from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP net income below, under the caption "Non-GAAP Financial Measures." |
First Quarter Operations Summary:
In the first quarter of 2018, CNX operated three horizontal rigs and drilled 19 wells: two Utica Shale wells in Monroe County, Ohio; seven Marcellus Shale wells in Greene County, Pennsylvania; and 10 Marcellus Shale wells in Washington County, Pennsylvania.
Also, CNX completed five wells during the quarter: three Marcellus Shale wells in Washington County, Pennsylvania and two deep dry Utica Shale wells, the RHL 11 and Marchand 3M. The RHL 11 is located in Greene County, Pennsylvania, and the Marchand 3M is located in Indiana County, Pennsylvania. These two deep dry Utica Shale wells are still in the early days of their producing lives. Both wells are flowing using managed pressure drawdown production methods and are valuable data points in delineating the Pennsylvania dry Utica Shale and are providing further confidence in understanding the play, as the company moves into commercial stacked pay development.
Marcellus Shale volumes, including liquids, in the 2018 first quarter were 65.9 Bcfe, approximately 14% higher than the 58.0 Bcfe produced in the 2017 first quarter. The increased production is due to new Marcellus Shale wells coming on line late in 2017 and during the first quarter of 2018. Marcellus total production costs were $2.30 per Mcfe in the just-ended quarter, which is a $0.12 per Mcfe increase from the first quarter of 2017 of $2.18 per Mcfe, driven by increases to water disposal costs and processing costs associated with the Shirley-Pennsboro wells that were turned-in-line (TIL) during the third and fourth quarters of 2017.
Utica Shale volumes, including liquids, in the 2018 first quarter were 43.5 Bcfe, approximately 184% higher than the 15.3 Bcfe in the year-earlier quarter, and which is consistent with the company's previously stated expectations that Utica Shale volumes would ramp in the fourth quarter of 2017 and the first quarter of 2018, driven primarily from TIL activity in Monroe County, Ohio. In addition to the production, the ramp in Monroe County volumes also benefited overall Utica Shale total production costs, which were $1.60 per Mcfe in the just-ended quarter, or a $0.56 per Mcfe improvement from the first quarter of 2017 total production costs of $2.16 per Mcfe.
CNX's natural gas production in the quarter came from the following categories:
Quarter |
Quarter |
Quarter |
|||||||||||||
Ended |
Ended |
Ended |
|||||||||||||
March 31, |
March 31, |
% Increase/ |
December 31, |
% Increase/ | |||||||||||
GAS |
|||||||||||||||
Marcellus Sales Volumes (Bcf) |
56.1 |
52.9 |
6.0 |
% |
53.6 |
4.7 |
% | ||||||||
Utica Sales Volumes (Bcf) |
41.4 |
11.6 |
256.9 |
% |
30.9 |
34.0 |
% | ||||||||
CBM Sales Volumes (Bcf) |
15.9 |
16.7 |
(4.8) |
% |
16.0 |
(0.6) |
% | ||||||||
Other Sales Volumes (Bcf)1 |
4.1 |
4.9 |
(16.3) |
% |
5.0 |
(18.0) |
% | ||||||||
LIQUIDS2 |
|||||||||||||||
NGLs Sales Volumes (Bcfe) |
11.1 |
8.1 |
37.0 |
% |
12.2 |
(9.0) |
% | ||||||||
Oil Sales Volumes (Bcfe) |
0.1 |
0.1 |
— |
% |
0.1 |
— |
% | ||||||||
Condensate Sales Volumes (Bcfe) |
0.8 |
0.7 |
14.3 |
% |
1.1 |
(27.3) |
% | ||||||||
TOTAL |
129.5 |
95.0 |
36.3 |
% |
118.9 |
8.9 |
% | ||||||||
Average Daily Production (MMcfe) |
1,439.0 |
1,055.8 |
1,292.3 |
||||||||||||
1Other Sales Volumes: primarily related to shallow oil and gas production. | |||||||||||||||
2NGLs, Oil and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. |
PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison: | ||||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
(Per Mcfe) |
March 31, |
March 31, |
December 31, | |||||||||
Average Sales Price - Gas |
$ |
2.96 |
$ |
3.18 |
$ |
2.29 |
||||||
Average (Loss) Gain on Commodity Derivative Instruments - Cash Settlement- Gas |
$ |
(0.14) |
$ |
(0.55) |
$ |
0.19 |
||||||
Average Sales Price - Oil* |
$ |
9.41 |
$ |
7.40 |
$ |
7.58 |
||||||
Average Sales Price - NGLs* |
$ |
4.58 |
$ |
4.86 |
$ |
5.08 |
||||||
Average Sales Price - Condensate* |
$ |
8.22 |
$ |
5.64 |
$ |
7.68 |
||||||
Average Sales Price - Total Company |
$ |
3.00 |
$ |
2.85 |
$ |
2.80 |
||||||
Lease Operating Expense |
$ |
0.28 |
$ |
0.23 |
$ |
0.21 |
||||||
Production, Ad Valorem, and Other Fees |
0.07 |
0.09 |
0.08 |
|||||||||
Transportation, Gathering and Compression |
0.86 |
0.99 |
0.87 |
|||||||||
Depreciation, Depletion and Amortization (DD&A) |
0.89 |
1.01 |
1.01 |
|||||||||
Total Production Costs |
$ |
2.10 |
$ |
2.32 |
$ |
2.17 |
||||||
Margin |
$ |
0.90 |
$ |
0.53 |
$ |
0.63 |
||||||
Addback: DD&A |
$ |
0.89 |
$ |
1.01 |
$ |
1.01 |
||||||
Margin, before DD&A |
$ |
1.79 |
$ |
1.54 |
$ |
1.64 |
||||||
*NGLs, Oil, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. | ||||||||||||
Note: "Total Production Costs" excludes Selling, General, and Administration and Other Operating Expenses. |
The average sales price of $3.00 per Mcfe, when combined with unit costs of $2.10 per Mcfe, resulted in a margin of $0.90 per Mcfe. This was an increase when compared to the year-earlier quarter, due to improvements in average sales price and total production costs.
Marketing Update:
For the first quarter of 2018, CNX's average sales price for natural gas, natural gas liquids (NGLs), oil, and condensate was $3.00 per Mcfe. CNX's average price for natural gas was $2.96 per Mcf for the quarter and, including cash settlements from hedging, was $2.82 per Mcf. The average realized price for all liquids for the first quarter of 2018 was $29.15 per barrel.
CNX's weighted average differential from NYMEX in the first quarter of 2018 was negative $0.21 per MMBtu. With an improved Henry Hub price coupled with an improved differential, CNX's average sales price for natural gas before hedging improved 29% to $2.96 per Mcf compared to the average sales price of $2.29 per Mcf in the fourth quarter of 2017. Including the impact of cash settlements from hedging, the average sales price for natural gas was $0.34 per Mcf higher than the fourth quarter of 2017.
Guidance:
CNX reaffirms its 2018 production guidance of approximately 500-525 Bcfe and total 2018 capital expenditures attributable to CNX of approximately $790-$915 million.
The company also reaffirms adjusted 2018 EBITDAX attributable to CNX of $825-$850 million, which includes approximately $60-$90 million of EBITDA attributable to CNX's ownership in CNXM.
Total hedged natural gas production in the 2018 second quarter is 93.8 Bcf. The annual gas hedge position is shown in the table below:
2018 |
2019 | ||||
Volumes Hedged (Bcf), as of 4/23/18 |
374.5* |
335.8 | |||
*Includes actual settlements of 117.5 Bcf. |
CNX's hedged gas volumes include a combination of NYMEX financial hedges and physical fixed price sales. In addition, to protect the NYMEX hedge volumes from basis exposure, CNX enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CNX's gas hedge position through 2021 is shown in the table below:
Q2 2018 |
2018 |
2019 |
2020 |
2021 | ||||||||||||||||
NYMEX Only Hedges |
||||||||||||||||||||
Volumes (Bcf) |
89.5 |
357.2 |
323.0 |
223.9 |
173.3 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
3.13 |
$ |
3.15 |
$ |
3.03 |
$ |
3.09 |
$ |
3.01 |
||||||||||
Physical Fixed Price Sales |
||||||||||||||||||||
Volumes (Bcf) |
4.3 |
17.3 |
12.8 |
11.0 |
21.3 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
2.60 |
$ |
2.62 |
$ |
2.49 |
$ |
2.44 |
$ |
2.46 |
||||||||||
Total Volumes Hedged (Bcf)1 |
93.8 |
374.5 |
335.8 |
234.9 |
194.6 |
|||||||||||||||
NYMEX + Basis (fully-covered volumes)2 |
||||||||||||||||||||
Volumes (Bcf) |
93.8 |
374.5 |
312.8 |
205.6 |
194.6 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
2.75 |
$ |
2.77 |
$ |
2.68 |
$ |
2.72 |
$ |
2.54 |
||||||||||
NYMEX Only Hedges Exposed to Basis |
||||||||||||||||||||
Volumes (Bcf) |
— |
— |
23.0 |
29.3 |
— |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
— |
$ |
— |
$ |
3.03 |
$ |
3.09 |
$ |
— |
||||||||||
Total Volumes Hedged (Bcf)1 |
93.8 |
374.5 |
335.8 |
234.9 |
194.6 |
|||||||||||||||
1Q2 2018, 2018, and 2021 exclude 2.3 Bcf, 14.2 Bcf, and 4.0 Bcf, respectively, of physical basis sales not matched with NYMEX hedges. | ||||||||||||||||||||
2Includes physical sales with fixed basis in Q2 2018, 2018, 2019, 2020, and 2021 of 24.0 Bcf, 92.6 Bcf, 102.1 Bcf, 67.2 Bcf, and 67.5 Bcf, respectively. |
During the first quarter of 2018, CNX added additional NYMEX natural gas hedges of 80.5 Bcf, 41.6 Bcf, 25.6 Bcf, and 19.8 Bcf for 2019, 2020, 2021, and 2022 respectively. To help mitigate basis exposure on NYMEX hedges, in the first quarter CNX added 0.4 Bcf, 54.3 Bcf, 27.3 Bcf, 54.4 Bcf, and 56.8 Bcf of basis hedges for 2018, 2019, 2020, 2021, and 2022, respectively.
Note: CNX is unable to provide a reconciliation of projected Adjusted EBITDAX to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing, and potential significance of certain income statement items. |
Finance:
At March 31, 2018, the company's credit facility had no borrowings outstanding and $253 million of letters of credit outstanding, leaving $1,847 million of unused capacity. In addition, CNX holds 21.7 million CNXM limited partnership units with a current market value of approximately $400 million as of April 19, 2018.
During the quarter, CNX amended and restated its senior secured revolving credit facility, which expires on March 8, 2023. The credit facility increased lenders' commitments from $1.5 billion to $2.1 billion with an accordion feature that allows the company to increase the commitments to $3.0 billion. The initial borrowing base increased from $2.0 billion to $2.5 billion.
During the quarter, CNX purchased $391 million of its outstanding 5.875% senior notes due in April 2022. As part of this transaction, a loss of $16 million was included in Loss on Debt Extinguishment on the Consolidated Statements of Income.
Also during the first quarter, the company bought back 5.8 million additional shares bringing the total amount of shares repurchased since the inception of the program in October 2017 to over 13 million shares for $200 million. As of April 16, 2018, CNX's shares outstanding were 217,910,959. The company has approximately $250 million remaining on its one-year $450 million share repurchase program, which expires in September 2018.
About CNX
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Non-GAAP Financial Measures
Definition: 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. Adjusted EBITDAX is defined as EBITDA after adjusting for the discrete items listed below, including exploration expense. Although EBIT, EBITDA, and Adjusted EBITDAX are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating CNX Resources because they are widely used to evaluate a company's operating performance. We exclude stock-based compensation from Adjusted EBITDAX because we do not believe it accurately reflects the actual operating expense incurred during the relevant period and may vary widely from period to period irrespective of operating results. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDA, or Adjusted EBITDAX identically, the presentation here may not be comparable to similarly titled measures of other companies.
Reconciliation of EBIT, EBITDA and Adjusted EBITDAX to financial net income attributable to CNX Resources Shareholders is as follows (dollars in 000):
Three Months Ended | ||||||||||||||||||||
March 31, | ||||||||||||||||||||
2018 |
2018 |
2018 |
2018 |
2017 | ||||||||||||||||
Dollars in thousands |
E&P |
Midstream |
Unallocated1 |
Total |
Total | |||||||||||||||
Net Income (Loss) |
$ |
99,809 |
$ |
35,534 |
$ |
410,203 |
$ |
545,546 |
$ |
(38,966) |
||||||||||
Less: Income from Discontinued Operations |
— |
— |
— |
— |
(52,041) |
|||||||||||||||
Add: Interest Expense |
36,062 |
2,489 |
— |
38,551 |
41,606 |
|||||||||||||||
Less: Interest Income |
(76) |
— |
— |
(76) |
(953) |
|||||||||||||||
Add: Income Taxes (Benefit) |
— |
— |
213,694 |
213,694 |
(47,422) |
|||||||||||||||
Earnings Before Interest & Taxes (EBIT) |
135,795 |
38,023 |
623,897 |
797,715 |
(97,776) |
|||||||||||||||
Add: Depreciation, Depletion & Amortization |
115,866 |
8,801 |
— |
124,667 |
95,678 |
|||||||||||||||
Earnings Before Interest, Taxes and DD&A (EBITDA) from Continuing Operations |
$ |
251,661 |
$ |
46,824 |
$ |
623,897 |
$ |
922,382 |
$ |
(2,098) |
||||||||||
Adjustments: |
||||||||||||||||||||
Unrealized Gain on Commodity Derivative Instruments |
(52,078) |
— |
— |
(52,078) |
(24,640) |
|||||||||||||||
Gain on Certain Asset Sales |
— |
(4,737) |
(4,750) |
(9,487) |
— |
|||||||||||||||
Gain on Previously Held Equity Interest |
— |
— |
(623,663) |
(623,663) |
— |
|||||||||||||||
Severance Expense |
749 |
65 |
— |
814 |
230 |
|||||||||||||||
Put Option Fair Value - Reversal from Prior Year |
— |
— |
(3,500) |
(3,500) |
— |
|||||||||||||||
Other Transaction Fees |
1,149 |
— |
— |
1,149 |
— |
|||||||||||||||
Loss (Gain) on Debt Extinguishment |
— |
— |
15,635 |
15,635 |
(822) |
|||||||||||||||
Stock-Based Compensation |
4,330 |
579 |
— |
4,909 |
3,754 |
|||||||||||||||
Impairment of E&P Properties |
— |
— |
— |
— |
137,865 |
|||||||||||||||
Exploration Expense |
2,380 |
— |
— |
2,380 |
9,785 |
|||||||||||||||
Total Pre-tax Adjustments |
(43,470) |
(4,093) |
(616,278) |
(663,841) |
126,172 |
|||||||||||||||
Adjusted EBITDAX from Continuing Operations |
$ |
208,191 |
$ |
42,731 |
$ |
7,619 |
$ |
258,541 |
$ |
124,074 |
||||||||||
Less: Adjusted EBITDA Attributable to Noncontrolling Interest2 |
— |
22,763 |
— |
22,763 |
— |
|||||||||||||||
Adjusted EBITDAX Attributable to CNX Resources Shareholders |
$ |
208,191 |
$ |
19,968 |
$ |
7,619 |
$ |
235,778 |
$ |
124,074 |
||||||||||
Note: Income tax effect of Total Pre-tax Adjustments (excluding exploration expense) was ($180,679) and $40,306 for the three months ended March 31, 2018 and March 31, 2017, respectively. Adjusted net income attributable to CNX Resources Shareholders for the three months ended March 31, 2018 is calculated as GAAP net income attributable to CNX shareholders of $527,563 less total pre-tax adjustments from the above table of ($666,221), plus the associated tax expense of ($180,679) equals the adjusted net income attributable to CNX shareholders of $42,021. | ||||||||||||||||||||
1CNX's unallocated expenses include other expense, gain on sale of assets, loss on debt extinguishment and income taxes. | ||||||||||||||||||||
2Adjusted EBITDA Attributable to Noncontrolling Interest for the three months ended March 31, 2018 is Net Income Attributable to Noncontrolling interest of $17,983 plus Depreciation, Depletion and Amortization of $2,707, plus Interest Expense of $1,699, plus Stock-based compensation of $374. Calculated by taking an average noncontrolling interest percentage of 63.91%. |
Management uses net debt to determine the company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. Management believes that using net debt attributable to CNX Resources shareholders is useful to investors in determining the company's leverage ratio since the company could choose to use its cash and cash equivalents to retire debt.
Net Debt Attributable to CNX Resources Shareholders |
March 31, 2018 | ||||||||
E&P |
Midstream |
Total | |||||||
Total Debt (GAAP)1 |
$ |
1,824,020 |
$ |
412,647 |
$ |
2,236,667 |
|||
Less Cash and Cash Equivalents |
76,608 |
5,882 |
82,490 |
||||||
Net Debt (Non-GAAP) |
1,747,412 |
406,765 |
2,154,177 |
||||||
Net Debt Attributable to Noncontrolling Interest2 |
— |
260,867 |
260,867 |
||||||
Net Debt Attributable to CNX Resources Shareholders |
$ |
1,747,412 |
$ |
145,898 |
$ |
1,893,310 |
|||
1Includes current portion. | |||||||||
2Calculated by taking an average noncontrolling interest percentage of 63.91% |
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; our dependence on gathering, processing and transportation facilities and other midstream facilities owned by CNXM and others; disruption of, capacity constraints in, or proximity to pipeline systems that could limit sales of our natural gas and natural gas liquids, and decreases in availability of third-party pipelines or other midstream facilities interconnected to CNXM's gathering systems; uncertainties in estimating our economically recoverable natural gas reserves, and inaccuracies in our estimates; the high-risk nature of drilling natural gas wells; our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; environmental regulations introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials to support our operations; if natural gas prices remain depressed or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties; a loss of our competitive position because of the competitive nature of the natural gas industry or overcapacity in this industry impairing our profitability; deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions; hedging activities may prevent us from benefiting from price increases and may expose us to other risks; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; existing and future government laws, regulations and other legal requirements that govern our business may increase our costs of doing business and may restrict our operations; significant costs and liabilities may be incurred as a result of pipeline and related facility integrity management program testing and any related pipeline repair or preventative or remedial measures; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of or recycle water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; risks associated with our debt; failure to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; decrease in our borrowing base, which could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, and lending requirements or regulations; we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; changes in federal or state income tax laws, particularly in the area of intangible drilling costs; challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; our development and exploration projects, as well as CNXM's midstream system development, require substantial capital expenditures; terrorist attacks or cyber-attacks could have a material adverse effect on our business, financial condition or results of operations; construction of new gathering, compression, dehydration, treating or other midstream assets by CNXM may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks; our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; we may not achieve some or all of the expected benefits of the separation of CONSOL Energy; CONSOL Energy may fail to perform under various transaction agreements that were executed as part of the separation, including with respect to indemnification obligations; CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy has been allocated responsibility; and the separation could result in substantial tax liability. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||
(Dollars in thousands, except per share data) |
Three Months Ended | ||||||
(Unaudited) |
March 31, | ||||||
Revenues and Other Operating Income: |
2018 |
2017 | |||||
Natural Gas, NGLs and Oil Revenue |
$ |
405,623 |
$ |
317,763 |
|||
Gain (Loss) on Commodity Derivative Instruments |
35,087 |
(22,463) |
|||||
Purchased Gas Revenue |
18,055 |
8,979 |
|||||
Midstream Revenue |
26,254 |
— |
|||||
Other Operating Income |
10,710 |
15,650 |
|||||
Total Revenue and Other Operating Income |
495,729 |
319,929 |
|||||
Costs and Expenses: |
|||||||
Operating Expense |
|||||||
Lease Operating Expense |
36,810 |
21,633 |
|||||
Transportation, Gathering and Compression |
86,261 |
94,332 |
|||||
Production, Ad Valorem, and Other Fees |
9,233 |
9,329 |
|||||
Depreciation, Depletion and Amortization |
124,667 |
95,678 |
|||||
Exploration and Production Related Other Costs |
2,380 |
9,785 |
|||||
Purchased Gas Costs |
17,054 |
8,895 |
|||||
Impairment of Exploration and Production Properties |
— |
137,865 |
|||||
Selling, General, and Administrative Costs |
31,349 |
21,802 |
|||||
Other Operating Expense |
16,047 |
18,176 |
|||||
Total Operating Expense |
323,801 |
417,495 |
|||||
Other (Income) Expense |
|||||||
Other (Income) Expense |
(6,493) |
4,075 |
|||||
Gain on Asset Sales |
(11,342) |
(3,996) |
|||||
Gain on Previously Held Equity Interest |
(623,663) |
— |
|||||
Loss (Gain) on Debt Extinguishment |
15,635 |
(822) |
|||||
Interest Expense |
38,551 |
41,606 |
|||||
Total Other (Income) Expense |
(587,312) |
40,863 |
|||||
Total Costs And Expenses |
(263,511) |
458,358 |
|||||
Earnings (Loss) From Continuing Operations Before Income Tax |
759,240 |
(138,429) |
|||||
Income Tax Expense (Benefit) |
213,694 |
(47,422) |
|||||
Income (Loss) From Continuing Operations |
545,546 |
(91,007) |
|||||
Income From Discontinued Operations, net |
— |
52,041 |
|||||
Net Income (Loss) |
545,546 |
(38,966) |
|||||
Less: Net Income Attributable to Noncontrolling Interest |
17,983 |
— |
|||||
Net Income (Loss) Attributable to CNX Resources Shareholders |
$ |
527,563 |
$ |
(38,966) |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF INCOME (CONTINUED) | |||||||
(Dollars in thousands, except per share data) |
Three Months Ended | ||||||
(Unaudited) |
March 31, | ||||||
Earnings (Loss) Per Share |
2018 |
2017 | |||||
Basic |
|||||||
Income (Loss) from Continuing Operations |
$ |
2.38 |
$ |
(0.40) |
|||
Income from Discontinued Operations |
— |
0.23 |
|||||
Total Basic Earnings (Loss) Per Share |
$ |
2.38 |
$ |
(0.17) |
|||
Dilutive |
|||||||
Income (Loss) from Continuing Operations |
$ |
2.35 |
$ |
(0.40) |
|||
Income from Discontinued Operations |
— |
0.23 |
|||||
Total Dilutive Earnings (Loss) Per Share |
$ |
2.35 |
$ |
(0.17) |
|||
Dividends Declared Per Share |
$ |
— |
$ |
— |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||
Three Months Ended | |||||||
(Dollars in thousands) |
March 31, | ||||||
(Unaudited) |
2018 |
2017 | |||||
Net Income (Loss) |
$ |
545,546 |
$ |
(38,966) |
|||
Other Comprehensive Income: |
|||||||
Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($94), ($2,052)) |
170 |
3,502 |
|||||
Comprehensive Income (Loss) |
545,716 |
(35,464) |
|||||
Less: Comprehensive Income Attributable to Noncontrolling Interest |
17,983 |
— |
|||||
Comprehensive Income (Loss) Attributable to CNX Resources Shareholders |
$ |
527,733 |
$ |
(35,464) |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited) |
||||||||
(Dollars in thousands) |
March 31, |
December 31, | ||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and Cash Equivalents |
$ |
82,490 |
$ |
509,167 |
||||
Accounts and Notes Receivable: |
||||||||
Trade |
157,605 |
156,817 |
||||||
Other Receivables |
43,344 |
48,908 |
||||||
Supplies Inventories |
10,676 |
10,742 |
||||||
Recoverable Income Taxes |
20,178 |
31,523 |
||||||
Prepaid Expenses |
92,651 |
95,347 |
||||||
Total Current Assets |
406,944 |
852,504 |
||||||
Property, Plant and Equipment: |
||||||||
Property, Plant and Equipment |
9,103,351 |
9,316,495 |
||||||
Less—Accumulated Depreciation, Depletion and Amortization |
2,481,535 |
3,526,742 |
||||||
Total Property, Plant and Equipment—Net |
6,621,816 |
5,789,753 |
||||||
Other Assets: |
||||||||
Investment in Affiliates |
20,678 |
197,921 |
||||||
Goodwill |
796,359 |
— |
||||||
Other Intangible Assets |
126,859 |
— |
||||||
Other |
149,573 |
91,735 |
||||||
Total Other Assets |
1,093,469 |
289,656 |
||||||
TOTAL ASSETS |
$ |
8,122,229 |
$ |
6,931,913 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands, except per share data) |
March 31, |
December 31, | |||||
LIABILITIES AND EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts Payable |
$ |
193,901 |
$ |
211,161 |
|||
Current Portion of Long-Term Debt |
6,891 |
7,111 |
|||||
Other Accrued Liabilities |
236,879 |
223,407 |
|||||
Total Current Liabilities |
437,671 |
441,679 |
|||||
Long-Term Debt: |
|||||||
Long-Term Debt |
2,211,165 |
2,187,026 |
|||||
Capital Lease Obligations |
18,611 |
20,347 |
|||||
Total Long-Term Debt |
2,229,776 |
2,207,373 |
|||||
Deferred Credits and Other Liabilities: |
|||||||
Deferred Income Taxes |
258,220 |
44,373 |
|||||
Asset Retirement Obligations |
7,985 |
198,768 |
|||||
Other |
120,671 |
139,821 |
|||||
Total Deferred Credits and Other Liabilities |
386,876 |
382,962 |
|||||
TOTAL LIABILITIES |
3,054,323 |
3,032,014 |
|||||
Stockholders' Equity: |
|||||||
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 218,639,873 Issued and Outstanding at March 31, 2018; 223,743,322 Issued and Outstanding at December 31, 2017 |
2,190 |
2,241 |
|||||
Capital in Excess of Par Value |
2,409,475 |
2,450,323 |
|||||
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding |
— |
— |
|||||
Retained Earnings |
1,940,882 |
1,455,811 |
|||||
Accumulated Other Comprehensive Loss |
(8,306) |
(8,476) |
|||||
Total CNX Resources Stockholders' Equity |
4,344,241 |
3,899,899 |
|||||
Noncontrolling Interest |
723,665 |
— |
|||||
TOTAL STOCKHOLDERS' EQUITY |
5,067,906 |
3,899,899 |
|||||
TOTAL LIABILITIES AND EQUITY |
$ |
8,122,229 |
$ |
6,931,913 |
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||
(Dollars in thousands) |
Common Stock |
Capital in Excess of Par Value |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Total CNX |
Non- Controlling Interest |
Total Equity | ||||||||||||||||||||
Balance at December 31, 2017 |
$ |
2,241 |
$ |
2,450,323 |
$ |
1,455,811 |
$ |
(8,476) |
$ |
3,899,899 |
$ |
— |
$ |
3,899,899 |
|||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||
Net Income |
— |
527,563 |
— |
527,563 |
17,983 |
545,546 |
|||||||||||||||||||||
Other Comprehensive Income (Net of ($94) Tax) |
— |
— |
170 |
170 |
— |
170 |
|||||||||||||||||||||
Comprehensive Income |
— |
527,563 |
170 |
527,733 |
17,983 |
545,716 |
|||||||||||||||||||||
Issuance of Common Stock |
6 |
1,050 |
— |
— |
1,056 |
— |
1,056 |
||||||||||||||||||||
Purchase and Retirement of Common Stock (5,785,900 shares) |
(57) |
(46,229) |
(37,677) |
— |
(83,963) |
— |
(83,963) |
||||||||||||||||||||
Shares Withheld for Taxes |
— |
— |
(4,815) |
— |
(4,815) |
(347) |
(5,162) |
||||||||||||||||||||
Acquisition of CNX Gathering, LLC |
— |
— |
— |
— |
— |
718,577 |
718,577 |
||||||||||||||||||||
Amortization of Stock-Based Compensation Awards |
— |
4,331 |
— |
— |
4,331 |
579 |
4,910 |
||||||||||||||||||||
Distributions to CNXM Noncontrolling Interest Holders |
— |
— |
— |
— |
— |
(13,127) |
(13,127) |
||||||||||||||||||||
Balance at March 31, 2018 |
$ |
2,190 |
$ |
2,409,475 |
$ |
1,940,882 |
$ |
(8,306) |
$ |
4,344,241 |
$ |
723,665 |
$ |
5,067,906 |
CNX RESOURCES AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Dollars in thousands) |
Three Months Ended | ||||||
(Unaudited) |
March 31, | ||||||
Cash Flows from Operating Activities: |
2018 |
2017 | |||||
Net Income (Loss) |
$ |
545,546 |
$ |
(38,966) |
|||
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By Operating Activities: |
|||||||
Net Income from Discontinued Operations |
— |
(52,041) |
|||||
Depreciation, Depletion and Amortization |
124,667 |
95,678 |
|||||
Amortization of Deferred Financing Costs |
3,043 |
— |
|||||
Impairment of Exploration and Production Properties |
— |
137,865 |
|||||
Stock-Based Compensation |
4,910 |
3,754 |
|||||
Gain on Sale of Assets |
(11,342) |
(3,996) |
|||||
Gain on Previously Held Equity Interest |
(623,663) |
— |
|||||
Loss (Gain) on Debt Extinguishment |
15,635 |
(822) |
|||||
(Gain) Loss on Commodity Derivative Instruments |
(35,087) |
22,463 |
|||||
Net Cash Paid in Settlement of Commodity Derivative Instruments |
(16,991) |
(47,103) |
|||||
Deferred Income Taxes |
213,694 |
(24,321) |
|||||
Equity in Earnings of Affiliates |
(1,778) |
(12,330) |
|||||
Changes in Operating Assets: |
|||||||
Accounts and Notes Receivable |
14,505 |
9,969 |
|||||
Recoverable Income Taxes |
11,345 |
(7,704) |
|||||
Supplies Inventories |
66 |
592 |
|||||
Prepaid Expenses |
(1,055) |
437 |
|||||
Changes in Operating Liabilities: |
|||||||
Accounts Payable |
2,152 |
24,954 |
|||||
Accrued Interest |
24,905 |
35,769 |
|||||
Other Operating Liabilities |
(5,251) |
11,997 |
|||||
Changes in Other Liabilities |
(5,500) |
(4,051) |
|||||
Other |
(461) |
10,930 |
|||||
Net Cash Provided by Continuing Operating Activities |
259,340 |
163,074 |
|||||
Net Cash Provided by Discontinued Operating Activities |
— |
48,721 |
|||||
Net Cash Provided by Operating Activities |
259,340 |
211,795 |
|||||
Cash Flows from Investing Activities: |
|||||||
Capital Expenditures |
(232,485) |
(103,922) |
|||||
CNX Gathering, LLC Acquisition, Net of Cash Acquired |
(299,272) |
— |
|||||
Proceeds from Asset Sales |
101,763 |
9,868 |
|||||
Net Distributions from Equity Affiliates |
3,650 |
5,909 |
|||||
Net Cash Used in Continuing Investing Activities |
(426,344) |
(88,145) |
|||||
Net Cash Provided by Discontinued Investing Activities |
— |
503 |
|||||
Net Cash Used in Investing Activities |
(426,344) |
(87,642) |
|||||
Cash Flows from Financing Activities: |
|||||||
Payments on Miscellaneous Borrowings |
(2,042) |
(1,953) |
|||||
Payments on Long-Term Notes |
(405,419) |
(98,243) |
|||||
Net Payments on CNXM Revolving Credit Facility |
(129,500) |
— |
|||||
Proceeds from Issuance of CNXM Senior Notes |
394,000 |
— |
|||||
Distributions to CNXM Noncontrolling Interest Holders |
(13,127) |
— |
|||||
Proceeds from Issuance of Common Stock |
1,056 |
494 |
|||||
Shares Withheld for Taxes |
(5,162) |
(6,278) |
|||||
Purchases of Common Stock |
(80,879) |
— |
|||||
Debt Repurchase and Financing Fees |
(18,600) |
(250) |
|||||
Net Cash Used in Continuing Financing Activities |
(259,673) |
(106,230) |
|||||
Net Cash Used in Discontinued Financing Activities |
— |
(10,456) |
|||||
Net Cash Used in Financing Activities |
(259,673) |
(116,686) |
|||||
Net (Decrease) Increase in Cash and Cash Equivalents |
(426,677) |
7,467 |
|||||
Cash and Cash Equivalents at Beginning of Period |
509,167 |
46,299 |
|||||
Cash and Cash Equivalents at End of Period |
$ |
82,490 |
$ |
53,766 |
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SOURCE CNX Resources Corporation
PITTSBURGH, March 16, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") announced today that it has terminated its previously announced cash tender offer for any and all of the approximately $500 million outstanding aggregate principal amount of its 8.000% senior notes due 2023 (the "2023 Notes"), as a result of its election not to proceed at this time with its previously announced offering of senior notes. Any of the 2023 Notes that have been tendered will not be accepted for purchase and no consideration will be paid or become payable to holders thereof.
Any questions relating to the termination of the tender offer and consent solicitation may be directed to D.F. King & Co., Inc. at (877) 478-5042 (Toll-Free) or (212) 269-5550.
About CNX Resources
CNX Resources Corporation is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Cautionary Statements:
This press release is for informational purposes only and does not constitute an offer to sell or purchase, or the solicitation of an offer to sell or purchase, 2023 Notes or other securities.
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the factors discussed in the 2017 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
View original content with multimedia:http://www.prnewswire.com/news-releases/cnx-resources-corporation-announces-termination-of-tender-offer-for-any-and-all-of-its-outstanding-8000-senior-notes-due-2023-300615530.html
SOURCE CNX Resources Corporation
PITTSBURGH, March 16, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or the company) and CNX Midstream Partners LP (NYSE: CNXM) ("CNXM") jointly announced today that CNXM has completed its previously announced acquisition of a 95% interest in the Shirley-Pennsboro gathering system ("Shirley-Pennsboro System") from CNX.
The Shirley-Pennsboro System gathers and transports gas in the core wet gas region of the Marcellus Shale in West Virginia across Doddridge, Tyler, Ritchie, and Pleasant counties and currently has approximately 180 million cubic feet equivalent per day of flowing production. At the closing, the Shirley-Pennsboro System, which was previously held in CNX's 95% owned subsidiary, CNX Midstream DevCo III, was transferred to CNXM's 100% owned subsidiary, CNX Midstream DevCo I.
CNXM financed the transaction with a portion of the proceeds from the sale of $400 million aggregate principal amount of their 6.500% senior notes due 2026, which also closed on March 16, 2018.
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. CNXM's assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on CNXM's website www.cnxmidstream.com.
* * * * *
This press release serves as a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Nominees should treat one hundred percent (100.0%) of CNX Midstream's distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business. Accordingly, CNX Midstream's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not CNX Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of non-U.S. investors.
Important Information about Company Names and Stock Trading Symbols
Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) separated its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo.
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SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, March 15, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced that it has commenced a cash tender offer (the "offer") to purchase any and all of the outstanding senior notes listed in the following table at the cash purchase price shown in the column titled "Purchase Price per $1,000 of Notes."
Issuer |
Title of Security |
CUSIP |
Principal Amount |
Purchase Price per |
CNX Resources |
8.000% Senior |
20854P AN9 |
$500,000,000 |
$1,063.50 |
Holders whose notes are purchased will also receive accrued and unpaid interest thereon from the last interest payment date up to, but not including, the settlement date.
The offer is being made pursuant to the terms and conditions contained in the Offer to Purchase and Notice of Guaranteed Delivery, copies of which may be obtained from D.F. King & Co., Inc., the tender agent and information agent for the offer, by calling (877) 478-5042 (toll free) or, for banks and brokers, (212) 269-5550 or by email at cnx@dfking.com. Copies of the Offer to Purchase and Notice of Guaranteed Delivery are also available at the following web address: http://www.dfking.com/cnx.
The offer will expire at 5:00 p.m. New York City Time on March 21, 2018, unless extended or earlier terminated (such time and date as the same may be extended, the "Expiration Time"). Tendered notes may be withdrawn at any time before the Expiration Time. Holders of notes must validly tender and not validly withdraw their notes (or comply with the procedures for guaranteed delivery) before the Expiration Time to be eligible to receive the consideration for their notes.
Settlement for notes tendered prior to the Expiration Time and accepted for purchase will occur promptly after the Expiration Time, which is expected to be March 22, 2018, assuming that the offer is not extended or earlier terminated. The settlement date for any notes tendered pursuant to a Notice of Guaranteed Delivery is expected to be on March 26, 2018, subject to the same assumption.
The offer for the notes is conditioned upon the satisfaction of certain conditions, including the completion of a contemporaneous notes offering by CNX on terms and conditions (including, but not limited to, the amount of proceeds raised in such offering) satisfactory to CNX. The offer is not conditioned upon any minimum amount of notes being tendered and the offer may be amended, extended, terminated or withdrawn, subject to applicable law.
CNX has retained Credit Suisse Securities (USA) LLC to serve as the exclusive Dealer Manager for the offer. Questions regarding the terms of the offer may be directed to Credit Suisse Securities (USA) LLC, Liability Management Group, at (212) 538-1862 (collect) or (800) 820-1653 (U.S. toll-free).
CNX is one of the largest independent oil and natural gas companies in the United States and is focused on the exploration, development, production, gathering, processing and acquisition of natural gas properties in the Appalachian Basin.
Cautionary Statements:
This press release does not constitute an offer to sell or the solicitation of an offer to buy any notes in the offer. In addition, this press release is not an offer to sell or the solicitation of an offer to buy any securities issued in connection with any contemporaneous notes offering, nor shall there be any sale of the securities issued in such offering in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the factors discussed in the 2017 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
View original content with multimedia:http://www.prnewswire.com/news-releases/cnx-resources-corporation-announces-tender-offer-for-its-8000-senior-notes-due-2023-300614529.html
SOURCE CNX Resources Corporation
PITTSBURGH, March 15, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") today announced that it intends, subject to market and other conditions, to offer and sell to eligible purchasers $500 million of senior notes due 2026 (the "Notes"). The Notes will be guaranteed by all of CNX's wholly-owned domestic restricted subsidiaries that guarantee its revolving credit facility. CNX intends to use the net proceeds of the sale of the Notes to purchase any and all of the approximately $500 million aggregate principal amount outstanding of its 8.000% senior notes due 2023 pursuant to the tender offer that commenced concurrently with the offering of the Notes and to redeem any of its 8.000% senior notes due 2023 that remain outstanding after completion of the tender offer.
The Notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.
CNX is one of the largest independent oil and natural gas companies in the United States and is focused on the exploration, development, production, gathering, processing and acquisition of natural gas properties in the Appalachian Basin.
Cautionary Statements:
This press release does not constitute an offer to sell or the solicitation of an offer to buy any notes nor shall there be any sale of notes in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The offering may be made only by means of an offering circular.
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the factors discussed in the 2017 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
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SOURCE CNX Resources Corporation
PITTSBURGH, March 8, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or the "Company") today announced that it has amended and restated its senior secured revolving credit facility (the "Credit Facility"). The Credit Facility increases lenders' commitments to $2.1 billion, with an accordion feature allowing the Company to increase the commitments to $3.0 billion, and establishes an initial borrowing base of $2.5 billion. Outstanding borrowings under the Credit Facility bear interest, at the Company's option, at either the base rate plus a margin ranging from 0.50% to 1.50% or LIBOR plus a margin ranging from 1.50% to 2.50%.
The Credit Facility matures on March 8, 2023, subject to a springing maturity date in the event the aggregate principal amount outstanding on the Company's existing senior notes or certain other publicly traded debt securities exceeds $500 million.
PNC Capital Markets LLC, JPMorgan Chase Bank, N.A., Credit Suisse Securities (USA) LLC and MUFG Union Bank, N.A. acted as the joint lead arrangers and joint bookrunners for the Credit Facility. PNC Bank, National Association will serve as administrative agent and collateral agent, and JPMorgan Chase Bank, N.A. will serve as syndication agent.
About CNX Resources
CNX Resources Corporation is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
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SOURCE CNX Resources Corporation
PITTSBURGH, Feb. 7, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or the company) and CNX Midstream Partners LP (NYSE: CNXM) ("CNXM") jointly announced today that they have entered into a definitive agreement ("Purchase Agreement") pursuant to which CNX will sell its 95% interest in the Shirley-Pennsboro gathering system ("Shirley-Pennsboro System") to CNXM for total cash consideration of $265 million ("Purchase Price").
The Shirley-Pennsboro System gathers and transports gas in the core wet gas region of the Marcellus Shale in West Virginia across Doddridge, Tyler, Ritchie, and Pleasant counties and currently has approximately 180 million cubic feet equivalent per day of flowing production.
"This transaction is a win-win for both CNX and CNXM," commented Nicholas J. DeIuliis, CEO of CNX and CNXM. "For CNX, the transaction provides significant cash proceeds that effectively return the investment we made for our acquisition of Noble Energy's general partner interest in CNXM. Also, in connection with the acquisition, CNX and CNXM have agreed to amend the existing gathering agreement to provide for a minimum volume commitment (MVC) with respect to the Shirley-Pennsboro System. This operating area was the largest growth contributor to CNX's 2017 Marcellus Shale volumes and will continue to be a growing part of CNX's future production."
"For CNXM, this transaction complements the MLP's growth outlook, as previously highlighted, and demonstrates the commitment and value-creation opportunities under the new single-sponsor ownership structure," continued Mr. DeIuliis. "The Shirley-Pennsboro System is already well-capitalized, and the timing of the transaction is ideal for CNXM as it is able to capture the volume growth as it executes near-term capacity expansion projects, with CNX volumes rapidly filling that capacity. The transaction is substantially de-risked through the MVC, which covers approximately 70% of CNX's planned production in the Shirley-Pennsboro operating area, resulting in approximately $400 million in revenue for CNXM through 2031. Additionally, this transaction is expected to add $22 million to $24 million of 2018 EBITDA for CNXM on a full year pro forma basis, with substantial EBITDA growth expected beyond 2018. CNX expects a negligible impact to 2018 EBITDA guidance since a transaction was contemplated in its prior guidance numbers."
At the closing, the Shirley-Pennsboro System, which is currently held in CNX's 95% owned CNX Midstream DevCo III, will be transferred to CNXM's 100% owned subsidiary, CNX Midstream DevCo I. CNXM currently intends to finance the transaction with cash on hand and through debt financing. Following closing of the transaction, which is expected to occur prior to the end of the first quarter of 2018, CNX Resources will continue to own 95% interests in each of CNX Midstream DevCo II LP and CNX Midstream DevCo III LP, with CNXM owning the remaining 5% in each.
The transaction represents the initial dropdown of assets by CNX to CNXM following CNX acquiring Noble Energy's GP and DevCo interests in CNXM, which closed on January 3, 2018. CNX continues to hold approximately 21.7 million common units, or 34.2%, of the common units of CNXM, along with 100% of the general partner interest, and the incentive distribution rights in CNXM.
The transaction was approved by the CNXM's Board of Directors' Conflicts Committee, which consists entirely of independent directors.
Latham & Watkins LLP served as the legal advisor to CNX. The Conflicts Committee of the Board of Directors of CNXM was advised by Evercore on financial matters and Baker Botts L.L.P. on legal matters.
Lastly, CNX and CNXM will provide additional guidance information in conjunction with the upcoming Analyst and Investor Meeting.
Note: CNX Midstream Partners LP is unable to provide a reconciliation of projected Adjusted EBITDA to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing, and potential significance of certain income statement items.
Analyst and Investor Meeting:
CNX and CNXM will host a joint Analyst and Investor Meeting in Pittsburgh, Pennsylvania on Tuesday, March 13, 2018.
The Analyst and Investor Meeting, which is expected to last approximately four hours, will feature presentations from members of CNX's and CNXM's senior leadership teams followed by a question and answer session.
Following the conclusion of CNX's portion of the Analyst and Investor Meeting, which the company expects to be approximately three hours, certain members of the senior leadership team from CNXM will make a presentation followed by a question and answer session.
A live audio webcast of the Analyst and Investor Meeting will begin at 8:30 a.m. Eastern Time and can be accessed by visiting the investor relations portion at each company's website, at www.cnx.com and www.cnxmidstream.com. The replay of the webcast will be available for approximately 30 days. Additionally, a comprehensive slide deck will be posted to each company's website (under the "Events" tab) to coincide with the onset of the meeting.
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CNX deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. CNX is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. CNXM's assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on CNXM's website www.cnxmidstream.com.
* * * * *
This press release serves as a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Nominees should treat one hundred percent (100.0%) of CNX Midstream's distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business. Accordingly, CNX Midstream's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not CNX Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of non-U.S. investors.
Important Information about Company Names and Stock Trading Symbols
Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) separated its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo.
Cautionary Statements
CNX and CNXM are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These forward-looking statements may include projections and estimates concerning the timing and success of specific projects, including the Shirley-Pennsboro transaction, and our future production, revenues, income and capital spending. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: the Shirley-Pennsboro transaction may not be consummated or the benefits contemplated therefrom may not be realized; the effects of changes in market prices of natural gas, NGLs and crude oil on CNX's drilling and development plans and the volumes of natural gas and condensate that are produced on CNXM's dedicated acreage; changes in CNX's drilling and development plans in the Marcellus Shale and Utica Shale; CNX's ability to meet its drilling and development plans in the Marcellus Shale and Utica Shale; the demand for natural gas and condensate gathering services; changes in general economic conditions; competitive conditions in our industry; actions taken by third-party operators, gatherers, processors and transporters; our ability to successfully implement our respective business plans; and our ability to complete internal growth projects on time and on budget. You should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs at the time they are made, forward-looking statements involve known and unknown risks, uncertainties and other factors, including the factors described in detail under the captions "Forward-Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.
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SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, Feb. 7, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or the company) announced today total proved reserves of 7.6 Tcfe, as of December 31, 2017, which is a 21% increase, compared to the previous year. Oil, condensate, and liquids account for 460 Bcfe, or 6.1%, of the 7.6 Tcfe total proved reserves, of which the Marcellus and Utica Shale represent over 99% of these heavier hydrocarbons.
During 2017, CNX added 1.89 Tcfe of proved reserves through extensions and discoveries, which resulted in the company replacing 463% of its 2017 net production of 407 Bcfe.
In 2017, total capital costs incurred were $633 million. Total capital costs incurred divided by the summation of 1,887 Bcfe for extensions and discoveries, negative 99 Bcfe for the sale of reserves in-place, and negative 51 Bcfe for revisions, yields an all-in finding and development (F&D) cost for proved reserve additions of $0.36 per Mcfe.
In 2017, drilling and completion costs incurred directly attributable to extensions and discoveries were $536 million. When divided by the extensions and discoveries of 1,887 Bcfe, this yields a drill bit F&D cost of $0.28 per Mcfe.
Future development costs for proved undeveloped reserves (PUDs) are estimated to be approximately $1.283 billion, or $0.40 per Mcfe.
The following table shows the summary of changes in reserves:
Summary of Changes in Proved Reserves (Bcfe) | |
Balance at December 31, 2016 |
6,252 |
Revisions |
(51) |
Extensions and discoveries |
1,887 |
Production |
(407) |
Sale of reserves in-place |
(99) |
Balance at December 31, 2017 |
7,582 |
Note: The proved reserve estimate as of December 31, 2017, was prepared by CNX Resources and audited by Netherland, Sewell & Associates, Inc. |
During the year, total net revisions were negative 51 Bcfe and included the following factors: 458 Bcfe negative revision due to reprioritizing other operational areas and removing a substantial number of wells in the Ohio wet Utica Shale area from the company's development plans, 181 Bcfe positive pricing revision from increased natural gas prices compared to year-end 2016, and 239 Bcfe positive revisions due to improved well performance.
Proved developed reserves of 4,409 Bcfe in 2017 comprised 58% of total proved reserves, compared to 59% in 2016. PUDs were 3,173 Bcfe at December 31, 2017, or 42% of total proved reserves, compared to 41% at year-end 2016. PUDs at year-end 2017 represent 47% of the total wells the company expects to drill over the next five years, with the majority of the remaining wells located within the dry Utica Shale in Pennsylvania and West Virginia.
During 2017 in the Marcellus Shale, CNX turned-in-line (TIL) 31 gross wells with an average completed lateral length of approximately 8,400 feet and expected ultimate recoveries (EURs) ranging between 1.1 and 2.9 Bcfe per thousand feet of completed lateral. Enhanced completion techniques have been a significant contributor to Marcellus Shale EUR improvements in 2017. These enhanced completion techniques have allowed the company to book approximately 70% of Marcellus Shale PUDs with EURs of 2.3 Bcfe per thousand feet of completed lateral, compared to 2.0 Bcfe per thousand feet booked during the previous year. CNX expects to see further improvements in EURs for all of the company's remaining PUD locations due to continuous improvement initiatives regarding completion optimization. As of December 31, 2017, the Marcellus Shale proved reserves were 4,336 Bcfe, which included 2,170 Bcfe of proved developed reserves.
During 2017 in the Utica Shale, CNX TIL 22 gross wells with an average completed lateral length of approximately 8,800 feet and EURs ranging between 2.0 and 3.5 Bcfe per thousand feet of completed lateral. In 2017, the company's type curves that were applied to PUDs increased from the previous year due to enhanced completion techniques, which allowed the company to book approximately 37% of Utica Shale PUDs with EURs of 2.6 Bcfe per thousand feet of completed lateral, compared to 2.4 Bcfe per thousand feet of completed lateral during the previous year. In 2017, CNX booked 1,372 Bcfe of Utica Shale proved reserves with 1,002 Bcfe coming from the dry gas region, compared to 624 Bcfe in the dry gas region the previous year. This 61% increase is attributable to the continued drilling success in the deep dry Utica Shale.
As of December 31, 2017, CNX has total proved, probable, and possible reserves (also known as "3P reserves") of 50.4 Tcfe, which is an increase of 9.0 Tcfe, or 22%, in 3P reserves from the 41.4 Tcfe reported at year-end 2016. The increase in 3P reserves is primarily attributed to more certainty of the success in the dry Utica Shale, as well as the continued success and optimization in the Marcellus Shale. The company continues testing dry Utica Shale potential in Pennsylvania, Ohio, and West Virginia and believes that these areas will provide additional opportunities for the company's proved reserves over time. The company's 3P reserves have been determined in accordance with the guidelines of the Society of Petroleum Engineers Petroleum Resources Management System.
The following table shows the breakdown of reserves, in Bcfe, from the company's current development and exploration plays:
Breakdown of Reserves (Bcfe) |
||||||||
Proved |
Proved Developed Non- Producing |
Proved |
Total |
|
|
Total 3P |
Total | |
Marcellus Shale |
2,170 |
0 |
2,166 |
4,336 |
20,515 |
6,452 |
31,303 |
31,804 |
Coalbed Methane |
964 |
17 |
373 |
1,353 |
744 |
297 |
2,394 |
3,414 |
Utica |
734 |
5 |
633 |
1,372 |
4,908 |
8,978 |
15,258 |
56,306 |
Other |
518 |
2 |
-- |
520 |
199 |
747 |
1,466 |
35,947 |
Total |
4,386 |
24 |
3,173 |
7,582 |
26,366 |
16,474 |
50,421 |
127,471 |
Definition: Total Reserve & Resource includes total 3P and other resource potential outside of 3P. |
The estimates of reserves and future revenue were prepared in accordance with the definitions and guidelines of the SEC Regulation S-X Rule 4.10(a). |
The table below summarizes the Securities and Exchange Commission (SEC) pricing as of December 31, 2017:
SEC | |
Pricing (1) | |
Benchmark Pricing: |
|
WTI Oil Price ($/Bbl) |
$51.34 |
NYMEX Natural Gas Price ($/MMBtu) |
$2.98 |
C2+ Natural Gas Liquids ($/Bbl)(2) |
$23.61 |
Condensate ($/Bbl) (3) |
$37.94 |
(1) |
The SEC rules require that the proved reserve calculations be based on the first day of the month average prices over the preceding twelve months. |
(2) |
NGL Pricing is 46% of WTI, which includes regional market differentials. |
(3) |
Condensate Pricing is 74% of WTI, which includes regional market differentials. |
Based on these prices adjusted for energy content, quality, hedges, transportation costs, and basis differentials ($2.44 per Mcf, $23.61 per barrel of natural gas liquids, $37.94 per barrel of condensate and $46.34 per barrel of crude oil, respectively), the pre-tax discounted (10%) present value ("PV-10") of the company's proved reserves was $4.14 billion for 2017, compared to $1.56 billion at year-end 2016. The $4.14 billion includes $42 million associated with hedges.
Standardized Measure of Discounted Future Net Cash Flows
The following information was prepared in accordance with the provisions of the Financial Accounting Standards Board's Accounting Standards Update No. 2010-03, "Extractive Activities-Oil and Gas (Topic 932)." This topic requires the standardized measure of discounted future net cash flows to be based on the average, first-day-of-the-month price for the year ended December 31, 2017. Because prices used in the calculation are average prices for that year, the standardized measure could vary significantly from year-to-year based on the market conditions that occurred.
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 CNX. 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. CNX'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 CNX'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.
Reconciliation of PV-10 to Standardized Measure |
||||||
December 31, | ||||||
(Dollars in millions) |
2017 |
2016 |
2015 | |||
Future cash inflows |
$ 19,262 |
$ 11,303 |
$ 11,838 | |||
Future production costs |
(7,234) |
(5,851) |
(6,585) | |||
Future development costs (including abandonments) |
(1,711) |
(1,550) |
(1,220) | |||
Future net cash flows (pre-tax) |
10,317 |
3,902 |
4,033 | |||
10% discount factor |
(6,177) |
(2,343) |
(2,374) | |||
PV-10 (Non-GAAP measure) (1) |
4,140 |
1,559 |
1,659 | |||
Undiscounted income taxes |
(2,476) |
(1,483) |
(1,534) | |||
10% discount factor |
1,467 |
879 |
894 | |||
Discounted income taxes |
(1,009) |
(604) |
(640) | |||
Standardized GAAP measure |
$ 3,131 |
$ 955 |
$ 1,019 |
(1) |
We calculate our present value at 10% (PV-10) in accordance with the following table. Management believes that the presentation of the non-Generally Accepted Accounting Principle (GAAP) financial measure of PV-10 provides useful information to investors because it is widely used by professional analysts and sophisticated investors in evaluating oil and gas companies. Because many factors that are unique to each individual company impact the amount of future income taxes estimated to be paid, the use of a pre-tax measure is valuable when comparing companies based on reserves. PV-10 is not a measure of the financial or operating performance under GAAP. PV-10 should not be considered as an alternative to the standardized measure as defined under GAAP. We have included a reconciliation of the most directly comparable GAAP measure-after-tax discounted future net cash flows. |
About CNX Resources
CNX Resources Corporation is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2017, CNX had 7.6 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Important Information about Company Names and Stock Trading Symbols
Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) separated its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo.
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; our dependence on gathering, processing and transportation facilities and other midstream facilities owned by CNXM and others; disruption of, capacity constraints in, or proximity to pipeline systems that could limit sales of our natural gas and natural gas liquids, and decreases in availability of third-party pipelines or other midstream facilities interconnected to CNXM's gathering systems; uncertainties in estimating our economically recoverable natural gas reserves, and inaccuracies in our estimates; the high-risk nature of drilling natural gas wells; our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; environmental regulations introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials to support our operations; if natural gas prices remain depressed or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties; a loss of our competitive position because of the competitive nature of the natural gas industry or overcapacity in this industry impairing our profitability; deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions; hedging activities may prevent us from benefiting from price increases and may expose us to other risks; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; existing and future government laws, regulations and other legal requirements that govern our business may increase our costs of doing business and may restrict our operations; significant costs and liabilities may be incurred as a result of pipeline and related facility integrity management program testing and any related pipeline repair or preventative or remedial measures; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of or recycle water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; risks associated with our debt; failure to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; decrease in our borrowing base, which could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, and lending requirements or regulations; we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; changes in federal or state income tax laws, particularly in the area of intangible drilling costs; challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; our development and exploration projects, as well as CNXM's midstream system development, require substantial capital expenditures; terrorist attacks or cyber-attacks could have a material adverse effect on our business, financial condition or results of operations; construction of new gathering, compression, dehydration, treating or other midstream assets by CNXM may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks; our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; we may not achieve some or all of the expected benefits of the separation of CONSOL Energy; CONSOL Energy may fail to perform under various transaction agreements that were executed as part of the separation, including with respect to indemnification obligations; CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy has been allocated responsibility; and the separation could result in substantial tax liability. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
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SOURCE CNX Resources Corporation
PITTSBURGH, Jan. 30, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or the company) reported net income from continuing operations of $282 million, or earnings of $1.24 per diluted share, compared to a net loss from continuing operations of $300 million, or a loss of $1.31 per diluted share in the year-earlier quarter. Discontinued operations consist of the assets and operations of the company's former coal business, which was spun-off to shareholders on November 28, 2017.
Earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization (EBITDA) from continuing operations1 were $250 million for the 2017 fourth quarter, compared to negative $113 million in the year-earlier quarter.
On a GAAP basis, the fourth quarter pre-tax earnings included a $106 million unrealized gain on commodity derivative instruments, related to changes in the fair market value of existing hedges on a mark-to-market basis and $20 million related to settlement expense.
After adjusting for certain items, which are described in the footnote to the EBITDA reconciliation table, the company had adjusted net income from continuing operations1 in the 2017 fourth quarter of $222 million, or $0.98 per diluted share, compared to a loss of $146 million in the year-earlier quarter. Adjusted EBITDA from continuing operations1 was $173 million for the 2017 fourth quarter, compared to $132 million in the year-earlier quarter.
"The fourth quarter marked a watershed period in the history of our company as we completed many of the strategic initiatives that have been underway for a number of years now," commented Nicholas J. DeIuliis, president and CEO. "Specifically, during the quarter we completed the separation of our gas and coal businesses, and in addition to this transformational transaction, we continued our share repurchase program and exceeded $100 million in the quarter; received our anticipated tax refund of approximately $100 million; and proved the commercial viability of the deep dry Utica in our central Pennsylvania operating area with our industry leading Aikens 5J and 5M well results. Also, following the close of the quarter, we acquired 100% of the general partner interest in CNX Midstream. The issues and overhangs of the past are resolved."
"Today we are singularly focused on the future, which is as a premier Appalachian focused E&P company with a non-replicable stacked pay opportunity-set, driving economies of scale and superior economics," continued Mr. DeIuliis. "We have put ourselves into a position to reduce our net leverage to under 2.5 times by year end assuming our 2018 EBITDA guidance, which allows us to continue to execute our share repurchase program. We have been successful in strategically positioning the company to go on offense, and this allows us to focus on continuing to differentiate ourselves as best-in-class capital allocators. This is an exciting time in our company's history, and the future is bright."
During the quarter, CNX received a federal tax refund for tax years 2010-2014 of $97 million. The tax refund was the result of a private letter ruling request the company had filed with the IRS to request the ability to claim previously unelected bonus deprecation.
On January 3, 2018, CNX closed on the acquisition of Noble Energy's 50% membership interest in the former CONE Gathering LLC, which holds the general partner interest and incentive distribution rights in CONE Midstream Partners LP. In conjunction with the closing, CONE Midstream Partners LP was renamed CNX Midstream Partners LP and now trades on the New York Stock Exchange under the ticker "CNXM".
CNX will benefit from the amended gas gathering agreement and owning 100% of the general partner of CNXM through having increased control and flexibility with respect to the scope and timing of midstream development. The company expects the new ownership structure to facilitate future dropdowns into CNXM.
1The terms "adjusted net loss from continuing operations," "EBITDA from continuing operations," and "adjusted EBITDA from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP net income below, under the caption "Non-GAAP Financial Measures."
Operating Results:
During the fourth quarter of 2017, CNX sold 118.9 Bcfe of natural gas, or an increase of 17% from the 101.3 Bcfe sold in the year-earlier quarter, driven primarily from Marcellus and Utica Shale volumes. Despite wet production increasing, total quarterly production costs decreased to $2.17 per Mcfe, compared to the year-earlier quarter of $2.27 per Mcfe, driven primarily by reductions in operating and gathering and transportation expense due to increased volumes. Capital expenditures in the fourth quarter increased to $233 million, compared to $34 million spent in the year-earlier quarter.
Marcellus Shale volumes, including liquids, in the 2017 fourth quarter were 64.0 Bcfe, approximately 13% higher than the 56.5 Bcfe produced in the 2016 fourth quarter. The increased production is due to four new Marcellus Shale wells coming on line during the quarter. Marcellus Shale total production costs were $2.32 per Mcfe in the just-ended quarter, which is a $0.12 per Mcfe increase from the fourth quarter of 2016 of $2.20 per Mcfe, driven primarily from gathering costs increasing due to higher processing and CNXM fees related to an increase in the production mix towards wet gas.
Utica Shale volumes, including liquids, in the 2017 fourth quarter were 33.8 Bcfe, approximately 52% higher than the 22.2 Bcfe produced in the 2016 fourth quarter, and which was consistent with the company's previously stated expectation that Utica Shale volumes would ramp in the fourth quarter, driven primarily from turned-in-line (TIL) activity in Monroe County, Ohio. In addition to the production benefit, the ramp in Monroe County volumes also benefited overall Utica Shale total production costs, which were $1.59 per Mcfe in the just-ended quarter, or a $0.27 per Mcfe improvement from the fourth quarter of 2016 total production costs of $1.86 per Mcfe. The cost improvement across the Utica Shale was driven primarily by a decrease to transportation, gathering and compression expenses resulting from a greater percentage of the Utica Shale volumes coming from the Monroe County, Ohio, dry gas area.
Fourth Quarter Operations Summary:
During the fourth quarter of 2017, CNX continued to operate two horizontal rigs and added a third rig in late December. The company drilled four wells in the fourth quarter: one dry Utica Shale well in Monroe County, Ohio; one deep dry Utica Shale well (RHL11E) in Greene County, Pennsylvania; one deep dry Utica Shale well (Marchand 3M) in Indiana County, Pennsylvania; and one Marcellus Shale well in Greene County, Pennsylvania. The RHL11E deep dry Utica Shale well was drilled in 67 days with a lateral length of 6,557 feet. The Marchand 3M deep dry Utica Shale well was drilled in 77 days with a lateral length 6,887 feet. The company believes that these two deep dry Utica Shale delineation wells were drilled 20-30 days faster than any other Pennsylvania dry Utica well that has been cored in the Utica/Point Pleasant interval, which highlights CNX's continued improvement in drilling cycle times. Normalizing for the time spent on one-time items related to core testing, which required drilling and plugging back the pilot hole, the company drilled the two deep dry Utica Shale wells (RHL11E and Marchand 3M) in 35-45 drilling days, which is in-line with the drilling days for the two recent Aikens wells in Westmoreland County, Pennsylvania.
The company utilized three frac crews to complete 19 wells in the fourth quarter: two deep dry Utica Shale wells (Aikens 5J and 5M) in Westmoreland County, Pennsylvania; nine dry Utica Shale wells in Monroe County, Ohio; six Marcellus Shale wells in Greene County, Pennsylvania; and two Marcellus Shale wells located in Tyler County, West Virginia. The completion cycle times for the Monroe County dry Utica wells improved 25%, compared to the second quarter of 2017, while sand loading increased 100%.
During the quarter, CNX TIL 15 wells: two dry Utica wells (Aikens 5J and 5M) in Westmoreland County, Pennsylvania; eight dry Utica wells in Monroe County, Ohio; four Marcellus wells in Tyler County, West Virginia; and one Rhinestreet well in Allegheny County, Pennsylvania. During the fourth quarter, the company's daily net production peaked at 1.4 Bcfe per day in early December, which is a new record level of production for CNX.
The Aikens 5J and 5M deep dry Pennsylvania Utica wells each averaged approximately 24 MMcf per day for a period of 47-days under restricted choke, with an average flowing casing pressure of 8,672 psi. The company expects production from these wells to be flat over the next 18 months. Cumulative production to date for both wells combined is 2.43 Bcf over the same period. Total costs for the Aikens wells averaged $15 million each, which is a reduction of $13.7 million, or 48%, compared to the CNX's initial Gaut 4IH well. Based on these capital costs, strip pricing, and assuming the same 3.5 Bcfe per 1,000 feet of lateral EUR of the Gaut 4IH, the company expects average after-tax rates of return from the Aikens wells of approximately 50%.
OPERATING RESULTS — Quarter-to-Quarter Comparison | ||||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
December 31, |
December 31, |
September 30, | ||||||||||
Sales - Gas |
$ |
241.9 |
$ |
202.4 |
$ |
196.3 |
||||||
Sales - Oil |
0.9 |
0.7 |
0.6 |
|||||||||
Sales - NGLs |
62.0 |
31.4 |
33.2 |
|||||||||
Sales - Condensate |
8.0 |
3.6 |
4.3 |
|||||||||
Total Sales Revenue ($ MM) |
$ |
312.8 |
$ |
238.1 |
$ |
234.4 |
||||||
Gain on Commodity Derivative Instruments - Cash Settlement |
20.5 |
42.0 |
17.7 |
|||||||||
Total Revenue |
$ |
333.3 |
$ |
280.1 |
$ |
252.1 |
||||||
Income (Loss) from Continuing Operations Before Income Tax |
$ |
88.5 |
$ |
(263.1) |
$ |
(11.3) |
||||||
Adjusted Income (Loss) from Continuing Operations Before |
$ |
10.9 |
1 |
$ |
(17.7) |
2 |
$ |
(35.0) |
3 | |||
Capital Expenditures ($ MM) |
$ |
233.4 |
$ |
34.2 |
$ |
149.5 |
||||||
1Adjusted income before income tax of $10.9 million for the three months ended December 31, 2017 is calculated as GAAP income from continuing operations before income tax of $88.5 million plus total pre-tax adjustments of $77.6 million from the Adjusted EBITDA table below. 2Adjusted loss before income tax of $17.7 million for the three months ended December 31, 2016 is calculated as GAAP loss from continuing operations before income tax of $263.1 million less total pre-tax adjustments of $245.3 million from the Adjusted EBITDA table below. 3Adjusted loss before income tax of $35.0 million for the three months ended September 30, 2017 is calculated as GAAP loss before income tax of $11.3 million less total pre-tax adjustments of $23.7 million. The $23.7 million of adjustments are $1.5 million of pre-tax gain related to the unrealized gain on commodity derivative instruments, $30.3 million of pre-tax gains on asset sales, a pre-tax charge of $5.2 million related to stock-based compensation, a pre-tax charge of $2.0 million related to loss on debt extinguishment and a pre-tax charge of $0.9 million related to severance expense. |
CNX's natural gas production in the quarter came from the following categories:
Quarter |
Quarter |
Quarter |
|||||||||||||
Ended |
Ended |
Ended |
|||||||||||||
December 31, 2017 |
December 31, 2016 |
% Increase/ |
September 30, 2017 |
% Increase/ | |||||||||||
GAS |
|||||||||||||||
Marcellus Sales Volumes (Bcf) |
53.6 |
51.5 |
4.1 |
% |
52.1 |
2.9 |
% | ||||||||
Utica Sales Volumes (Bcf) |
30.9 |
17.2 |
79.7 |
% |
17.5 |
76.6 |
% | ||||||||
CBM Sales Volumes (Bcf) |
16.0 |
17.4 |
(8.0) |
% |
16.2 |
(1.2) |
% | ||||||||
Other Sales Volumes (Bcf)1 |
5.0 |
5.2 |
(3.8) |
% |
4.2 |
19.0 |
% | ||||||||
LIQUIDS2 |
|||||||||||||||
NGLs Sales Volumes (Bcfe) |
12.2 |
9.2 |
32.6 |
% |
10.3 |
18.4 |
% | ||||||||
Oil Sales Volumes (Bcfe) |
0.1 |
0.1 |
— |
% |
0.1 |
— |
% | ||||||||
Condensate Sales Volumes (Bcfe) |
1.1 |
0.7 |
57.1 |
% |
0.6 |
83.3 |
% | ||||||||
TOTAL |
118.9 |
101.3 |
17.4 |
% |
101.0 |
17.7 |
% | ||||||||
Average Daily Production (MMcfe) |
1,292.3 |
1,100.7 |
1,098.1 |
||||||||||||
1Other Sales Volumes: primarily related to shallow oil and gas production. 2NGLs, oil and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. |
PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison: | ||||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
(Per Mcfe) |
December 31, 2017 |
December 31, 2016 |
September 30, 2017 | |||||||||
Average Sales Price - Gas |
$ |
2.29 |
$ |
2.22 |
$ |
2.18 |
||||||
Average Gain on Commodity Derivative Instruments - Cash Settlement- Gas |
$ |
0.19 |
$ |
0.46 |
$ |
0.20 |
||||||
Average Sales Price - Oil* |
$ |
7.58 |
$ |
6.93 |
$ |
6.99 |
||||||
Average Sales Price - NGLs* |
$ |
5.08 |
$ |
3.40 |
$ |
3.22 |
||||||
Average Sales Price - Condensate* |
$ |
7.68 |
$ |
5.14 |
$ |
6.89 |
||||||
Average Sales Price - Total Company |
$ |
2.80 |
$ |
2.77 |
$ |
2.50 |
||||||
Lease Operating Expense |
$ |
0.21 |
$ |
0.22 |
$ |
0.22 |
||||||
Production, Ad Valorem, and Other Fees |
0.08 |
0.07 |
0.06 |
|||||||||
Transportation, Gathering and Compression |
0.87 |
0.93 |
0.98 |
|||||||||
Depreciation, Depletion and Amortization (DD&A) |
1.01 |
1.05 |
1.00 |
|||||||||
Total Production Costs |
$ |
2.17 |
$ |
2.27 |
$ |
2.26 |
||||||
Margin |
$ |
0.63 |
$ |
0.50 |
$ |
0.24 |
||||||
Addback: DD&A |
$ |
1.01 |
$ |
1.05 |
$ |
1.00 |
||||||
Margin, before DD&A |
$ |
1.64 |
$ |
1.55 |
$ |
1.24 |
||||||
*Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. Note: "Total Production Costs" excludes Selling, General, and Administration and Other Operating Expenses. |
Marketing Update:
For the fourth quarter of 2017, CNX's average sales price for natural gas, natural gas liquids (NGLs), oil, and condensate was $2.80 per Mcfe. CNX's average price for natural gas was $2.29 per Mcf for the quarter and, including cash settlements from hedging, was $2.48 per Mcf. The average realized price for all liquids for the fourth quarter of 2017 was $31.82 per barrel.
CNX's weighted average differential from NYMEX in the fourth quarter of 2017 was negative $0.76 per MMBtu. Despite a lower average NYMEX, CNX's average sales price for natural gas before hedging improved 5% to $2.29 per Mcf compared to the average sales price of $2.18 per Mcf in the third quarter of 2017, due primarily to an improved differential, which more than offset the lower NYMEX. Including the impact of cash settlements from hedging, the average sales price for natural gas was $0.10 per Mcf higher than the third quarter of 2017.
Guidance:
The company continues to expect 2018 production volumes of 520-550 Bcfe, or an approximately 31% annual increase, based on the midpoint of guidance, compared to 2017 volumes of 407 Bcfe. Also, CNX plans to run three rigs through the first half of 2018 and add a fourth rig starting in July.
As stated in the company's recently announced 2018 capital budget on January 9, 2018, CNX re-affirms the 2018 capital expenditure forecast of $790-$880 million, excluding the recent acquisition of the general partner interest of CNXM, which includes $515-$580 million of drilling and completion ("D&C") capital and approximately $275-$300 million of capital associated with land, midstream, and water infrastructure. The 2018 D&C capital budget is allocated approximately 65% to the Marcellus Shale and 35% to the Utica Shale.
The company expects adjusted 2018 EBITDA attributable to CNX of $845-$895 million, based on NYMEX as of January 3, 2018 and a weighted average basis of ($0.32) per MMBtu on open volumes. The company's total expected adjusted 2018 EBITDA includes approximately $60-$90 million of EBITDA attributable to CNX's ownership in CNXM.
Note: CNX Resources Corporation is unable to provide a reconciliation of projected Adjusted EBITDA to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing, and potential significance of certain income statement items.
Total hedged natural gas production in the 2018 first quarter is 92.4 Bcf. The annual gas hedge position is shown in the table below:
2018 |
2019 | ||||
Volumes Hedged (Bcf), as of 1/15/18 |
374.9* |
273.0 | |||
*Includes actual settlements of 30.7 Bcf. |
CNX's hedged gas volumes include a combination of NYMEX financial hedges and physical fixed price sales. In addition, to protect the NYMEX hedge volumes from basis exposure, CNX enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CNX's gas hedge position through 2021 is shown in the table below:
Q1 2018 |
2018 |
2019 |
2020 |
2021 | ||||||||||||||||
NYMEX Only Hedges |
||||||||||||||||||||
Volumes (Bcf) |
88.2 |
357.6 |
260.1 |
187.3 |
148.5 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
3.14 |
$ |
3.14 |
$ |
3.04 |
$ |
3.09 |
$ |
2.99 |
||||||||||
Physical Fixed Price Sales |
||||||||||||||||||||
Volumes (Bcf) |
4.2 |
17.3 |
12.9 |
11.0 |
18.0 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
2.61 |
$ |
2.61 |
$ |
2.48 |
$ |
2.43 |
$ |
2.47 |
||||||||||
Total Volumes Hedged (Bcf)1 |
92.4 |
374.9 |
273.0 |
198.3 |
166.5 |
|||||||||||||||
NYMEX + Basis (fully-covered volumes)2 |
||||||||||||||||||||
Volumes (Bcf) |
92.4 |
374.9 |
263.2 |
182.2 |
148.2 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
2.75 |
$ |
2.76 |
$ |
2.73 |
$ |
2.76 |
$ |
2.58 |
||||||||||
NYMEX Only Hedges Exposed to Basis |
||||||||||||||||||||
Volumes (Bcf) |
- |
- |
9.8 |
16.1 |
18.3 |
|||||||||||||||
Average Prices ($/Mcf) |
- |
- |
$ |
3.04 |
$ |
3.09 |
$ |
2.99 |
||||||||||||
Total Volumes Hedged (Bcf)1 |
92.4 |
374.9 |
273.0 |
198.3 |
166.5 |
|||||||||||||||
1Q1 2018 and 2018 exclude 6.0 Bcf and 13.7 Bcf , respectively, of physical basis sales not matched with NYMEX hedges. 2Includes physical sales with fixed basis in Q1 2018, 2018, 2019, 2020, and 2021 of 20.8 Bcf, 93.2 Bcf, 102.1 Bcf, 60.6 Bcf, and 54.9 Bcf, respectively. |
During the fourth quarter of 2017, CNX added additional NYMEX natural gas hedges of 42.3 Bcf, 20.6 Bcf, 32.3 Bcf, 48.9 Bcf, and 135.2 Bcf for 2018, 2019, 2020, 2021, and 2022 respectively. To help mitigate basis exposure on NYMEX hedges, in the fourth quarter CNX added 2.1 Bcf, 45.5 Bcf, 24.0 Bcf, 23.8 Bcf, 58.0 Bcf, and 55.5 Bcf of basis hedges for 2017, 2018, 2019, 2020, 2021, and 2022, respectively.
Liquidity:
As of December 31, 2017, CNX had $1,770.0 million in total liquidity, which is comprised of $509 million of cash and $1,261 million available to be borrowed under its $1.5 billion bank facility. In addition, CNX holds 21.7 million CNXM limited partnership units with a current market value of approximately $415 million, as of January 19, 2018.
As part of the recent spin-off of CONSOL Energy, the company reduced the commitments under its bank facility from $2.0 billion to $1.5 billion. The borrowing base under its bank facility remained at $2.0 billion and was reaffirmed in November 2017.
The company continues to focus on maintaining a solid balance sheet and expects to finish the year under a 2.5x net debt to EBITDA leverage ratio.
About CNX Resources
CNX Resources Corporation is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2016, CNX had 6.3 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Important Information about Company Names and Stock Trading Symbols
Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) separated its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo.
Non-GAAP Financial Measures
Definition: EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) and income taxes. EBITDA from continuing operations is defined as earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization. Adjusted EBITDA from continuing operations is defined as EBITDA from continuing operations after adjusting for the discrete items listed below. Although EBIT, EBITDA from continuing operations, and Adjusted EBITDA from continuing operations are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating CNX Resources because they are widely used to evaluate a company's operating performance. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDA from continuing operations or Adjusted EBITDA from continuing operations identically, the presentation here may not be comparable to similarly titled measures of other companies.
Reconciliation of EBIT, EBITDA from continuing operations and Adjusted EBITDA from continuing operations to financial net income attributable to CNX Resources Shareholders is as follows (dollars in 000):
Three Months Ended | ||||||||
December 31, | ||||||||
2017 |
2016 | |||||||
Dollars in thousands |
Total Company |
Total Company | ||||||
Net Income (Loss) |
$ |
276,643 |
$ |
(306,047) |
||||
Less: Loss from Discontinued Operations, net |
5,500 |
5,592 |
||||||
Add: Interest Expense |
40,319 |
43,986 |
||||||
Less: Interest Income |
(1,198) |
(3) |
||||||
Add: Income Taxes |
75,427 |
37,396 |
||||||
Add: Income Tax Reform Benefit* |
(269,060) |
— |
||||||
Earnings (Loss) Before Interest & Taxes (EBIT) |
127,631 |
(219,076) |
||||||
Add: Depreciation, Depletion & Amortization |
122,707 |
105,998 |
||||||
Earnings (Loss) Before Interest, Taxes and DD&A (EBITDA) from Continuing Operations |
$ |
250,338 |
$ |
(113,078) |
||||
Adjustments: |
||||||||
Unrealized (Gain)/Loss on Commodity Derivative Instruments |
(105,879) |
236,802 |
||||||
Settlement Expense |
19,787 |
— |
||||||
Stock-Based Compensation |
3,907 |
4,289 |
||||||
Put Option Fair Value |
3,500 |
— |
||||||
Loss on Debt Extinguishment |
896 |
— |
||||||
Severance Expense |
177 |
424 |
||||||
Marcellus Dissolution |
— |
3,752 |
||||||
Total Pre-tax Adjustments |
(77,612) |
245,267 |
||||||
Adjusted EBITDA Attributable to Continuing Operations |
$ |
172,726 |
$ |
132,189 |
||||
Note: Income tax effect of Total Pre-tax Adjustments was $17,850 and $90,749 for the three months ended December 31, 2017 and December 31, 2016, respectively. Adjusted net income for the three months ended December 31, 2017 is calculated as GAAP income from continuing operations of $282,143 less total pre-tax adjustments from the above table of $77,612, plus the associated tax expense of $17,850 equals the adjusted net income from continuing operations of $222,381. *Financial results for 2017 reflect provisional amounts related to the December 2017 enactment of the Tax Cuts and Jobs Act. These provisional estimates are based on CNX's initial analysis and current interpretation of the legislation. Given the complexity of the legislation, anticipated guidance from the U.S. Treasury, and the potential for additional guidance from the Securities and Exchange Commission (SEC) or the Financial Accounting Standards Board, these estimates may be adjusted during 2018. As a result, CNX continues to evaluate the impacts to the company's balance sheet and cash flow statements and expects to provide an update with its 10-K filing. |
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; our dependence on gathering, processing and transportation facilities and other midstream facilities owned by CNXM and others; disruption of, capacity constraints in, or proximity to pipeline systems that could limit sales of our natural gas and natural gas liquids, and decreases in availability of third-party pipelines or other midstream facilities interconnected to CNXM's gathering systems; uncertainties in estimating our economically recoverable natural gas reserves, and inaccuracies in our estimates; the high-risk nature of drilling natural gas wells; our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; environmental regulations introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials to support our operations; if natural gas prices remain depressed or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties; a loss of our competitive position because of the competitive nature of the natural gas industry or overcapacity in this industry impairing our profitability; deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, or negative credit market conditions; hedging activities may prevent us from benefiting from price increases and may expose us to other risks; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; existing and future government laws, regulations and other legal requirements that govern our business may increase our costs of doing business and may restrict our operations; significant costs and liabilities may be incurred as a result of pipeline and related facility integrity management program testing and any related pipeline repair or preventative or remedial measures; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of or recycle water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; risks associated with our debt; failure to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves; decrease in our borrowing base, which could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, and lending requirements or regulations; we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture; changes in federal or state income tax laws, particularly in the area of intangible drilling costs; challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities; our development and exploration projects, as well as CNXM's midstream system development, require substantial capital expenditures; terrorist attacks or cyber-attacks could have a material adverse effect on our business, financial condition or results of operations; construction of new gathering, compression, dehydration, treating or other midstream assets by CNXM may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks; our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel; we may not achieve some or all of the expected benefits of the separation of CONSOL Energy; CONSOL Energy may fail to perform under various transaction agreements that were executed as part of the separation, including with respect to indemnification obligations; CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy has been allocated responsibility; and the separation could result in substantial tax liability. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
CNX RESOURCES CORPORATION AND SUBSIDIARIES | |||||||||||||||
Three Months Ended |
Year Ended | ||||||||||||||
(Dollars in thousands, except per share data) |
December 31, |
December 31, | |||||||||||||
(Unaudited) |
2017 |
2016 |
2017 |
2016 | |||||||||||
Revenue and Other Operating Income: |
|||||||||||||||
Natural Gas, NGLs and Oil Sales |
$ |
312,714 |
$ |
238,145 |
$ |
1,125,224 |
$ |
793,248 |
|||||||
Gain (Loss) on Commodity Derivative Instruments |
126,422 |
(194,894) |
206,930 |
(141,021) |
|||||||||||
Purchased Gas Sales |
21,117 |
14,623 |
53,795 |
43,256 |
|||||||||||
Other Operating Income |
16,698 |
16,137 |
69,182 |
64,485 |
|||||||||||
Total Revenue and Other Operating Income |
476,951 |
74,011 |
1,455,131 |
759,968 |
|||||||||||
Costs and Expenses: |
|||||||||||||||
Operating Expense |
|||||||||||||||
Lease Operating Expense |
24,473 |
22,438 |
88,932 |
96,434 |
|||||||||||
Transportation, Gathering and Compression |
103,165 |
94,597 |
382,865 |
374,350 |
|||||||||||
Production, Ad Valorem, and Other Fees |
9,413 |
7,317 |
29,267 |
31,049 |
|||||||||||
Depreciation, Depletion and Amortization |
122,707 |
105,998 |
412,036 |
419,939 |
|||||||||||
Impairment of Exploration and Production Properties |
— |
— |
137,865 |
— |
|||||||||||
Exploration and Production Related Other Costs |
14,093 |
9,485 |
48,074 |
14,522 |
|||||||||||
Purchased Gas Costs |
20,366 |
14,025 |
52,597 |
42,717 |
|||||||||||
Selling, General and Administrative Costs |
28,221 |
22,052 |
93,211 |
104,843 |
|||||||||||
Other Operating Expense |
42,510 |
22,272 |
112,369 |
88,754 |
|||||||||||
Total Operating Expense |
364,948 |
298,184 |
1,357,216 |
1,172,608 |
|||||||||||
Other Expense (Income) |
|||||||||||||||
Other (Income) Expense |
(13,978) |
(272) |
3,825 |
4,783 |
|||||||||||
Gain on Sale of Assets |
(3,744) |
(4,828) |
(188,063) |
(14,270) |
|||||||||||
Loss on Debt Extinguishment |
896 |
— |
2,129 |
— |
|||||||||||
Interest Expense |
40,319 |
43,986 |
161,443 |
182,195 |
|||||||||||
Total Other Expense (Income) |
23,493 |
38,886 |
(20,666) |
172,708 |
|||||||||||
Total Costs And Expenses |
388,441 |
337,070 |
1,336,550 |
1,345,316 |
|||||||||||
Income (Loss) from Continuing Operations Before Income Tax |
88,510 |
(263,059) |
118,581 |
(585,348) |
|||||||||||
Income Tax (Benefit) Expense |
(193,633) |
37,396 |
(176,458) |
(34,403) |
|||||||||||
Income (Loss) From Continuing Operations |
282,143 |
(300,455) |
295,039 |
(550,945) |
|||||||||||
(Loss) Income From Discontinued Operations, net |
(5,500) |
(5,592) |
85,708 |
(297,157) |
|||||||||||
Net Income (Loss) |
$276,643 |
$(306,047) |
$380,747 |
$(848,102) |
CNX RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (CONTINUED) | |||||||||||||||
Three Months Ended |
For the Year Ended | ||||||||||||||
(Dollars in thousands, except per share data) |
December 31, |
December 31, | |||||||||||||
(Unaudited) |
2017 |
2016 |
2017 |
2016 | |||||||||||
Earnings (Loss) Per Share |
|||||||||||||||
Basic |
|||||||||||||||
Income (Loss) from Continuing Operations |
$ |
1.25 |
$ |
(1.31) |
$ |
1.29 |
$ |
(2.40) |
|||||||
(Loss) Income from Discontinued Operations |
(0.02) |
(0.02) |
0.37 |
(1.30) |
|||||||||||
Total Basic Earnings (Loss) Per Share |
$ |
1.23 |
$ |
(1.33) |
$ |
1.66 |
$ |
(3.70) |
|||||||
Dilutive |
|||||||||||||||
Income (Loss) from Continuing Operations |
$ |
1.24 |
$ |
(1.31) |
$ |
1.28 |
$ |
(2.40) |
|||||||
(Loss) Income from Discontinued Operations |
(0.03) |
(0.02) |
0.37 |
(1.30) |
|||||||||||
Total Dilutive Earnings (Loss) Per Share |
$ |
1.21 |
$ |
(1.33) |
$ |
1.65 |
$ |
(3.70) |
|||||||
Dividends Paid Per Share |
$ |
— |
$ |
— |
$ |
— |
$ |
0.010 |
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SOURCE CNX Resources Corporation
PITTSBURGH, Jan. 9, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or the company) announced today an updated 2018 capital expenditure forecast of $790-$880 million, excluding the recent acquisition of the general partner interest of CNX Midstream Partners LP (NYSE: CNXM) ("CNXM"). The 2018 budget includes $515-$580 million of drilling and completion ("D&C") capital and approximately $275-$300 million of capital associated with land, midstream, and water infrastructure. The 2018 D&C capital budget is allocated approximately 65% to the Marcellus Shale and 35% to the Utica Shale.
"CNX's updated 2018 capital plan reflects an industry leading balance sheet and the company's commitment to invest in high rate of return projects, which will result in substantial value creation in 2018 and beyond," commented Nicholas J. DeIuliis, president and CEO. "Our development program in 2018 is largely supported by our robust hedge book, which, as of December 31, 2017, has fully-covered volumes with both NYMEX and basis hedges of approximately 375 Bcfe, or 70% of 2018 production volumes, based on the midpoint of guidance. This de-risking of our revenue allows us to lock in attractive rates of return and confidently execute our development plans."
The company expects 2018 non-D&C capital for midstream, water, and land to drive future stacked pay development and further differentiate CNX's unique asset base. With CNX recently closing the acquisition to now control 100% of CNXM, stacked pay development has begun to directly impact the capital budgeting process and 2018 represents the initial investment required. This non-D&C capital is primarily driving production over the course of 2019, 2020 and beyond. The new stacked pay development lifecycle allows CNX to develop a single formation first and then come back on a pad to take advantage of existing, first formation, infrastructure. This development sequencing is essentially doubling the life and value of a field. As a result, rates of return on future development should benefit meaningfully from this infrastructure build-out as CNX capitalizes on the sequencing of dual formation development.
With the company's recent purchase of Noble Energy's general partner interest in CNXM, CNX has absorbed Noble Energy's 50% of capital contributions that they previously made to CNXM. As a result, CNX expects midstream capital in 2018 to be approximately $100 million. Much of the 2018 midstream capital will go towards building out development companies (DevCo's) outside of DevCo I, which will create future dropdown opportunities.
The company is increasing water capital in 2018 to approximately $75-$100 million, which includes building water infrastructure for two major stacked pay project areas that the company expects to be ready in the fourth quarter of 2019. This additional infrastructure will increase completion efficiencies by improving cycle times, resulting in additional production, lower costs per barrel, and lower future capital costs. Overall, the company estimates material cost savings by building out water infrastructure, compared to the alternative of trucking water. This water capital investment will benefit the company through future dropdowns of ownership interest into CNXM.
The company's 2018 land capital is approximately $100 million, which includes title, land acquisition, and permitting, in order to maximize future development. Land capital in 2018 will help CNX build out its core Marcellus and extensional stacked pay Utica areas that are part of the company's 5-year development plan. A negligible amount of land capital is associated with 2018 development, but instead, the capital that the company is spending in the current year is driving net asset value per share growth by securing future development beyond 2018.
CNX is maintaining its 2018 expected production volumes of 520-550 Bcfe, which equates to an approximately 30% annual increase, compared to 2017 expected volumes, based on the midpoint of guidance. CNX plans to run three rigs through the first half of 2018 and will add a fourth rig starting in July.
2018 Development Program:
TD |
Frac |
Turn-in-line | |
Marcellus |
|||
Southwest Pennsylvania |
55 |
37 |
41 |
West Virginia |
5 |
5 |
5 |
Total Marcellus |
60 |
42 |
46 |
Utica |
|||
Ohio dry Utica (Monroe |
7 |
4 |
10 |
Southwest Pennsylvania |
4 |
1 |
1 |
Central Pennsylvania |
4 |
4 |
2 |
Total Utica |
15 |
9 |
13 |
Total Marcellus and Utica |
75 |
51 |
59 |
In addition to the table above: CNX expects to drill and TIL 26 and 25 CBM wells in 2018, respectively.
Financial Guidance:
Based on current NYMEX natural gas prices, as of January 3, 2018 the company expects Adjusted 2018 EBITDA attributable to CNX of $845-$895 million. Also, CNX expects to continue its previously announced share buyback program, of which the company has bought back approximately $100 million to-date under the one-year $450 million authorization. The company continues to focus on maintaining a solid balance sheet and expects to finish the year under a 2.5x net debt to EBITDA leverage ratio.
Note: CNX Resources Corporation is unable to provide a reconciliation of projected Adjusted EBITDA to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing, and potential significance of certain income statement items.
Dry Utica Results:
In late November 2017, CNX turned-in-line the Aiken's 5J and 5M dry Utica wells located in Westmoreland County, Pennsylvania, which had an average lateral length of 7,500 feet. Similar to the Gaut 4IH dry Utica well, which is offset to the Aikens wells, the company is utilizing managed pressure drawdown. Each well averaged approximately 25 MMcf per day for a period of 35-days under restricted choke, with an average flowing casing pressure of 8,830 psi. Cumulative production for both wells combined is 1.74 Bcf over the same period. The company believes that the pressure data provides a positive indication for production volumes and an estimated ultimate recovery (EUR). Total costs for the Aikens wells averaged $15 million each, which is a reduction of $13.7 million, or 48%, compared to the CNX's initial Gaut 4IH well. Based on these capital costs, strip pricing, and assuming the same 3.5 Bcfe per 1,000 feet of lateral EUR of the Gaut 4IH, the company expects average after-tax rates of return from the Aikens wells of approximately 50%.
"Given the continuation of extraordinary results of these dry Utica wells, at substantially lower capital costs, compared to our initial well, we have successfully proven the commercial viability of developing the deep dry Utica Shale in Pennsylvania," stated Timothy C. Dugan, Chief Operating Officer. "The future of dry Utica development is on the immediate horizon, and CNX will significantly benefit from stacked pay opportunities through leveraging existing pads, gathering and water infrastructure, and takeaway capacity. Also, stacked pays will give us the flexibility to toggle between accelerating and decelerating activity based on varying market conditions. Our dry Utica and stacked pay opportunity-set cannot be replicated and it gives CNX a tremendous competitive advantage."
Earnings call information:
CNX Resources Corporation will report financial results for the quarter ended December 31, 2017 at 6:45 a.m. ET on Tuesday, January 30, followed by a conference call at 10:00 a.m. ET. The call can be accessed at the investor relations section of the company's website, at www.cnx.com.
About CNX Resources
CNX Resources Corporation is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2016, CNX had 6.3 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Important Information about Company Names and Stock Trading Symbols
Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) separated its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo.
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act")) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: the impact of the separation of the natural gas exploration and production company from the coal company on our business; the expected tax treatment of the separation; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate which may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our natural gas liquids abroad; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of gathering, processing and transportation facilities and other systems that deliver our natural gas and natural gas liquids to market; a loss of our competitive position because of the competitive nature of the natural gas industry or overcapacity in this industry impairing our profitability; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our natural gas operations; obtaining and renewing governmental permits and approvals for our natural gas; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current gas operations; the effects gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas and oil reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by CONSOL Energy to satisfy liabilities it acquired from us in connection with the separation, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity; and, with respect to our acquisition of the 50% interest in CONE Gathering LLC from Noble, disruption to our business, including customer, employee and supplier relationships resulting from this transaction and the impact of the transaction on our future operating and financial results. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission, as supplemented by our quarterly reports on Form 10-Q.
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SOURCE CNX Resources Corporation
PITTSBURGH, Jan. 3, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") and CNX Midstream Partners LP (NYSE: CNXM) ("CNXM") jointly announced today that CNX has closed its previously announced acquisition of Noble Energy, Inc.'s (NYSE: NBL) ("Noble") 50% membership interest in CONE Gathering LLC, which holds the general partner interest and incentive distribution rights in CONE Midstream Partners LP. In conjunction with the closing, CONE Midstream Partners LP was renamed CNX Midstream Partners LP and will commence trading on the New York Stock Exchange under the ticker "CNXM" effective January 4, 2018.
Separately, CNXM announced today that its board of directors, following prior approval by the Board of Director's Conflicts Committee, which consists entirely of independent directors, has authorized CNXM to enter into an amendment to its gas gathering agreement (the "GGA") with CNX Gas Company LLC, a wholly-owned subsidiary of CNX. As part of the amendment to the GGA:
This amendment is expected to help CNX unlock the stacked pay potential of the core of southwest Pennsylvania and capitalize on economies of scale, which would support accelerating drilling activity and production moving forward. CNXM believes this will result in a higher level of confidence to support sustainable distribution growth into the future, which in turn will benefit CNX, which owns 21.7 million common units, the general partner interest, and the incentive distribution rights in CNXM. In addition, CNX and Noble have agreed to divide equitably their jointly owned water assets so that either CNX or Noble will own all of the formerly jointly owned water assets within agreed upon areas.
"Owning 100% of the general partner of CNXM, while simultaneously amending the existing GGA, is very significant for CNX," commented Nicholas J. DeIuliis, president and CEO. "CNX will benefit from increased control and flexibility with respect to the scope and timing of midstream development, which in turn will give CNX a greater level of optionality in its development plans and future drop opportunities. Ultimately, this GGA allows CNX to lock in our multi-year development plan under mutually beneficial terms for both CNX and CNXM. The single sponsor MLP model is the first key step in unlocking the value potential of CNX Midstream."
"For CNXM," Mr. DeIuliis said, "the amended GGA is expected to lock in distributable cash flow growth, enabling CNXM to maintain its strong distribution growth policy for the next several years."
As part of the change in ownership, effective immediately, Nicholas J. DeIuliis will serve as the chief executive officer (CEO) of CNXM, in addition to his current role as president and CEO of CNX. Also, effective immediately, Donald W. Rush will serve as the chief financial officer (CFO) of CNXM in addition to his current role as CFO of CNX.
Following the closing of the acquisition, Nicholas J. DeIuliis, Donald W. Rush, and Timothy C. Dugan will join Stephen W. Johnson and the three existing independent directors to constitute the board of directors of CNXM.
The changes to CNXM's management team and board of directors illustrate CNX's intent to better align the strategic initiatives of CNX and CNXM to unlock the growth potential for both companies.
Goldman Sachs & Co. LLC served as the financial advisor and Latham & Watkins LLP served as the legal advisor to CNX. The conflicts committee was advised by Evercore on financial matters and Baker Botts L.L.P. on legal matters.
Conference Call
A conference call and webcast, during which management will discuss these announcements, is scheduled for January 4, 2018 at 10:00 a.m. Eastern Time. Reference material for the call will be available on the "Events" page of the new CNX Midstream website, www.cnxmidstream.com, shortly before the start of the call. Prepared remarks by members of management will be followed by a question and answer period. Interested parties may listen via webcast by using the link posted on the "Events" page of our website or at https://services.choruscall.com/links/cnxm180104.html. Participants who would like to ask questions may join the conference by phone at 888-349-0097 (international 412-902-0126) five to ten minutes prior to the scheduled start time (reference the CNX Midstream call). An on-demand replay of the webcast will be also be available at https://services.choruscall.com/ccforms/replay.html shortly after the conclusion of the conference call. A telephonic replay will be available through January 18, 2018 by dialing 877-344-7529 (international: 412-317-0088) and using the conference playback number 10115469.
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2016, CNX had 6.3 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on our website www.cnxmidstream.com.
This press release serves a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Nominees should treat one hundred percent (100.0%) of CNX Midstream's distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business. Accordingly, CNX Midstream's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not CNX Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of non-U.S. investors.
Important Information about Company Names and Stock Trading Symbols
Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) separated its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo.
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include statements regarding benefits of the acquisition and the plans, objectives, and strategies of CNX and CNXM following the acquisition, 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: the impact of the separation of the natural gas exploration and production company from the coal company on our business; the expected tax treatment of the separation; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate which may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our natural gas liquids abroad; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of gathering, processing and transportation facilities and other systems that deliver our natural gas and natural gas liquids to market; a loss of our competitive position because of the competitive nature of the natural gas industry overcapacity in this industry impairing our profitability; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our natural gas operations; obtaining and renewing governmental permits and approvals for our natural gas; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current gas operations; the effects gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas and oil reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by CONSOL Energy to satisfy liabilities it acquired from us in connection with the separation, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity; and, with respect to our acquisition of the 50% interest in CONE Gathering LLC from Noble, disruption to our business, including customer, employee and supplier relationships resulting from this transaction, risks that the conditions to closing may not be satisfied and the purchase may not occur, and the impact of the transaction on our future operating and financial results. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in CNX's and CNXM's Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission, as supplemented by their respective Quarterly Reports on Form 10-Q.
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SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, Jan. 3, 2018 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") and CNX Midstream Partners LP (NYSE: CNXM) ("CNXM") jointly announced today that CNX has closed its previously announced acquisition of Noble Energy, Inc.'s (NYSE: NBL) ("Noble") 50% membership interest in CONE Gathering LLC, which holds the general partner interest and incentive distribution rights in CONE Midstream Partners LP. In conjunction with the closing, CONE Midstream Partners LP was renamed CNX Midstream Partners LP and will commence trading on the New York Stock Exchange under the ticker "CNXM" effective January 4, 2018.
Separately, CNXM announced today that its board of directors, following prior approval by the Board of Director's Conflicts Committee, which consists entirely of independent directors, has authorized CNXM to enter into an amendment to its gas gathering agreement (the "GGA") with CNX Gas Company LLC, a wholly-owned subsidiary of CNX. As part of the amendment to the GGA:
This amendment is expected to help CNX unlock the stacked pay potential of the core of southwest Pennsylvania and capitalize on economies of scale, which would support accelerating drilling activity and production moving forward. CNXM believes this will result in a higher level of confidence to support sustainable distribution growth into the future, which in turn will benefit CNX, which owns 21.7 million common units, the general partner interest, and the incentive distribution rights in CNXM. In addition, CNX and Noble have agreed to divide equitably their jointly owned water assets so that either CNX or Noble will own all of the formerly jointly owned water assets within agreed upon areas.
"Owning 100% of the general partner of CNXM, while simultaneously amending the existing GGA, is very significant for CNX," commented Nicholas J. DeIuliis, president and CEO. "CNX will benefit from increased control and flexibility with respect to the scope and timing of midstream development, which in turn will give CNX a greater level of optionality in its development plans and future drop opportunities. Ultimately, this GGA allows CNX to lock in our multi-year development plan under mutually beneficial terms for both CNX and CNXM. The single sponsor MLP model is the first key step in unlocking the value potential of CNX Midstream."
"For CNXM," Mr. DeIuliis said, "the amended GGA is expected to lock in distributable cash flow growth, enabling CNXM to maintain its strong distribution growth policy for the next several years."
As part of the change in ownership, effective immediately, Nicholas J. DeIuliis will serve as the chief executive officer (CEO) of CNXM, in addition to his current role as president and CEO of CNX. Also, effective immediately, Donald W. Rush will serve as the chief financial officer (CFO) of CNXM in addition to his current role as CFO of CNX.
Following the closing of the acquisition, Nicholas J. DeIuliis, Donald W. Rush, and Timothy C. Dugan will join Stephen W. Johnson and the three existing independent directors to constitute the board of directors of CNXM.
The changes to CNXM's management team and board of directors illustrate CNX's intent to better align the strategic initiatives of CNX and CNXM to unlock the growth potential for both companies.
Goldman Sachs & Co. LLC served as the financial advisor and Latham & Watkins LLP served as the legal advisor to CNX. The conflicts committee was advised by Evercore on financial matters and Baker Botts L.L.P. on legal matters.
Conference Call
A conference call and webcast, during which management will discuss these announcements, is scheduled for January 4, 2018 at 10:00 a.m. Eastern Time. Reference material for the call will be available on the "Events" page of the new CNX Midstream website, www.cnxmidstream.com, shortly before the start of the call. Prepared remarks by members of management will be followed by a question and answer period. Interested parties may listen via webcast by using the link posted on the "Events" page of our website or at https://services.choruscall.com/links/cnxm180104.html. Participants who would like to ask questions may join the conference by phone at 888-349-0097 (international 412-902-0126) five to ten minutes prior to the scheduled start time (reference the CNX Midstream call). An on-demand replay of the webcast will be also be available at https://services.choruscall.com/ccforms/replay.html shortly after the conclusion of the conference call. A telephonic replay will be available through January 18, 2018 by dialing 877-344-7529 (international: 412-317-0088) and using the conference playback number 10115469.
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2016, CNX had 6.3 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on our website www.cnxmidstream.com.
This press release serves a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Nominees should treat one hundred percent (100.0%) of CNX Midstream's distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business. Accordingly, CNX Midstream's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not CNX Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of non-U.S. investors.
Important Information about Company Names and Stock Trading Symbols
Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) separated its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo.
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include statements regarding benefits of the acquisition and the plans, objectives, and strategies of CNX and CNXM following the acquisition, 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," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: the impact of the separation of the natural gas exploration and production company from the coal company on our business; the expected tax treatment of the separation; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate which may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our natural gas liquids abroad; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of gathering, processing and transportation facilities and other systems that deliver our natural gas and natural gas liquids to market; a loss of our competitive position because of the competitive nature of the natural gas industry overcapacity in this industry impairing our profitability; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our natural gas operations; obtaining and renewing governmental permits and approvals for our natural gas; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current gas operations; the effects gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas and oil reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by CONSOL Energy to satisfy liabilities it acquired from us in connection with the separation, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity; and, with respect to our acquisition of the 50% interest in CONE Gathering LLC from Noble, disruption to our business, including customer, employee and supplier relationships resulting from this transaction, risks that the conditions to closing may not be satisfied and the purchase may not occur, and the impact of the transaction on our future operating and financial results. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in CNX's and CNXM's Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission, as supplemented by their respective Quarterly Reports on Form 10-Q.
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SOURCE CNX Resources Corporation; CNX Midstream Partners LP
PITTSBURGH, Dec. 26, 2017 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") announced that, upon the closing of the transaction contemplated by the agreement to purchase Noble Energy, Inc.'s (NYSE: NBL) ("Noble") 50% membership interest in CONE Gathering LLC (the "Agreement"), CNX expects to rebrand CONE Gathering and its subsidiaries, including CONE Midstream Partners, LP (NYSE: CNNX) ("CONE"), to conform to the CNX brand identity.
This rebranding initiative includes changing the name of CONE to "CNX Midstream Partners LP" and changing the ticker symbol from "CNNX" to "CNXM".
About CNX Resources
CNX Resources Corporation is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2016, CNX had 6.3 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Important Information about Company Names and Stock Trading Symbols
Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) separated its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo.
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: the impact of the separation of the natural gas exploration and production company from the coal company on our business; the expected tax treatment of the separation; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our natural gas liquids abroad; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of gathering, processing and transportation facilities and other systems that deliver our natural gas and natural gas liquids to market; a loss of our competitive position because of the competitive nature of the natural gas industry or a loss of our competitive position because of overcapacity in this industry impairing our profitability; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our natural gas operations; obtaining and renewing governmental permits and approvals for our natural gas; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current gas operations; the effects gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas and oil reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by CONSOL Energy to satisfy liabilities it acquired from us in connection with the separation, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity; with respect to our proposed purchase of the 50% interest in CONE Gathering LLC from Noble Energy, - the disruption to our business, including customer, employee and supplier relationships resulting from this transaction, risks that the conditions to closing may not be satisfied and the purchase may not occur, and the impact of the transaction on our future operating and financial results. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2016 filed with the SEC, as supplemented by our quarterly reports on Form 10-Q.
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SOURCE CNX Resources Corporation
PITTSBURGH, Dec. 15, 2017 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX") announced that it has entered into an agreement to purchase Noble Energy, Inc.'s (NYSE: NBL) ("Noble") 50% membership interest in CONE Gathering LLC ("CONE Gathering") for $305 million in cash and the mutual release of all outstanding claims. CONE Gathering holds all of the interests in CONE Midstream GP, LLC, which in turn holds the general partnership interest in CONE Midstream Partners, LP (NYSE: CNNX) ("CONE") and all of the incentive distribution rights in CONE. As a result of this transaction, CNX will own 100% of CONE Gathering, making CONE a single-sponsor master limited partnership.
"This transaction is expected to create significant value for both CNX and CONE," commented Nicholas J. DeIuliis, president and CEO. "As the single sponsor of CONE, CNX will benefit from increased flexibility with respect to the scope and timing of midstream development, which will enhance the value of existing development and create future opportunities such as future dropdowns and gathering more CNX volumes including dry Utica."
Completion of the Purchase Agreement is subject to customary closing conditions. The closing of the Purchase Agreement is not subject to a financing condition and is expected to close in the first quarter of 2018.
About CNX Resources
CNX Resources Corporation is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2016, CNX had 6.3 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Important Information about Company Names and Stock Trading Symbols
Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) separated its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo.
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: the impact of the separation of the natural gas exploration and production company from the coal company on our business; the expected tax treatment of the separation; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our natural gas liquids abroad; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of gathering, processing and transportation facilities and other systems that deliver our natural gas and natural gas liquids to market; a loss of our competitive position because of the competitive nature of the natural gas industry or a loss of our competitive position because of overcapacity in this industry impairing our profitability; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our natural gas operations; obtaining and renewing governmental permits and approvals for our natural gas; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current gas operations; the effects gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas and oil reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by CONSOL Energy to satisfy liabilities it acquired from us in connection with the separation, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2016 filed with the SEC, as supplemented by our quarterly reports on Form 10-Q.
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SOURCE CNX Resources Corporation
CANONSBURG, Pa., Nov. 29, 2017 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CEIX) (CONSOL), formerly named CONSOL Mining Corporation, today announced that it has completed the separation from its former parent company CNX Resources Corporation (NYSE: CNX), formerly named CONSOL Energy Inc., and has begun operating as an independent, publicly-traded company listed on the New York Stock Exchange under the symbol "CEIX". CONSOL is a low-cost producer of high-Btu thermal and crossover metallurgical coals from its Pennsylvania Mining Complex in the Northern Appalachian Basin, and it also owns and operates a major coal export terminal located in the Port of Baltimore. The company is well positioned to capitalize on the ongoing recovery in the coal markets, and its coal assets and management team have a demonstrated capability of generating strong free cash flow throughout all parts of the commodity cycle.
"This is a monumental event in the history of a 150-plus year old company. I am very excited about what the future has in store for CONSOL and about being able to lead a team of extremely talented people. The coal assets that are the foundation of our company today are well-capitalized and have a well-documented history of generating strong free cash flow. We look forward to now allocating capital to further develop this globally known platform that stands apart within the industry in terms of safety, margins, and productivity. We are committed to strong financial discipline and will be rate-of-return-driven as we evaluate future growth and capital return opportunities. I also want to take this opportunity to thank our advisors, banking partners and investors who provided us with the necessary support to make this spin-off possible. We are coming out with a strong balance sheet and liquidity that complements our asset base. Investor expectations are re-emerging and the timing of our spin ties very nicely to prior upcycles that should create value for all of our stakeholders" said Jimmy Brock, Chief Executive Officer of CONSOL Energy Inc.
Capitalization
As of November 28, 2017, CONSOL has total debt of approximately $918 million after taking into account the various financings entered into as part of the spin-off, unrestricted cash and cash equivalents of approximately $142 million and total liquidity of approximately $354 million, after accounting for $88 million in outstanding letters of credit. We also anticipate entering into an accounts receivables securitization facility by the end of 2017 that is anticipated to provide us with additional liquidity of approximately $50 million. Based on the when-issued share price at the close of business on November 28, 2017, and approximately 28 million shares outstanding, the current equity market capitalization of CEIX is approximately $600 million. CEIX is expected to be added to the S&P Small Cap 600 GICS Coal & Consumable Fuels Sub-Industry Index.
Completion of the Spin-off
Under the terms of the separation and distribution agreement, on November 28, 2017, the CNX Resources Corporation stockholders received a distribution of one share of common stock of the newly named CONSOL Energy for every 8 shares of the CNX Resources Corporation's common stock held as of the close of business on the record date of November 15, 2017. No fractional shares of CONSOL Energy were issued, and stockholders will receive cash in lieu of fractional shares.
In connection with the distribution, the former parent changed its name from CONSOL Energy Inc. to CNX Resources Corporation and retained its ticker symbol "CNX" on the New York Stock Exchange. At the same time, the newly formed CONSOL Mining Corporation changed its name to CONSOL Energy Inc., and its common stock begins trading today on the New York Stock Exchange under the ticker symbol "CEIX".
In addition, the former parent transferred all of its ownership interest in CNX Coal Resources LP to CONSOL Energy Inc. as part of the separation. As a result, CNX Coal Resources LP changed its name to CONSOL Coal Resources LP and changed its ticker to "CCR".
About CONSOL Energy Inc.
CONSOL Energy Inc. (NYSE: CEIX) is a Canonsburg-based producer and exporter of high-Btu bituminous thermal and crossover metallurgical coal. It owns and operates some of the most productive longwall mining operations in the Northern Appalachian Basin. Our flagship operation is the Pennsylvania Mining Complex, which has the capacity to produce approximately 28.5 million tons of coal per year and is comprised of 3 large-scale underground mines: Bailey, Enlow Fork, and Harvey. The company also owns and operates the CONSOL Marine Terminal, which is located in the port of Baltimore and has a throughput capacity of approximately 15 million tons per year. In addition to the ~767 million reserve tons associated with the Pennsylvania Mining Complex, the company also controls approximately 1.6 billion tons of greenfield thermal and metallurgical coal reserves located in the major coal-producing basins of the eastern United States. Additional information regarding CONSOL Energy may be found at www.consolenergy.com.
Contacts:
Investor:
Mitesh Thakkar, (724) 485-3133
miteshthakkar@consolenergy.com
Media:
Zach Smith, (724) 485-4017
zacherysmith@consolenergy.com
Cautionary Statements:
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Please see the Registration Statement on Form 10 (as amended) declared effective by Securities and Exchange Committee on November 3, 2017 for a further discussion of some of the risks and uncertainties relating to CONSOL Energy's operations, business and results.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, Nov. 29, 2017 /PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) (CNX Resources or the Company), formerly named CONSOL Energy Inc., announced today that it has completed the spin-off of CONSOL Energy Inc. (NYSE: CEIX), formerly named CONSOL Mining Corporation, creating two publicly-traded companies--a natural gas exploration and production (E&P) company and a coal company. Today marks the first day of post-separation trading in each company's common stock on the New York Stock Exchange.
"Today's historic announcement is the culmination of a strategy over a decade in the making. Our objective was to once again transform a 150-year old institution, which owns and operates the best natural gas and coal assets in the world. We have accomplished that goal and, in doing so, positioned two new companies to dedicate singular focus to their individual industries and market segments. The E&P company is now one of the premiere pure-play natural gas E&P companies with a significant Marcellus and Utica Shale legacy acreage position, low-cost structure, and stacked pay opportunities, while the coal company holds some of the best coal assets in the world and is positioned to dominate the coal space for years to come," commented Nicholas J. DeIuliis, CNX Resources' President and Chief Executive Officer.
Under the terms of the separation, on November 28, 2017, the Company's stockholders received a distribution of one share of common stock of the newly named CONSOL Energy for every 8 shares of the Company's common stock held as of the close of business on the record date of November 15, 2017. No fractional shares of CONSOL Energy were issued and stockholders received cash in lieu of fractional shares. The Company's stockholders retained their shares of Company common stock, but as a result of the name change, these shares now represent shares of CNX Resources Corporation.
In connection with the distribution, the Company changed its name from CONSOL Energy Inc. to CNX Resources Corporation and retained its ticker symbol "CNX" on the New York Stock Exchange. At the same time, the newly formed CONSOL Mining Corporation changed its name to CONSOL Energy Inc. and its common stock begins trading today on the New York Stock Exchange under the ticker symbol "CEIX".
About CNX Resources
CNX Resources Corporation is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2016, CNX had 6.3 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.cnx.com.
Important Information about Company Names and Stock Trading Symbols
Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) separated its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo.
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: the impact of the separation on our business; the expected tax treatment of the separation; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our natural gas liquids abroad; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of gathering, processing and transportation facilities and other systems that deliver our natural gas and natural gas liquids to market; a loss of our competitive position because of the competitive nature of the natural gas industry or a loss of our competitive position because of overcapacity in this industry impairing our profitability; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our natural gas operations; obtaining and renewing governmental permits and approvals for our natural gas; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current gas operations; the effects gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas and oil reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by CONSOL Energy to satisfy liabilities it acquired from us in connection with the separation, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2016 filed with the SEC, as supplemented by our quarterly reports on Form 10-Q.
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SOURCE CNX Resources Corporation
PITTSBURGH, Oct. 31, 2017 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) reported net cash provided by operating activities in the just-ended quarter of $178 million, compared to $163 million in the year-earlier quarter, which included $5 million of net cash used in discontinued operating activities. The company reported a net loss attributable to CONSOL Energy shareholders of $26 million, or a loss of $0.11 per diluted share, compared to net income attributable to CONSOL Energy shareholders of $25 million, or earnings of $0.11 per diluted share, in the third quarter of 2016.
Earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization (EBITDA) from continuing operations1 were $190 million for the 2017 third quarter, compared to $314 million in the year-earlier quarter.
On a GAAP basis, the third quarter earnings included the following pre-tax items attributable to continuing operations:
After adjusting for certain items, which are described in the footnote to the EBITDA reconciliation table, the company had an adjusted net loss attributable to CONSOL Energy Shareholders1 in the 2017 third quarter of $36 million, or a loss of $0.15 per diluted share. Adjusted EBITDA from continuing operations1 was $168 million for the 2017 third quarter, compared to $158 million in the year-earlier quarter.
"The company has been hard at work during the quarter finalizing the process to separate the gas and coal businesses and recently filed an amended Form 10," commented Nicholas J. DeIuliis, president and CEO. "Our strategic goal of creating two successful, separately-traded, pure play entities is expected to be complete in the coming weeks, and as indicated by the press release this morning, the record and distribution dates have been set for November 15, 2017 and November 28, 2017, respectively. Both of the teams are executing at peak performance; respective company financials and balance sheets are strong; and the future looks bright for both the gas business, which will be renamed CNX Resources Corporation after the separation, and the coal business, which will be renamed CONSOL Energy Inc. after the separation. This is truly a historic time for our company, and once the separation is completed, we are looking forward to focusing 100% of our time and energy on our core operations: as an industry leading pure play Appalachian E&P company. Going into year-end, not only will our businesses be separated, but our E&P operations will be growing substantially, and we will continue to opportunistically buy back shares."
"During the quarter, we had strong operational execution, and we finished slightly above our previously stated production guidance for the third quarter," continued Mr. DeIuliis. "This implies that we expect fourth quarter volumes to be a little over 120 Bcfe based on the midpoint of our full year 2017 production guidance range of 405-415 Bcfe. Our program is heavily weighted in the fourth quarter, and our turn-in-line (TIL) schedule peaks in November. This will help drive an estimated exit rate for the year of around 1.4 Bcfe per day, which will set us up to achieve our 2018 production guidance of 520-550 Bcfe. Also, this production ramp is expected to correspondingly ramp EBITDA higher over the coming quarters, which will naturally de-lever the balance sheet further and help us quickly reach our targeted pro forma net debt to EBITDA leverage ratio of around 2.5x."
During the third quarter, CONSOL Energy received approximately $82 million in proceeds from asset sales, which included the sale of non-core Marcellus Shale acres in Allegheny, Westmoreland, Washington, and Greene counties, Pennsylvania, for approximately $55 million and surface acres and other miscellaneous non-core assets for approximately $27 million. Including these recent transactions, CONSOL Energy has closed on asset sales totaling $427 million year-to-date. The company continues to pursue the sale of various non-core assets, including its Virginia coalbed methane project area and scattered Marcellus and Utica acres. Despite already being within the full year 2017 asset sale guidance range of $400-$600 million, the company believes that it could enter into agreements for some of these additional asset sale transactions in the fourth quarter.
During the quarter, CONSOL Energy generated approximately $94 million in free cash flow1, which included proceeds from sales of assets. In addition to the $286 million of cash on the balance sheet as of the end of the quarter, as part of the spin-off transaction, CONSOL expects to receive a cash distribution from CoalCo of approximately $425 million, net of fees, which the company will use to achieve its targeted leverage ratio. Following the end of the quarter and through October 30, 2017, the company utilized a portion of the $286 million of cash on the balance sheet to repurchase $81 million of its common stock through a Rule 10b5-1 plan under the one-year share repurchase program of up to $450 million, which was recently increased from the original $200 million program.
1The terms "adjusted net (loss) income attributable to CONSOL Energy Shareholders," "EBITDA from continuing operations," and "adjusted EBITDA from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP net income below, under the caption "Non-GAAP Financial Measures." The terms "free cash flow," and "organic free cash flow from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP Net Cash Provided by Operating Activities, also under the caption "Non-GAAP Financial Measures."
E&P Division:
During the third quarter of 2017, CONSOL's E&P Division sold 101.0 Bcfe, or an increase of 5% from the 96.4 Bcfe sold in the year-earlier quarter, driven primarily from Marcellus Shale volumes. Total quarterly production costs decreased to $2.26 per Mcfe, compared to the year-earlier quarter of $2.36 per Mcfe, driven primarily by reductions in operating expense, non-income based taxes and depreciation, depletion and amortization (DD&A). E&P Division capital expenditures increased in the third quarter to $148 million, compared to $49 million spent in year-earlier quarter.
Marcellus Shale production volumes, including liquids, in the 2017 third quarter were 60.4 Bcfe, approximately 17% higher than the 51.8 Bcfe produced in the 2016 third quarter. The increased production is due to 16 new Marcellus Shale wells coming on line during the quarter. Marcellus total production costs were $2.20 per Mcfe in the just-ended quarter, which is a $0.13 per Mcfe improvement from the third quarter of 2016 of $2.33 per Mcfe, driven by reductions to depreciation, depletion and amortization (DD&A) and production, ad valorem and other fees. The decrease in DD&A is primarily driven by increased reserves.
CONSOL Energy's Utica Shale production volumes, including liquids, in the 2017 third quarter were 20.1 Bcfe, down approximately 11% from 22.5 Bcfe in the year-earlier quarter, which is due to natural production declines in the Ohio wet Utica Shale area. Utica Shale total production costs were $1.91 per Mcfe in the just-ended quarter, which is a $0.10 per Mcfe increase from the third quarter of 2016 total production costs of $1.81 per Mcfe. The cost increase was driven by lower Utica Shale volumes resulting in increased lease operating expense (LOE). Also, Utica Shale DD&A rates increased, in part, due to higher capital costs associated with the initial dry Utica delineation wells in Pennsylvania. These cost increases were partially offset by a decrease in taxes due to an adjustment related to a non-operated area. Despite the year-over-year production decline, quarterly Utica Shale volumes grew 45% from the second quarter of 2017. This quarter-over-quarter growth was driven by Monroe County, Ohio, dry Utica Shale volumes, which grew 476% in the third quarter to 9.8 Bcf, compared to 1.7 Bcf from the second quarter of 2017. For the fourth quarter of 2017, the company expects further growth in Utica Shale volumes to approximately 33.4 Bcfe, or an increase of approximately 66%, compared to the third quarter of 2017. The fourth quarter growth will also be driven by Monroe County, Ohio, dry Utica Shale volumes, which the company expects to increase approximately 125% to approximately 22.0 Bcfe, compared to the third quarter of 2017. With the continued ramp in Monroe County, Ohio, volumes through the remainder of the year, the company expects Utica Shale total production costs to improve to approximately $1.70 per Mcfe in the fourth quarter of 2017.
E&P Division Third Quarter Operations Summary:
In the quarter, CONSOL operated two horizontal rigs and drilled six Greene County, Pennsylvania, Marcellus Shale wells and four Monroe County, Ohio, dry Utica Shale wells. The Marcellus and Utica Shale laterals averaged 9,576 feet and 9,007 feet, respectively. The company averaged 17 days to drill the Marcellus Shale wells, which included two wells that the company drilled in less than 14 days. For the Utica Shale wells, the company averaged 17.4 drilling days, which is a 2% improvement when compared to the second quarter of 2017 and a 10% improvement, compared to the first quarter of 2017.
The company utilized three frac crews and completed 21 wells in the third quarter: five Marcellus Shale wells located in Tyler County, West Virginia; seven Marcellus Shale wells located in Ritchie County, West Virginia; and nine dry Utica Shale wells located in Monroe County, Ohio.
During the quarter, CONSOL turned-in-line 29 wells: seven Marcellus Shale wells located in Ritchie County, West Virginia; four Marcellus Shale wells located in Tyler County, West Virginia; five Marcellus Shale wells and one Burkett Shale well located in Washington County, Pennsylvania; and 12 dry Utica Shale wells in Monroe County, Ohio. The company is on schedule to TIL 15 wells in the fourth quarter of 2017, including its Aikens 5J and 5M dry Utica Shale wells in Westmoreland County, Pennsylvania.
In the quarter, CONSOL Energy continued to improve production and capital efficiency performance in two core areas: the Morris Marcellus Shale field in Greene County, PA, and the Switz Utica Shale field in Monroe County, Ohio. Compared to legacy results, CONSOL Energy increased the estimated ultimate recovery (EUR) and capital efficiency in the Morris Marcellus Shale field by 77% and 311%, respectively. Similarly, the company achieved performance results in the Switz Utica Shale field by increasing EURs and capital efficiency by 38% and 258%, respectively. The company delivered these results through drilling and completion (D&C) advancements and reservoir optimization initiatives. Reservoir modeling advancements have driven increased sand loading in each area by 40%-150%, compared to previous designs. Extended laterals combined with increased proppant loading, azimuth optimization, diversion technology, and perforation efficiency have been the key drivers in yielding superior results.
E&P DIVISION RESULTS — Quarter-to-Quarter Comparison | |||||||||||||
Quarter |
Quarter |
Quarter |
|||||||||||
Ended |
Ended |
Ended |
|||||||||||
September 30, |
September 30, |
June 30, |
|||||||||||
Sales - Gas |
$ |
196.3 |
$ |
170.7 |
$ |
233.7 |
|||||||
Sales - Oil |
0.6 |
0.6 |
1.1 |
||||||||||
Sales - NGLs |
33.2 |
27.1 |
21.6 |
||||||||||
Sales - Condensate |
4.3 |
7.5 |
3.9 |
||||||||||
Total Sales Revenue ($ MM) |
$ |
234.4 |
$ |
205.9 |
$ |
260.3 |
|||||||
Gain (Loss) on Commodity Derivative Instruments - Cash Settlement |
17.7 |
38.6 |
(32.3) |
||||||||||
Total Revenue |
$ |
252.1 |
$ |
244.5 |
$ |
228.0 |
|||||||
Earnings Before Income Tax ($ MM) |
$ |
20.2 |
$ |
161.1 |
$ |
227.4 |
|||||||
Adjusted Earnings (Loss) Before Income Tax ($MM) |
$ |
12.3 |
1 |
$ |
6.4 |
2 |
$ |
5.7 |
3 | ||||
Capital Expenditures ($ MM) |
$ |
147.5 |
$ |
48.7 |
$ |
142.3 |
1Adjusted earnings before income tax for the E&P Division of $12.3 million for the three months ended September 30, 2017 is calculated as GAAP earnings before income tax of $20.2 million less total pre-tax adjustments of $7.9 million. The $7.9 million of adjustments are $1.5 million of pre-tax gain related to the unrealized gain on commodity derivative instruments, $11.6 million of pre-tax gains on asset sales, a pre-tax charge of $4.8 million related to stock-based compensation and a pre-tax charge of $0.4 million related to severance expense.
2Adjusted earnings before income tax for the E&P Division of $6.4 million for the three months ended September 30, 2016 is calculated as GAAP earnings before income tax of $161.1 million less total pre-tax adjustments of $154.7 million. The $154.7 million adjustment includes a $159.6 million pre-tax gain related to the unrealized gain on commodity derivative instruments, a pre-tax charge of $4.8 million related to stock-based compensation and a pre-tax loss of $0.1 million related to severance expense.
3Adjusted earnings before income tax for the E&P Division of $5.7 million for the three months ended June 30, 2017 is calculated as GAAP earnings before income tax of $227.4 million less total pre-tax adjustments of $221.7 million. The $221.7 million of adjustments are $116.0 million of pre-tax gain related to the unrealized gain on commodity derivative instruments, $126.7 million of pre-tax gains on asset sales, a pre-tax loss related to $16.9 million in lease expirations and a pre-tax charge of $4.1 million related to stock-based compensation.
CONSOL's E&P Division production in the quarter came from the following categories:
Quarter |
Quarter |
Quarter |
|||||||||||||
Ended |
Ended |
Ended |
|||||||||||||
September 30, |
September 30, |
% Increase/ |
June 30, |
% Increase/ | |||||||||||
GAS |
|||||||||||||||
Marcellus Sales Volumes (Bcf)1 |
52.1 |
43.0 |
21.2 |
% |
51.1 |
2.0 |
% | ||||||||
Utica Sales Volumes (Bcf) |
17.5 |
17.7 |
(1.1) |
% |
10.7 |
63.6 |
% | ||||||||
CBM Sales Volumes (Bcf) |
16.2 |
17.0 |
(4.7) |
% |
16.5 |
(1.8) |
% | ||||||||
Other Sales Volumes (Bcf)2 |
4.2 |
5.1 |
(17.6) |
% |
4.9 |
(14.3) |
% | ||||||||
LIQUIDS3 |
|||||||||||||||
NGLs Sales Volumes (Bcfe) |
10.3 |
12.3 |
(16.3) |
% |
8.1 |
27.2 |
% | ||||||||
Oil Sales Volumes (Bcfe) |
0.1 |
0.1 |
— |
% |
0.2 |
(50.0) |
% | ||||||||
Condensate Sales Volumes (Bcfe) |
0.6 |
1.2 |
(50.0) |
% |
0.7 |
(14.3) |
% | ||||||||
TOTAL |
101.0 |
96.4 |
4.8 |
% |
92.2 |
9.5 |
% | ||||||||
Average Daily Production (MMcfe) |
1,098.1 |
1,047.7 |
1,013.4 |
1In the quarter ended June 30 2017, the company sold approximately 3.0 Bcfe of production related to the net developed acres located in Doddridge and Wetzel counties, West Virginia, and the production was retroactive from January 1, 2017 through May 31, 2017.
2Other Sales Volumes: primarily related to shallow oil and gas production.
3NGLs, Oil and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.
E&P PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison: | ||||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
(Per Mcfe) |
September 30, 2017 |
September 30, 2016 |
June 30, | |||||||||
Average Sales Price - Gas |
$ |
2.18 |
$ |
2.06 |
$ |
2.81 |
||||||
Average Gain (Loss) on Commodity Derivative Instruments - Cash Settlement- Gas |
$ |
0.20 |
$ |
0.47 |
$ |
(0.39) |
||||||
Average Sales Price - Oil* |
$ |
6.99 |
$ |
7.01 |
$ |
8.03 |
||||||
Average Sales Price - NGLs* |
$ |
3.22 |
$ |
2.19 |
$ |
2.66 |
||||||
Average Sales Price - Condensate* |
$ |
6.89 |
$ |
6.21 |
$ |
5.69 |
||||||
Average Sales Price - Total Company |
$ |
2.50 |
$ |
2.54 |
$ |
2.47 |
||||||
Lease Operating Expense |
$ |
0.22 |
$ |
0.23 |
$ |
0.23 |
||||||
Production, Ad Valorem, and Other Fees |
0.06 |
0.10 |
0.05 |
|||||||||
Transportation, Gathering and Compression |
0.98 |
0.98 |
0.94 |
|||||||||
Depreciation, Depletion and Amortization (DD&A) |
1.00 |
1.05 |
0.98 |
|||||||||
Total Production Costs |
$ |
2.26 |
$ |
2.36 |
$ |
2.20 |
||||||
Margin |
$ |
0.24 |
$ |
0.18 |
$ |
0.27 |
||||||
Addback: DD&A |
$ |
1.00 |
$ |
1.05 |
$ |
0.98 |
||||||
Margin, before DD&A |
$ |
1.24 |
$ |
1.23 |
$ |
1.25 |
*Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.
Note: "Total Production Costs" excludes Selling, General, and Administration and Other Corporate Expenses.
The average sales price of $2.50 per Mcfe, when combined with unit costs of $2.26 per Mcfe, resulted in a margin of $0.24 per Mcfe. This was an increase when compared to the year-earlier quarter, due to improvements in total production costs, partially offset by a reduction in average sales price.
Marketing Update:
For the third quarter of 2017, CONSOL's average sales price for natural gas, natural gas liquids (NGLs), oil, and condensate was $2.50 per Mcfe. CONSOL's average price for natural gas was $2.18 per Mcf for the quarter and, including cash settlements from hedging, was $2.38 per Mcf. The average realized price for all liquids for the third quarter of 2017 was $20.77 per barrel.
CONSOL's weighted average differential from NYMEX in the third quarter of 2017 was negative $0.94 per MMBtu. CONSOL's average sales price for natural gas before hedging was $0.63 per Mcf lower than the $2.81 per Mcf reported for the second quarter of 2017. This decrease results primarily from a lower Henry Hub price coupled with a wider differential. Including the impact of cash settlements from hedging, the average sales price for natural gas was $0.04 per Mcf lower than the second quarter.
CONSOL continued to recover and sell discretionary ethane during the quarter. Directly-marketed ethane volumes were 637,000 barrels in the third quarter of 2017 and yielded a weighted average sales price that was $1.52 per MMBtu higher than CONSOL's residue natural gas alternative.
E&P Division Guidance:
CONSOL Energy maintains its E&P Division production guidance for 2017 of approximately 405-415 Bcfe and total E&P capital expenditures in 2017 of approximately $620-$645 million. For full year 2018, the company maintains production guidance of 520-550 Bcfe.
CONSOL Energy continued its programmatic hedge program to further build out NYMEX and basis hedges through 2021. Total hedged natural gas production in the 2017 fourth quarter is 83.1 Bcf. The annual gas hedge position is shown in the table below:
2017 |
2018 | ||||
Volumes Hedged (Bcf), as of 10/17/17 |
316.6* |
333.3 |
*Includes actual settlements of 258.2 Bcf.
CONSOL Energy's hedged gas volumes include a combination of NYMEX financial hedges and index (NYMEX and basis) hedges and contracts. In addition, to protect the NYMEX hedge volumes from basis exposure, CONSOL enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CONSOL Energy's gas hedge position is shown in the table below:
Q4 2017 |
2017 |
2018 |
2019 |
2020 | ||||||||||||||||
NYMEX Only Hedges |
||||||||||||||||||||
Volumes (Bcf) |
73.5 |
282.4 |
316.1 |
226.3 |
161.6 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
3.16 |
$ |
3.14 |
$ |
3.14 |
$ |
2.99 |
$ |
2.89 |
||||||||||
Index Hedges and Contracts |
||||||||||||||||||||
Volumes (Bcf) |
9.6 |
34.2 |
17.2 |
13.1 |
11.9 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
3.01 |
$ |
3.11 |
$ |
2.62 |
$ |
2.44 |
$ |
2.27 |
||||||||||
Total Volumes Hedged (Bcf)1 |
83.1 |
316.6 |
333.3 |
239.4 |
173.5 |
|||||||||||||||
NYMEX + Basis (fully-covered volumes)2 |
||||||||||||||||||||
Volumes (Bcf) |
81.7 |
311.3 |
333.3 |
239.1 |
166.2 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
2.62 |
$ |
2.59 |
$ |
2.78 |
$ |
2.69 |
$ |
2.59 |
||||||||||
NYMEX Only Hedges Exposed to Basis |
||||||||||||||||||||
Volumes (Bcf) |
1.4 |
5.3 |
— |
0.3 |
7.3 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
3.16 |
$ |
3.14 |
$ |
— |
$ |
2.99 |
$ |
2.89 |
||||||||||
Total Volumes Hedged (Bcf)1 |
83.1 |
316.6 |
333.3 |
239.4 |
173.5 |
12018 excludes 9.1 Bcf of physical basis sales not matched with NYMEX hedges.
2Includes physical sales with fixed basis in Q4 2017, 2017, 2018, 2019, and 2020 of 19.1 Bcf, 64.0 Bcf, 97.5 Bcf, 103.9 Bcf, and 65.0 Bcf, respectively.
During the third quarter of 2017, CONSOL Energy added additional NYMEX natural gas hedges of 4.3 Bcf, 7.0 Bcf, 21.9 Bcf, and 94.1 Bcf for 2018, 2019, 2020, and 2021, respectively. To help mitigate basis exposure on NYMEX hedges, in the third quarter CONSOL added 1.4 Bcf, 34.4 Bcf, 37.7 Bcf, 41.4 Bcf, and 54.2 Bcf of basis hedges for 2017, 2018, 2019, 2020, and 2021, respectively.
Pennsylvania (PA) Mining Operations Division:
CONSOL Energy's PA Mining Operations sold 6.3 million tons in the 2017 third quarter, compared to 6.0 million tons during the year-earlier quarter. During the quarter, the average cost of coal sold increased slightly to $37.32 per ton, compared to $35.79 per ton in the year-earlier quarter.
Third Quarter Summary:
CNX Coal Resources LP ("CNXC") reported the following in its third quarter 2017 earnings press release, dated October 30, 2017: "The marketing team did an excellent job of communicating with our customers to make sure that shipments were managed to meet their requirements during the quarter when we were volume-constrained due to Enlow Fork geological conditions in July, and one idled Bailey longwall in September. The operations team added incremental shifts at other longwalls to make up for some of the lost production and we expect to do this in the fourth quarter as well. I am very pleased to announce that all of our longwalls resumed production in the first week of October, and we expect to meet our contractual obligations and previously-provided sales guidance for the full year."
During the quarter, on a total consolidated basis, PA Mining Operations Division generated $83 million of cash flow before capital expenditures.
PA MINING OPERATIONS RESULTS - Quarter-To-Quarter Comparison | ||||||||||||
PA Mining Ops |
PA Mining Ops |
PA Mining Ops | ||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
September 30, |
September 30, |
June 30, | ||||||||||
2017 |
2016 |
2017 | ||||||||||
Beginning Inventory (millions of tons) |
0.3 |
0.1 |
0.3 |
|||||||||
Coal Production (millions of tons) |
6.1 |
6.2 |
6.8 |
|||||||||
Ending Inventory (millions of tons) |
0.2 |
0.2 |
0.3 |
|||||||||
Sales - Company Produced (millions of tons) |
6.3 |
6.0 |
6.8 |
|||||||||
Sales Per Ton |
$ |
44.16 |
$ |
44.30 |
$ |
44.75 |
||||||
Average Cost of Coal Sold Per Ton |
$ |
37.32 |
$ |
35.79 |
$ |
34.79 |
||||||
Average Margin Per Ton Sold |
$ |
6.84 |
$ |
8.51 |
$ |
9.96 |
||||||
Addback: DD&A Per Ton |
$ |
6.38 |
$ |
6.50 |
$ |
5.71 |
||||||
Average Margin Per Ton, before DD&A |
$ |
13.22 |
$ |
15.01 |
$ |
15.67 |
||||||
Cash Flow before Cap. Ex ($ MM) |
$ |
83 |
$ |
90 |
$ |
107 |
Note: The PA Mining Operations include Bailey, Enlow Fork, and Harvey mines. Total Production Costs per Ton include: operating and other costs, royalty and production taxes and depreciation, depletion and amortization. Sales tons times Average Margin Per Ton, before DD&A is meant to approximate the amount of cash generated by PA Mining Operations. This cash generation will be offset by maintenance of production (MOP) capital expenditures. Table may not sum due to rounding.
CONSOL Energy expects total consolidated PA Mining Operations annual sales to be approximately 26.0-27.0 million tons for 2017. Also, CONSOL Energy reduces total consolidated capital expenditures for PA Mining Operations to $92-$108 million for 2017.
2017 EBITDA Guidance by Segment: | ||||||||||||||||
(in millions) |
E&P Division1 |
PA Mining Operations Division |
Other |
Total | ||||||||||||
Earnings Before Interest, Taxes and DD&A (EBITDA) |
$ |
615 |
$ |
365 |
$ |
(20) |
$ |
960 |
||||||||
Adjustments: |
||||||||||||||||
Unrealized Gain on Commodity Derivative Instruments |
(140) |
- |
- |
(140) |
||||||||||||
Stock-Based Compensation |
20 |
15 |
- |
35 |
||||||||||||
Adjusted EBITDA |
$ |
495 |
$ |
380 |
$ |
(20) |
855 |
|||||||||
Noncontrolling Interest |
- |
$ |
(40) |
- |
(40) |
|||||||||||
Adjusted EBITDA Attributable to CNX |
$ |
495 |
$ |
340 |
$ |
(20) |
$ |
815 |
Note: CONSOL Energy is unable to provide a reconciliation of projected Adjusted EBITDA to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing and potential significance of certain income statement items. EBITDA guidance based on the midpoint of production guidance and assumes NYMEX as of 9/29/2017 of $3.14 + weighted average differential of ($0.61) per MMBtu.
1Includes forecasted Earnings of Equity Affiliates of $40 million in 2017 associated with CONSOL Energy's proportionate share of ownership in CONE Midstream Partners LP and CONE Gathering LLC. This income is reflected within Miscellaneous Other Income in the CNX income statement.
Liquidity:
As of September 30, 2017, CONSOL Energy had $1,967.9 million in total liquidity, which is comprised of $282.1 million of cash, excluding the CNXC cash balance, and $1,685.8 million available to be borrowed under its $2.0 billion bank facility. In addition, CONSOL holds 16.6 million CNXC limited partnership units with an aggregated current market value of approximately $247 million and 21.7 million CONE Midstream Partners LP ("CNNX") limited partnership units with a current market value of approximately $357 million, in each case as of October 16, 2017.
CONSOL Energy's net leverage ratio at the end of the quarter was 2.8x, which is an improvement of 0.2x and 1.1x compared to 3.0x at June 30, 2017 and 3.9x at December 31, 2016, respectively. Financial performance from operations along with asset sales and debt reduction drove the decrease in leverage. Lastly, following the end of the third quarter, the company's $2.0 billion bank facility borrowing base was reaffirmed.
About CONSOL
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2016, CONSOL Energy had 6.3 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
Important Information about Company Names and Stock Trading Symbols
Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) expects to separate its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo.
Non-GAAP Financial Measures
Definition: 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. Adjusted EBITDA is defined as EBITDA after adjusting for the discrete items listed below. Although EBIT, EBITDA, and Adjusted 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 to evaluate a company's operating performance. We exclude stock-based compensation from Adjusted EBITDA because we do not believe it accurately reflects the actual operating expense incurred during the relevant period and may vary widely from period to period irrespective of operating results. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDA, or Adjusted EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies.
Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial net income attributable to CONSOL Energy Shareholders is as follows (dollars in 000):
Three Months Ended | ||||||||||||||||||||
September 30, | ||||||||||||||||||||
2017 |
2017 |
2017 |
2017 |
2016 | ||||||||||||||||
Dollars in thousands |
E&P |
PA Mining Operations Division |
Other1 |
Total |
Total | |||||||||||||||
Net Income (Loss) |
$ |
20,226 |
$ |
21,011 |
$ |
(66,888) |
$ |
(25,651) |
$ |
27,593 |
||||||||||
Less: Loss from Discontinued Operations |
— |
— |
— |
— |
34,975 |
|||||||||||||||
Add: Interest Expense |
575 |
2,164 |
38,763 |
41,502 |
47,317 |
|||||||||||||||
Less: Interest Income |
(3) |
— |
(1,303) |
(1,306) |
(214) |
|||||||||||||||
Add: Income Taxes |
— |
— |
26,758 |
26,758 |
52,858 |
|||||||||||||||
Earnings Before Interest & Taxes (EBIT) |
20,798 |
23,175 |
(2,670) |
41,303 |
162,529 |
|||||||||||||||
Add: Depreciation, Depletion & Amortization |
101,585 |
41,638 |
5,545 |
148,768 |
151,712 |
|||||||||||||||
Earnings Before Interest, Taxes and DD&A (EBITDA) from Continuing Operations |
$ |
122,383 |
$ |
64,813 |
$ |
2,875 |
$ |
190,071 |
$ |
314,241 |
||||||||||
Adjustments: |
||||||||||||||||||||
Unrealized Gain on Commodity Derivative Instruments |
(1,512) |
— |
— |
(1,512) |
(159,555) |
|||||||||||||||
Gain on Asset Sales |
(11,557) |
— |
(18,758) |
(30,315) |
— |
|||||||||||||||
Severance Expense |
348 |
4,563 |
509 |
5,420 |
229 |
|||||||||||||||
Other Transaction Fees |
— |
— |
6,387 |
6,387 |
— |
|||||||||||||||
Loss on Debt Extinguishment |
— |
— |
2,019 |
2,019 |
— |
|||||||||||||||
Stock-Based Compensation |
4,788 |
5,882 |
798 |
11,468 |
7,771 |
|||||||||||||||
Pension Settlement |
— |
— |
— |
— |
3,651 |
|||||||||||||||
Lease Expirations |
— |
— |
— |
— |
— |
|||||||||||||||
Coal Contract Buyout |
— |
(8,410) |
— |
(8,410) |
— |
|||||||||||||||
Total Pre-tax Adjustments |
(7,933) |
2,035 |
(9,045) |
(14,943) |
(147,904) |
|||||||||||||||
Adjusted EBITDA from Continuing Operations |
$ |
114,450 |
$ |
66,848 |
$ |
(6,170) |
$ |
175,128 |
$ |
166,337 |
||||||||||
Less: Adjusted EBITDA Attributable to Noncontrolling Interest2 |
— |
7,065 |
— |
7,065 |
8,812 |
|||||||||||||||
Adjusted EBITDA Attributable to Continuing Operations |
$ |
114,450 |
$ |
59,783 |
$ |
(6,170) |
$ |
168,063 |
$ |
157,525 |
Note: Income tax effect of Total Pre-tax Adjustments was $5,530 and $48,784 for the three months ended September 30, 2017 and September 30, 2016, respectively. Adjusted net income attributable to CONSOL Energy Shareholders for the three months ended September 30, 2017 is calculated as GAAP net loss attributable to CONSOL Energy Shareholders of $26,441 less total pre-tax adjustments from the above table of $14,943, plus the associated tax expense of $5,530 equals the adjusted net loss attributable to CONSOL Energy Shareholders of $35,854.
1CONSOL Energy's Other Division includes expenses from various other corporate and diversified business unit activities including legacy liabilities costs and income tax expense that are not allocated to E&P or PA Mining Operations Divisions.
2Adjusted EBITDA Attributable to Noncontrolling Interest for the three months ended September 30,2017 is Net Income Attributable to Noncontrolling interest of $790 plus Depreciation, Depletion and Amortization of $4,640, plus Interest Expense of $1,077, plus Stock-based compensation of $558.
Adjusted EBITDA Attributable to Noncontrolling Interest for the three months ended September 30,2016 is Net Income Attributable to Noncontrolling interest of $2,248 plus Depreciation, Depletion and Amortization of $5,233, plus Interest Expense of $1,098 plus Stock-based compensation of $233.
Free cash flow and organic free cash flow from continuing operations are non-GAAP financial measures. Management believes that these measures are meaningful to investors because management reviews cash flows generated from operations and non-core asset sales after taking into consideration capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand CONSOL's asset base and are expected to generate future cash flows from operations. It is important to note that free cash flow and organic free cash flow from continuing operations do not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure.
Organic Free Cash Flow from Continuing Operations |
Three Months Ended | ||
Net Cash Provided by Continuing Operations |
$ |
178,667 |
|
Capital Expenditures |
(177,294) |
||
Net Distributions from Equity Affiliates |
10,920 |
||
Organic Free Cash Flow from Continuing Operations |
$ |
12,293 |
Free Cash Flow |
Three Months Ended | ||
Net Cash Provided by Operating Activities |
$ |
178,328 |
|
Capital Expenditures |
(177,294) |
||
Net Distributions from Equity Affiliates |
10,920 |
||
Proceeds From Sales of Assets |
81,727 |
||
Free Cash Flow |
$ |
93,681 |
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: uncertainties as to the timing of the separation and whether it will be completed; the possibility that various closing conditions for the separation (as set forth in the information statement attached as an exhibit to the Form 10 filed with the SEC by CONSOL Mining Corporation, as amended) may not be satisfied; the impact of the separation on our business; the expected tax treatment of the separation; the risk that the coal and natural gas exploration and production businesses will not be separated successfully or such separation may be more difficult, time-consuming or costly than expected, which could result in additional demands on our resources, systems, procedures and controls, disruption of our ongoing business and diversion of management's attention from other business concerns; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas and other liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal and natural gas liquids abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our natural gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current natural gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas and coal rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year coal sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; a majority of our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC - disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating results; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity; other factors discussed in the 2016 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 disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law
The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible oil and gas reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by application of development projects to known accumulations. We may use certain terms in this press release, such as EUR (estimated ultimate recovery), unproved reserves and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. These measures are by their nature more speculative than estimates of reserves prepared in accordance with SEC definitions and guidelines and accordingly are less certain. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category.
This announcement does not constitute an offer to sell, or the solicitation of an offer to buy, any securities of CNX Coal Resources LP.
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||
(Dollars in thousands, except per share data) |
Three Months Ended |
Nine Months Ended | |||||||||||||
(Unaudited) |
September 30, |
September 30, | |||||||||||||
Revenues and Other Income: |
2017 |
2016 |
2017 |
2016 | |||||||||||
Natural Gas, NGLs and Oil Sales |
$ |
234,443 |
$ |
205,913 |
$ |
812,511 |
$ |
555,101 |
|||||||
Gain on Commodity Derivative Instruments |
19,183 |
198,192 |
80,508 |
53,872 |
|||||||||||
Coal Sales |
279,245 |
267,685 |
899,400 |
744,411 |
|||||||||||
Other Outside Sales |
16,959 |
4,714 |
45,986 |
20,687 |
|||||||||||
Purchased Gas Sales |
13,384 |
12,086 |
32,678 |
28,633 |
|||||||||||
Freight-Outside Coal |
21,803 |
9,392 |
51,847 |
33,949 |
|||||||||||
Miscellaneous Other Income |
41,036 |
32,393 |
115,669 |
114,159 |
|||||||||||
Gain on Sale of Assets |
45,230 |
15,203 |
197,343 |
13,541 |
|||||||||||
Total Revenue and Other Income |
671,283 |
745,578 |
2,235,942 |
1,564,353 |
|||||||||||
Costs and Expenses: |
|||||||||||||||
Exploration and Production Costs |
|||||||||||||||
Lease Operating Expense |
21,754 |
22,602 |
64,459 |
73,996 |
|||||||||||
Transportation, Gathering and Compression |
98,768 |
94,796 |
279,699 |
279,753 |
|||||||||||
Production, Ad Valorem, and Other Fees |
5,919 |
9,027 |
19,854 |
23,732 |
|||||||||||
Depreciation, Depletion and Amortization |
101,585 |
101,257 |
288,220 |
312,122 |
|||||||||||
Exploration and Production Related Other Costs |
4,479 |
384 |
33,980 |
5,036 |
|||||||||||
Purchased Gas Costs |
13,142 |
11,940 |
32,231 |
28,692 |
|||||||||||
Other Corporate Expenses |
26,844 |
21,760 |
68,172 |
65,980 |
|||||||||||
Impairment of Exploration and Production Properties |
— |
— |
137,865 |
— |
|||||||||||
Selling, General, and Administrative Costs |
20,328 |
26,198 |
62,490 |
74,067 |
|||||||||||
Total Exploration and Production Costs |
292,819 |
287,964 |
986,970 |
863,378 |
|||||||||||
PA Mining Operations Costs |
|||||||||||||||
Operating and Other Costs |
207,772 |
182,717 |
608,678 |
521,277 |
|||||||||||
Depreciation, Depletion and Amortization |
41,638 |
42,370 |
125,341 |
125,334 |
|||||||||||
Freight Expense |
21,803 |
9,392 |
51,847 |
33,949 |
|||||||||||
Selling, General, and Administrative Costs |
18,664 |
7,653 |
50,637 |
20,207 |
|||||||||||
Total PA Mining Operations Costs |
289,877 |
242,132 |
836,503 |
700,767 |
|||||||||||
Other Costs |
|||||||||||||||
Miscellaneous Operating Expense |
35,518 |
39,658 |
117,007 |
126,580 |
|||||||||||
Selling, General, and Administrative Costs |
2,896 |
4,996 |
9,182 |
11,124 |
|||||||||||
Depreciation, Depletion and Amortization |
5,545 |
8,085 |
1,047 |
4,463 |
|||||||||||
Loss on Debt Extinguishment |
2,019 |
— |
1,233 |
— |
|||||||||||
Interest Expense |
41,502 |
47,317 |
129,367 |
144,609 |
|||||||||||
Total Other Costs |
87,480 |
100,056 |
257,836 |
286,776 |
|||||||||||
Total Costs And Expenses |
670,176 |
630,152 |
2,081,309 |
1,850,921 |
|||||||||||
Earnings (Loss) From Continuing Operations Before Income Tax |
1,107 |
115,426 |
154,633 |
(286,568) |
|||||||||||
Income Tax Expense (Benefit) |
26,758 |
52,858 |
39,962 |
(71,798) |
|||||||||||
(Loss) Income From Continuing Operations |
(25,651) |
62,568 |
114,671 |
(214,770) |
|||||||||||
Loss From Discontinued Operations, net |
— |
(34,975) |
— |
(322,747) |
|||||||||||
Net (Loss) Income |
(25,651) |
27,593 |
114,671 |
(537,517) |
|||||||||||
Less: Net Income Attributable to Noncontrolling Interest |
790 |
2,248 |
10,567 |
4,541 |
|||||||||||
Net (Loss) Income Attributable to CONSOL Energy Shareholders |
$ |
(26,441) |
$ |
25,345 |
$ |
104,104 |
$ |
(542,058) |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||
(Dollars in thousands, except per share data) |
Three Months Ended |
Nine Months Ended | |||||||||||||
(Unaudited) |
September 30, |
September 30, | |||||||||||||
(Loss) Earnings Per Share |
2017 |
2016 |
2017 |
2016 | |||||||||||
Basic |
|||||||||||||||
(Loss) Income from Continuing Operations |
$ |
(0.11) |
$ |
0.26 |
$ |
0.45 |
$ |
(0.96) |
|||||||
Loss from Discontinued Operations |
— |
(0.15) |
— |
(1.40) |
|||||||||||
Total Basic (Loss) Earnings Per Share |
$ |
(0.11) |
$ |
0.11 |
$ |
0.45 |
$ |
(2.36) |
|||||||
Dilutive |
|||||||||||||||
(Loss) Income from Continuing Operations |
$ |
(0.11) |
$ |
0.26 |
$ |
0.45 |
$ |
(0.96) |
|||||||
Loss from Discontinued Operations |
— |
(0.15) |
— |
(1.40) |
|||||||||||
Total Dilutive (Loss) Earnings Per Share |
$ |
(0.11) |
$ |
0.11 |
$ |
0.45 |
$ |
(2.36) |
|||||||
Dividends Declared Per Share |
$ |
— |
$ |
— |
$ |
— |
$ |
0.0100 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||
(Dollars in thousands) |
September 30, |
September 30, | |||||||||||||
(Unaudited) |
2017 |
2016 |
2017 |
2016 | |||||||||||
Net (Loss) Income |
$ |
(25,651) |
$ |
27,593 |
$ |
114,671 |
$ |
(537,517) |
|||||||
Other Comprehensive Income (Loss) : |
|||||||||||||||
Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($2,034), ($1,043), ($6,121), ($5,369)) |
3,464 |
1,305 |
10,430 |
6,866 |
|||||||||||
Reclassification of Cash Flow Hedges from OCI to Earnings (Net of tax: $7,139, $19,284) |
— |
(12,458) |
— |
(33,475) |
|||||||||||
Other Comprehensive Income (Loss) |
3,464 |
(11,153) |
10,430 |
(26,609) |
|||||||||||
Comprehensive (Loss) Income |
(22,187) |
16,440 |
125,101 |
(564,126) |
|||||||||||
Less: Comprehensive Income Attributable to Noncontrolling Interest |
779 |
2,248 |
10,533 |
4,541 |
|||||||||||
Comprehensive (Loss) Income Attributable to CONSOL Energy Inc. Shareholders |
$ |
(22,966) |
$ |
14,192 |
$ |
114,568 |
$ |
(568,667) |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
(Unaudited) |
|||||||
(Dollars in thousands) |
September 30, |
December 31, | |||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash and Cash Equivalents |
$ |
285,708 |
$ |
60,475 |
|||
Accounts and Notes Receivable: |
|||||||
Trade |
193,778 |
220,222 |
|||||
Other Receivables |
77,746 |
69,901 |
|||||
Inventories |
63,182 |
65,461 |
|||||
Recoverable Income Taxes |
105,432 |
116,851 |
|||||
Prepaid Expenses |
79,437 |
93,146 |
|||||
Current Assets of Discontinued Operations |
— |
83 |
|||||
Total Current Assets |
805,283 |
626,139 |
|||||
Property, Plant and Equipment: |
|||||||
Property, Plant and Equipment |
13,738,388 |
13,771,388 |
|||||
Less—Accumulated Depreciation, Depletion and Amortization |
5,939,426 |
5,630,949 |
|||||
Total Property, Plant and Equipment—Net |
7,798,962 |
8,140,439 |
|||||
Other Assets: |
|||||||
Deferred Income Taxes |
— |
4,290 |
|||||
Investment in Affiliates |
190,154 |
190,964 |
|||||
Other |
185,169 |
222,149 |
|||||
Total Other Assets |
375,323 |
417,403 |
|||||
TOTAL ASSETS |
$ |
8,979,568 |
$ |
9,183,981 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
(Unaudited) |
|||||||
(Dollars in thousands, except per share data) |
September 30, |
December 31, | |||||
LIABILITIES AND EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts Payable |
$ |
303,196 |
$ |
241,616 |
|||
Current Portion of Long-Term Debt |
10,971 |
12,000 |
|||||
Other Accrued Liabilities |
540,672 |
680,348 |
|||||
Current Liabilities of Discontinued Operations |
5,353 |
6,050 |
|||||
Total Current Liabilities |
860,192 |
940,014 |
|||||
Long-Term Debt: |
|||||||
Long-Term Debt |
2,500,782 |
2,722,995 |
|||||
Capital Lease Obligations |
31,530 |
39,074 |
|||||
Total Long-Term Debt |
2,532,312 |
2,762,069 |
|||||
Deferred Credits and Other Liabilities: |
|||||||
Deferred Income Taxes |
44,720 |
— |
|||||
Postretirement Benefits Other Than Pensions |
649,565 |
659,474 |
|||||
Pneumoconiosis Benefits |
106,837 |
108,073 |
|||||
Mine Closing |
198,764 |
218,631 |
|||||
Gas Well Closing |
223,446 |
223,352 |
|||||
Workers' Compensation |
66,165 |
67,277 |
|||||
Salary Retirement |
100,510 |
112,543 |
|||||
Other |
125,822 |
151,660 |
|||||
Total Deferred Credits and Other Liabilities |
1,515,829 |
1,541,010 |
|||||
TOTAL LIABILITIES |
4,908,333 |
5,243,093 |
|||||
Stockholders' Equity: |
|||||||
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 230,090,909 Issued and Outstanding at September 30, 2017; 229,443,008 Issued and Outstanding at December 31, 2016 |
2,305 |
2,298 |
|||||
Capital in Excess of Par Value |
2,486,071 |
2,460,864 |
|||||
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding |
— |
— |
|||||
Retained Earnings |
1,825,547 |
1,727,789 |
|||||
Accumulated Other Comprehensive Loss |
(382,092) |
(392,556) |
|||||
Total CONSOL Energy Inc. Stockholders' Equity |
3,931,831 |
3,798,395 |
|||||
Noncontrolling Interest |
139,404 |
142,493 |
|||||
TOTAL EQUITY |
4,071,235 |
3,940,888 |
|||||
TOTAL LIABILITIES AND EQUITY |
$ |
8,979,568 |
$ |
9,183,981 |
CONSOL ENERGY INC. AND SUBSIDIARIES |
|||||||||||||||||||||||||||
(Dollars in thousands) |
Common Stock |
Capital in Excess of Par Value |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Total CONSOL Energy Inc. |
Non- Controlling Interest |
Total Equity | ||||||||||||||||||||
Balance at December 31, 2016 |
$ |
2,298 |
$ |
2,460,864 |
$ |
1,727,789 |
$ |
(392,556) |
$ |
3,798,395 |
$ |
142,493 |
$ |
3,940,888 |
|||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||
Net Income |
— |
— |
104,104 |
— |
104,104 |
10,567 |
114,671 |
||||||||||||||||||||
Other Comprehensive Income (Loss) (Net of ($6,121) Tax) |
— |
— |
— |
10,464 |
10,464 |
(34) |
10,430 |
||||||||||||||||||||
Comprehensive Income |
— |
— |
104,104 |
10,464 |
114,568 |
10,533 |
125,101 |
||||||||||||||||||||
Issuance of Common Stock |
7 |
852 |
— |
— |
859 |
— |
859 |
||||||||||||||||||||
Treasury Stock Activity |
— |
— |
(6,346) |
— |
(6,346) |
(1,009) |
(7,355) |
||||||||||||||||||||
Amortization of Stock-Based Compensation Awards |
— |
24,355 |
— |
— |
24,355 |
3,790 |
28,145 |
||||||||||||||||||||
Distributions to Noncontrolling Interest |
— |
— |
— |
— |
— |
(16,403) |
(16,403) |
||||||||||||||||||||
Balance at September 30, 2017 |
$ |
2,305 |
$ |
2,486,071 |
$ |
1,825,547 |
$ |
(382,092) |
$ |
3,931,831 |
$ |
139,404 |
$ |
4,071,235 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||
(Dollars in thousands) |
Three Months Ended |
Nine Months Ended | |||||||||||||
(Unaudited) |
September 30, |
September 30, | |||||||||||||
Cash Flows from Operating Activities: |
2017 |
2016 |
2017 |
2016 | |||||||||||
Net (Loss) Income |
$ |
(25,651) |
$ |
27,593 |
$ |
114,671 |
$ |
(537,517) |
|||||||
Adjustments to Reconcile Net (Loss) Income to Net Cash Provided By Operating Activities: |
|||||||||||||||
Net Loss from Discontinued Operations |
— |
34,975 |
— |
322,747 |
|||||||||||
Depreciation, Depletion and Amortization |
148,768 |
151,712 |
414,608 |
441,919 |
|||||||||||
Impairment of Exploration and Production Properties |
— |
— |
137,865 |
— |
|||||||||||
Stock-Based Compensation |
11,468 |
7,771 |
28,145 |
23,825 |
|||||||||||
Gain on Sale of Assets |
(45,230) |
(15,203) |
(197,343) |
(13,541) |
|||||||||||
Loss on Debt Extinguishment |
2,019 |
— |
1,233 |
— |
|||||||||||
Gain on Commodity Derivative Instruments |
(19,183) |
(198,192) |
(80,508) |
(53,872) |
|||||||||||
Net Cash Received (Paid) in Settlement of Commodity Derivative Instruments |
17,671 |
38,637 |
(61,717) |
203,303 |
|||||||||||
Deferred Income Taxes |
25,600 |
51,650 |
42,888 |
(72,866) |
|||||||||||
Equity in Earnings of Affiliates |
(12,425) |
(15,355) |
(34,810) |
(41,239) |
|||||||||||
Return on Equity Investment |
— |
13,076 |
— |
22,268 |
|||||||||||
Changes in Operating Assets: |
|||||||||||||||
Accounts and Notes Receivable |
22,334 |
(13,546) |
18,231 |
4,555 |
|||||||||||
Inventories |
11,772 |
12,116 |
1,974 |
4,169 |
|||||||||||
Prepaid Expenses |
(9,646) |
24,287 |
1,869 |
71,423 |
|||||||||||
Changes in Other Assets |
11,705 |
1,057 |
37,357 |
(14,241) |
|||||||||||
Changes in Operating Liabilities: |
|||||||||||||||
Accounts Payable |
21,176 |
33,139 |
23,700 |
(10,985) |
|||||||||||
Accrued Interest |
32,537 |
36,792 |
31,093 |
35,985 |
|||||||||||
Other Operating Liabilities |
(5,394) |
(7,301) |
(13,423) |
(21,370) |
|||||||||||
Changes in Other Liabilities |
(9,890) |
(17,963) |
(31,221) |
(2,620) |
|||||||||||
Other |
1,036 |
2,290 |
38,226 |
11,937 |
|||||||||||
Net Cash Provided by Continuing Operating Activities |
178,667 |
167,535 |
472,838 |
373,880 |
|||||||||||
Net Cash (Used in) Provided by Discontinued Operating Activities |
(339) |
(4,626) |
(614) |
14,427 |
|||||||||||
Net Cash Provided by Operating Activities |
178,328 |
162,909 |
472,224 |
388,307 |
|||||||||||
Cash Flows from Investing Activities: |
|||||||||||||||
Capital Expenditures |
(177,294) |
(64,132) |
(450,620) |
(179,389) |
|||||||||||
Proceeds from Sales of Assets |
81,727 |
20,693 |
426,878 |
38,977 |
|||||||||||
Net Distributions from (Investments in) Equity Affiliates |
10,920 |
1,023 |
35,620 |
(4,555) |
|||||||||||
Net Cash (Used in) Provided by Continuing Investing Activities |
(84,647) |
(42,416) |
11,878 |
(144,967) |
|||||||||||
Net Cash (Used in) Provided by Discontinued Investing Activities |
— |
(28,260) |
— |
366,251 |
|||||||||||
Net Cash (Used in) Provided by Investing Activities |
(84,647) |
(70,676) |
11,878 |
221,284 |
|||||||||||
Cash Flows from Financing Activities: |
|||||||||||||||
Payments on Short-Term Borrowings |
— |
(112,000) |
— |
(598,000) |
|||||||||||
Payments on Miscellaneous Borrowings |
(2,971) |
(1,763) |
(8,944) |
(6,222) |
|||||||||||
Payments on Long-Term Notes |
(96,543) |
— |
(213,728) |
— |
|||||||||||
Net (Payments on) Proceeds from Revolver - CNX Coal Resources LP |
(2,000) |
10,000 |
(13,000) |
23,000 |
|||||||||||
Distributions to Noncontrolling Interest |
(5,468) |
(5,416) |
(16,403) |
(16,241) |
|||||||||||
Dividends Paid |
— |
— |
— |
(2,294) |
|||||||||||
Issuance of Common Stock |
136 |
— |
859 |
4 |
|||||||||||
Treasury Stock Activity |
(262) |
(12) |
(7,355) |
(1,669) |
|||||||||||
Debt Repurchase and Financing Fees |
— |
(482) |
(298) |
(482) |
|||||||||||
Net Cash Used in Continuing Financing Activities |
(107,108) |
(109,673) |
(258,869) |
(601,904) |
|||||||||||
Net Cash Provided by (Used in) Discontinued Financing Activities |
— |
61 |
— |
(14) |
|||||||||||
Net Cash Used in Financing Activities |
(107,108) |
(109,612) |
(258,869) |
(601,918) |
|||||||||||
Net (Decrease) Increase in Cash and Cash Equivalents |
(13,427) |
(17,379) |
225,233 |
7,673 |
|||||||||||
Cash and Cash Equivalents at Beginning of Period |
299,135 |
97,626 |
60,475 |
72,574 |
|||||||||||
Cash and Cash Equivalents at End of Period |
$ |
285,708 |
$ |
80,247 |
$ |
285,708 |
$ |
80,247 |
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SOURCE CONSOL Energy Inc.
PITTSBURGH, Oct. 31, 2017 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) (CONSOL or the Company) announced today that its board of directors has given final approval of the Company's previously announced separation into two publicly-traded companies--a coal company and a natural gas exploration and production (E&P) company--and has declared a pro rata distribution of all of the outstanding shares of CONSOL Mining Corporation (CoalCo) common stock to the Company's stockholders.
Distribution Ratio
On November 28, 2017, the expected distribution date, CONSOL stockholders will receive one share of common stock of CoalCo for every eight shares of CONSOL common stock held as of the close of business on the record date of November 15, 2017. No fractional shares of CoalCo will be issued, and stockholders will receive cash in lieu of fractional shares. The distribution of CoalCo common stock will complete the separation of the coal business from the Company. After the distribution, CoalCo will be an independent, publicly-traded company and the Company will retain no ownership interest.
Names and Stock Trading Symbols of the Post-Separation Companies
In connection with the distribution, the current parent CONSOL Energy will change its name to CNX Resources Corporation, and will retain its ticker symbol "CNX" on the New York Stock Exchange. At the same time, CoalCo will change its name to CONSOL Energy Inc., and its common stock will trade on the New York Stock Exchange under the ticker symbol "CEIX". CONSOL stockholders will retain their shares of Company common stock, but as a result of the name change, these shares will represent shares of CNX Resources Corporation after the time of separation.
In addition, CNX Coal Resources LP will change its name to CONSOL Coal Resources LP. In connection with the name change, CNX Coal Resources will also change its NYSE ticker symbol to "CCR" from "CNXC", and its common units will continue to be listed on the NYSE.
Trading of Common Stock
Beginning on or about November 14, 2017, and continuing up to and through the distribution date, two markets are expected for CONSOL common stock: the "regular-way" market and the "ex-distribution" market. Shares that trade in the "regular-way" market will be entitled to shares of CoalCo common stock distributed pursuant to the distribution; shares that trade in the "ex-distribution" market will trade under the symbol CNX WI and without an entitlement to shares of CoalCo common stock distributed pursuant to the distribution. CoalCo anticipates "when-issued" trading of its common stock will begin on or about November 14, 2017, under the symbol CEIX WI, and will continue up to and through the distribution date. "Regular-way" trading in CoalCo's common stock is expected to begin on November 29, 2017. CONSOL Stockholders who sell their shares of CONSOL common stock in the "regular-way" market prior to November 29, 2017 will also be selling their entitlement to receive shares of CoalCo common stock in the distribution. Investors are encouraged to consult with their financial advisors regarding the specific implications of buying or selling Company or CoalCo common stock on or before the distribution date.
Distribution of the CoalCo Stock
Distribution of the stock dividend of shares of CoalCo common stock remains subject to the satisfaction or waiver of certain conditions described in CoalCo's Registration Statement on Form 10, as amended, including among others, the Securities and Exchange Commission (SEC) declaring the Form 10 effective. A copy of the final Form 10, as amended, will be available on the SEC website at www.sec.gov.
No action is required by CONSOL stockholders to receive shares of CoalCo common stock in the distribution. CONSOL expects to mail a notice of Internet availability of the information statement to all stockholders entitled to receive the distribution of shares of CoalCo common stock on or about November 3, 2017. The information statement is an exhibit to CoalCo's Registration Statement on Form 10 that describes CoalCo, including the risks of owning CoalCo common stock, and other details regarding the separation and distribution.
Share Repurchase Program
On September 5, 2017, CONSOL's board of directors approved a one-year share repurchase program of up to $200 million, under which approximately $81 million of its common stock had been repurchased as of October 30, 2017, at an average price of approximately $16.00 per share, through a Rule 10b5-1 plan that will terminate on November 1, 2017. On October 30, 2017, the board approved an increase in the aggregate amount of the repurchase plan to $450 million. CONSOL may determine, from time-to-time, to effect repurchases through open market purchases, Rule 10b5-1 plans, accelerated stock repurchases or derivative contracts. The timing of any repurchases will be based on a number of factors, including available liquidity, the Company's stock price, the company's financial outlook, and alternative investment options. The share repurchase program does not obligate the Company to repurchase any dollar amount or number of shares and the Board's authorization of the program may be modified, suspended or discontinued at any time. The Board of Directors will continue to evaluate the size of the stock repurchase program based on CONSOL's free cash flow position, leverage ratio, and capital plans.
About CONSOL
CONSOL Energy Inc. is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The Company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2016, CONSOL had 6.3 trillion cubic feet equivalent of proved natural gas reserves. CONSOL is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
About CONSOL Mining
CONSOL Mining Corporation was formed in connection with the separation to hold CONSOL Energy Inc.'s coal business. Following the separation, CONSOL Mining Corporation will hold the assets and liabilities of CONSOL Energy Inc. relating to (i) its interests in the Pennsylvania Mining Complex, (ii) its interests in CNX Coal Resources LP, (iii) its wholly-owned terminal in the Port of Baltimore, and (iv) its greenfield reserves and certain related coal assets and liabilities.
Important Information about Company Names and Stock Trading Symbols
Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) expects to separate its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo.
Cautionary Statements
We are including the following cautionary statement in this press release 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. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties may be applicable to either, or both, of the GasCo and CoalCo following the separation and distribution, and relate to, among other matters, the following: uncertainties as to the timing and manner of the separation and whether it will be completed; the possibility that various closing conditions for the separation may not be satisfied; the impact of the separation on our business; the expected tax treatment of the separation; the risk that the coal and natural gas exploration and production businesses will not be separated successfully or such separation may be more difficult, time-consuming or costly than expected, which could result in additional demands on our resources, systems, procedures and controls, disruption of our ongoing business and diversion of management's attention from other business concerns; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal and natural gas liquids abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our coal mining and natural gas operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year coal sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; a majority of our limited partner interests in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC – any disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating results; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity. Additional factors are described in detail under the captions "Forward Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2016 filed with the SEC, as supplemented by our quarterly reports on Form 10-Q, and the factors described under the captions "Cautionary Statements Regarding Forward Looking Statements" and "Risk Factors" in the Form 10 filed with the SEC by CONSOL Mining Corporation, on July 11, 2017, as amended from time to time.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, Oct. 31, 2017 /PRNewswire/ -- CONSOL Mining Corporation (the "Company"), a Delaware corporation formed in connection with the announcement by its parent corporation, CONSOL Energy Inc. (NYSE: CNX), of its intention to separate its interests in its coal business from its oil and gas exploration business (the "Separation"), today announced the pricing of $300 million of its 11.00% senior secured second lien notes due 2025 (the "Notes") at a price of 100% of their face value in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). The Notes will pay interest semi-annually in arrears. The offering is expected to close on or about November 13, 2017, subject to the satisfaction of customary closing conditions.
The gross proceeds of the offering will initially be deposited into a segregated account held by the Company. The release of the proceeds is conditioned upon the consummation of the Separation. If the Separation is not consummated on or prior to 5 p.m. Eastern Time March 15, 2018 (the "Outside Date"), the Company will redeem the Notes in a special mandatory redemption at a price equal to 100% of the initial issue price of the Notes, plus accrued and unpaid interest to, but excluding, the payment date of the special mandatory redemption.
If the Separation is consummated prior to the Outside Date, the Company intends to use the net proceeds of the sale of the Notes to make a payment to CONSOL Energy Inc. in accordance with the conditions of the Separation. The Company intends to use borrowings under its term loan facilities to be entered into on the date of the consummation of the Separation to (i) fund a portion of the payment to CONSOL Energy Inc., (ii) refinance existing indebtedness of CNX Coal Resources LP under its revolving credit facility, (iii) pay related fees and expenses and (iv) otherwise fund the Company's capital needs and general corporate purposes. Upon the release of the proceeds, the Notes will be guaranteed on a senior secured second lien basis by the domestic wholly-owned subsidiaries of the Company that guarantee the Company's credit facilities.
The Notes have not been, and will not be, registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes will be offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act. In addition, the Company does not intend to list the Notes on any securities exchange or to include the Notes in any automated dealer quotation system.
About CONSOL Mining Corporation
CONSOL Mining Corporation was formed in connection with the Separation to hold CONSOL Energy Inc.'s coal business. Following the Separation, the Company will hold the assets and liabilities of CONSOL Energy Inc. relating to (i) its interests in the Pennsylvania Mining Complex, (ii) its interests in CNX Coal Resources LP, (iii) its wholly-owned terminal in the Port of Baltimore, and (iv) its greenfield reserves and certain related coal assets and liabilities.
Cautionary Statements:
This press release does not constitute an offer to sell or the solicitation of an offer to buy any Notes nor shall there be any sale of Notes in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. This notice is being issued pursuant to and in accordance with Rule 135c of the Securities Act.
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, Oct. 23, 2017 /PRNewswire/ -- CONSOL Mining Corporation (the "Company"), a Delaware corporation formed in connection with the announcement by its parent corporation, CONSOL Energy Inc. (NYSE: CNX), of its intention to separate its interests in its coal business from its oil and gas exploration business (the "Separation"), today announced that it intends, subject to market and other conditions, to offer and sell to eligible purchasers $350 million of senior secured second lien notes due 2025 (the "Notes") in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). The Notes will pay interest semi-annually in arrears, and the final terms of the Notes will be determined at the time of pricing of the Notes. The offering of Notes is not conditioned upon the consummation of the Separation
On the date of the consummation of the Separation (the "Separation Date"), the Company intends to use the net proceeds of the sale of the Notes, together with borrowings under its term loan facilities and its revolving credit facility to be entered into on the Separation Date, to (i) make a payment to CONSOL Energy Inc. in accordance with the conditions of the Separation, (ii) refinance existing indebtedness of CNX Coal Resources LP under its revolving credit facility, (iii) pay related fees and expenses and (iv) otherwise fund the Company's working capital needs and general corporate purposes.
The Notes have not been, and will not be, registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes will be offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act. In addition, the Company does not intend to list the notes on any securities exchange or to include the Notes in any automated dealer quotation system.
About CONSOL Mining Corporation
CONSOL Mining Corporation was formed in connection with the Separation to hold CONSOL Energy Inc.'s coal business. Following the Separation, the Company will hold the assets and liabilities of CONSOL Energy Inc. relating to (i) its interests in the Pennsylvania Mining Complex, (ii) its interests in CNX Coal Resources LP, (iii) its wholly-owned terminal in the Port of Baltimore, and (iv) its greenfield reserves and certain related coal assets and liabilities.
Cautionary Statements:
This press release does not constitute an offer to sell or the solicitation of an offer to buy any Notes nor shall there be any sale of Notes in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. This notice is being issued pursuant to and in accordance with Rule 135c of the Securities Act.
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, Oct. 16, 2017 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) will issue its third quarter earnings release at 6:45 a.m. Eastern Time on Tuesday, October 31. This will be followed by a conference call at 10:00 a.m. Eastern Time. A live webcast will be available on the 'Investor Relations' page of the company's website, www.consolenergy.com. Also, earnings call slides will be available at 6:45 a.m. Eastern Time on Tuesday, October 31, on the 'Investor Relations' page of the company's website.
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2016, CONSOL Energy had 6.3 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, Oct. 16, 2017 /PRNewswire/ -- CNX Coal Resources LP (NYSE: CNXC) will issue its third quarter earnings release after the market close on Monday, October 30. This will be followed by a conference call hosted by members of the management team at 5:00 p.m. Eastern Time. The webcast will be accessible on the 'Investor Relations' page of the company's website, www.cnxlp.com. An archive of the webcast will be available for at least 30 days after the event.
Participant dial in (toll free) |
1-855-656-0928 |
Participant international dial in |
1-412-902-4112 |
Participants should ask to be joined into the CNX Coal Resources earnings conference call. |
CNX Coal Resources is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active coal operations in Pennsylvania. Its assets include a 25% undivided interest in, and operational control over, CONSOL's Pennsylvania mining complex, which consists of three underground mines and related infrastructure. More Information is available on our website www.cnxlp.com
Contacts: |
|
Investor: |
Mitesh Thakkar, at (724) 485-3133 |
Media: |
Zach Smith, at (724) 485-4017 |
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SOURCE CNX Coal Resources LP
PITTSBURGH, Sept. 18, 2017 /PRNewswire/ -- CNX Coal Resources LP (NYSE: CNXC) announced today that the Pennsylvania Department of Environmental Protection (DEP) is requiring more time to evaluate the approval of the Bailey mine permit for the 4L panel, and as a result, the company has decided to move the longwall to another panel in order to resume operations. The company expects the longwall move to last approximately four weeks and is implementing several measures in order to mitigate the production impact from this delay. These measures include working additional unscheduled shifts at the remaining four longwalls, compared to the previous five and a half day schedule. This operating schedule change will also allow the company to meet its customers' needs and to immediately recall some of the previously furloughed workers.
As a result of increasing the operating schedule to offset the production impact from the longwall move delay, the company reaffirms its previously stated full year 2017 guidance:
The company continues to work closely with the necessary agencies to obtain operating permits, which allow for continuity of longwall mining operations. The Pennsylvania Mining Complex operates five total longwalls with approved permits as far out as ten years in advance.
About CNX Coal Resources LP
CNX Coal Resources is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active coal operations in Pennsylvania. Its assets include a 25% undivided interest in, and operational control over, CONSOL's Pennsylvania mining complex, which consists of three underground mines and related infrastructure. More information is available on our website www.cnxlp.com.
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: generation of sufficient distributable cash flow to support the payment of minimum quarterly distributions; changes in coal prices or the costs of mining or transporting coal; uncertainty in estimating economically recoverable coal reserves and replacement of reserves; our ability to develop our existing coal reserves and successfully execute our mining plans; changes in general economic conditions, both domestically and globally; competitive conditions within the coal industry; changes in the consumption patterns of coal-fired power plants and steelmakers and other factors affecting the demand for coal by coal-fired power plants and steelmakers; the availability and price of coal to the consumer compared to the price of alternative and competing fuels; competition from the same and alternative energy sources; energy efficiency and technology trends; our ability to successfully implement our business plan; the price and availability of debt and equity financing; operating hazards and other risks incidental to coal mining; major equipment failures and difficulties in obtaining equipment, parts and raw materials; availability, reliability and costs of transporting coal; adverse or abnormal geologic conditions, which may be unforeseen; natural disasters, weather-related delays, casualty losses and other matters beyond our control; interest rates; labor availability, relations and other workforce factors; defaults by our sponsor under our operating agreement and employee services agreement; changes in availability and cost of capital; changes in our tax status; delays in the receipt of, failure to receive or revocation of necessary governmental permits; defects in title or loss of any leasehold interests with respect to our properties; the effect of existing and future laws and government regulations, including the enforcement and interpretation of environmental laws thereof; the effect of new or expanded greenhouse gas regulations; the effects of litigation; and other factors discussed in our 2016 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
1 Adjusted EBITDA is a non-GAAP financial measure defined as (i) net income (loss) before net interest expense, depreciation, depletion and amortization, as adjusted for (ii) certain non-cash items, such as long-term incentive awards including phantom units under the CNX Coal Resources LP 2015 Long-Term Incentive Plan ("Unit Based Compensation"). At this time, CNXC is unable to provide a reconciliation of Adjusted EBITDA guidance to Net Income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing and potential significance of certain income statement items.
Contacts:
Investor:
Mitesh Thakkar, (724) 485-3133
miteshthakkar@cnxlp.com
Media:
Zach Smith, (724) 485-4017
zacherysmith@cnxlp.com
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SOURCE CNX Coal Resources LP
PITTSBURGH, Sept. 18, 2017 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) announced today that the Pennsylvania Department of Environmental Protection (DEP) is requiring more time to evaluate the approval of the Bailey mine permit for the 4L panel, and as a result, the company has decided to move the longwall to another panel in order to resume operations. The company expects the longwall move to last approximately four weeks and is implementing several measures in order to mitigate the production impact from this delay. These measures include working additional unscheduled shifts at the remaining four longwalls, compared to the previous five and a half day schedule. This operating schedule change will also allow the company to meet its customers' needs and to immediately recall some of the previously furloughed workers.
As a result of increasing the operating schedule to offset the production impact from the longwall move delay, the company reaffirms previously stated full-year 2017 guidance for the Pennsylvania Mining Complex: 25.6-27.6 million tons and total coal capital expenditures of $112-$120 million. Also, the company reaffirms previously stated full-year 2017 adjusted EBITDA attributable to CONSOL Energy of approximately $345 million, which is included in the expected 2017 total company adjusted EBITDA of $815 million.
The company continues to work closely with the necessary agencies to obtain operating permits, which allow for continuity of longwall mining operations. The Pennsylvania Mining Complex operates five total longwalls with approved permits as far out as ten years in advance.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2016, CONSOL Energy had 6.3 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: uncertainties as to the timing and manner of the separation (whether by sale or spin-off) and whether it will be completed (including any dropdowns of the coal business); the possibility that various closing conditions for the separation may not be satisfied; the impact of the separation on our business; the expected tax treatment of the separation; the risk that the coal and natural gas exploration and production businesses will not be separated successfully or such separation may be more difficult, time-consuming or costly than expected, which could result in additional demands on our resources, systems, procedures and controls, disruption of our ongoing business and diversion of management's attention from other business concerns; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas and other liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal and natural gas liquids abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our natural gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current natural gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas and coal rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year coal sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; a majority of our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC - disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating results; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity; other factors discussed in the 2016 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 disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, Sept. 6, 2017 /PRNewswire/ -- Today, CNX Coal Resources LP (NYSE:CNXC) and OMNIS Bailey, LLC (OMNIS), announced a partnership to build a first-of-a-kind solid energy refinery. The refinery will be used for processing waste coal at CONSOL's Bailey Mine Complex and converting it into high-quality, Clean Carbon Fuel (CCF).
A pilot plant was constructed at the Bailey Central Preparation Plant in May of this year to allow for optimization of the production process and commercial-scale testing of CCF by power plant customers. Successful scale-up of the process is expected to provide dual benefits: (a) provide additional revenue streams from the sale of CCF and certain other byproducts having potential agricultural applications, and (b) reduce the environmental footprint of our operations by eliminating or greatly reducing the need for future fine coal refuse impoundments.
Jimmy Brock, CEO of CNX Coal Resources, said: "We're excited to partner with OMNIS on an innovative technology that we believe can help to revolutionize the coal industry. OMNIS's technology development program has shown promising progress toward enabling alternative uses for coal byproducts. Following successful pilot testing and scale-up of the refinery, we're optimistic that we will have a Clean Carbon Fuel product that can be used to further enhance the energy content and performance characteristics of our already high-Btu, high-quality coal product. Moreover, this project represents a major step in line with our stewardship commitments to reduce our environmental footprint by eliminating or greatly reducing the future need for fine coal refuse impoundments."
Simon Hodson, Chairman of OMNIS, states: "It just makes sense to further remove the impurities from coal before burning it. This is truly clean coal production in our view. It makes even more sense to return ancient mineral matter to depleted top soils to grow better quality food."
Charles Gassenheimer, CEO of OMNIS Bailey continues: "The impurities we are removing from coal are really fossilized mineral matter from plants. After several years of testing at USDA facilities, this topsoil has been shown to remediate mineral-depleted farmland, leading to both enhanced plant growth and nutritionally-superior food. Simply stated, we are creating two marketable products from coal waste that offer significant benefits to society – cleaner energy and better food."
About CNX Coal Resources LP
CNX Coal Resources (NYSE: CNXC) is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active coal operations in Pennsylvania. Its assets include a 25 percent undivided interest in—and operational control over—CONSOL's Pennsylvania mining complex, which consists of three underground mines and related infrastructure. More information may be found at www.cnxlp.com.
Contacts:
Media:
Zach Smith, (724) 485-4017
zacherysmith@cnxlp.com
Investor:
Mitesh Thakkar, (724) 485-3133
miteshthakkar@cnxlp.com
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SOURCE CNX Coal Resources LP
PITTSBURGH, Sept. 5, 2017 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) announced today several updates in connection with its participation in the Barclays CEO Energy-Power Conference in New York.
First, in order to provide better clarity and visibility to the market with respect to the company achieving its strategic goal of separating its coal and E&P businesses, the company intends to execute the spin-off transaction at the earliest possible time, which is expected to be in the fourth quarter of 2017.
Second, CONSOL Energy is decreasing its 2017 E&P Division production guidance to approximately 405-415 Bcfe, compared to the previously stated guidance of 420-440 Bcfe. For the third quarter of 2017, the company expects production of approximately 100 Bcfe, which implies higher growth in the fourth quarter, driven in part by the well turn-in-line (TIL) schedule peaking in November. The company maintains previously announced 2017 total E&P capital expenditures guidance of approximately $620-$645 million. Also, the company maintains the previously announced 2018 E&P Division production guidance of approximately 520-550 Bcfe, or approximately 30% growth compared to 2017 based on the midpoint of the guidance ranges.
The decrease in 2017 production volumes is due to larger ceramic completion designs increasing cycle times, operational issues, and a tightening in the availability of field services. These issues have added complexity and delayed several TILs in 2017. However, the issues are transitory, and 2018 volumes will not be impacted. In accordance with its NAV-driven philosophy, the company determined not to sacrifice value solely to achieve 2017 production within its previously announced guidance.
Third, for the Pennsylvania Mining Complex, the company is decreasing guidance for 2017 adjusted EBITDA attributable to CONSOL Energy to $345 million, which is a decrease of $25 million from previously stated guidance. The decrease is due to a reduction in coal price realizations resulting from cooler than normal summer, modest delivery impacts related to the railroads, and a one week longwall permit delay. However, through optimization initiatives, the company expects total consolidated coal capital expenditures to decrease to $112-$120 million, which is a reduction from the previously stated guidance of $120-$136 million.
As of midnight last night, the Pennsylvania Department of Environmental Protection (DEP) has sought more time to review the technical merits of the permit submittal for continued longwall mining in the 4L panel at the company's Bailey Mine, in light of a recent Environmental Hearing Board decision. As a result, the longwall has been idled and workforce adjustments are being made. This is the first time in the 35-year history of the Bailey Mine that the company has failed to timely receive a needed mining permit. The company maintains that this permit meets the necessary criteria for approval, and the company is in ongoing communication with Pennsylvania Governor Wolf's office and the Secretary of the DEP asking that the permit be issued in order to enable the company to get its miners back to work and resume production. CONSOL will lose approximately 25,000 tons of production per day as a result of this permit delay. While the company can make up some lost production in the fourth quarter, if the permit is not issued in the near future, additional layoffs will be likely and the impact on the company could be material. The EBITDA guidance provided above assumes that the permit is issued in the near future. The company hopes that the DEP resolves this matter quickly, and the company will provide updates as new information becomes available.
The company now expects full year 2017 adjusted EBITDA guidance to be approximately $815 million, which is a decrease of $55 million from the previously stated guidance. Also, the company now expects 2017 leverage to be approximately 2.8x net debt to EBITDA, which is an increase of 0.2x from previously stated guidance.
Finally, as stated in the previous quarter's earnings call, CONSOL has continued to sell non-core assets, and since August 1, 2017, the company has closed on an additional $40 million, which includes the sale of non-core Marcellus Shale acres in Allegheny and Westmoreland counties, Pennsylvania, for approximately $30 million, discussed on the previous quarter's earnings call. Therefore, year-to-date, the company has closed on $385 million of asset sales. In addition, the company has entered into a contract to sell a large block of surface acreage for approximately $25 million, which the company expects to close early in the fourth quarter. Once closed, asset sales will total approximately $410 million.
Share Repurchase Program
CONSOL Energy's Board of Directors has approved a one-year share repurchase program of up to $200 million. The repurchases will be effected from time-to-time through open market purchases, privately negotiated transactions, Rule 10b5-1 plans, accelerated stock repurchases, block trades, derivative contracts or otherwise in compliance with Rule 10b-18. The timing of any repurchases will be based on a number of factors, including available liquidity, the company's stock price, the company's financial outlook, and alternative investment options. The share repurchase program does not obligate the company to repurchase any dollar amount or number of shares and the Board's authorization of the program may be modified, suspended or discontinued at any time. The Board of Directors will continue to evaluate the size of the stock repurchase program based on CONSOL's free cash flow position, leverage ratio, and capital plans.
Barclays CEO Energy-Power Conference Participation and Presentation
CONSOL Energy's President and Chief Executive Officer, Nicholas J. DeIuliis will meet with investors and present today, September 5, 2017, at 2:25 pm ET at the Barclay's 2017 CEO Energy-Power Conference. The presentation materials will be available on the company's website at 6:45am ET. Also, the live webcast will be available on CONSOL Energy's website at www.consolenergy.com, and the replay will be archived there as well.
Note: CONSOL Energy is unable to provide a reconciliation of projected Adjusted EBITDA to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing and potential significance of certain income statement items. EBITDA guidance based on the midpoint of production guidance.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2016, CONSOL Energy had 6.3 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: uncertainties as to the timing and manner of the separation (whether by sale or spin-off) and whether it will be completed (including any dropdowns of the coal business); the possibility that various closing conditions for the separation may not be satisfied; the impact of the separation on our business; the expected tax treatment of the separation; the risk that the coal and natural gas exploration and production businesses will not be separated successfully or such separation may be more difficult, time-consuming or costly than expected, which could result in additional demands on our resources, systems, procedures and controls, disruption of our ongoing business and diversion of management's attention from other business concerns; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas and other liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal and natural gas liquids abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our natural gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current natural gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas and coal rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year coal sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; a majority of our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC - disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating results; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity; other factors discussed in the 2016 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 disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, Sept. 5, 2017 /PRNewswire/ -- CNX Coal Resources LP (NYSE: CNXC), announced today that it is adjusting its previously announced 2017 guidance ranges based on the third quarter results to date and expectations for the rest of the year. The revised 2017 outlook is as follows:
Specifically, CNXC is reducing the top end of its adjusted EBITDA range to reflect ongoing mild weather trends in the third quarter of 2017 that have affected power demand in the PJM region. This reduced demand has resulted in lower pricing than forecasted in our contracts that are indexed to power prices. Crossover met coal sales to date have also been lower than expected resulting in somewhat lower realizations due to increasing discounts for our crossover product compared to the benchmark quality. Finally, our sales mix was also affected due to CSX-related logistics issues that we foreshadowed on our second quarter earnings call. We continue to work closely with our rail partners to effectuate improved efficiency.
On the operational front, the Enlow Fork mine encountered some unexpected geological conditions following a longwall move in the third quarter. The Bailey and Harvey mines have performed well during this time and Enlow Fork has been producing well since mid-August. As a result, we expect to be well within our sales guidance range of 6.4-6.9 million tons. While the Enlow Fork longwall has now moved out of the difficult geology and resumed a normal operational schedule, the resulting cash cost of coal sold is now expected to be modestly higher than previously anticipated, which also weighed on the EBITDA outlook. To reduce this adverse cost impact, CNXC has taken various steps including temporarily suspending the use of contractors, rationalizing other discretionary spending at the mine and lowering capital expenditures by approximately $3.0 million at the midpoint of the guidance range. Management is evaluating additional revenue enhancing and cost saving opportunities which it plans to discuss on its third quarter earnings call.
As of midnight last night, the Pennsylvania Department of Environmental Protection (DEP) has sought more time to review the technical merits of the permit submittal for continued longwall mining in the 4L panel at the company's Bailey Mine, in light of a recent Environmental Hearing Board decision. As a result, the longwall has been idled and workforce adjustments are being made. This is the first time in the 35-year history of the Bailey Mine that the company has failed to timely receive a needed mining permit. The company maintains that this permit meets the necessary criteria for approval, and the company is in ongoing communication with Pennsylvania Governor Wolf's office and the Secretary of the DEP asking that the permit be issued in order to enable the company to get its miners back to work and resume production. The Pennsylvania Mining Complex will lose approximately 25,000 tons of production per day as a result of this permit delay. While the company can make up some lost production in the fourth quarter, if the permit is not issued in the near future, additional layoffs will be likely and the impact on the company could be material. The EBITDA guidance provided above assumes that the permit is issued in the near future. The company hopes that the DEP resolves this matter quickly, and the company will provide updates as new information becomes available.
1 Adjusted EBITDA is a non-GAAP financial measure defined as (i) net income (loss) before net interest expense, depreciation, depletion and amortization, as adjusted for (ii) certain non-cash items, such as long-term incentive awards including phantom units under the CNX Coal Resources LP 2015 Long-Term Incentive Plan ("Unit Based Compensation"). At this time, CNXC is unable to provide a reconciliation of Adjusted EBITDA guidance to Net Income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing and potential significance of certain income statement items.
About CNX Coal Resources LP
CNX Coal Resources is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active coal operations in Pennsylvania. Its assets include a 25% undivided interest in, and operational control over, CONSOL's Pennsylvania mining complex, which consists of three underground mines and related infrastructure. More information is available on our website www.cnxlp.com.
Contacts:
Investor:
Mitesh Thakkar, (724) 485-3133
miteshthakkar@cnxlp.com
Media:
Zach Smith, (724) 485-4017
zacherysmith@cnxlp.com
View original content with multimedia:http://www.prnewswire.com/news-releases/cnx-coal-resources-updates-2017-outlook-300513623.html
SOURCE CNX Coal Resources LP
PITTSBURGH, Aug. 1, 2017 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) reported net cash provided by operating activities in the just-ended quarter of $89 million, compared to $95 million in the year-earlier quarter, which included $13 million of net cash provided by discontinued operating activities. The company reported net income of $174 million for the quarter, less $4 million of net income attributable to noncontrolling interest, for net income attributable to CONSOL Energy shareholders of $170 million or earnings of $0.73 per diluted share, compared to a net loss of $469 million in the year-earlier quarter, less $1 million of net income attributable to noncontrolling interest, for a net loss attributable to CONSOL Energy shareholders of $470 million, or a loss of $2.05 per diluted share in the second quarter of 2016.
Earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization (EBITDA) from continuing operations1 were $395 million for the 2017 second quarter, compared to a negative $153 million in the year-earlier quarter.
On a GAAP basis, the second quarter earnings included the following pre-tax items attributable to continuing operations:
After adjusting for certain items, which are described in the footnote to the EBITDA reconciliation table, the company had adjusted net income attributable to CONSOL Energy Shareholders1 in the 2017 second quarter of $39 million, or $0.17 per diluted share. Adjusted EBITDA attributable to continuing operations1 was $177 million for the 2017 second quarter, compared to $139 million in the year-earlier quarter.
"We are at a pivotal point in our transformation as a company," commented Nicholas J. DeIuliis, president and CEO. "The steady march of continuous improvement was sustained this past quarter in our E&P operations in all phases including drilling and completions. Despite short term turn-in-line delays at two of our Monroe County Utica pads and a post-closing adjustment from an asset sale, both of which impacted quarterly production, our 2017 production guidance remains unchanged. Closed asset sales did not disappoint and beat our prior stated goals, helping to drive our leverage ratio down to 3.0x at quarter-end, with an undrawn credit facility and $300 million of cash on hand. To top things off, we are fully immersed in preparing to spin and separate the coal and E&P businesses."
"Increased efficiencies that we fought hard to achieve now allow us to hold our 2017 production guidance and raise our 2018 production guidance for a modest amount of incremental capital. We are raising 2017 capital by approximately $78 million, based on the midpoint of the guidance. About half of the capital increase reflects expected service cost inflation and the cost of the two pad delays. The other half of the capital increase reflects continuous improvement gains, which provide a 30 Bcfe production bump in 2018 guidance while holding 2017 production guidance steady. This yields compelling rates of return and NAV per share accretion."
"Assuming no additional asset sales beyond those currently under contract or closed, we should finish the year at a leverage ratio in the mid-2x range. Additional asset sales that get us to the $600 million end of our asset sale guidance range would drive leverage ratio even lower. Our liquidity, leverage, and overall balance sheet strength have come a long way since mid-2015 and now provide us the optionality we have desired to grow NAV per share across what is an exciting game board over the next 18 months."
During the second quarter, CONSOL Energy received approximately $326 million in proceeds from asset sales, which included four recently closed transactions for approximately $215 million. The total undeveloped acres sold in these transactions included approximately 22,500 Marcellus Shale acres, along with some associated Utica Shale acres in Pennsylvania. The first transaction, which resulted in assets being sold for approximately $130 million, included the sale of 12 proved developed producing (PDP) wells averaging a total of approximately 20.0 MMcfe per day, 15 drilled but uncompleted (DUC) wells, and approximately 11,000 undeveloped leasehold acres, in each case located in Doddridge and Wetzel counties, West Virginia. Also, as part of the transaction, CONSOL received approximately 2,400 Marcellus and Utica Shale acres within the company's Wadestown project area, which is located in Monongalia County, West Virginia. In aggregate, the other three transactions consisted of the sale of non-producing scattered Marcellus Shale acres, along with some associated Utica Shale acres, in Westmoreland, Washington, and Allegheny counties, Pennsylvania. These three Pennsylvania transactions, which also included an overriding royalty on future production associated with the Utica Shale, consisted of the sale of 11,500 undeveloped acres and totaled approximately $85 million, or on average approximately $7,800 per undeveloped acre. Lastly, the company expects to close another transaction during the third quarter involving the sale of non-core Marcellus Shale acres in Allegheny and Westmoreland counties, Pennsylvania, for approximately $30 million.
During the quarter, CONSOL Energy generated approximately $273 million in free cash flow1, which included proceeds from sales of assets. Utilizing free cash flow generated during the quarter, the company repurchased approximately $19 million of its 2022 bonds at an average price of $99.51 in the open market, and increased its liquidity to approximately $2.0 billion, which includes $292.5 million of cash. Also, after the end of the second quarter, the company redeemed the outstanding balance on its 2020 and 2021 bonds, which was $74.5 million and $20.6 million, respectively.
CONSOL Energy recently announced the filing of a Form 10 registration statement with the U.S. Securities and Exchange Commission for a spin-off of its coal business, including the Pennsylvania Mining Complex and other coal-related assets and liabilities. This filing represents an important milestone for the company to complete the separation of the coal and E&P businesses, with each separate company being well capitalized and free cash flow generating following the separation. The company has been running dual processes to separate the businesses, and shortly following the recent filing of the Form 10 registration statement, the company concluded that the sale process did not produce compelling results. Therefore, the company is now 100% focused on executing a spin-off transaction of the coal business and expects to be ready to spin no later than year-end 2017.
1The terms "adjusted net income attributable to CONSOL Energy Shareholders," "EBITDA from continuing operations," and "adjusted EBITDA from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP net income below, under the caption "Non-GAAP Financial Measures." The terms "free cash flow," and "organic free cash flow from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP Net Cash Provided by Operating Activities, also under the caption "Non-GAAP Financial Measures."
E&P Division:
During the second quarter of 2017, CONSOL's E&P Division sold 92.2 Bcfe, or a decrease of 7% from the 99.3 Bcfe sold in the year-earlier quarter, which resulted primarily from both timing delays associated with the TIL schedule and from the company selling approximately 3.0 Bcfe of production related to the net developed acres located in Doddridge and Wetzel counties, West Virginia. As stated last quarter, the company expected to TIL three pads in the second quarter; however, due to operational delays, the company ended up turning-in-line one pad. Therefore, the company expects to TIL five pads in the third quarter, which includes the two delayed pads from the second quarter. Lastly, the decrease of 3.0 Bcfe of production associated with the West Virginia sale was retroactive starting on January 1, 2017 through May 31, 2017.
During the quarter, total production costs decreased to $2.20 per Mcfe, compared to the year-earlier quarter of $2.27 per Mcfe, driven primarily by reductions to depreciation, depletion and amortization (DD&A), lease operating expense (LOE), and taxes. These reductions were partially offset by an increase in gathering costs related to the Marcellus Shale production mix increasing. When compared to the first quarter of 2017, total production costs decreased by $0.12 per Mcfe, despite a modest decline in production of approximately 3%. These sequential quarter-over-quarter cost reductions were driven in part by improved gathering costs resulting from lower Marcellus Shale production volumes, as well as improved processing costs related to the sale of the West Virginia assets.
E&P Division capital expenditures increased in the second quarter to $142.3 million, compared to $100.8 million spent in the first quarter of 2017, due primarily to an increase in capital associated with additional completion activity.
Marcellus Shale production volumes, including liquids, in the 2017 second quarter were 56.9 Bcfe, approximately 7% higher than the 53.1 Bcfe produced in the 2016 second quarter. The increased Marcellus production is due in part to CONSOL obtaining newer wells and more flowing production as part of the dissolution of the Marcellus Shale joint venture. Marcellus total production costs were $2.05 per Mcfe in the just-ended quarter, which is a $0.20 per Mcfe improvement from the second quarter of 2016 of $2.25 per Mcfe, driven by reductions to LOE and DD&A. The decrease in LOE is primarily driven by reductions to water disposal costs resulting from increased use of produced water in active completion operations.
CONSOL Energy's Utica Shale production volumes, including liquids, in the 2017 second quarter were 13.8 Bcfe, down approximately 41% from 23.3 Bcfe in the year-earlier quarter. The decline in Utica Shale volumes was driven primarily from timing delays associated with the TIL schedule, resulting in natural production declines in both the wet and dry gas areas. Utica Shale total production costs were $2.04 per Mcfe in the just-ended quarter, which is a $0.28 per Mcfe impairment from the second quarter of 2016 total production costs of $1.76 per Mcfe. The cost impairment was driven by lower Utica Shale volumes resulting in increased LOE and firm transportation and processing costs. Also, Utica Shale DD&A rates increased, in part, due to higher capital costs associated with the initial dry Utica delineation wells in Pennsylvania. These cost increases were partially offset by a decrease in taxes due to an adjustment related to a non-operated area. CONSOL Energy continues to expect Utica Shale total production costs to improve to approximately $1.80 per Mcfe for full year 2017, driven primarily by the addition of lower operating cost dry Utica Shale wells becoming a larger part of the production mix.
E&P Division Second Quarter Operations Summary:
In the quarter, CONSOL operated two horizontal rigs and drilled seven dry Utica Shale wells: five wells located in Monroe County, Ohio and two wells (Aikens 5J and 5M) located in Westmoreland County, Pennsylvania, which are offset wells to the Gaut 4IH dry Utica well. The Monroe County, Ohio, wells averaged approximately 10,000 lateral feet and 19.7 drilling days per well, compared to 21.5 drilling days per well during the first quarter of 2017. At the current pace, a single rig could drill 17.5 Ohio dry Utica Shale wells averaging 10,000 foot laterals, per year, which is an 8% improvement compared to the first quarter of 2017. Also during the quarter, drilling costs in the Ohio Utica Shale improved by 5%, compared to the first quarter of 2017. The Aikens 5J and 5M wells averaged 7,500 foot laterals and 38.6 drilling days, with the Aikens 5M well finishing in 34 days. The drilling costs associated with the Aikens 5J and 5M wells are $5.5 million and $4.6 million, respectively. Over the course of the first three Westmoreland County, Pennsylvania, dry Utica Shale wells, CONSOL has reduced drilling capital by 71% or $11.45 million, when comparing the third well (Aikens 5M) to the first (Gaut 4IH).
Utilizing two frac crews, the company completed 15 wells in the quarter: five Marcellus Shale wells and one Upper Devonian well located in Greene County, Pennsylvania; three West Virginia Marcellus Shale wells located in Ritchie County, West Virginia; and six dry Utica Shale wells located in Monroe County, Ohio.
During the quarter, CONSOL turned-in-line six wells: five Marcellus Shale wells located in Ritchie County, West Virginia, and one wet Marcellus Shale well located in Allegheny County, Pennsylvania.
In the second half of 2017, the company expects to TIL slightly more wells in the third quarter, compared to the fourth quarter. Due to the timing associated with the TIL schedule, the company expects sequential quarterly production growth in the third and fourth quarters of 2017, with production highest in the fourth quarter of 2017.
E&P DIVISION RESULTS — Quarter-to-Quarter Comparison | |||||||||||||
Quarter |
Quarter |
Quarter |
|||||||||||
Ended |
Ended |
Ended |
|||||||||||
June 30, |
June 30, |
March 31, |
|||||||||||
Sales - Gas |
$ |
233.7 |
$ |
140.3 |
$ |
273.6 |
|||||||
Sales - Oil |
1.1 |
0.6 |
0.6 |
||||||||||
Sales - NGLs |
21.6 |
19.2 |
39.3 |
||||||||||
Sales - Condensate |
3.9 |
7.8 |
4.3 |
||||||||||
Total Sales Revenue ($ MM) |
$ |
260.3 |
$ |
167.9 |
$ |
317.8 |
|||||||
(Loss) Gain on Commodity Derivative Instruments - Cash Settlement |
(32.3) |
80.3 |
(47.1) |
||||||||||
Total Revenue |
$ |
228.0 |
$ |
248.2 |
$ |
270.7 |
|||||||
Earnings (Loss) Before Income Tax ($ MM) |
$ |
227.4 |
$ |
(294.6) |
$ |
(93.5) |
|||||||
Adjusted Earnings (Loss) Before Income Tax ($MM) |
$ |
5.7 |
1 |
$ |
(7.3) |
2 |
$ |
23.6 |
3 | ||||
Capital Expenditures ($ MM) |
$ |
142.3 |
$ |
23.4 |
$ |
100.8 |
1Adjusted earnings before income tax for the E&P Division of $5.7 million for the three months ended June 30, 2017 is calculated as GAAP earnings before income tax of $227.4 million less total pre-tax adjustments of $221.7 million. The $221.7 million of adjustments are $116.0 million of pre-tax gain related to the unrealized gain on commodity derivative instruments, $126.7 million of pre-tax gains on asset sales, a pre-tax loss related to $16.9 million in lease expirations and a pre-tax charge of $4.1 million related to stock-based compensation. |
2Adjusted loss before income tax for the E&P Division of $7.3 million for the three months ended June 30, 2016 is calculated as GAAP loss before income tax of $294.6 million plus total pre-tax adjustments of $273.1 million. The $273.1 million adjustment includes a $279.7 million pre-tax loss related to the unrealized loss on commodity derivative instruments, a pre-tax charge of $7.1 million related to stock-based compensation and a pre-tax loss of $0.5 million related to severance expense. |
3Adjusted earnings before income tax for the E&P Division of $23.6 million for the three months ended March 31, 2017 is calculated as GAAP loss before income tax of $93.5 million plus total pre-tax adjustments of $117.1 million. The $117.1 million adjustment includes a $24.6 million pre-tax gain related to the unrealized gain on commodity derivative instruments, a pre-tax loss of $137.9 million related to the impairment of exploration and production assets, a pre-tax charge of $3.7 million related to stock-based compensation and a pre-tax loss of $0.1 million related to severance expense. |
CONSOL's E&P Division production in the quarter came from the following categories:
Quarter |
Quarter |
Quarter |
|||||||||||||
Ended |
Ended |
Ended |
|||||||||||||
June 30, |
June 30, |
% Increase/ |
March 31, |
% Increase/ | |||||||||||
GAS |
|||||||||||||||
Marcellus Sales Volumes (Bcf)1 |
51.1 |
47.2 |
8.3 |
% |
52.9 |
(3.4) |
% | ||||||||
Utica Sales Volumes (Bcf) |
10.7 |
18.7 |
(42.8) |
% |
11.6 |
(7.8) |
% | ||||||||
CBM Sales Volumes (Bcf) |
16.5 |
17.1 |
(3.5) |
% |
16.7 |
(1.2) |
% | ||||||||
Other Sales Volumes (Bcf)2 |
4.9 |
5.7 |
(14.0) |
% |
4.9 |
— |
% | ||||||||
LIQUIDS3 |
|||||||||||||||
NGLs Sales Volumes (Bcfe) |
8.1 |
9.0 |
(10.0) |
% |
8.1 |
— |
% | ||||||||
Oil Sales Volumes (Bcfe) |
0.2 |
0.1 |
100.0 |
% |
0.1 |
100.0 |
% | ||||||||
Condensate Sales Volumes (Bcfe) |
0.7 |
1.5 |
(53.3) |
0.7 |
— |
% | |||||||||
TOTAL |
92.2 |
99.3 |
(7.2) |
% |
95.0 |
(2.9) |
% | ||||||||
Average Daily Production (MMcfe) |
1,013.4 |
1,090.9 |
1,055.8 |
1In the quarter, the company sold approximately 3.0 Bcfe of production related to the net developed acres located in Doddridge and Wetzel counties, West Virginia, and the production was retroactive from January 1, 2017 through May 31, 2017. |
2Other Sales Volumes: primarily related to shallow oil and gas production. |
3NGLs, oil and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. |
E&P PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison: | ||||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
(Per Mcfe) |
June 30, |
June 30, |
March 31, | |||||||||
Average Sales Price - Gas |
$ |
2.81 |
$ |
1.58 |
$ |
3.18 |
||||||
Average (Loss) Gain on Commodity Derivative Instruments - Cash Settlement- Gas |
$ |
(0.39) |
$ |
0.91 |
$ |
(0.55) |
||||||
Average Sales Price - Oil* |
$ |
8.03 |
$ |
5.62 |
$ |
7.40 |
||||||
Average Sales Price - NGLs* |
$ |
2.66 |
$ |
2.14 |
$ |
4.86 |
||||||
Average Sales Price - Condensate* |
$ |
5.69 |
$ |
5.28 |
$ |
5.64 |
||||||
Average Sales Price - Total Company |
$ |
2.47 |
$ |
2.50 |
$ |
2.85 |
||||||
Lease Operating Expense |
$ |
0.23 |
$ |
0.24 |
$ |
0.23 |
||||||
Production, Ad Valorem, and Other Fees |
0.05 |
0.07 |
0.09 |
|||||||||
Transportation, Gathering and Compression |
0.94 |
0.92 |
0.99 |
|||||||||
Depreciation, Depletion and Amortization (DD&A) |
0.98 |
1.04 |
1.01 |
|||||||||
Total Production Costs |
$ |
2.20 |
$ |
2.27 |
$ |
2.32 |
||||||
Margin |
$ |
0.27 |
$ |
0.23 |
$ |
0.53 |
||||||
Addback: DD&A |
$ |
0.98 |
$ |
1.04 |
$ |
1.01 |
||||||
Margin, before DD&A |
$ |
1.25 |
$ |
1.27 |
$ |
1.54 |
*Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. |
Note: "Total Production Costs" excludes Selling, General, and Administration and Other Corporate Expenses. |
The average sales price of $2.47 per Mcfe, when combined with unit costs of $2.20 per Mcfe, resulted in a margin of $0.27 per Mcfe. This was an increase when compared to the year-earlier quarter, due to improvements in total production costs, offset by a reduction in average sales price.
Marketing Update:
For the second quarter of 2017, CONSOL's average sales price for natural gas, natural gas liquids (NGLs), oil, and condensate was $2.47 per Mcfe. CONSOL's average price for natural gas was $2.81 per Mcf for the quarter and, including cash settlements from hedging, was $2.42 per Mcf. The average realized price for all liquids for the second quarter of 2017 was $17.81 per barrel.
CONSOL's weighted average differential from NYMEX in the second quarter of 2017 was negative $0.52 per MMBtu. CONSOL's average sales price for natural gas before hedging was $0.37 per Mcf lower than the $3.18 per Mcf reported for the first quarter of 2017. The decrease results primarily from a lower Henry Hub price coupled with a wider differential.
CONSOL continued to recover and sell discretionary ethane during the quarter. Directly-marketed ethane volumes were 600,000 barrels in the second quarter of 2017 and yielded a weighted average sales price in excess of Mont Belvieu ethane and $1.14 per MMBtu higher than CONSOL's residue natural gas alternative.
E&P Division Guidance:
CONSOL Energy maintains its E&P Division production guidance for 2017 of approximately 420-440 Bcfe, while increasing its total E&P capital expenditures in 2017 to approximately $620-$645 million, compared to previous guidance of approximately $555 million. The increase in 2017 capital is driven primarily by three areas: additional capital associated with operational challenges in the second quarter, service cost inflation related to pressure pumping services, and continuous improvement progress. The continuous improvement progress is driven by improved drilling cycle times resulting in the company expecting to drill nine additional wells in 2017 and by modifying production protocols, both of which are expected to increase 2018 production to 520-550 Bcfe, compared to previous guidance of 490-520 Bcfe. Also, the company has added another layer of hedges for the expected incremental production in 2018 to help lock in returns and cash flows.
CONSOL Energy continued its programmatic hedge program to further build out NYMEX and basis hedges through 2021. Total hedged natural gas production in the 2017 third quarter is 81.7 Bcf. The annual gas hedge position is shown in the table below:
2017 |
2018 | ||||
Volumes Hedged (Bcf), as of 7/12/17 |
315.2* |
329.1 |
|||
*Includes actual settlements of 177.3 Bcf. |
CONSOL Energy's hedged gas volumes include a combination of NYMEX financial hedges and index (NYMEX and basis) hedges and contracts. In addition, to protect the NYMEX hedge volumes from basis exposure, CONSOL enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CONSOL Energy's gas hedge position is shown in the table below:
Q3 2017 |
2017 |
2018 |
2019 |
2020 | ||||||||||||||||
NYMEX Only Hedges |
||||||||||||||||||||
Volumes (Bcf) |
73.5 |
282.4 |
311.9 |
217.6 |
134.1 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
3.15 |
$ |
3.14 |
$ |
3.14 |
$ |
3.02 |
$ |
3.05 |
||||||||||
Index Hedges and Contracts |
||||||||||||||||||||
Volumes (Bcf) |
8.2 |
32.8 |
17.2 |
13.0 |
7.8 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
3.17 |
$ |
3.15 |
$ |
2.62 |
$ |
2.47 |
$ |
2.41 |
||||||||||
Total Volumes Hedged (Bcf) |
81.7 |
315.2 |
329.1 |
230.6 |
141.9 |
|||||||||||||||
NYMEX + Basis (fully-covered volumes)1 |
||||||||||||||||||||
Volumes (Bcf) |
77.7 |
309.8 |
308.0 |
200.0 |
120.2 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
2.54 |
$ |
2.59 |
$ |
2.81 |
$ |
2.73 |
$ |
2.78 |
||||||||||
NYMEX Only Hedges Exposed to Basis |
||||||||||||||||||||
Volumes (Bcf) |
4.0 |
5.4 |
21.1 |
30.6 |
21.7 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
3.15 |
$ |
3.14 |
$ |
3.14 |
$ |
3.02 |
$ |
3.05 |
||||||||||
Total Volumes Hedged (Bcf) |
81.7 |
315.2 |
329.1 |
230.6 |
141.9 |
1Includes physical sales with fixed basis in Q3 2017, 2017, 2018, 2019, and 2020 of 15.1 Bcf, 62.6 Bcf, 106.6 Bcf, 97.6 Bcf, and 48.1 Bcf, respectively. |
During the second quarter of 2017, CONSOL Energy added additional NYMEX natural gas hedges of 40.5 Bcf, 27.6 Bcf, and 20.0 Bcf for 2018, 2019, and 2020, respectively. To help mitigate basis exposure on NYMEX hedges, in the second quarter CONSOL added 52.6 Bcf, 28.7 Bcf, 9.9 Bcf, and 9.4 Bcf of basis hedges for 2018, 2019, 2020, and 2021, respectively.
Pennsylvania (PA) Mining Operations Division:
CONSOL Energy's PA Mining Operations sold 6.8 million tons in the 2017 second quarter, compared to 6.2 million tons during the year-earlier quarter. During the quarter, the average cost of coal sold increased slightly to $34.79 per ton, compared to $34.46 per ton in the year-earlier quarter due in part to additional equipment maintenance.
Second Quarter Summary:
CNX Coal Resources LP ("CNXC") reported the following in its second quarter 2017 earnings press release, dated July 31, 2017: "The CNXC marketing team was also successful in placing significant volumes of coal under contract for the 2019-2021 period... demonstrating our ability and willingness to enter into longer term (3+ years) commitments with the right partners. Approximately 30% of the PAMC's 2019 planned production is now sold."
During the quarter, on a total consolidated basis, PA Mining Operations Division generated $107 million of cash flow before capital expenditures.
PA MINING OPERATIONS RESULTS - Quarter-To-Quarter Comparison | ||||||||||||
PA Mining Ops |
PA Mining Ops |
PA Mining Ops | ||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
June 30, |
June 30, |
March 31, | ||||||||||
2017 |
2016 |
2017 | ||||||||||
Beginning Inventory (millions of tons) |
0.3 |
0.3 |
0.2 |
|||||||||
Coal Production (millions of tons) |
6.8 |
6.0 |
6.9 |
|||||||||
Ending Inventory (millions of tons) |
0.3 |
0.1 |
0.3 |
|||||||||
Sales - Company Produced (millions of tons) |
6.8 |
6.2 |
6.8 |
|||||||||
Sales Per Ton |
$ |
44.75 |
$ |
40.61 |
$ |
46.80 |
||||||
Average Cost of Coal Sold Per Ton |
$ |
34.79 |
$ |
34.46 |
$ |
34.52 |
||||||
Average Margin Per Ton Sold |
$ |
9.96 |
$ |
6.15 |
$ |
12.28 |
||||||
Addback: DD&A Per Ton |
$ |
5.71 |
$ |
6.50 |
$ |
5.77 |
||||||
Average Margin Per Ton, before DD&A |
$ |
15.67 |
$ |
12.65 |
$ |
18.05 |
||||||
Cash Flow before Cap. Ex ($ MM) |
$ |
107 |
$ |
78 |
$ |
123 |
Note: The PA Mining Operations include Bailey, Enlow Fork, and Harvey mines. Total Production Costs per Ton include: operating and other costs, royalty and production taxes and depreciation, depletion and amortization. Sales tons times Average Margin Per Ton, before DD&A is meant to approximate the amount of cash generated by PA Mining Operations. This cash generation will be offset by maintenance of production (MOP) capital expenditures. Table may not sum due to rounding. |
CONSOL Energy maintains total consolidated PA Mining Operations annual sales to be approximately 25.6-27.6 million tons for 2017. Also, CONSOL Energy maintains total consolidated capital expenditures for PA Mining Operations to be $120-$136 million for 2017.
2017 EBITDA Guidance by Segment: | ||||||||||||||||
(in millions) |
E&P |
PA Mining |
Other |
Total | ||||||||||||
Earnings Before Interest, Taxes and DD&A (EBITDA) |
$ |
665 |
$ |
410 |
$ |
(20) |
$ |
1,055 |
||||||||
Adjustments: |
||||||||||||||||
Unrealized Gain on Commodity Derivative Instruments |
(165) |
- |
- |
(165) |
||||||||||||
Stock-Based Compensation |
20 |
10 |
- |
30 |
||||||||||||
Adjusted EBITDA |
$ |
520 |
$ |
420 |
$ |
(20) |
920 |
|||||||||
Noncontrolling Interest |
- |
$ |
(50) |
- |
(50) |
|||||||||||
Adjusted EBITDA Attributable to CNX |
$ |
520 |
$ |
370 |
$ |
(20) |
$ |
870 |
Note: CONSOL Energy is unable to provide a reconciliation of projected Adjusted EBITDA to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing and potential significance of certain income statement items. EBITDA guidance based on the midpoint of production guidance and assumes NYMEX as of 6/30/2017 of $3.17 + weighted average basis of ($0.51) per MMBtu on open volumes. |
1Includes forecasted Earnings of Equity Affiliates of $40 million in 2017 associated with CONSOL Energy's proportionate share of ownership in CONE Midstream Partners. This income is reflected within Miscellaneous Other Income in the CNX income statement. |
During the quarter, EBITDA guidance for 2017 decreased for the E&P Division by approximately $55 million, compared to the first quarter of 2017, due to decreased NYMEX pricing and basis differentials. Specifically, second quarter EBITDA guidance is based on NYMEX as of June 30, 2017 of $3.17 per MMBtu plus a weighted average basis of negative $0.51 per MMBtu on open volumes. This compares to the first quarter EBITDA guidance, which was based on NYMEX as of April 4, 2017 of $3.40 per MMBtu plus a weighted average basis of negative $0.29 per MMBtu on open volumes.
Liquidity:
As of June 30, 2017, CONSOL Energy had $1,978.7 million in total liquidity, which is comprised of $292.5 million of cash, excluding the CNXC cash balance, and $1,686.2 million available to be borrowed under its $2.0 billion bank facility. In addition, CONSOL holds 16.6 million CNXC limited partnership units, including 3.9 million class A preferred units, with an aggregated current market value of approximately $268 million and 21.7 million CONE Midstream Partners LP ("CNNX") limited partnership units with a current market value of approximately $432 million, in each case as of July 21, 2017.
CONSOL Energy's net leverage ratio at the end of the quarter was 3.0x, which is an improvement of 0.5x and 0.9x compared to 3.5x at March 31, 2017 and 3.9x at December 31, 2016, respectively. Financial performance from operations along with asset sales and debt reduction drove the decrease in leverage.
About CONSOL
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2016, CONSOL Energy had 6.3 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
Non-GAAP Financial Measures
Definition: 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. Adjusted EBITDA is defined as EBITDA after adjusting for the discrete items listed below. Although EBIT, EBITDA, and Adjusted 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 to evaluate a company's operating performance. We exclude stock-based compensation from Adjusted EBITDA because we do not believe it accurately reflects the actual operating expense incurred during the relevant period and may vary widely from period to period irrespective of operating results. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDA, or Adjusted EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies.
Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial net income attributable to CONSOL Energy Shareholders is as follows (dollars in 000):
Three Months Ended | ||||||||||||||||||||
June 30, | ||||||||||||||||||||
2017 |
2017 |
2017 |
2017 |
2016 | ||||||||||||||||
Dollars in thousands |
E&P |
PA Mining |
Other1 |
Total |
Total | |||||||||||||||
Net Income (Loss) |
$ |
227,413 |
$ |
51,876 |
$ |
(105,466) |
$ |
173,823 |
$ |
(468,649) |
||||||||||
Less: Loss from Discontinued Operations |
— |
— |
— |
— |
234,605 |
|||||||||||||||
Add: Interest Expense |
598 |
2,233 |
40,601 |
43,432 |
47,428 |
|||||||||||||||
Less: Interest Income |
— |
— |
(6,533) |
(6,533) |
(547) |
|||||||||||||||
Add: Income Taxes |
— |
— |
66,993 |
66,993 |
(100,856) |
|||||||||||||||
Earnings Before Interest & Taxes (EBIT) |
228,011 |
54,109 |
(4,405) |
277,715 |
(288,019) |
|||||||||||||||
Add: Depreciation, Depletion & Amortization |
91,287 |
41,402 |
(15,620) |
117,069 |
135,220 |
|||||||||||||||
Earnings Before Interest, Taxes and DD&A (EBITDA) from Continuing Operations |
$ |
319,298 |
$ |
95,511 |
$ |
(20,025) |
$ |
394,784 |
$ |
(152,799) |
||||||||||
Adjustments: |
||||||||||||||||||||
Unrealized (Gain) Loss on Commodity Derivative Instruments |
(116,073) |
— |
— |
(116,073) |
279,715 |
|||||||||||||||
Gain on Asset Sales |
(126,707) |
— |
— |
(126,707) |
— |
|||||||||||||||
Severance Expense |
10 |
— |
103 |
113 |
1,451 |
|||||||||||||||
Other Transaction Fees |
— |
— |
8,411 |
8,411 |
— |
|||||||||||||||
Loss on Debt Extinguishment |
— |
— |
36 |
36 |
— |
|||||||||||||||
Stock-Based Compensation |
4,148 |
5,332 |
495 |
9,975 |
10,430 |
|||||||||||||||
Pension Settlement |
— |
— |
— |
— |
13,696 |
|||||||||||||||
Lease Expirations |
16,861 |
— |
— |
16,861 |
— |
|||||||||||||||
Coal Contract Buyout |
— |
— |
— |
— |
(6,288) |
|||||||||||||||
Total Pre-tax Adjustments |
(221,761) |
5,332 |
9,045 |
(207,384) |
299,004 |
|||||||||||||||
Adjusted EBITDA from Continuing Operations |
$ |
97,537 |
$ |
100,843 |
$ |
(10,980) |
$ |
187,400 |
$ |
146,205 |
||||||||||
Less: Adjusted EBITDA Attributable to Noncontrolling Interest2 |
— |
10,302 |
— |
10,302 |
6,942 |
|||||||||||||||
Adjusted EBITDA Attributable to Continuing Operations |
$ |
97,537 |
$ |
90,541 |
$ |
(10,980) |
$ |
177,098 |
$ |
139,263 |
Note: Income tax effect of Total Pre-tax Adjustments was $76,732 and $110,631 for the three months ended June 30, 2017 and June 30, 2016, respectively. Adjusted net income attributable to CONSOL Energy Shareholders for the three months ended June 30, 2017 is calculated as GAAP net income attributable to CONSOL Energy Shareholders of $169,510 less total pre-tax adjustments from the above table of $207,384, plus the associated tax expense of $76,732 equals the adjusted net income attributable to CONSOL Energy Shareholders of $38,858. |
1CONSOL Energy's Other Division includes expenses from various other corporate and diversified business unit activities including legacy liabilities costs and income tax expense that are not allocated to E&P or PA Mining Operations Divisions. |
2Adjusted EBITDA Attributable to Noncontrolling Interest for the three months ended June 30,2017 is Net Income Attributable to Noncontrolling interest of $4,313 plus Depreciation, Depletion and Amortization of $4,606, plus Interest Expense of $1,074, plus Stock-based compensation of $309. |
Adjusted EBITDA Attributable to Noncontrolling Interest for the three months ended June 30,2016 is Net Income Attributable to Noncontrolling interest of $1,179 plus Depreciation, Depletion and Amortization of $4,646, plus Interest Expense of $925 plus Stock-based compensation of $192. |
Free cash flow and organic free cash flow from continuing operations are non-GAAP financial measures. Management believes that these measures are meaningful to investors because management reviews cash flows generated from operations and non-core asset sales after taking into consideration capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand CONSOL's asset base and are expected to generate future cash flows from operations. It is important to note that free cash flow and organic free cash flow from continuing operations do not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure.
Organic Free Cash Flow from Continuing Operations |
Three Months Ended | ||
Net Cash Provided by Continuing Operations |
$ |
88,977 |
|
Capital Expenditures |
(160,348) |
||
Net Distributions from Equity Affiliates |
18,791 |
||
Organic Free Cash Flow from Continuing Operations |
$ |
(52,580) |
|
Free Cash Flow |
Three Months Ended | ||
Net Cash Provided by Operating Activities |
$ |
88,777 |
|
Capital Expenditures |
(160,348) |
||
Net Distributions from Equity Affiliates |
18,791 |
||
Proceeds From Sales of Assets |
325,724 |
||
Free Cash Flow |
$ |
272,944 |
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: uncertainties as to the timing and manner of the separation (whether by sale or spin-off) and whether it will be completed (including any dropdowns of the coal business); the possibility that various closing conditions for the separation may not be satisfied; the impact of the separation on our business; the expected tax treatment of the separation; the risk that the coal and natural gas exploration and production businesses will not be separated successfully or such separation may be more difficult, time-consuming or costly than expected, which could result in additional demands on our resources, systems, procedures and controls, disruption of our ongoing business and diversion of management's attention from other business concerns; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas and other liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal and natural gas liquids abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our natural gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current natural gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas and coal rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from nearterm price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year coal sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; a majority of our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC - disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating results; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity; other factors discussed in the 2016 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 disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law
The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible oil and gas reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by application of development projects to known accumulations. We may use certain terms in this press release, such as EUR (estimated ultimate recovery), unproved reserves and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. These measures are by their nature more speculative than estimates of reserves prepared in accordance with SEC definitions and guidelines and accordingly are less certain. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category.
This announcement does not constitute an offer to sell, or the solicitation of an offer to buy, any securities of CNX Coal Resources LP.
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(Dollars in thousands, except per share data) |
Three Months Ended |
Six Months Ended | |||||||||||||
(Unaudited) |
June 30, |
June 30, | |||||||||||||
Revenues and Other Income: |
2017 |
2016 |
2017 |
2016 | |||||||||||
Natural Gas, NGLs and Oil Sales |
$ |
260,305 |
$ |
167,931 |
$ |
578,068 |
$ |
349,188 |
|||||||
Gain (Loss) on Commodity Derivative Instruments |
83,788 |
(199,380) |
61,325 |
(144,320) |
|||||||||||
Coal Sales |
303,707 |
250,562 |
620,155 |
476,726 |
|||||||||||
Other Outside Sales |
15,974 |
8,207 |
29,027 |
15,973 |
|||||||||||
Purchased Gas Sales |
10,316 |
7,929 |
19,294 |
16,547 |
|||||||||||
Freight-Outside Coal |
17,763 |
11,447 |
30,045 |
24,557 |
|||||||||||
Miscellaneous Other Income |
33,937 |
33,636 |
74,633 |
81,766 |
|||||||||||
Gain (Loss) on Sale of Assets |
140,162 |
5,614 |
152,113 |
(1,662) |
|||||||||||
Total Revenue and Other Income |
865,952 |
285,946 |
1,564,660 |
818,775 |
|||||||||||
Costs and Expenses: |
|||||||||||||||
Exploration and Production Costs |
|||||||||||||||
Lease Operating Expense |
21,072 |
23,655 |
42,705 |
51,394 |
|||||||||||
Transportation, Gathering and Compression |
86,599 |
90,983 |
180,931 |
184,957 |
|||||||||||
Production, Ad Valorem, and Other Fees |
4,606 |
6,402 |
13,935 |
14,705 |
|||||||||||
Depreciation, Depletion and Amortization |
91,287 |
105,151 |
186,635 |
210,866 |
|||||||||||
Exploration and Production Related Other Costs |
19,715 |
2,905 |
29,501 |
4,652 |
|||||||||||
Purchased Gas Costs |
10,194 |
8,884 |
19,089 |
16,752 |
|||||||||||
Other Corporate Expenses |
23,398 |
21,422 |
41,328 |
44,220 |
|||||||||||
Impairment of Exploration and Production Properties |
— |
— |
137,865 |
— |
|||||||||||
Selling, General, and Administrative Costs |
20,672 |
25,411 |
42,162 |
47,869 |
|||||||||||
Total Exploration and Production Costs |
277,543 |
284,813 |
694,151 |
575,415 |
|||||||||||
PA Mining Operations Costs |
|||||||||||||||
Operating and Other Costs |
201,091 |
184,459 |
400,905 |
338,560 |
|||||||||||
Depreciation, Depletion and Amortization |
41,402 |
41,698 |
83,703 |
82,964 |
|||||||||||
Freight Expense |
17,763 |
11,447 |
30,045 |
24,557 |
|||||||||||
Selling, General, and Administrative Costs |
17,104 |
6,779 |
31,972 |
12,554 |
|||||||||||
Total PA Mining Operations Costs |
277,360 |
244,383 |
546,625 |
458,635 |
|||||||||||
Other Costs |
|||||||||||||||
Miscellaneous Operating Expense |
38,731 |
51,776 |
81,493 |
86,923 |
|||||||||||
Selling, General, and Administrative Costs |
3,654 |
4,075 |
6,286 |
6,128 |
|||||||||||
Depreciation, Depletion and Amortization |
(15,620) |
(11,629) |
(4,499) |
(3,622) |
|||||||||||
Loss (Gain) on Debt Extinguishment |
36 |
— |
(786) |
— |
|||||||||||
Interest Expense |
43,432 |
47,428 |
87,865 |
97,292 |
|||||||||||
Total Other Costs |
70,233 |
91,650 |
170,359 |
186,721 |
|||||||||||
Total Costs And Expenses |
625,136 |
620,846 |
1,411,135 |
1,220,771 |
|||||||||||
Earnings (Loss) From Continuing Operations Before Income Tax |
240,816 |
(334,900) |
153,525 |
(401,996) |
|||||||||||
Income Tax Expense (Benefit) |
66,993 |
(100,856) |
13,204 |
(124,656) |
|||||||||||
Income (Loss) From Continuing Operations |
173,823 |
(234,044) |
140,321 |
(277,340) |
|||||||||||
Loss From Discontinued Operations, net |
— |
(234,605) |
— |
(287,772) |
|||||||||||
Net Income (Loss) |
173,823 |
(468,649) |
140,321 |
(565,112) |
|||||||||||
Less: Net Income Attributable to Noncontrolling Interest |
4,313 |
1,179 |
9,777 |
2,293 |
|||||||||||
Net Income (Loss) Attributable to CONSOL Energy Shareholders |
$ |
169,510 |
$ |
(469,828) |
$ |
130,544 |
$ |
(567,405) |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (CONTINUED) | |||||||||||||||
(Dollars in thousands, except per share data) |
Three Months Ended |
Six Months Ended | |||||||||||||
(Unaudited) |
June 30, |
June 30, | |||||||||||||
Earnings (Loss) Per Share |
2017 |
2016 |
2017 |
2016 | |||||||||||
Basic |
|||||||||||||||
Income (Loss) from Continuing Operations |
$ |
0.74 |
$ |
(1.03) |
$ |
0.57 |
$ |
(1.22) |
|||||||
Loss from Discontinued Operations |
— |
(1.02) |
— |
(1.25) |
|||||||||||
Total Basic Earnings (Loss) Per Share |
$ |
0.74 |
$ |
(2.05) |
$ |
0.57 |
$ |
(2.47) |
|||||||
Dilutive |
|||||||||||||||
Income (Loss) from Continuing Operations |
$ |
0.73 |
$ |
(1.03) |
$ |
0.56 |
$ |
(1.22) |
|||||||
Loss from Discontinued Operations |
— |
(1.02) |
— |
(1.25) |
|||||||||||
Total Dilutive Earnings (Loss) Per Share |
$ |
0.73 |
$ |
(2.05) |
$ |
0.56 |
$ |
(2.47) |
|||||||
Dividends Declared Per Share |
$ |
— |
$ |
— |
$ |
— |
$ |
0.0100 |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
(Dollars in thousands) |
June 30, |
June 30, | |||||||||||||
(Unaudited) |
2017 |
2016 |
2017 |
2016 | |||||||||||
Net Income (Loss) |
$ |
173,823 |
$ |
(468,649) |
$ |
140,321 |
$ |
(565,112) |
|||||||
Other Comprehensive Income (Loss): |
|||||||||||||||
Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($2,034), ($5,008), ($4,086), ($4,326)) |
3,464 |
8,045 |
6,966 |
5,561 |
|||||||||||
Reclassification of Cash Flow Hedges from OCI to Earnings (Net of tax: $6,521, $12,145 ) |
— |
(11,203) |
— |
(21,017) |
|||||||||||
Other Comprehensive Income (Loss) |
3,464 |
(3,158) |
6,966 |
(15,456) |
|||||||||||
Comprehensive Income (Loss) |
177,287 |
(471,807) |
147,287 |
(580,568) |
|||||||||||
Less: Comprehensive Income Attributable to Noncontrolling Interest |
4,302 |
1,179 |
9,754 |
2,293 |
|||||||||||
Comprehensive Income (Loss) Attributable to CONSOL Energy Inc. Shareholders |
$ |
172,985 |
$ |
(472,986) |
$ |
137,533 |
$ |
(582,861) |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands) |
June 30, |
December 31, | |||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash and Cash Equivalents |
$ |
299,135 |
$ |
60,475 |
|||
Accounts and Notes Receivable: |
|||||||
Trade |
215,650 |
220,222 |
|||||
Other Receivables |
77,609 |
69,901 |
|||||
Inventories |
74,965 |
65,461 |
|||||
Recoverable Income Taxes |
115,558 |
116,851 |
|||||
Prepaid Expenses |
64,177 |
93,146 |
|||||
Current Assets of Discontinued Operations |
— |
83 |
|||||
Total Current Assets |
847,094 |
626,139 |
|||||
Property, Plant and Equipment: |
|||||||
Property, Plant and Equipment |
13,619,819 |
13,771,388 |
|||||
Less—Accumulated Depreciation, Depletion and Amortization |
5,825,601 |
5,630,949 |
|||||
Total Property, Plant and Equipment—Net |
7,794,218 |
8,140,439 |
|||||
Other Assets: |
|||||||
Deferred Income Taxes |
— |
4,290 |
|||||
Investment in Affiliates |
188,649 |
190,964 |
|||||
Other |
195,231 |
222,149 |
|||||
Total Other Assets |
383,880 |
417,403 |
|||||
TOTAL ASSETS |
$ |
9,025,192 |
$ |
9,183,981 |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands, except per share data) |
June 30, |
December 31, | |||||
LIABILITIES AND EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts Payable |
$ |
265,125 |
$ |
241,616 |
|||
Current Portion of Long-Term Debt |
11,385 |
12,000 |
|||||
Other Accrued Liabilities |
543,511 |
680,348 |
|||||
Current Liabilities of Discontinued Operations |
5,692 |
6,050 |
|||||
Total Current Liabilities |
825,713 |
940,014 |
|||||
Long-Term Debt: |
|||||||
Long-Term Debt |
2,596,055 |
2,722,995 |
|||||
Capital Lease Obligations |
34,053 |
39,074 |
|||||
Total Long-Term Debt |
2,630,108 |
2,762,069 |
|||||
Deferred Credits and Other Liabilities: |
|||||||
Deferred Income Taxes |
17,084 |
— |
|||||
Postretirement Benefits Other Than Pensions |
652,206 |
659,474 |
|||||
Pneumoconiosis Benefits |
107,321 |
108,073 |
|||||
Mine Closing |
200,132 |
218,631 |
|||||
Gas Well Closing |
224,327 |
223,352 |
|||||
Workers' Compensation |
66,009 |
67,277 |
|||||
Salary Retirement |
104,463 |
112,543 |
|||||
Other |
110,282 |
151,660 |
|||||
Total Deferred Credits and Other Liabilities |
1,481,824 |
1,541,010 |
|||||
TOTAL LIABILITIES |
4,937,645 |
5,243,093 |
|||||
Stockholders' Equity: |
|||||||
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 230,067,466 Issued and Outstanding at June 30, 2017; 229,443,008 Issued and Outstanding at December 31, 2016 |
2,304 |
2,298 |
|||||
Capital in Excess of Par Value |
2,476,552 |
2,460,864 |
|||||
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding |
— |
— |
|||||
Retained Earnings |
1,852,048 |
1,727,789 |
|||||
Accumulated Other Comprehensive Loss |
(385,567) |
(392,556) |
|||||
Total CONSOL Energy Inc. Stockholders' Equity |
3,945,337 |
3,798,395 |
|||||
Noncontrolling Interest |
142,210 |
142,493 |
|||||
TOTAL EQUITY |
4,087,547 |
3,940,888 |
|||||
TOTAL LIABILITIES AND EQUITY |
$ |
9,025,192 |
$ |
9,183,981 |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||
(Dollars in thousands) |
Common Stock |
Capital in Excess of Par Value |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Total CONSOL Energy Inc. |
Non- Controlling Interest |
Total Equity | ||||||||||||||||||||
December 31, 2016 |
$ |
2,298 |
$ |
2,460,864 |
$ |
1,727,789 |
$ |
(392,556) |
$ |
3,798,395 |
$ |
142,493 |
$ |
3,940,888 |
|||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||
Net Income |
— |
— |
130,544 |
— |
130,544 |
9,777 |
140,321 |
||||||||||||||||||||
Other Comprehensive Income (Loss) (Net of ($4,086) Tax) |
— |
— |
— |
6,989 |
6,989 |
(23) |
6,966 |
||||||||||||||||||||
Comprehensive Income |
— |
— |
130,544 |
6,989 |
137,533 |
9,754 |
147,287 |
||||||||||||||||||||
Issuance of Common Stock |
6 |
717 |
— |
— |
723 |
— |
723 |
||||||||||||||||||||
Treasury Stock Activity |
— |
— |
(6,285) |
— |
(6,285) |
(808) |
(7,093) |
||||||||||||||||||||
Amortization of Stock-Based Compensation Awards |
— |
14,971 |
— |
— |
14,971 |
1,706 |
16,677 |
||||||||||||||||||||
Distributions to Noncontrolling Interest |
— |
— |
— |
— |
— |
(10,935) |
(10,935) |
||||||||||||||||||||
Balance at June 30, 2017 |
$ |
2,304 |
$ |
2,476,552 |
$ |
1,852,048 |
$ |
(385,567) |
$ |
3,945,337 |
$ |
142,210 |
$ |
4,087,547 |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(Dollars in thousands) |
Three Months Ended |
Six Months Ended | |||||||||||||
(Unaudited) |
June 30, |
June 30, | |||||||||||||
Cash Flows from Operating Activities: |
2017 |
2016 |
2017 |
2016 | |||||||||||
Net Income (Loss) |
$ |
173,823 |
$ |
(468,649) |
$ |
140,321 |
$ |
(565,112) |
|||||||
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By Operating Activities: |
|||||||||||||||
Net Loss from Discontinued Operations |
— |
234,605 |
— |
287,772 |
|||||||||||
Depreciation, Depletion and Amortization |
117,069 |
135,220 |
265,839 |
290,208 |
|||||||||||
Impairment of Exploration and Production Properties |
— |
— |
137,865 |
— |
|||||||||||
Stock-Based Compensation |
9,975 |
10,430 |
16,677 |
16,054 |
|||||||||||
(Gain) Loss on Sale of Assets |
(140,162) |
(5,614) |
(152,113) |
1,662 |
|||||||||||
Loss (Gain) on Debt Extinguishment |
36 |
— |
(786) |
— |
|||||||||||
(Gain) Loss on Commodity Derivative Instruments |
(83,788) |
199,380 |
(61,325) |
144,320 |
|||||||||||
Net Cash (Paid) Received in Settlement of Commodity Derivative Instruments |
(32,285) |
80,335 |
(79,388) |
164,666 |
|||||||||||
Deferred Income Taxes |
59,224 |
(100,716) |
17,288 |
(124,516) |
|||||||||||
Equity in Earnings of Affiliates |
(10,055) |
(9,219) |
(22,385) |
(25,884) |
|||||||||||
Return on Equity Investment |
— |
4,680 |
— |
9,192 |
|||||||||||
Changes in Operating Assets: |
|||||||||||||||
Accounts and Notes Receivable |
23,805 |
32,934 |
(4,103) |
18,101 |
|||||||||||
Inventories |
(5,483) |
10,511 |
(9,798) |
(7,947) |
|||||||||||
Prepaid Expenses |
10,645 |
28,156 |
11,515 |
47,136 |
|||||||||||
Changes in Other Assets |
24,716 |
(5,434) |
25,652 |
(15,298) |
|||||||||||
Changes in Operating Liabilities: |
|||||||||||||||
Accounts Payable |
(1,492) |
(35,808) |
2,524 |
(44,124) |
|||||||||||
Accrued Interest |
(35,855) |
(36,674) |
(1,444) |
(807) |
|||||||||||
Other Operating Liabilities |
(36,180) |
(15,448) |
(8,029) |
(14,069) |
|||||||||||
Changes in Other Liabilities |
(11,295) |
18,656 |
(21,331) |
15,343 |
|||||||||||
Other |
26,279 |
5,556 |
37,192 |
9,648 |
|||||||||||
Net Cash Provided by Continuing Operating Activities |
88,977 |
82,901 |
294,171 |
206,345 |
|||||||||||
Net Cash (Used in) Provided by Discontinued Operating Activities |
(200) |
12,545 |
(275) |
19,053 |
|||||||||||
Net Cash Provided by Operating Activities |
88,777 |
95,446 |
293,896 |
225,398 |
|||||||||||
Cash Flows from Investing Activities: |
|||||||||||||||
Capital Expenditures |
(160,348) |
(37,601) |
(273,326) |
(115,257) |
|||||||||||
Proceeds from Sales of Assets |
325,724 |
9,831 |
345,151 |
18,284 |
|||||||||||
Net Distributions from (Investments in) Equity Affiliates |
18,791 |
— |
24,700 |
(5,578) |
|||||||||||
Net Cash Provided by (Used in) Continuing Investing Activities |
184,167 |
(27,770) |
96,525 |
(102,551) |
|||||||||||
Net Cash (Used in) Provided by Discontinued Investing Activities |
— |
(1,246) |
— |
394,511 |
|||||||||||
Net Cash Provided by (Used in) Investing Activities |
184,167 |
(29,016) |
96,525 |
291,960 |
|||||||||||
Cash Flows from Financing Activities: |
|||||||||||||||
Payments on Short-Term Borrowings |
— |
(385,500) |
— |
(486,000) |
|||||||||||
Payments on Miscellaneous Borrowings |
(3,031) |
(2,364) |
(5,973) |
(4,459) |
|||||||||||
Payments on Long-Term Notes |
(18,942) |
— |
(117,185) |
— |
|||||||||||
Net (Payments on) Proceeds from Revolver - CNX Coal Resources LP |
(7,000) |
(2,000) |
(11,000) |
13,000 |
|||||||||||
Distributions to Noncontrolling Interest |
(5,468) |
(5,412) |
(10,935) |
(10,825) |
|||||||||||
Dividends Paid |
— |
— |
— |
(2,294) |
|||||||||||
Issuance of Common Stock |
229 |
1 |
723 |
4 |
|||||||||||
Treasury Stock Activity |
(815) |
(147) |
(7,093) |
(1,657) |
|||||||||||
Debt Repurchase and Financing Fees |
(48) |
— |
(298) |
— |
|||||||||||
Net Cash Used in Continuing Financing Activities |
(35,075) |
(395,422) |
(151,761) |
(492,231) |
|||||||||||
Net Cash Used in Discontinued Financing Activities |
— |
(28) |
— |
(75) |
|||||||||||
Net Cash Used in Financing Activities |
(35,075) |
(395,450) |
(151,761) |
(492,306) |
|||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents |
237,869 |
(329,020) |
238,660 |
25,052 |
|||||||||||
Cash and Cash Equivalents at Beginning of Period |
61,266 |
426,646 |
60,475 |
72,574 |
|||||||||||
Cash and Cash Equivalents at End of Period |
$ |
299,135 |
$ |
97,626 |
$ |
299,135 |
$ |
97,626 |
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SOURCE CONSOL Energy Inc.
PITTSBURGH, July 27, 2017 /PRNewswire/ -- The Board of Directors of CNX Coal Resources GP LLC, the general partner of CNX Coal Resources LP (NYSE: CNXC), today announced a cash distribution $0.5125 per unit to all limited partner unitholders and the holder of the general partner interest. The Board of Directors has also approved a full cash distribution of approximately $0.4678 per unit to the holder of the convertible Class A Preferred Units. The distribution to all unitholders of the Partnership will be made on August 15, 2017 to such holders of record at the close of business on August 7, 2017.
CNX Coal Resources is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active coal operations in Pennsylvania. Its assets include a 25% undivided interest in, and operational control over, CONSOL's Pennsylvania mining complex, which consists of three underground mines and related infrastructure. More information is available on our website www.cnxlp.com.
Contacts:
Investor:
Mitesh Thakkar, (724) 485-3133
miteshthakkar@cnxlp.com
Media:
Zach Smith, (724) 485-4017
zacherysmith@cnxlp.com
View original content with multimedia:http://www.prnewswire.com/news-releases/cnx-coal-resources-announces-distribution-for-second-quarter-of-2017-300495773.html
SOURCE CNX Coal Resources LP
PITTSBURGH, July 11, 2017 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) (Company) announced today the filing of a registration statement on Form 10 with the U.S. Securities and Exchange Commission (SEC), an important milestone in the Company's previously announced plan to separate CONSOL Energy Inc. into two publicly-traded companies: a coal company and a natural gas exploration and production (E&P) company. The spin-off would provide current shareholders ownership in two leading and focused companies, each positioned to capitalize on distinct opportunities for future growth and profitability.
"Today's filing represents a significant step towards completing the Company's separation, with both entities being well capitalized and free cash flow generating. This strategic separation will enable both businesses to focus on their inherent strengths and unlock value for their shareholders," commented Nicholas J. DeIuliis, the Company's President and Chief Executive Officer.
The initial Form 10, which was filed by CONSOL Mining Corporation, a subsidiary of the Company that will hold the coal business at the time of the spin-off, includes detailed information about the coal business, including historical financial information. The coal business will be comprised of the Pennsylvania Mining Complex (consisting of the Bailey Mine, the Enlow Fork Mine and the Harvey Mine and the related coal preparation plant), the Company's ownership interest in CNX Coal Resources LP, a publicly traded master limited partnership that owns a 25% undivided interest in the Pennsylvania Mining Complex (NYSE: CNXC), the coal export terminal at the Port of Baltimore, undeveloped coal reserves located in the Northern Appalachian, Central Appalachian and Illinois basins, and certain related coal assets and liabilities. The initial Form 10 is preliminary and subject to change prior to completion of the separation.
As disclosed in the Form 10, Jimmy Brock has been appointed as Chief Executive Officer of the coal business and Katharine Fredriksen as President of the coal business. Effective August 2, 2017, David Khani will serve as Chief Financial Officer of the coal business and Don Rush, a current Vice President of the Company, will assume the role of Executive Vice President and Chief Financial Officer of the Company. After the separation, Nick DeIuliis will serve as the President and Chief Executive Officer of the E&P business and Don Rush will serve as the Executive Vice President and Chief Financial Officer of the E&P business.
About Jimmy Brock
Jimmy Brock currently serves as the Chief Executive Officer of the coal business, the Chief Operating Officer – Coal of the Company, and the Chief Executive Officer and director of the general partner of CNX Coal Resources, LP. With a career in coal spanning five decades, Mr. Brock's vast operational and leadership experience in the industry will continue to be an invaluable asset to the employees and shareholders of the new coal business.
About Katharine Fredriksen
Katharine Fredriksen, who formerly served as the Senior Vice President for Diversified Business Units and Environmental Affairs of the Company, has assumed the role of President of the coal business. Ms. Fredriksen has been responsible for the management of the Company's health, safety and environmental matters, including management of the Company's environmental legacy coal liabilities. She also has had responsibility for overseeing the operation of the company's Baltimore Marine Terminal and Central Appalachian mining operations. Previously, Ms. Fredriksen served in the George W. Bush administration as Assistant Secretary and Principal Deputy Assistant Secretary for the Office of Policy and International Affairs at the U.S. Department of Energy.
About David Khani
David Khani, Executive Vice President and Chief Financial Officer of the Company, will assume the same role with the newly formed coal entity effective August 2, 2017. Mr. Khani joined the Company in 2011 as Vice President of Finance where he played a key role in the growth of the Company's E&P business and is deeply involved in the ultimate separation of the coal and E&P businesses. Before joining the Company, Mr. Khani served as the Director of Research at FBR Capital Markets and Co. Mr. Khani previously served as Managing Director and head of FBR's Energy and Natural Resources Group covering the coal mining space.
About Don Rush
Don Rush, the Company's Vice President for Energy Marketing, will assume the role of Chief Financial Officer of the Company effective August 2, 2017. Having served in numerous leadership roles during his career with the Company, Mr. Rush has effectively guided the Company through every significant transaction during its transformative journey into a pure play natural gas exploration and production company, including the sale of the company's five West Virginia mines in 2013 and the dissolution of the Company's Marcellus Shale joint venture with Noble Energy, Inc. He currently oversees the Company's commercial functions, including mergers and acquisitions, gas marketing and transportation.
The Form 10 also contemplates that the coal business will operate under the name CONSOL Energy Inc. after the spin-off, and that the E&P company will operate under a new name that will be announced at a later date.
The spin-off remains subject to the satisfaction of certain conditions, including, among others, obtaining final approval from the Company's Board of Directors and the SEC declaring the Form 10 effective. A copy of the initial Form 10 is available on the SEC website at www.sec.gov and on the Investor Relations section of the Company's website: http://investors.consolenergy.com/.
The Company remains committed to separating its coal and gas businesses and expects to be in a position to complete the separation as early as 2017.
Second Quarter 2017 Earnings Release and Conference Call Schedule
Separately, the Company will issue its second quarter earnings release at 6:45 a.m. Eastern Time on Tuesday, August 1. This will be followed by a conference call at 10:00 a.m. Eastern Time. A live webcast will be available on the 'Investor Relations' page of the company's website, www.consolenergy.com. Also, earnings call slides will be available at 6:45 a.m. Eastern Time on Tuesday, August 1, on the 'Investor Relations' page of the company's website.
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, are forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects, including the potential separation, and our future production, revenues, income and capital spending. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," "will," 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: uncertainties as to the timing and manner of the separation (whether by sale or spin-off) and whether it will be completed (including any dropdowns of the coal business); the possibility that various closing conditions for the separation may not be satisfied; the impact of the separation on our business; the expected tax treatment of the separation; the risk that the coal and natural gas exploration and production businesses will not be separated successfully or such separation may be more difficult, time-consuming or costly than expected, which could result in additional demands on our resources, systems, procedures and controls, disruption of our ongoing business and diversion of management's attention from other business concerns; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas and other liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal and natural gas liquids abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our natural gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current natural gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas and coal rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year coal sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; a majority of our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC - disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating results; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity; other factors discussed in the 2016 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 disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, July 7, 2017 /PRNewswire/ -- CNX Coal Resources LP (NYSE: CNXC) will issue its second quarter earnings release after the market close on Monday, July 31. This will be followed by a conference call hosted by members of the management team at 5:00 p.m. Eastern Time. The webcast will be accessible on the 'Investor Relations' page of the company's website, www.cnxlp.com. An archive of the webcast will be available for at least 30 days after the event.
Participant dial in (toll free) 1-855-656-0928
Participant international dial in 1-412-902-4112
Participants should ask to be joined into the CNX Coal Resources earnings conference call.
CNX Coal Resources is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active coal operations in Pennsylvania. Its assets include a 25% undivided interest in, and operational control over, CONSOL's Pennsylvania mining complex, which consists of three underground mines and related infrastructure. More Information is available on our website www.cnxlp.com
Contacts:
Investor:
Mitesh Thakkar, at (724) 485-3133
miteshthakkar@cnxlp.com
Media:
Zach Smith, at (724) 485-4017
zacherysmith@cnxlp.com
SOURCE CNX Coal Resources LP
PITTSBURGH, May 2, 2017 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) reported net cash provided by operating activities in the just-ended quarter of $205 million, compared to $130 million in the year-earlier quarter, which included $6 million of net cash provided by discontinued operating activities. The company reported a net loss of $34 million for the quarter, less $5 million of net income attributable to noncontrolling interest, for a net loss attributable to CONSOL Energy shareholders of $39 million or a loss of $0.17 per diluted share.
Earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization (EBITDA) from continuing operations1 were $104 million for the 2017 first quarter, compared to $138 million in the year-earlier quarter.
On a GAAP basis, the first quarter earnings included the following pre-tax items attributable to continuing operations:
After adjusting for certain items, which are described in the footnote to the EBITDA reconciliation table, the company had adjusted net income attributable to CONSOL Energy Shareholders1 in the 2017 first quarter of $38 million, or $0.17 per diluted share. Adjusted EBITDA attributable to continuing operations1 was $217 million for the 2017 first quarter, compared to $181 million in the year-earlier quarter.
"During the quarter, substantial progress was achieved on three important drivers of net asset value (NAV) per share," commented Nicholas J. DeIuliis, president and CEO. "First, for E&P, cycle times are down, capital efficiencies are up, and well type curves are further optimized, resulting in production guidance increases in 2017 and 2018 without any increases to last quarter's previously announced capital budgets. Second, our asset sales program is in high gear, and we monetized over $100 million to date and expect to be over halfway to the high end of our $400-$600 million asset sales target by the end of the second quarter. Third, the company generated approximately $100 million in organic free cash flow from continuing operations1, which excludes asset sales, in the first quarter and used that organic free cash flow to purchase our debt at a discount and reduce interest expense."
During the quarter, CONSOL Energy operated two horizontal rigs and drilled nine wells: seven dry Utica Shale wells in Monroe County, Ohio, and two Marcellus Shale wells in Washington County, Pennsylvania. The Ohio wells averaged approximately 9,900 lateral feet, while averaging 21.5 drilling days per well, compared to 24.0 drilling days per well during the fourth quarter of 2016. At the current pace, a single rig could drill 16 dry Utica Shale wells averaging 10,000 foot laterals, per year, which is a 14% improvement compared to the fourth quarter of 2016. Also during the quarter, CONSOL set a Marcellus Shale record by drilling 7,380 feet of lateral in 24 hours on the MOR30B well, located in Washington County, Pennsylvania.
"Over the course of the quarter, the operational execution of the team has been tremendous and, as a result, we have continued to see further efficiency improvements in both drilling and completion activities," commented Timothy C. Dugan, chief operating officer. "These improvements have led to further reductions in cycle times resulting in the acceleration of activity in 2017."
With the recent dissolution of the Marcellus Shale joint venture (JV) now providing full operational and strategic control, along with commodity price improvement, the company began monetizing non-core E&P assets in the quarter. CONSOL Energy recently closed on three asset sale transactions for total cash consideration of $108 million, of which the company has received aggregate proceeds of $16 million through March 31. One of the transactions was the sale of approximately 6,300 net undeveloped acres of the Utica-Point Pleasant Shale in Jefferson, Belmont and Guernsey counties, Ohio, for total cash consideration of approximately $77 million, or approximately $12,200 per undeveloped acre. Separately, the company divested non-core oil and gas assets, pipelines, and surface properties in two separate transactions for total cash consideration of $31 million. "These divestitures, along with additional packages in process, give us the momentum and confidence to reach our previously announced asset sales target of $400-$600 million, and we expect to be halfway to the high end of the target by the end of the second quarter," commented David M. Khani, chief financial officer.
During the quarter, CONSOL Energy generated approximately $117 million in free cash flow1, which included approximately $100 million of organic free cash flow from continuing operations1. Utilizing free cash generated during the quarter, the company repurchased approximately $100 million of its 2022 bonds at an average price of $98.54 in the open market, while maintaining liquidity at year-end levels. The company expects the 2017 leverage ratio to decline to approximately 2.0x by year-end.
1The terms "adjusted net income attributable to CONSOL Energy Shareholders," "EBITDA from continuing operations," and "adjusted EBITDA from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP net income below, under the caption "Non-GAAP Financial Measures." The terms "free cash flow," and "organic free cash flow from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP Net Cash Provided by Operating Activities, also under the caption "Non-GAAP Financial Measures."
E&P Division:
During the first quarter of 2017, CONSOL's E&P Division sold 95.0 Bcfe, or a decrease of 3% from the 97.5 Bcfe sold in the year-earlier quarter, driven primarily from production declines in the Utica Shale segment.
During the quarter, total production costs decreased to $2.32 per Mcfe, compared to the year-earlier quarter of $2.41 per Mcfe, driven primarily by reductions to lease operating expense and depreciation, depletion and amortization (DD&A). The reductions to lease operating expense were partially offset by an increase in gathering costs related to CONE Midstream fees due to the Marcellus Shale production mix increasing resulting from the Marcellus Shale JV dissolution in the fourth quarter of 2016, as well as additional flowing production for CONSOL.
Due to increased drilling and completion activities, E&P Division capital expenditures increased in the first quarter to $100.8 million, compared to $30.1 million spent in the fourth quarter of 2016.
Marcellus Shale production volumes, including liquids, in the 2017 first quarter were 58.0 Bcfe, approximately 13% higher than the 51.2 Bcfe produced in the 2016 first quarter. The increased Marcellus production is due in part to CONSOL obtaining newer wells and more flowing production as part of the Marcellus Shale JV dissolution. Marcellus total production costs were $2.18 per Mcfe in the just-ended quarter, which is a $0.27 per Mcfe improvement from the first quarter of 2016 of $2.45 per Mcfe, driven by reductions to lease operating expense, transportation, gathering and compression, and DD&A. DD&A decreased on a per-unit basis primarily due to a reduction in Marcellus DD&A rates resulting from an increase in the company's Marcellus reserves following the Marcellus Shale JV dissolution in the fourth quarter of 2016.
CONSOL Energy's Utica Shale production volumes, including liquids, in the 2017 first quarter were 15.3 Bcfe, down approximately 33% from 22.9 Bcfe in the year-earlier quarter. The decline in Utica Shale volumes resulted primarily from three areas: delayed timing associated with the development plan and turning wells in-line; natural production declines in both the wet and dry gas areas; and temporary shut-ins due to operational considerations. CONSOL expects 2017 Utica Shale volume growth, compared to 2016, driven by wells scheduled to get turned-in-line (TIL) in the second half of the year. Utica Shale total production costs were $2.16 per Mcfe in the just-ended quarter, which is a $0.37 per Mcfe impairment from the first quarter of 2016 total production costs of $1.79 per Mcfe. The cost impairment was driven by an increase in firm transportation and processing costs, an increase in property taxes associated with Hess operated Utica production, and an increase in Utica Shale DD&A rates due to higher capital costs associated with the initial dry Utica Pennsylvania wells. These three increases were partially offset with a reduction to lease operating expense. CONSOL expects Utica Shale total production costs to improve to approximately $1.80 per Mcfe for full year 2017, driven primarily by the addition of lower operating cost dry Utica Shale wells becoming a larger part of the production mix.
E&P Division First Quarter Operations Summary:
In addition to drilling nine wells in the quarter with two horizontal rigs, the company also utilized three frac crews. In January 2017, the company finished completion activity in Allegheny County, Pennsylvania, on its ACAA1 pad, which contains six Marcellus wells, as well as one Burkett and Rhinestreet well each. Three of the Marcellus Shale wells were TIL in the quarter with the remaining five wells carrying over into the second quarter. Frac design optimization and improved logistics resulted in the company frac'ing on average 1,245 feet per day, compared to 800 feet per day in 2016. Operating at this pace, with pads drilled and ready to frac, a crew can frac 46 Marcellus wells per year with an average lateral length of 8,000 feet. Also during the quarter, the company commenced completion activities in Monroe County, Ohio, on the SWITZ16 and SWITZ5 Utica pads, and in Ritchie County, West Virginia, on the PENS2 Marcellus Shale pad. The company expects these three pads to be TIL in the second quarter of 2017.
E&P DIVISION RESULTS — Quarter-to-Quarter Comparison
Quarter |
Quarter |
Quarter |
|||||||||||
Ended |
Ended |
Ended |
|||||||||||
March 31, |
March 31, |
December 31, |
|||||||||||
Sales - Gas |
$ |
273.6 |
$ |
157.4 |
$ |
202.4 |
|||||||
Sales - Oil |
0.6 |
0.5 |
0.7 |
||||||||||
Sales - NGLs |
39.3 |
19.9 |
31.4 |
||||||||||
Sales - Condensate |
4.3 |
3.9 |
3.6 |
||||||||||
Total Sales Revenue ($ MM) |
$ |
317.8 |
$ |
181.7 |
$ |
238.1 |
|||||||
(Loss) Gain on Commodity Derivative Instruments - Cash Settlement |
(47.1) |
84.3 |
42.0 |
||||||||||
Total Revenue |
$ |
270.7 |
$ |
266.0 |
$ |
280.1 |
|||||||
Loss Before Income Tax ($ MM) |
$ |
(93.5) |
$ |
(22.9) |
$ |
(222.5) |
|||||||
Adjusted Earnings Before Income Tax ($MM) |
$ |
19.9 |
1 |
$ |
19.0 |
2 |
$ |
14.3 |
3 | ||||
Capital Expenditures ($ MM) |
$ |
100.8 |
$ |
62.9 |
$ |
30.1 |
|||||||
1Adjusted earnings before income tax for the E&P Division of $19.9 million for the three months ended March 31, 2017 is calculated as GAAP loss before income tax of $93.5 million plus total pre-tax adjustments of $113.4 million. The $113.4 million adjustment includes a $24.6 million pre-tax gain related to the unrealized gain on commodity derivative instruments, a pre-tax loss of $137.9 million related to the impairment of exploration and production assets and a pre-tax loss of $0.1 million related to severance expense. | |||||||||||||
2Adjusted earnings before income tax for the E&P Division of $19.0 million for the three months ended March 31, 2016 is calculated as GAAP loss before income tax of $22.9 million plus total pre-tax adjustments of $41.9 million. The $41.9 million adjustment includes a $29.3 million pre-tax loss related to the unrealized loss on commodity derivative instruments and a pre-tax loss of $12.6 million related to a gathering pipeline sale. | |||||||||||||
3Adjusted earnings before income tax for the E&P Division of $14.3 million for the three months ended December 31, 2016 is calculated as GAAP loss before income tax of $222.5 million plus total pre-tax adjustments of $236.8 million. The $236.8 million adjustment is a pre-tax loss related to the unrealized loss on commodity derivative instruments. |
CONSOL's E&P Division production in the quarter came from the following categories:
Quarter |
Quarter |
Quarter |
|||||||||||||
Ended |
Ended |
Ended |
|||||||||||||
March 31, |
March 31, |
% Increase/ |
December 31, |
% Increase/ | |||||||||||
GAS |
|||||||||||||||
Marcellus Sales Volumes (Bcf) |
52.9 |
45.1 |
17.3 |
% |
51.5 |
2.7 |
% | ||||||||
Utica Sales Volumes (Bcf) |
11.6 |
17.7 |
(34.5) |
% |
17.2 |
(32.6) |
% | ||||||||
CBM Sales Volumes (Bcf) |
16.7 |
17.6 |
(5.1) |
% |
17.4 |
(4.0) |
% | ||||||||
Other Sales Volumes (Bcf)1 |
4.9 |
5.7 |
(14.0) |
% |
5.2 |
(5.8) |
% | ||||||||
LIQUIDS2 |
|||||||||||||||
NGLs Sales Volumes (Bcfe) |
8.1 |
9.7 |
(16.5) |
% |
9.2 |
(12.0) |
% | ||||||||
Oil Sales Volumes (Bcfe) |
0.1 |
0.1 |
— |
% |
0.1 |
— |
% | ||||||||
Condensate Sales Volumes (Bcfe) |
0.7 |
1.6 |
(56.3) |
% |
0.7 |
— |
% | ||||||||
TOTAL |
95.0 |
97.5 |
(2.6) |
% |
101.3 |
(6.2) |
% | ||||||||
Average Daily Production (MMcfe) |
1,055.8 |
1,071.0 |
1,100.7 |
||||||||||||
1Other Sales Volumes: primarily related to shallow oil and gas production and the Chattanooga shale in Tennessee. | |||||||||||||||
2NGLs, oil and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. |
E&P PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison:
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
(Per Mcfe) |
March 31, |
March 31, |
December 31, | |||||||||
Average Sales Price - Gas |
$ |
3.18 |
$ |
1.83 |
$ |
2.22 |
||||||
Average (Loss) Gain on Commodity Derivative Instruments - Cash Settlement- Gas |
$ |
(0.55) |
$ |
0.98 |
$ |
0.46 |
||||||
Average Sales Price - Oil* |
$ |
7.40 |
$ |
5.14 |
$ |
6.93 |
||||||
Average Sales Price - NGLs* |
$ |
4.86 |
$ |
2.05 |
$ |
3.40 |
||||||
Average Sales Price - Condensate* |
$ |
5.64 |
$ |
2.44 |
$ |
5.14 |
||||||
Average Sales Price - Total Company |
$ |
2.85 |
$ |
2.73 |
$ |
2.77 |
||||||
Lease Operating Expense |
$ |
0.23 |
$ |
0.28 |
$ |
0.22 |
||||||
Production, Ad Valorem, and Other Fees |
0.09 |
0.09 |
0.07 |
|||||||||
Transportation, Gathering and Compression |
0.99 |
0.96 |
0.93 |
|||||||||
Depreciation, Depletion and Amortization |
1.01 |
1.08 |
1.05 |
|||||||||
Total Production Costs |
$ |
2.32 |
$ |
2.41 |
$ |
2.27 |
||||||
Margin |
$ |
0.53 |
$ |
0.32 |
$ |
0.50 |
||||||
*Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. | ||||||||||||
Note: "Total Production Costs" excludes Selling, General, and Administration and Other Corporate Expenses. |
The average sales price of $2.85 per Mcfe, when combined with unit costs of $2.32 per Mcfe, resulted in a margin of $0.53 per Mcfe. This was an increase when compared to the year-earlier quarter, due to improvements in both average sales price and unit costs.
Marketing Update:
For the first quarter of 2017, CONSOL's average sales price for natural gas, natural gas liquids (NGL), oil, and condensate was $2.85 per Mcfe. CONSOL's average price for natural gas was $3.18 per Mcf for the quarter and, including cash settlements from hedging, was $2.63 per Mcf. Excluding hedging, the average realized price for all liquids for the first quarter of 2017 was $29.72 per barrel, an increase of 39% from the previous quarter.
CONSOL's weighted average differential from NYMEX in the first quarter of 2017 was ($0.30) per MMBtu. With an improved Henry Hub price coupled with an improved differential, CONSOL's average sales price for natural gas before hedging improved 43% to $3.18 per Mcf, compared to the average sales price of $2.22 per Mcf in the fourth quarter of 2016.
During the quarter, CONSOL executed on its strategy to add firm transportation capacity while avoiding expensive, long-term contracts. Specifically, CONSOL executed large-volume sales with two customers served on East Tennessee Natural Gas Pipeline ("ETNG"). These sales meet three marketing priorities. First, the deals complement the company's hedging program by providing a protection of physical basis in an illiquid, premium market for over three years, beginning in April of 2017. Next, the pricing structures for both deals provide value above the pool sales on Columbia Gas Transmission where much of the gas flowed prior to certain system enhancements. Finally, both deals utilize the customers' firm transportation capacity, at no cost to CONSOL, thereby allowing CONSOL to forego the renewal of certain firm transportation obligations on ETNG.
CONSOL continued to recover and sell discretionary ethane during the quarter. Directly-marketed ethane volumes were 367,000 barrels in the first quarter of 2017 and yielded a weighted average sales price in excess of Mont Belvieu ethane and $1.15 per MMBtu higher than CONSOL's residue natural gas alternative.
E&P Division Guidance:
CONSOL Energy is increasing its E&P Division production guidance for 2017 and 2018 to approximately 420-440 Bcfe and 490-520 Bcfe, respectively, compared to previous guidance of 415 Bcfe and 485 Bcfe. The increase in production guidance is driven primarily by two factors: improved cycle times resulting in more production over a longer period of time, and type curve optimization in the Morris and Switz operating areas through changes to the production protocol resulting in holding production flatter for a longer period of time. The increase in production assumes no change to previously announced total E&P capital expenditures in 2017 and 2018 of approximately $555 and $600 million, respectively.
CONSOL Energy continued its programmatic hedge program to further build out NYMEX and basis hedges through 2021. Total hedged natural gas production in the 2017 second quarter is 76.1 Bcf. The annual gas hedge position is shown in the table below:
2017 |
2018 |
|||||
Volumes Hedged (Bcf), as of 4/18/17 |
312.4* |
283.2 | ||||
*Includes actual settlements of 97.8 Bcf. |
CONSOL Energy's hedged gas volumes include a combination of NYMEX financial hedges and index (NYMEX and basis) hedges and contracts. In addition, to protect the NYMEX hedge volumes from basis exposure, CONSOL enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CONSOL Energy's gas hedge position is shown in the table below:
Q2 2017 |
2017 |
2018 |
2019 |
2020 | ||||||||||||||||
NYMEX Only Hedges |
||||||||||||||||||||
Volumes (Bcf) |
68.0 |
279.9 |
276.4 |
194.9 |
117.2 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
3.18 |
$ |
3.17 |
$ |
3.17 |
$ |
3.07 |
$ |
3.11 |
||||||||||
Index Hedges and Contracts |
||||||||||||||||||||
Volumes (Bcf) |
8.1 |
32.5 |
6.8 |
12.8 |
7.7 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
3.19 |
$ |
3.18 |
$ |
2.61 |
$ |
2.51 |
$ |
2.46 |
||||||||||
Total Volumes Hedged (Bcf) |
76.1 |
312.4 |
283.2 |
207.7 |
124.9 |
|||||||||||||||
NYMEX + Basis (fully-covered volumes)1 |
||||||||||||||||||||
Volumes (Bcf) |
71.1 |
307.2 |
253.8 |
170.0 |
109.8 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
2.59 |
$ |
2.61 |
$ |
2.86 |
$ |
2.81 |
$ |
2.85 |
||||||||||
NYMEX Only Hedges Exposed to Basis |
||||||||||||||||||||
Volumes (Bcf) |
5.0 |
5.2 |
29.4 |
37.7 |
15.1 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
3.18 |
$ |
3.17 |
$ |
3.17 |
$ |
3.07 |
$ |
3.11 |
||||||||||
Total Volumes Hedged (Bcf) |
76.1 |
312.4 |
283.2 |
207.7 |
124.9 |
|||||||||||||||
1Includes physical sales with fixed basis in Q2 2017, 2017, 2018, 2019, and 2020 of 14.0 Bcf, 62.1 Bcf, 95.3 Bcf, 82.6 Bcf, and 48.7 Bcf, respectively. |
During the first quarter of 2017, CONSOL Energy added additional NYMEX natural gas hedges of 60.6 Bcf, 40.0 Bcf, 32.5 Bcf, and 13.8 Bcf for 2018, 2019, 2020, and 2021, respectively. To help mitigate basis exposure on NYMEX hedges, in the first quarter CONSOL added 29.2 Bcf, 76.9 Bcf, 66.5 Bcf, 55.9 Bcf, and 25.0 Bcf of basis hedges for 2017, 2018, 2019, 2020, and 2021, respectively.
Pennsylvania (PA) Mining Operations Division:
CONSOL Energy's PA Mining Operations sold 6.8 million tons in the 2017 first quarter, compared to 5.3 million tons during the year-earlier quarter. During the quarter, the average cost of coal sold increased to $34.52 per ton, compared to $33.16 per ton in the year-earlier quarter due to the mobilization of additional resources for the development of longwall panels, demanding geological conditions at Enlow Fork mine, and increased equipment maintenance.
First Quarter Operations Summary:
CNX Coal Resources LP ("CNXC") reported the following in its first quarter 2017 earnings press release, dated May 1, 2017: "In spite of another mild winter, our coal sales improved substantially during the first quarter compared to the year-ago period, as higher natural gas prices and more normal coal inventory levels supported improved demand from our domestic power plant customers. Based on our updated coal sales guidance range, we are approximately 95% contracted for 2017 and 64% contracted for 2018. We believe our contracted position is well-balanced in hedging against market downside risk while allowing us to continue to build out the portfolio strategically and opportunistically as the market evolves."
During the quarter, on a total consolidated basis, PA Mining Operations Division generated $123 million of cash flow before capital expenditures.
PA MINING OPERATIONS RESULTS - Quarter-To-Quarter Comparison
PA Mining Ops |
PA Mining Ops |
PA Mining Ops | ||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
March 31, |
March 31, |
December 31, | ||||||||||
2017 |
2016 |
2016 | ||||||||||
Beginning Inventory (millions of tons) |
0.2 |
0.1 |
0.2 |
|||||||||
Coal Production (millions of tons) |
6.9 |
5.4 |
7.1 |
|||||||||
Ending Inventory (millions of tons) |
0.3 |
0.3 |
0.2 |
|||||||||
Sales - Company Produced (millions of tons) |
6.8 |
5.3 |
7.1 |
|||||||||
Sales Per Ton |
$ |
46.80 |
$ |
42.99 |
$ |
45.05 |
||||||
Average Cost of Coal Sold Per Ton |
$ |
34.52 |
$ |
33.16 |
$ |
33.90 |
||||||
Average Margin Per Ton Sold |
$ |
12.28 |
$ |
9.83 |
$ |
11.15 |
||||||
Addback: DD&A Per Ton |
$ |
5.77 |
$ |
6.45 |
$ |
5.70 |
||||||
Average Margin Per Ton, before DD&A |
$ |
18.05 |
$ |
16.28 |
$ |
16.85 |
||||||
Cash Flow before Cap. Ex ($ MM) |
$ |
123 |
$ |
86 |
$ |
120 |
||||||
Note: The PA Mining Operations include Bailey, Enlow Fork, and Harvey mines. Total Production Costs per Ton include: operating and other costs, royalty and production taxes and depreciation, depletion and amortization. Sales tons times Average Margin Per Ton, before DD&A is meant to approximate the amount of cash generated by PA Mining Operations. This cash generation will be offset by maintenance of production (MOP) capital expenditures. Table may not sum due to rounding. |
CONSOL Energy now expects total consolidated PA Mining Operations annual sales to be approximately 25.6-27.6 million tons for 2017, compared to previous guidance of 26.0 million tons. Also, CONSOL Energy updates expected total consolidated capital expenditures for PA Mining Operations to be $120-$136 million for 2017, compared to previous guidance of $135 million.
2017 EBITDA Guidance by Segment:
(in millions) |
E&P Division1 |
PA Mining Operations Division |
Other |
Total | ||||||||||||
Earnings Before Interest, Taxes and DD&A (EBITDA) |
$ |
705 |
$ |
410 |
$ |
(20) |
$ |
1,095 |
||||||||
Adjustments: |
||||||||||||||||
Unrealized Loss/(Gain) on Commodity Derivative Instruments |
(150) |
- |
- |
(150) |
||||||||||||
Stock-Based Compensation |
20 |
10 |
- |
30 |
||||||||||||
Adjusted EBITDA |
$ |
575 |
$ |
420 |
$ |
(20) |
975 |
|||||||||
Noncontrolling Interest |
- |
$ |
(50) |
- |
(50) |
|||||||||||
Adjusted EBITDA Attributable to CNX |
$ |
575 |
$ |
370 |
$ |
(20) |
$ |
925 |
||||||||
Note: CONSOL Energy is unable to provide a reconciliation of projected Adjusted EBITDA to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing and potential significance of certain income statement items. EBITDA guidance based on the midpoint of production guidance and assumes NYMEX as of 4/4/2017 of $3.40 + weighted average basis of ($0.29) per MMBtu on open volumes. | ||||||||||||||||
1Includes forecasted Earnings of Equity Affiliates of $40 million in 2017 associated with CONSOL Energy's proportionate share of ownership in CONE Midstream Partners. This income is reflected within Miscellaneous Other Income in the CNX income statement. |
Liquidity:
As of March 31, 2017, CONSOL Energy had $1,721.4 million in total liquidity, which is comprised of $54.7 million of cash, excluding the CNXC cash balance, and $1,666.7 million available to be borrowed under its $2.0 billion bank facility. In addition, CONSOL holds 16.6 million CNXC limited partnership units, including 3.9 million class A preferred units, with an aggregated current market value of approximately $252 million and 21.7 million CONE Midstream Partners LP ("CNNX") limited partnership units with a current market value of approximately $461 million, in each case as of April 21, 2017.
CONSOL's net leverage ratio, using bank methodology, at the end of the quarter was 3.9x, a reduction from 4.4x at year-end. Improving financial performance from operations along with free cash flow generation and debt reduction drove the decrease in leverage.
About CONSOL
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2016, CONSOL Energy had 6.3 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
Non-GAAP Financial Measures
Definition: 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. Adjusted EBITDA is defined as EBITDA after adjusting for the discrete items listed below. Although EBIT, EBITDA, and Adjusted 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 to evaluate a company's operating performance. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDA, or Adjusted EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies.
Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial net income attributable to CONSOL Energy Shareholders is as follows (dollars in 000):
Three Months Ended | ||||||||||||||||||||
March 31, | ||||||||||||||||||||
2017 |
2017 |
2017 |
2017 |
2016 | ||||||||||||||||
Dollars in thousands |
E&P Division |
PA Mining Operations Division |
Other1 |
Total Company |
Total Company | |||||||||||||||
Net (Loss) Income |
$ |
(93,502) |
$ |
61,015 |
$ |
(1,015) |
$ |
(33,502) |
$ |
(96,458) |
||||||||||
Less: Loss from Discontinued Operations |
— |
— |
— |
— |
53,167 |
|||||||||||||||
Add: Interest Expense |
621 |
2,297 |
41,515 |
44,433 |
49,865 |
|||||||||||||||
Less: Interest Income |
— |
— |
(1,543) |
(1,543) |
(214) |
|||||||||||||||
Add: Income Taxes |
— |
— |
(53,789) |
(53,789) |
(23,800) |
|||||||||||||||
Earnings Before Interest & Taxes (EBIT) |
(92,881) |
63,312 |
(14,832) |
(44,401) |
(17,440) |
|||||||||||||||
Add: Depreciation, Depletion & Amortization |
95,348 |
42,301 |
11,104 |
148,753 |
154,988 |
|||||||||||||||
Earnings Before Interest, Taxes and DD&A (EBITDA) from Continuing Operations |
$ |
2,467 |
$ |
105,613 |
$ |
(3,728) |
$ |
104,352 |
$ |
137,548 |
||||||||||
Adjustments: |
||||||||||||||||||||
Unrealized (Gain) Loss on Commodity Derivative Instruments |
(24,640) |
— |
— |
(24,640) |
29,271 |
|||||||||||||||
Impairment of E&P Properties |
137,865 |
— |
— |
137,865 |
— |
|||||||||||||||
Loss on Sale of Gathering Pipeline |
— |
— |
— |
— |
12,636 |
|||||||||||||||
Severance Expense |
162 |
— |
68 |
230 |
2,918 |
|||||||||||||||
Other Transaction Fees |
— |
— |
5,316 |
5,316 |
— |
|||||||||||||||
Gain on Debt Extinguishment |
— |
— |
(822) |
(822) |
— |
|||||||||||||||
Total Pre-tax Adjustments |
113,387 |
— |
4,562 |
117,949 |
44,825 |
|||||||||||||||
Adjusted EBITDA from Continuing Operations |
$ |
115,854 |
$ |
105,613 |
$ |
834 |
$ |
222,301 |
$ |
182,373 |
||||||||||
Less: Net Income Attributable to Noncontrolling Interest |
— |
5,464 |
— |
5,464 |
1,114 |
|||||||||||||||
Adjusted EBITDA Attributable to Continuing Operations |
$ |
115,854 |
$ |
100,149 |
$ |
834 |
$ |
216,837 |
$ |
181,259 |
||||||||||
Note: Income tax effect of Total Pre-tax Adjustments was $40,884 and $10,310 for the three months ended March 31, 2017 and March 31, 2016, respectively. Adjusted net income attributable to CONSOL Energy Shareholders for the three months ended March 31, 2017 is calculated as GAAP net loss attributable to CONSOL Energy Shareholders of $38,966 plus total pre-tax adjustments from the above table of $117,949, less the associated tax expense of $40,884 equals the adjusted net income attributable to CONSOL Energy Shareholders of $38,099. | ||||||||||||||||||||
1CONSOL Energy's Other Division includes expenses from various other corporate and diversified business unit activities including legacy liabilities costs and income tax expense that are not allocated to E&P or PA Mining Operations Divisions. |
Free cash flow and organic free cash flow from continuing operations are non-GAAP financial measures. Management believes that these measures are meaningful to investors because management reviews cash flows generated from operations and non-core asset sales after taking into consideration capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand CONSOL's asset base and are expected to generate future cash flows from operations. It is important to note that free cash flow and organic free cash flow from continuing operations do not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure.
Organic Cash Flow from Continuing Operations |
Three Months Ended | ||
Net Cash Provided by Continuing Operations |
$ |
205,194 |
|
Capital Expenditures |
(112,978) |
||
Net Distributions from Equity Affiliates |
5,909 |
||
Organic Free Cash Flow from Continuing Operations |
$ |
98,125 |
|
Free Cash Flow |
Three Months Ended | ||
Net Cash Provided by Operating Activities |
$ |
205,119 |
|
Capital Expenditures |
(112,978) |
||
Net Distributions from Equity Affiliates |
5,909 |
||
Proceeds From Sales of Assets |
19,427 |
||
Free Cash Flow |
$ |
117,477 |
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas and other liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal and natural gas liquids abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our natural gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current natural gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas and coal rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year coal sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; a majority of our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC - disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating results; there is no assurance that the potential dropdowns, spin-off or sale of the coal business will occur, or if it does occur that we will be able to negotiate favorable terms; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity; other factors discussed in the 2016 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible oil and gas reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by application of development projects to known accumulations. We may use certain terms in this press release, such as EUR (estimated ultimate recovery), unproved reserves and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. These measures are by their nature more speculative than estimates of reserves prepared in accordance with SEC definitions and guidelines and accordingly are less certain. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category.
This announcement does not constitute an offer to sell, or the solicitation of an offer to buy, any securities of CNX Coal Resources LP.
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||
(Dollars in thousands, except per share data) |
Three Months Ended | ||||||
(Unaudited) |
March 31, | ||||||
Revenues and Other Income: |
2017 |
2016 | |||||
Natural Gas, NGLs and Oil Sales |
$ |
317,763 |
$ |
181,255 |
|||
(Loss) Gain on Commodity Derivative Instruments |
(22,463) |
55,060 |
|||||
Coal Sales |
316,448 |
226,164 |
|||||
Other Outside Sales |
13,053 |
7,766 |
|||||
Purchased Gas Sales |
8,979 |
8,618 |
|||||
Freight-Outside Coal |
12,282 |
13,110 |
|||||
Miscellaneous Other Income |
40,696 |
48,131 |
|||||
Gain (Loss) on Sale of Assets |
11,951 |
(7,276) |
|||||
Total Revenue and Other Income |
698,709 |
532,828 |
|||||
Costs and Expenses: |
|||||||
Exploration and Production Costs |
|||||||
Lease Operating Expense |
21,633 |
27,739 |
|||||
Transportation, Gathering and Compression |
94,332 |
93,974 |
|||||
Production, Ad Valorem, and Other Fees |
9,329 |
8,303 |
|||||
Depreciation, Depletion and Amortization |
95,348 |
105,715 |
|||||
Exploration and Production Related Other Costs |
9,786 |
1,747 |
|||||
Purchased Gas Costs |
8,895 |
7,868 |
|||||
Other Corporate Expenses |
17,930 |
22,798 |
|||||
Impairment of Exploration and Production Properties |
137,865 |
— |
|||||
Selling, General, and Administrative Costs |
21,490 |
22,458 |
|||||
Total Exploration and Production Costs |
416,608 |
290,602 |
|||||
PA Mining Operations Costs |
|||||||
Operating and Other Costs |
199,815 |
154,101 |
|||||
Depreciation, Depletion and Amortization |
42,301 |
41,266 |
|||||
Freight Expense |
12,282 |
13,110 |
|||||
Selling, General, and Administrative Costs |
14,868 |
5,776 |
|||||
Total PA Mining Operations Costs |
269,266 |
214,253 |
|||||
Other Costs |
|||||||
Miscellaneous Operating Expense |
43,200 |
35,339 |
|||||
Selling, General, and Administrative Costs |
2,211 |
1,853 |
|||||
Depreciation, Depletion and Amortization |
11,104 |
8,007 |
|||||
Gain on Debt Extinguishment |
(822) |
— |
|||||
Interest Expense |
44,433 |
49,865 |
|||||
Total Other Costs |
100,126 |
95,064 |
|||||
Total Costs And Expenses |
786,000 |
599,919 |
|||||
Loss From Continuing Operations Before Income Tax |
(87,291) |
(67,091) |
|||||
Income Tax Benefit |
(53,789) |
(23,800) |
|||||
Loss From Continuing Operations |
(33,502) |
(43,291) |
|||||
Loss From Discontinued Operations, net |
— |
(53,167) |
|||||
Net Loss |
(33,502) |
(96,458) |
|||||
Less: Net Income Attributable to Noncontrolling Interest |
5,464 |
1,114 |
|||||
Net Loss Attributable to CONSOL Energy Shareholders |
$ |
(38,966) |
$ |
(97,572) |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF INCOME (CONTINUED) | |||||||
(Dollars in thousands, except per share data) |
Three Months Ended | ||||||
(Unaudited) |
March 31, | ||||||
Loss Per Share |
2017 |
2016 | |||||
Basic |
|||||||
Loss from Continuing Operations |
$ |
(0.17) |
$ |
(0.19) |
|||
Loss from Discontinued Operations |
— |
(0.24) |
|||||
Total Basic Loss Per Share |
$ |
(0.17) |
$ |
(0.43) |
|||
Dilutive |
|||||||
Loss from Continuing Operations |
$ |
(0.17) |
$ |
(0.19) |
|||
Loss from Discontinued Operations |
— |
(0.24) |
|||||
Total Dilutive Loss Per Share |
$ |
(0.17) |
$ |
(0.43) |
|||
Dividends Declared Per Share |
$ |
— |
$ |
0.0100 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||
Three Months Ended | |||||||
(Dollars in thousands) |
March 31, | ||||||
(Unaudited) |
2017 |
2016 | |||||
Net Loss |
$ |
(33,502) |
$ |
(96,458) |
|||
Other Comprehensive Income (Loss): |
|||||||
Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($2,052), $682) |
3,502 |
(2,484) |
|||||
Reclassification of Cash Flow Hedges from OCI to Earnings (Net of tax: $5,624) |
— |
(9,814) |
|||||
Other Comprehensive Income (Loss) |
3,502 |
(12,298) |
|||||
Comprehensive Loss |
(30,000) |
(108,756) |
|||||
Less: Comprehensive Income Attributable to Noncontrolling Interests |
5,452 |
1,114 |
|||||
Comprehensive Loss Attributable to CONSOL Energy Inc. Shareholders |
$ |
(35,452) |
$ |
(109,870) |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands) |
March 31, |
December 31, | |||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash and Cash Equivalents |
$ |
61,266 |
$ |
60,475 |
|||
Accounts and Notes Receivable: |
|||||||
Trade |
215,329 |
220,222 |
|||||
Other Receivables |
100,949 |
69,901 |
|||||
Inventories |
69,618 |
65,461 |
|||||
Recoverable Income Taxes |
124,555 |
116,851 |
|||||
Prepaid Expenses |
44,498 |
93,146 |
|||||
Current Assets of Discontinued Operations |
— |
83 |
|||||
Total Current Assets |
616,215 |
626,139 |
|||||
Property, Plant and Equipment: |
|||||||
Property, Plant and Equipment |
13,518,261 |
13,771,388 |
|||||
Less—Accumulated Depreciation, Depletion and Amortization |
5,695,342 |
5,630,949 |
|||||
Property, Plant and Equipment of Assets Held for Sale, Net |
163,622 |
— |
|||||
Total Property, Plant and Equipment—Net |
7,986,541 |
8,140,439 |
|||||
Other Assets: |
|||||||
Deferred Income Taxes |
44,174 |
4,290 |
|||||
Investment in Affiliates |
197,385 |
190,964 |
|||||
Other |
219,454 |
222,149 |
|||||
Total Other Assets |
461,013 |
417,403 |
|||||
TOTAL ASSETS |
$ |
9,063,769 |
$ |
9,183,981 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands, except per share data) |
March 31, |
December 31, | |||||
LIABILITIES AND EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts Payable |
$ |
270,739 |
$ |
241,616 |
|||
Current Portion of Long-Term Debt |
11,851 |
12,000 |
|||||
Other Accrued Liabilities |
704,367 |
680,348 |
|||||
Current Liabilities of Discontinued Operations |
5,892 |
6,050 |
|||||
Total Current Liabilities |
992,849 |
940,014 |
|||||
Long-Term Debt: |
|||||||
Long-Term Debt |
2,620,698 |
2,722,995 |
|||||
Capital Lease Obligations |
36,596 |
39,074 |
|||||
Total Long-Term Debt |
2,657,294 |
2,762,069 |
|||||
Deferred Credits and Other Liabilities: |
|||||||
Postretirement Benefits Other Than Pensions |
656,890 |
659,474 |
|||||
Pneumoconiosis Benefits |
107,792 |
108,073 |
|||||
Mine Closing |
224,055 |
218,631 |
|||||
Gas Well Closing |
224,588 |
223,352 |
|||||
Workers' Compensation |
66,429 |
67,277 |
|||||
Salary Retirement |
108,485 |
112,543 |
|||||
Other |
119,048 |
151,660 |
|||||
Total Deferred Credits and Other Liabilities |
1,507,287 |
1,541,010 |
|||||
TOTAL LIABILITIES |
5,157,430 |
5,243,093 |
|||||
Stockholders' Equity: |
|||||||
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 230,034,586 Issued and Outstanding at March 31, 2017; 229,443,008 Issued and Outstanding at December 31, 2016 |
2,304 |
2,298 |
|||||
Capital in Excess of Par Value |
2,467,996 |
2,460,864 |
|||||
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding |
— |
— |
|||||
Retained Earnings |
1,682,545 |
1,727,789 |
|||||
Accumulated Other Comprehensive Loss |
(389,042) |
(392,556) |
|||||
Total CONSOL Energy Inc. Stockholders' Equity |
3,763,803 |
3,798,395 |
|||||
Noncontrolling Interest |
142,536 |
142,493 |
|||||
TOTAL EQUITY |
3,906,339 |
3,940,888 |
|||||
TOTAL LIABILITIES AND EQUITY |
$ |
9,063,769 |
$ |
9,183,981 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||
(Dollars in thousands) |
Common Stock |
Capital in Excess of Par Value |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Total CONSOL Energy Inc. Stockholders' Equity |
Non- Controlling Interest |
Total Equity | ||||||||||||||||||||
December 31, 2016 |
$ |
2,298 |
$ |
2,460,864 |
$ |
1,727,789 |
$ |
(392,556) |
$ |
3,798,395 |
$ |
142,493 |
$ |
3,940,888 |
|||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||
Net (Loss) Income |
— |
— |
(38,966) |
— |
(38,966) |
5,464 |
(33,502) |
||||||||||||||||||||
Other Comprehensive Income (Loss) (Net of ($2,052) Tax) |
— |
— |
— |
3,514 |
3,514 |
(12) |
3,502 |
||||||||||||||||||||
Comprehensive (Loss) Income |
— |
— |
(38,966) |
3,514 |
(35,452) |
5,452 |
(30,000) |
||||||||||||||||||||
Issuance of Common Stock |
6 |
488 |
— |
— |
494 |
— |
494 |
||||||||||||||||||||
Treasury Stock Activity |
— |
— |
(6,278) |
— |
(6,278) |
— |
(6,278) |
||||||||||||||||||||
Amortization of Stock-Based Compensation Awards |
— |
6,644 |
— |
— |
6,644 |
58 |
6,702 |
||||||||||||||||||||
Distributions to Noncontrolling Interest |
— |
— |
— |
— |
— |
(5,467) |
(5,467) |
||||||||||||||||||||
Balance at March 31, 2017 |
$ |
2,304 |
$ |
2,467,996 |
$ |
1,682,545 |
$ |
(389,042) |
$ |
3,763,803 |
$ |
142,536 |
$ |
3,906,339 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Dollars in thousands) |
Three Months Ended | ||||||
(Unaudited) |
March 31, | ||||||
Cash Flows from Operating Activities: |
2017 |
2016 | |||||
Net Loss |
$ |
(33,502) |
$ |
(96,458) |
|||
Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities: |
|||||||
Net Loss from Discontinued Operations |
— |
53,167 |
|||||
Depreciation, Depletion and Amortization |
148,753 |
154,988 |
|||||
Impairment of Exploration and Production Properties |
137,865 |
— |
|||||
Stock-Based Compensation |
6,702 |
5,624 |
|||||
(Gain) Loss on Sale of Assets |
(11,951) |
7,276 |
|||||
Gain on Debt Extinguishment |
(822) |
— |
|||||
Loss (Gain) on Commodity Derivative Instruments |
22,463 |
(55,060) |
|||||
Net Cash (Paid) Received in Settlement of Commodity Derivative Instruments |
(47,103) |
84,331 |
|||||
Deferred Income Taxes |
(41,936) |
(23,582) |
|||||
Equity in Earnings of Affiliates |
(12,330) |
(16,665) |
|||||
Return on Equity Investment |
— |
4,512 |
|||||
Changes in Operating Assets: |
|||||||
Accounts and Notes Receivable |
(27,908) |
(14,833) |
|||||
Inventories |
(4,315) |
(18,458) |
|||||
Prepaid Expenses |
870 |
18,980 |
|||||
Changes in Other Assets |
936 |
(9,864) |
|||||
Changes in Operating Liabilities: |
|||||||
Accounts Payable |
4,016 |
(8,316) |
|||||
Accrued Interest |
34,411 |
35,867 |
|||||
Other Operating Liabilities |
28,151 |
1,379 |
|||||
Changes in Other Liabilities |
(10,036) |
(3,313) |
|||||
Other |
10,930 |
4,087 |
|||||
Net Cash Provided by Continuing Operating Activities |
205,194 |
123,662 |
|||||
Net Cash (Used in) Provided by Discontinued Operating Activities |
(75) |
6,290 |
|||||
Net Cash Provided by Operating Activities |
205,119 |
129,952 |
|||||
Cash Flows from Investing Activities: |
|||||||
Capital Expenditures |
(112,978) |
(77,656) |
|||||
Proceeds from Sales of Assets |
19,427 |
8,453 |
|||||
Net Distributions from (Investments in) Equity Affiliates |
5,909 |
(5,578) |
|||||
Net Cash Used in Continuing Investing Activities |
(87,642) |
(74,781) |
|||||
Net Cash Provided by Discontinued Investing Activities |
— |
395,757 |
|||||
Net Cash (Used in) Provided by Investing Activities |
(87,642) |
320,976 |
|||||
Cash Flows from Financing Activities: |
|||||||
Payments on Short-Term Borrowings |
— |
(100,500) |
|||||
Payments on Miscellaneous Borrowings |
(2,942) |
(2,095) |
|||||
Payments on Long-Term Notes |
(98,243) |
— |
|||||
Net (Payments on) Proceeds from Revolver - CNX Coal Resources LP |
(4,000) |
15,000 |
|||||
Distributions to Noncontrolling Interest |
(5,467) |
(5,413) |
|||||
Dividends Paid |
— |
(2,294) |
|||||
Issuance of Common Stock |
494 |
3 |
|||||
Treasury Stock Activity |
(6,278) |
(1,510) |
|||||
Debt Repurchase and Financing Fees |
(250) |
— |
|||||
Net Cash Used in Continuing Financing Activities |
(116,686) |
(96,809) |
|||||
Net Cash Used in Discontinued Financing Activities |
— |
(47) |
|||||
Net Cash Used in Financing Activities |
(116,686) |
(96,856) |
|||||
Net Increase in Cash and Cash Equivalents |
791 |
354,072 |
|||||
Cash and Cash Equivalents at Beginning of Period |
60,475 |
72,574 |
|||||
Cash and Cash Equivalents at End of Period |
$ |
61,266 |
$ |
426,646 |
SOURCE CONSOL Energy Inc.
PITTSBURGH, April 26, 2017 /PRNewswire/ -- The Board of Directors of CNX Coal Resources GP LLC, the general partner of CNX Coal Resources LP (NYSE: CNXC), today announced a cash distribution $0.5125 per unit to all limited partner unitholders and the holder of the general partner interest. The Board of Directors has also approved a full cash distribution of approximately $0.4678 per unit to the holders of the convertible Class A Preferred Units. The distribution to all unitholders of the Partnership will be made on May 15, 2017 to such holders of record at the close of business on May 8, 2017.
CNX Coal Resources is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active coal operations in Pennsylvania. Its assets include a 25% undivided interest in, and operational control over, CONSOL's Pennsylvania mining complex, which consists of three underground mines and related infrastructure. More information is available on our website www.cnxlp.com.
Contacts:
Investor:
Mitesh Thakkar, (724) 485-3133
miteshthakkar@cnxlp.com
Media:
Zach Smith, (724) 485-4017
zacherysmith@cnxlp.com
SOURCE CNX Coal Resources LP
PITTSBURGH, April 5, 2017 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) will issue its first quarter earnings release at 6:45 a.m. Eastern Time on Tuesday, May 2. This will be followed by a conference call at 10:00 a.m. Eastern Time. A live webcast will be available on the 'Investor Relations' page of the company's website, www.consolenergy.com. Also, earnings call slides will be available at 6:45 a.m. Eastern Time on Tuesday, May 2, on the 'Investor Relations' page of the company's website.
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2016, CONSOL Energy had 6.3 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, March 17, 2017 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) announced today that it will participate in the Scotia Howard Weil 45th Annual Energy Conference in New Orleans on Monday and Tuesday, March 27-28, 2017.
CONSOL Energy's President and Chief Executive Officer, Nicholas J. DeIuliis, and Chief Operating Officer, Timothy C. Dugan, will meet with investors at the conference on Monday and Tuesday, March 27-28, 2017. Also, on Tuesday, March 28, 2017 at 3:20pm CT, Mr. DeIuliis will present at the conference.
The company's presentation materials will be available on the investor relations portion of the company's website, www.consolenergy.com, at 6:45 a.m. ET on Tuesday, March 28, 2017. The presentation will not be webcast.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2016, CONSOL Energy had 6.3 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, Feb. 8, 2017 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) today announced total proved reserves of 6.3 Tcfe, as of December 31, 2016, which is an 11% increase compared to the previous year. Oil, condensate, and liquids account for 423 Bcfe, or 6.8%, of the 6.3 Tcfe total proved reserves, of which the Marcellus and Utica Shale represent 99% of these heavier hydrocarbons.
During 2016, CONSOL Energy added 720 Bcfe of proved reserves through extensions and discoveries, which resulted in CONSOL Energy replacing 183% of its 2016 net production of 394 Bcfe.
In 2016, total capital costs incurred were $165 million. Total capital costs incurred divided by the summation of 720 Bcfe for extensions and discoveries, 1,444 Bcfe for the purchase of reserves in-place, negative 871 Bcfe for the sale of reserves in-place, and negative 290 Bcfe for revisions, yields an all-in finding and development (F&D) cost for proved reserve additions of $0.16 per Mcfe.
In 2016, drilling and completion costs incurred directly attributable to extensions and discoveries were $144 million. When divided by the extensions and discoveries of 720 Bcfe, this yields a drill bit F&D cost of $0.20 per Mcfe, compared to $0.66 per Mcfe at year-end 2015.
Future development costs for proved undeveloped (PUD) reserves are estimated to be approximately $1.191 billion, or $0.46 per Mcfe, compared to $0.48 per Mcfe at year-end 2015.
The following table shows the summary of changes in reserves:
Summary of Changes in Proved Reserves (Bcfe) | |
Balance at December 31, 2015 |
5,643 |
Revisions |
(290) |
Extensions and discoveries |
720 |
Production |
(394) |
Purchase of reserves in-place |
1,444 |
Sale of reserves in-place |
(871) |
Balance at December 31, 2016 |
6,252 |
Note: The proved reserve estimate for 2016 was prepared by CONSOL Energy and audited by Netherland, Sewell & Associates, Inc. |
During the year, total net revisions were negative 290 Bcfe, largely caused by a decrease in pricing. As a result of the Marcellus Shale joint venture (JV) dissolution, CONSOL Energy had a positive net impact on the reserves that were retained: CONSOL Energy effectively sold 871 Bcfe of proved reserves, while purchasing 1,444 Bcfe of proved reserves due to the JV exchange agreement.
Proved developed reserves of 3,683 Bcfe in 2016 comprised 59% of total proved reserves, compared to 66% in 2015. Proved undeveloped reserves (PUDs) were 2,568 Bcfe at December 31, 2016, or 41% of total proved reserves, compared to 34% at year-end 2015. This reflects the company's increased flexibility to accelerate its development plan due to the Marcellus Shale joint venture (JV) dissolution, continued success in the Marcellus Shale, and increased activity in the dry Utica Shale. PUDs at year-end 2016 represent 55% of the total wells the company expects to drill over the next five years.
In the Marcellus Shale, CONSOL Energy and its previous JV partner turned-in-line 47 gross wells with an average completed lateral length of approximately 7,300 feet and expected ultimate recoveries (EUR) averaging approximately 2.3 Bcfe per thousand feet of completed lateral. Enhanced completion techniques have been a significant contributor to Marcellus Shale EUR improvements in 2016, compared to the 2.0 Bcfe per thousand feet of completed lateral booked for the Marcellus Shale during the previous year. These enhanced completion techniques have allowed the company to book approximately 7% of Marcellus PUDs with EURs of 3.6 Bcfe per thousand feet of completed lateral, compared to 3.0 Bcfe per thousand feet booked during the previous year. CONSOL Energy expects to see further improvements in EURs for all of the company's remaining PUD locations due to continuous improvement initiatives regarding completion optimization. As of December 31, 2016, the Marcellus Shale proved reserves were 3,137 Bcfe, which included 1,868 Bcfe of proved developed reserves.
During 2016 in the Utica Shale, CONSOL Energy and its JV partner turned-in-line 15 gross wells with an average completed lateral length of approximately 8,000 feet and EURs ranging up to 2.2 Bcfe per thousand feet of completed lateral. In 2016, the company's type curves that were applied to PUDs remained unchanged compared to the previous year; however, the company expects future upward revisions to type curves through further completion optimization. In 2016, CONSOL booked 1,372 Bcfe of Utica proved reserves, an increase of 6% from the 1,299 Bcfe booked during 2015, which is attributable to the continued drilling success in the Utica Shale. The total Utica proved reserves include 624 Bcfe associated with the dry Utica Shale, or 10% of the company's total reserves.
The following table shows the breakdown of reserves, in Bcfe, from the company's current development and exploration plays:
Breakdown of Reserves (Bcfe) |
||||||||
Proved |
Proved Developed Non- Producing |
Proved |
Total |
|
|
Total 3P |
Total Reserve | |
Marcellus Shale |
1,771 |
97 |
1,269 |
3,137 |
17,940 |
9,547 |
30,624 |
33,091 |
Coalbed Methane |
940 |
5 |
310 |
1,255 |
744 |
297 |
2,296 |
3,314 |
Utica (1) |
377 |
6 |
989 |
1,372 |
2,838 |
2,336 |
6,546 |
50,695 |
Other |
477 |
11 |
-- |
488 |
358 |
1,057 |
1,903 |
32,854 |
Total |
3,565 |
119 |
2,568 |
6,252 |
21,880 |
13,237 |
41,369 |
119,954 |
Definition: Total Reserve & Resource includes total 3P and other resource potential outside of 3P. |
The estimates of reserves and future revenue were prepared in accordance with the definitions and guidelines of the SEC Regulation S-X Rule 4.10(a). |
(1) Included in the Proved Developed Reserves is 17 Bcfe from two Utica Shale wells in Pennsylvania (PA). The majority of the Utica in PA and West Virginia (WV) fall into the resource classification. |
As of December 31, 2016, CONSOL Energy has total proved, probable, and possible reserves (also known as "3P reserves") of 41.4 Tcfe, which is an increase of 3.0 Tcfe, or 8%, in 3P reserves from the 38.3 Tcfe reported at year-end 2015. The increase in 3P reserves is primarily attributed to more certainty of the success in the Ohio Utica Shale, as well as the continued success and optimization in the Marcellus Shale. The company has had strong initial success in the Pennsylvania dry Utica Shale, however it is still early in the play and reserve bookings are currently limited to two proved developed producing (PDP) wells in the 2016 reserve report. The company continues testing Upper Devonian and dry Utica potential in Pennsylvania, Ohio, and West Virginia and believes that these areas will provide additional opportunities for CONSOL Energy's proved reserves over time. The company's 3P reserves have been determined in accordance with the guidelines of the Society of Petroleum Engineers Petroleum Resources Management System.
The table below summarizes both Securities and Exchange Commission (SEC) and strip pricing as of December 31, 2016:
SEC |
Strip |
||
Pricing (1) |
Pricing (2) |
Variance % | |
Benchmark Pricing: |
|||
WTI Oil Price ($/Bbl) |
$42.75 |
$56.19 |
31% |
NYMEX Natural Gas Price ($/MMBtu) |
$2.48 |
$3.08 |
24% |
C2+ Natural Gas Liquids ($/Bbl) (3) |
$15.77 |
$20.78 |
32% |
Condensate ($/Bbl) |
$27.40 |
$36.01 |
31% |
(1) The SEC rules require that the proved reserve calculations be based on the first day of the month average prices over the preceding twelve months. |
(2) Strip pricing as of December 31, 2016 for each of the first five years and flat thereafter. |
(3) NGL Pricing is 37% of WTI, which includes regional market differentials. |
SEC Pricing: Based on these prices adjusted for energy content, quality, hedges, transportation costs, and basis differentials ($1.73 per Mcf, $15.77 per barrel of natural gas liquids, $24.19 per barrel of condensate and $37.75 per barrel of crude oil, respectively), the pre-tax discounted (10%) present value ("PV-10") of the company's proved reserves was $1.56 billion for 2016, compared to $1.66 billion at year-end 2015. The $1.56 billion includes $440 million associated with hedges.
Strip Pricing: The company's reserve based lending credit facility, which as of December 31, 2016 had a $2 billion borrowing base, is redetermined semiannually in the spring and fall based off the present value of the company's oil and gas reserves at a forward looking price deck. At future strip pricing for natural gas and liquids as of December 31, 2016 adjusted for energy content, quality, hedges, transportation costs, and basis differentials, the pre-tax discounted (10%) PV-10 of the company's proved reserves would be $3.7 billion for 2016.
Standardized Measure of Discounted Future Net Cash Flows
The following information was prepared in accordance with the provisions of the Financial Accounting Standards Board's Accounting Standards Update No. 2010-03, "Extractive Activities-Oil and Gas (Topic 932)." This topic requires the standardized measure of discounted future net cash flows to be based on the average, first-day-of-the-month price for the year ended December 31, 2016. Because prices used in the calculation are average prices for that year, the standardized measure could vary significantly from year-to-year based on the market conditions that occurred.
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.
Reconciliation of PV-10 to Standardized Measure |
||||||
December 31, | ||||||
(Dollars in millions) |
2016 |
2015 |
2014 | |||
Future cash inflows |
$ 11,303 |
$ 11,838 |
$ 28,503 | |||
Future production costs |
(5,851) |
(6,585) |
(10,101) | |||
Future development costs (including abandonments) |
(1,550) |
(1,220) |
(3,369) | |||
Future net cash flows (pre-tax) |
3,902 |
4,033 |
15,033 | |||
10% discount factor |
(2,343) |
(2,374) |
(10,149) | |||
PV-10 (Non-GAAP measure) (1) |
1,559 |
1,659 |
4,884 | |||
Undiscounted income taxes |
(1,483) |
(1,534) |
(5,712) | |||
10% discount factor |
879 |
894 |
3,812 | |||
Discounted income taxes |
(604) |
(640) |
(1,900) | |||
Standardized GAAP measure |
$ 955 |
$ 1,019 |
$ 2,984 |
(1) We calculate our present value at 10% (PV-10) in accordance with the following table. Management believes that the presentation of the non-Generally Accepted Accounting Principle (GAAP) financial measure of PV-10 provides useful information to investors because it is widely used by professional analysts and sophisticated investors in evaluating oil and gas companies. Because many factors that are unique to each individual company impact the amount of future income taxes estimated to be paid, the use of a pre-tax measure is valuable when comparing companies based on reserves. PV-10 is not a measure of the financial or operating performance under GAAP. PV-10 should not be considered as an alternative to the standardized measure as defined under GAAP. We have included a reconciliation of the most directly comparable GAAP measure-after-tax discounted future net cash flows. |
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas and other liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal and natural gas liquids abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our natural gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current natural gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas and coal rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year coal sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; a majority of our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC - disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating results; there is no assurance that the potential dropdowns, spin-off or sale of the coal business will occur, or if it does occur that we will be able to negotiate favorable terms; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity; other factors discussed in the 2015 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible oil and gas reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by application of development projects to known accumulations. We may use certain terms in this press release, such as EUR (estimated ultimate recovery), unproved reserves, resources and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. These measures are by their nature more speculative than estimates of reserves prepared in accordance with SEC definitions and guidelines and accordingly are less certain. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, Jan. 31, 2017 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) reported net cash provided by operating activities in the just-ended quarter of $83 million, compared to $102 million in the year-earlier quarter, which includes $4 million and $5 million of net cash used in discontinued operating activities, respectively. For the year ended December 31, 2016, CONSOL Energy reported net cash provided by operating activities of $469 million, compared to $506 million for year ended December 31, 2015, which includes $10 million and $6 million of net cash provided by discontinued operating activities, respectively.
"During the quarter, CONSOL further executed upon strategic goals with an additional ownership drop into CONE Midstream Partners LP and the dissolution of the Marcellus Shale joint venture," commented Nicholas J. DeIuliis, president and CEO. "These successful transactions, in part, helped generate approximately $349 million in free cash flow1 during the quarter, while bringing the full year 2016 free cash flow to approximately $957 million. During the quarter, organic free cash flow from continuing operations, along with proceeds from asset sales, helped to pay down our revolving credit facility and increase our liquidity position by over $300 million to $1.73 billion. Our even stronger liquidity position and balance sheet allow us to continue to focus on opportunistically allocating capital to prudently develop our tier one assets, while simultaneously providing us with the flexibility and optionality to divest assets in order to pull value forward."
On a GAAP basis, the fourth quarter earnings included the following pre-tax items attributable to continuing operations:
During the quarter, CONSOL Energy also recorded a valuation allowance of $167 million related to alternative minimum tax (AMT) credits accumulated over time. The company remains entitled to these positive tax attributes with no expiration date and will release the valuation allowance when the credits can be used.
Taking these items into account, the company reported a net loss from continuing operations of $321 million for the quarter, or a loss of $1.42 per diluted share. Including the income from discontinued operations, net of tax, of $20 million, less $4 million of net income attributable to noncontrolling interest, the company reported a net loss attributable to CONSOL Energy shareholders of $306 million or a loss of $1.33 per diluted share.
(Dollars in thousands) |
Q4 2016 | ||
Loss From Continuing Operations Before Income Tax |
$ |
(239,390) |
|
Income Taxes |
81,808 |
||
Loss From Continuing Operations |
(321,198) |
||
Income From Discontinued Operations, net |
19,564 |
||
Net Loss |
(301,634) |
||
Less: Net Income Attributable to Noncontrolling Interest |
4,413 |
||
Net Loss Attributable to CONSOL Energy Shareholders |
$ |
(306,047) |
Earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization (EBITDA), from continuing operations1 were a negative $36 million for the 2016 fourth quarter, compared to a positive $360 million in the year-earlier quarter.
After adjusting for certain items, which are described in the footnote to the EBITDA reconciliation table, the company had adjusted income from continuing operations1 in the 2016 fourth quarter of $0.5 million, or $0.00 per diluted share. Adjusted EBITDA attributable to continuing operations1 was $205 million for the 2016 fourth quarter, compared to $198 million in the year-earlier quarter.
Strategic Initiatives:
Further to CONSOL Energy's previously stated goal of separating its coal and E&P businesses, CONSOL is pursuing several different approaches for achieving that separation as early as 2017, including the possible sale of the coal business to a third party or the spin-off of the coal business to CONSOL's shareholders. David M. Khani, Chief Financial Officer, commented: "We think there may be a market opportunity to achieve a sale of the coal business on favorable terms or, alternatively, to effect a spin-off as our leverage ratio comes down to a level that allows each business to stand on its own. At the same time, we will continue to evaluate dropdowns of additional undivided interests in the Pennsylvania Mining Complex."
1The terms "adjusted net loss from continuing operations," "EBITDA from continuing operations," and "adjusted EBITDA from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP net income below, under the caption "Non-GAAP Financial Measures." The terms "free cash flow," and "organic free cash flow from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP Net Cash Provided by Operating Activities, also under the caption "Non-GAAP Financial Measures."
E&P Division:
During the fourth quarter of 2016, CONSOL's E&P Division produced 101.3 Bcfe, or an increase of 6% from the 95.5 Bcfe produced in the year-earlier quarter. During the quarter, total production costs decreased to $2.27 per Mcfe, compared to the year-earlier quarter of $2.37 per Mcfe, driven primarily by reductions to transportation, gathering and compression and lease operating expense as a result of the overall increase in production.
E&P Division capital expenditures decreased in the fourth quarter to $30.1 million, compared to $48.7 million spent in the third quarter of 2016, primarily due to less completion activity.
Marcellus Shale production volumes, including liquids, in the 2016 fourth quarter were 56.5 Bcfe, approximately 14% higher than the 49.7 Bcfe produced in the 2015 fourth quarter. Marcellus Shale total production costs were $2.20 per Mcfe in the just-ended quarter, which is a $0.18 per Mcfe improvement from the fourth quarter of 2015 of $2.38 per Mcfe, driven primarily by a reduction to transportation, gathering and compression and lease operating expense.
CONSOL Energy's Utica Shale production volumes, including liquids, in the 2016 fourth quarter were 22.2 Bcfe, up approximately 7% from 20.7 Bcfe in the year-earlier quarter. Utica Shale total production costs were $1.86 per Mcfe in the just-ended quarter, which is a $0.02 per Mcfe improvement from the fourth quarter of 2015 total production costs of $1.88 per Mcfe. The cost improvement across the Utica Shale was driven, in part, by reductions to lease operating expenses, partially offset by an increase to transportation, gathering and compression expenses in the wet gas areas.
E&P Division Fourth Quarter Operations Summary:
During the quarter, CONSOL Energy operated two horizontal rigs, drilling seven dry Utica Shale wells in Monroe County, Ohio, with an average lateral length of 9,593 feet, while averaging 24 drilling days per well or two days shorter than previous projections. Two Monroe County Utica pads are now fully drilled and prepared for completion operations in the first quarter of 2017. Also in the fourth quarter, CONSOL completed three laterals, including one Marcellus, Burkett, and Rhinestreet well each, on the eight-well ACAA1 pad in Allegheny County, Pennsylvania. The company expects to complete the remaining five Marcellus Shale laterals on the ACAA1 pad in the first quarter of 2017. In Greene County, Pennsylvania, seven Marcellus Shale wells and one Burkett Shale well were turned-in-line in the fourth quarter. Utilizing managed pressure, five of the Marcellus laterals on the GH-58 pad, which had an average lateral length of 7,400 feet, each averaged 12.5 MMcf per day for their first 60 days.
E&P DIVISION RESULTS — Quarter-to-Quarter Comparison | |||||||||||||
Quarter |
Quarter |
Quarter |
|||||||||||
Ended |
Ended |
Ended |
|||||||||||
December 31, 2016 |
December 31, 2015 |
September 30, 2016 |
|||||||||||
Sales - Gas |
$ |
202.4 |
$ |
152.9 |
$ |
170.8 |
|||||||
Sales - Oil |
0.7 |
0.6 |
0.7 |
||||||||||
Sales - NGLs |
31.4 |
23.2 |
27.0 |
||||||||||
Sales - Condensate |
3.6 |
8.9 |
7.5 |
||||||||||
Total Sales Revenue ($ MM) |
$ |
238.1 |
$ |
185.6 |
$ |
206.0 |
|||||||
Gain on Commodity Derivative Instruments - Cash Settlement |
42.0 |
79.5 |
38.6 |
||||||||||
Total Revenue |
$ |
280.1 |
$ |
265.1 |
$ |
244.6 |
|||||||
(Loss) Earnings Before Income Tax ($ MM) |
$ |
(222.5) |
$ |
86.3 |
$ |
161.1 |
|||||||
Adjusted Earnings Before Income Tax ($MM) |
$ |
14.3 |
1 |
$ |
24.0 |
2 |
$ |
1.6 |
3 |
||||
Capital Expenditures ($ MM) |
$ |
30.1 |
$ |
83.4 |
$ |
48.7 |
1Adjusted earnings before income tax for the E&P Division of $14.3 million for the three months ended December 31, 2016 is calculated as GAAP loss before income tax of $222.5 million plus total pre-tax adjustments of $236.8 million. The $236.8 million adjustment is the pre-tax loss related to the unrealized loss on commodity derivative instruments.
2Adjusted earnings before income tax for the E&P Division of $24.0 million for the three months ended December 31, 2015 is calculated as GAAP earnings before income tax of $86.3 million less total pre-tax adjustments of $62.3 million. The $62.3 million adjustment is the $62.4 million pre-tax gain related to the unrealized gain on commodity derivative instruments and a pre-tax loss of $0.1 million related to severance expense.
3Adjusted earnings before income tax for the E&P Division of $1.6 million for the three months ended September 30, 2016 is calculated as GAAP earnings before income tax of $161.1 million less total pre-tax adjustments of $159.5 million. The $159.5 million adjustment is the $159.6 million pre-tax gain related to the unrealized gain on commodity derivative instruments and a pre-tax loss of $0.1 million related to severance expense.
CONSOL's E&P division production in the quarter came from the following categories:
Quarter |
Quarter |
Quarter |
|||||||||||||
Ended |
Ended |
Ended |
|||||||||||||
December 31, 2016 |
December 31, 2015 |
% Increase/ |
September 30, 2016 |
% Increase/ | |||||||||||
GAS |
|||||||||||||||
Marcellus Sales Volumes (Bcf) |
51.5 |
43.7 |
17.8 |
% |
43.0 |
19.8 |
% | ||||||||
Utica Sales Volumes (Bcf) |
17.2 |
14.8 |
16.2 |
% |
17.7 |
(2.8) |
% | ||||||||
CBM Sales Volumes (Bcf) |
17.4 |
18.7 |
(7.0) |
% |
17.0 |
2.4 |
% | ||||||||
Other Sales Volumes (Bcf)1 |
5.2 |
6.3 |
(17.5) |
% |
5.0 |
4.0 |
% | ||||||||
LIQUIDS2 |
|||||||||||||||
NGLs Sales Volumes (Bcfe) |
9.2 |
9.8 |
(6.1) |
% |
12.4 |
(25.8) |
% | ||||||||
Oil Sales Volumes (Bcfe) |
0.1 |
0.1 |
— |
% |
0.1 |
— |
% | ||||||||
Condensate Sales Volumes (Bcfe) |
0.7 |
2.1 |
(66.7) |
% |
1.2 |
(41.7) |
% | ||||||||
TOTAL |
101.3 |
95.5 |
6.1 |
% |
96.4 |
5.1 |
% | ||||||||
Average Daily Production (MMcfe) |
1,100.7 |
1,037.8 |
1,047.7 |
1Other Sales Volumes: primarily related to shallow oil and gas production and the Chattanooga shale in Tennessee.
2NGLs, oil and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.
E&P PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison: | ||||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
(Per Mcfe) |
December 31, 2016 |
December 31, 2015 |
September 30, 2016 | |||||||||
Average Sales Price - Gas |
$ |
2.22 |
$ |
1.83 |
$ |
2.06 |
||||||
Average Gain on Commodity Derivative Instruments - Cash Settlement- Gas |
$ |
0.46 |
$ |
0.95 |
$ |
0.47 |
||||||
Average Sales Price - Oil* |
$ |
6.93 |
$ |
6.51 |
$ |
7.01 |
||||||
Average Sales Price - NGLs* |
$ |
3.40 |
$ |
2.36 |
$ |
2.19 |
||||||
Average Sales Price - Condensate* |
$ |
5.14 |
$ |
4.23 |
$ |
6.21 |
||||||
Average Sales Price - Total Company |
$ |
2.77 |
$ |
2.78 |
$ |
2.54 |
||||||
Lease Operating Expense |
$ |
0.22 |
$ |
0.27 |
$ |
0.23 |
||||||
Production, Ad Valorem, and Other Fees |
0.07 |
0.06 |
0.10 |
|||||||||
Transportation, Gathering and Compression |
0.93 |
0.99 |
0.98 |
|||||||||
Depreciation, Depletion and Amortization |
1.05 |
1.05 |
1.05 |
|||||||||
Total Production Costs |
$ |
2.27 |
$ |
2.37 |
$ |
2.36 |
||||||
Margin |
$ |
0.50 |
$ |
0.41 |
$ |
0.18 |
*Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.
Note: "Total Production Costs" excludes Selling, General, and Administration and Other Corporate Expenses.
The average sales price of $2.77 per Mcfe, when combined with unit costs of $2.27 per Mcfe, resulted in a margin of $0.50 per Mcfe. This was an increase when compared to the year-earlier quarter, with improvements primarily in unit costs.
Marketing Update:
For the fourth quarter of 2016, CONSOL's average sales price for natural gas, natural gas liquids (NGL), oil, and condensate was $2.77 per Mcfe. CONSOL's average price for natural gas was $2.22 per Mcf for the quarter and, including cash settlements from hedging, was $2.68 per Mcf. Excluding hedging, the average realized price for all liquids for the fourth quarter of 2016 was $21.34 per barrel, an increase of 38% from the previous quarter.
During the fourth quarter, CONSOL's weighted average differential from NYMEX was ($0.88) per MMBtu. Despite a slightly wider differential, CONSOL's average sales price for natural gas before hedging improved 8% to $2.22 per Mcf, compared to the average sales price of $2.06 per Mcf in the third quarter 2016, primarily due to an improved Henry Hub price, which more than offset the wider differential.
During the fourth quarter, CONSOL continued to recover and sell discretionary ethane. Directly-marketed ethane volumes were 466,000 barrels in the fourth quarter of 2016, and, on an equivalent basis, yielded a premium over the Texas Eastern M2 gas market where sales would generally have occurred had the volumes been rejected into the natural gas stream. Beginning in October 2016, an additional contract for ethane commenced with volumes priced significantly above the value the ethane would receive if rejected into the gas stream.
E&P Division Guidance:
CONSOL Energy re-affirms production and capital guidance released during the company's Analyst and Investor Day on December 13, 2016: the company expects E&P Division production guidance for 2017 and 2018 to be approximately 415 and 485 Bcfe, respectively, while E&P and midstream capital expenditures for 2017 and 2018 remains approximately $555 and $600 million, respectively.
Total hedged natural gas production in the 2017 first quarter is 73.3 Bcf. The annual gas hedge position is shown in the table below:
E&P DIVISION GUIDANCE | |||||
2017 |
2018 | ||||
Volumes Hedged (Bcf), as of 1/17/17 |
311.3* |
220.6 |
*Includes actual settlements of 25.0 Bcf.
CONSOL Energy's hedged gas volumes include a combination of NYMEX financial hedges and index (NYMEX and basis) hedges and contracts. In addition, to protect the NYMEX hedge volumes from basis exposure, CONSOL enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CONSOL Energy's gas hedge position is shown in the table below:
Q1 2017 |
2017 |
2018 |
2019 |
2020 | ||||||||||||||||
NYMEX Only Hedges |
||||||||||||||||||||
Volumes (Bcf) |
65.3 |
278.9 |
218.9 |
153.2 |
81.6 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
3.18 |
$ |
3.18 |
$ |
3.15 |
$ |
3.07 |
$ |
3.17 |
||||||||||
Index Hedges and Contracts |
||||||||||||||||||||
Volumes (Bcf) |
8.0 |
32.4 |
1.7 |
8.5 |
3.4 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
3.19 |
$ |
3.19 |
$ |
2.42 |
$ |
2.52 |
$ |
2.35 |
||||||||||
Total Volumes Hedged (Bcf)1 |
73.3 |
311.3 |
220.6 |
161.7 |
85.0 |
|||||||||||||||
NYMEX + Basis (fully-covered volumes)2 |
||||||||||||||||||||
Volumes (Bcf) |
73.3 |
287.1 |
182.4 |
108.6 |
57.0 |
|||||||||||||||
Average Prices ($/Mcf) |
$ |
2.63 |
$ |
2.57 |
$ |
2.67 |
$ |
2.60 |
$ |
2.79 |
||||||||||
NYMEX Only Hedges Exposed to Basis |
||||||||||||||||||||
Volumes (Bcf) |
- |
24.2 |
38.2 |
53.1 |
28.0 |
|||||||||||||||
Average Prices ($/Mcf) |
- |
$ |
3.18 |
$ |
3.15 |
$ |
3.07 |
$ |
3.17 |
|||||||||||
Total Volumes Hedged (Bcf)1 |
73.3 |
311.3 |
220.6 |
161.7 |
85.0 |
1Q1 2017 excludes 4.4 Bcf of physical basis sales not matched with NYMEX hedges.
2Includes physical sales with fixed basis in Q1 2017, 2017, 2018, 2019, and 2020 of 10.4 Bcf, 42.9 Bcf, 30.4 Bcf, 28.0 Bcf, and 9.8 Bcf, respectively.
During the fourth quarter of 2016, CONSOL Energy added additional NYMEX natural gas hedges of 76.7 Bcf, 48.7 Bcf, 47.7 Bcf, 38.3 Bcf, and 3.4 Bcf for 2017, 2018, 2019, 2020, and 2021, respectively. To help mitigate basis exposure on NYMEX hedges in the fourth quarter, CONSOL added 66.2 Bcf, 33.3 Bcf, 32.2 Bcf, and 17.0 Bcf of basis hedges for 2017, 2018, 2019, and 2020, respectively. Based on CONSOL's view of regional pricing during 2017, CONSOL focused primarily on regional hedging. Of the 66.2 Bcf of basis hedges added for 2017, 52.8 Bcf is applicable to the Texas Eastern M2 sales point.
CONSOL Energy has also entered into NGL (propane) hedges. CONSOL currently has 5.3 million gallons of propane directly hedged through March of 2017 at an average price of $0.48 per gallon. CONSOL also has direct, term sales contracts with counterparties for NGLs.
Pennsylvania (PA) Mining Operations Division:
CONSOL Energy's PA Mining Operations sold 7.1 million tons in the 2016 fourth quarter, compared to 5.0 million tons during the year-earlier quarter. Total cost of coal sold was $33.90 per ton, compared to $39.70 per ton in the year-earlier quarter.
Fourth Quarter Operations Summary:
As reported by CNXC in its fourth quarter 2016 earnings press release, dated January 30, 2017, "We sold a record 7.1 million tons of coal during the quarter, of which approximately 8.5% was in the high-vol metallurgical coal markets in Asia and South America. More importantly, we also improved the average realized price by 2% compared to the previous quarter. During the quarter, we contracted 325 thousand additional tons for 2017 across all of our markets, bringing our total sold position to 98% of the estimated total sales volumes. In addition to a strong 2017 sold position, we have a solid position of approximately 66% sold for 2018. With our planned coal production in 2017 largely sold out, our focus now has shifted to maximizing realizations for any additional production and booking additional sales for contract years 2018 and 2019. We are currently active in negotiations with several customers to expand our crossover metallurgical coal portfolio, and we continue to pursue select domestic customers that fit with our long-term market strategy."
During the quarter, on a total consolidated basis, PA Mining Operations Division generated $120 million of cash flow before capital expenditures.
PA MINING OPERATIONS RESULTS - Quarter-To-Quarter Comparison | ||||||||||||
PA Mining Ops |
PA Mining Ops |
PA Mining Ops | ||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
December 31, |
December 31, |
September 30, | ||||||||||
2016 |
2015 |
2016 | ||||||||||
Beginning Inventory (millions of tons) |
0.2 |
0.5 |
— |
|||||||||
Coal Production (millions of tons) |
7.1 |
4.6 |
6.2 |
|||||||||
Ending Inventory (millions of tons) |
0.2 |
0.1 |
0.2 |
|||||||||
Sales - Company Produced (millions of tons) |
7.1 |
5.0 |
6.0 |
|||||||||
Sales Per Ton |
$ |
45.05 |
$ |
52.57 |
$ |
44.30 |
||||||
Total Production Costs Per Ton |
$ |
33.90 |
$ |
39.70 |
$ |
35.79 |
||||||
Average Margin Per Ton Sold |
$ |
11.15 |
$ |
12.87 |
$ |
8.51 |
||||||
Addback: DD&A Per Ton |
$ |
5.70 |
$ |
8.26 |
$ |
6.50 |
||||||
Average Margin Per Ton, before DD&A |
$ |
16.85 |
$ |
21.13 |
$ |
15.01 |
||||||
Cash Flow before Cap. Ex ($ MM) |
$ |
120 |
$ |
106 |
$ |
90 |
Note: The PA Mining Operations include Bailey, Enlow Fork, and Harvey mines. Total Production Costs per Ton include: operating and other costs, royalty and production taxes and depreciation, depletion and amortization. Sales tons times Average Margin Per Ton, before DD&A is meant to approximate the amount of cash generated by PA Mining Operations. This cash generation will be offset by maintenance of production (MOP) capital expenditures. Table may not sum due to rounding.
CONSOL Energy expects total consolidated PA Mining Operations annual sales to be approximately 26.0 million tons for both 2017 and 2018. Also, CONSOL Energy continues to expect total consolidated capital expenditures for PA Mining Operations to be $135 million and $140 million for 2017 and 2018, respectively.
2017 EBITDA Guidance by Segment: | ||||||||||||||||
(in millions) |
E&P Division1 |
PA Mining Operations Division |
Other |
Total | ||||||||||||
Earnings Before Interest, Taxes and DD&A (EBITDA) |
$ |
705 |
$ |
390 |
$ |
(15) |
$ |
1,080 |
||||||||
Adjustments: |
||||||||||||||||
Unrealized Loss/(Gain) on Commodity |
(200) |
- |
- |
(200) |
||||||||||||
Stock-Based Compensation |
20 |
10 |
- |
30 |
||||||||||||
Adjusted EBITDA |
$ |
525 |
$ |
400 |
$ |
(15) |
910 |
|||||||||
Noncontrolling Interest |
- |
$ |
(45) |
- |
(45) |
|||||||||||
Adjusted EBITDA Attributable to CNX |
$ |
525 |
$ |
355 |
$ |
(15) |
$ |
865 |
Note: CONSOL Energy is unable to provide a reconciliation of projected Adjusted EBITDA to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing and potential significance of certain income statement items. EBITDA guidance assumes NYMEX as of 1/3/2017 of $3.38 + weighted average basis of ($0.65) per MMBtu on open volumes.
1Includes forecasted Earnings of Equity Affiliates of $36 million in 2017 associated with CONSOL Energy's proportionate share of ownership in CONE Midstream Partners. This income is reflected within Miscellaneous Other Income in the CNX income statement.
Liquidity:
As of December 31, 2016, CONSOL Energy had $1,725.0 million in total liquidity, which is comprised of $50.7 million of cash, excluding the CNXC cash balance, and $1,674.3 million available to be borrowed under its $2.0 billion bank facility. During the quarter, CONSOL's liquidity improved $328.8 million due to cash received with the additional ownership interest acquired by CONE Midstream Partners LP and from the dissolution of the Marcellus joint venture, as well as an increase in net cash provided by operating activities. In addition, CONSOL holds 16.6 million CNXC limited partnership units, including 3.9 million class A preferred units, with an aggregated current market value of approximately $297 million and 21.7 million CONE Midstream Partners LP ("CNNX") limited partnership units with a current market value of approximately $533 million, in each case as of January 20, 2017.
CONSOL's generation of significant free cash flow in 2016 allowed the company to repay all outstanding borrowings on its revolving credit facility, while more than doubling the company's liquidity, compared to the previous year. At December 31, 2015, revolving credit facility borrowings totaled $952.0 million with liquidity of $855.9 million.
The company's $2.0 billion bank facility borrowing base was reaffirmed during the fourth quarter.
About CONSOL
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
Non-GAAP Financial Measures
Definition: 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. Adjusted EBITDA is defined as EBITDA after adjusting for the discrete items listed below. Although EBIT, EBITDA, and Adjusted 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 to evaluate a company's operating performance. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDA, or Adjusted EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies.
Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial net income attributable to CONSOL Energy Shareholders is as follows (dollars in 000):
Three Months Ended | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2016 |
2016 |
2016 |
2016 |
2015 | ||||||||||||||||
Dollars in thousands |
E&P Division |
PA Mining Operations Division |
Other1 |
Total Company |
Total Company | |||||||||||||||
Net (Loss) Income |
$ |
(222,454) |
$ |
50,121 |
$ |
(129,301) |
$ |
(301,634) |
$ |
34,325 |
||||||||||
Less: (Income) Loss from Discontinued Operations, net |
— |
— |
(19,564) |
(19,564) |
11,017 |
|||||||||||||||
Add: Interest Expense |
646 |
2,502 |
43,719 |
46,867 |
49,081 |
|||||||||||||||
Less: Interest Income |
— |
— |
(532) |
(532) |
(431) |
|||||||||||||||
Add: Tax Valuation Allowance |
— |
— |
166,798 |
166,798 |
65,395 |
|||||||||||||||
Add: Income Taxes |
— |
— |
(84,990) |
(84,990) |
60,347 |
|||||||||||||||
(Loss) Earnings Before Interest & Taxes (EBIT) |
(221,808) |
52,623 |
(23,870) |
(193,055) |
219,734 |
|||||||||||||||
Add: Depreciation, Depletion & Amortization |
105,730 |
42,861 |
7,992 |
156,583 |
139,988 |
|||||||||||||||
(Loss) Earnings Before Interest, Taxes and DD&A (EBITDA) from Continuing Operations |
$ |
(116,078) |
$ |
95,484 |
$ |
(15,878) |
$ |
(36,472) |
$ |
359,722 |
||||||||||
Adjustments: |
||||||||||||||||||||
Unrealized Loss/(Gain) on Commodity Derivative Instruments |
236,802 |
— |
— |
236,802 |
(62,388) |
|||||||||||||||
Severance Expense |
— |
— |
424 |
424 |
— |
|||||||||||||||
Pension Settlement |
— |
— |
4,848 |
4,848 |
15,921 |
|||||||||||||||
Marcellus Dissolution |
— |
— |
3,752 |
3,752 |
— |
|||||||||||||||
Industrial Supplies Working Capital Settlement |
— |
— |
— |
— |
6,258 |
|||||||||||||||
OPEB Plan Changes |
— |
— |
— |
— |
(109,879) |
|||||||||||||||
Gain on Sale of Non-Core Assets |
— |
— |
— |
— |
(7,551) |
|||||||||||||||
Total Pre-tax Adjustments |
236,802 |
— |
9,024 |
245,826 |
(157,639) |
|||||||||||||||
Adjusted EBITDA |
$ |
120,724 |
$ |
95,484 |
$ |
(6,854) |
$ |
209,354 |
$ |
202,083 |
||||||||||
Less: Net Income Attributable to Noncontrolling Interest |
— |
4,413 |
— |
4,413 |
3,920 |
|||||||||||||||
Adjusted EBITDA Attributable to Continuing Operations |
$ |
120,724 |
$ |
91,071 |
$ |
(6,854) |
$ |
204,941 |
$ |
198,163 |
Note: Income tax effect of Total Pre-tax Adjustments was $90,956 and $36,257 for the three months ended December 31, 2016 and December 31, 2015, respectively. Adjusted net income for the three months ended December 31, 2016 is calculated as GAAP net loss from continuing operations of $321,198 plus total pre-tax adjustments from the above table of $245,826, less the associated tax expense of $90,956, plus a valuation allowance charge of $166,798 for alternative minimum tax credits equals the adjusted net income from continuing operations of $470.
1CONSOL Energy's Other Division includes expenses from various other corporate and diversified business unit activities including legacy liabilities costs and income tax expense that are not allocated to E&P or PA Mining Operations Divisions.
Free cash flow and organic free cash flow from continuing operations are non-GAAP financial measures. Management believes that these measures are meaningful to investors because management reviews cash flows generated from operations and non-core asset sales after taking into consideration capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand CONSOL's asset base and are expected to generate future cash flows from operations. It is important to note that free cash flow and organic free cash flow from continuing operations do not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure.
Organic Free Cash Flow From Continuing Operations |
Three Months Ended |
Year Ended | |||||
Net Cash Provided by Continuing Operations |
$ |
87,139 |
$ |
459,350 |
|||
Capital Expenditures |
(47,431) |
(226,820) |
|||||
Net Investment in Equity Affiliates |
78,298 |
73,743 |
|||||
Organic Free Cash Flow from Continuing Operations |
$ |
118,006 |
$ |
306,273 |
Free Cash Flow |
Three Months Ended |
Year Ended | |||||
Net Cash Provided by Operating Activities |
$ |
82,647 |
$ |
469,285 |
|||
Capital Expenditures |
(47,431) |
(226,820) |
|||||
Net Investment in Equity Affiliates |
78,298 |
73,743 |
|||||
Proceeds from Noble Exchange |
213,295 |
213,295 |
|||||
Proceeds from Sales of Assets |
20,925 |
59,902 |
|||||
Capital Expenditures of Discontinued Operations |
— |
(8,295) |
|||||
Payments on Sale of Miller Creek/Fola |
— |
(28,271) |
|||||
Proceeds From Sale of Buchanan Mine |
1,000 |
403,817 |
|||||
Free Cash Flow |
$ |
348,734 |
$ |
956,656 |
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas and other liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal and natural gas liquids abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our natural gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current natural gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas and coal rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year coal sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; a majority of our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC - disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating results; there is no assurance that the potential dropdowns, spin-off or sale of the coal business will occur, or if it does occur that we will be able to negotiate favorable terms; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity; other factors discussed in the 2015 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible oil and gas reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by application of development projects to known accumulations. We may use certain terms in this press release, such as EUR (estimated ultimate recovery), unproved reserves and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. These measures are by their nature more speculative than estimates of reserves prepared in accordance with SEC definitions and guidelines and accordingly are less certain. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category.
This announcement does not constitute an offer to sell, or the solicitation of an offer to buy, any securities of CNX Coal Resources LP.
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
Three Months Ended |
Year Ended | ||||||||||||||
(Dollars in thousands, except per share data) |
December 31, |
December 31, | |||||||||||||
(Unaudited) |
2016 |
2015 |
2016 |
2015 | |||||||||||
Revenues and Other Income: |
|||||||||||||||
Natural Gas, NGLs and Oil Sales |
$ |
238,146 |
$ |
185,291 |
$ |
793,248 |
$ |
726,921 |
|||||||
(Loss) Gain on Commodity Derivative Instruments |
(194,893) |
141,869 |
(141,021) |
392,942 |
|||||||||||
Coal Sales |
321,171 |
262,440 |
1,065,582 |
1,289,036 |
|||||||||||
Other Outside Sales |
11,351 |
6,371 |
32,038 |
30,967 |
|||||||||||
Purchased Gas Sales |
14,623 |
6,801 |
43,256 |
14,450 |
|||||||||||
Freight-Outside Coal |
12,519 |
10,295 |
46,468 |
20,499 |
|||||||||||
Miscellaneous Other Income |
53,147 |
33,072 |
167,306 |
144,351 |
|||||||||||
Gain on Sale of Assets |
5,957 |
19,844 |
19,498 |
74,173 |
|||||||||||
Total Revenue and Other Income |
462,021 |
665,983 |
2,026,375 |
2,693,339 |
|||||||||||
Costs and Expenses: |
|||||||||||||||
Exploration and Production Costs |
|||||||||||||||
Lease Operating Expense |
22,438 |
25,619 |
96,434 |
121,847 |
|||||||||||
Transportation, Gathering and Compression |
94,597 |
94,721 |
374,350 |
343,403 |
|||||||||||
Production, Ad Valorem, and Other Fees |
7,317 |
5,833 |
31,049 |
30,438 |
|||||||||||
Depreciation, Depletion and Amortization |
105,730 |
100,997 |
417,853 |
370,374 |
|||||||||||
Exploration and Production Related Other Costs |
9,484 |
2,424 |
14,519 |
10,120 |
|||||||||||
Purchased Gas Costs |
14,025 |
4,782 |
42,717 |
10,721 |
|||||||||||
Other Corporate Expenses |
21,933 |
18,851 |
87,913 |
65,939 |
|||||||||||
Impairment of Exploration and Production Properties |
— |
— |
— |
828,905 |
|||||||||||
Selling, General and Administrative Costs |
28,436 |
21,833 |
102,503 |
102,229 |
|||||||||||
Total Exploration and Production Costs |
303,960 |
275,060 |
1,167,338 |
1,883,976 |
|||||||||||
PA Mining Operations Costs |
|||||||||||||||
Operating and Other Costs |
212,023 |
101,698 |
733,300 |
666,302 |
|||||||||||
Depreciation, Depletion and Amortization |
42,861 |
40,328 |
168,195 |
176,864 |
|||||||||||
Freight Expense |
12,519 |
10,295 |
46,468 |
20,499 |
|||||||||||
Selling, General and Administrative Costs |
17,305 |
6,612 |
37,512 |
40,843 |
|||||||||||
Total PA Mining Operations Costs |
284,708 |
158,933 |
985,475 |
904,508 |
|||||||||||
Other Costs |
|||||||||||||||
Miscellaneous Operating Expense |
55,340 |
8,190 |
182,869 |
78,743 |
|||||||||||
Selling, General and Administrative Costs |
2,544 |
4,972 |
12,717 |
14,918 |
|||||||||||
Depreciation, Depletion and Amortization |
7,992 |
(1,337) |
12,455 |
19,882 |
|||||||||||
Loss on Debt Extinguishment |
— |
— |
— |
67,751 |
|||||||||||
Interest Expense |
46,867 |
49,081 |
191,476 |
199,266 |
|||||||||||
Total Other Costs |
112,743 |
60,906 |
399,517 |
380,560 |
|||||||||||
Total Costs And Expenses |
701,411 |
494,899 |
2,552,330 |
3,169,044 |
|||||||||||
(Loss) Earnings from Continuing Operations Before Income Tax |
(239,390) |
171,084 |
(525,955) |
(475,705) |
|||||||||||
Income Tax Expense (Benefit) |
81,808 |
125,742 |
10,010 |
(125,439) |
|||||||||||
(Loss) Income From Continuing Operations |
(321,198) |
45,342 |
(535,965) |
(350,266) |
|||||||||||
Income (Loss) From Discontinued Operations, net |
19,564 |
(11,017) |
(303,183) |
(14,209) |
|||||||||||
Net (Loss) Income |
(301,634) |
34,325 |
(839,148) |
(364,475) |
|||||||||||
Less: Net Income Attributable to Noncontrolling Interests |
4,413 |
3,920 |
8,954 |
10,410 |
|||||||||||
Net (Loss) Income Attributable to CONSOL Energy Shareholders |
$ |
(306,047) |
$ |
30,405 |
$ |
(848,102) |
$ |
(374,885) |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(CONTINUED) | |||||||||||||||
Three Months Ended |
For the Year Ended | ||||||||||||||
(Dollars in thousands, except per share data) |
December 31, |
December 31, | |||||||||||||
(Unaudited) |
2016 |
2015 |
2016 |
2015 | |||||||||||
(Loss) Earnings Per Share |
|||||||||||||||
Basic |
|||||||||||||||
(Loss) Income from Continuing Operations |
$ |
(1.42) |
$ |
0.18 |
$ |
(2.38) |
$ |
(1.57) |
|||||||
Income (Loss) from Discontinued Operations |
0.09 |
(0.05) |
(1.32) |
(0.07) |
|||||||||||
Total Basic (Loss) Earnings Per Share |
$ |
(1.33) |
$ |
0.13 |
$ |
(3.70) |
$ |
(1.64) |
|||||||
Dilutive |
|||||||||||||||
(Loss) Income from Continuing Operations |
$ |
(1.42) |
$ |
0.18 |
$ |
(2.38) |
$ |
(1.57) |
|||||||
Income (Loss) from Discontinued Operations |
0.09 |
(0.05) |
(1.32) |
(0.07) |
|||||||||||
Total Dilutive (Loss) Earnings Per Share |
$ |
(1.33) |
$ |
0.13 |
$ |
(3.70) |
$ |
(1.64) |
|||||||
Dividends Paid Per Share |
$ |
— |
$ |
0.010 |
$ |
0.010 |
$ |
0.145 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
Three Months Ended |
For the Year Ended | ||||||||||||||
(Dollars in thousands) |
December 31, |
December 31, | |||||||||||||
(Unaudited) |
2016 |
2015 |
2016 |
2015 | |||||||||||
Net (Loss) Income |
$ |
(301,634) |
$ |
34,325 |
$ |
(839,148) |
$ |
(364,475) |
|||||||
Other Comprehensive Loss: |
|||||||||||||||
Actuarially Determined Long-Term Liability |
(40,092) |
(46,410) |
(33,226) |
(86,447) |
|||||||||||
Reclassification of Cash Flow Hedges from Other Comprehensive Income to Earnings (Net of tax: $5,727, $9,931, $25,011, $45,054) |
(9,995) |
(17,331) |
(43,470) |
(78,051) |
|||||||||||
Other Comprehensive Loss |
(50,087) |
(63,741) |
(76,696) |
(164,498) |
|||||||||||
Comprehensive Loss |
(351,721) |
(29,416) |
(915,844) |
(528,973) |
|||||||||||
Less: Comprehensive Income Attributable to Noncontrolling Interests |
4,675 |
3,920 |
9,216 |
10,410 |
|||||||||||
Comprehensive Loss Attributable to CONSOL Energy Inc. Shareholders |
$ |
(356,396) |
$ |
(33,336) |
$ |
(925,060) |
$ |
(539,383) |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands) |
December 31, |
December 31, | |||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash and Cash Equivalents |
$ |
60,475 |
$ |
72,574 |
|||
Accounts and Notes Receivable: |
|||||||
Trade |
220,222 |
151,383 |
|||||
Other Receivables |
69,901 |
121,735 |
|||||
Inventories |
65,461 |
66,792 |
|||||
Recoverable Income Taxes |
116,851 |
13,887 |
|||||
Prepaid Expenses |
93,146 |
297,287 |
|||||
Current Assets of Discontinued Operations |
83 |
81,105 |
|||||
Total Current Assets |
626,139 |
804,763 |
|||||
Property, Plant and Equipment: |
|||||||
Property, Plant and Equipment |
13,771,388 |
13,794,907 |
|||||
Less—Accumulated Depreciation, Depletion and Amortization |
5,630,949 |
5,062,201 |
|||||
Property, Plant and Equipment of Discontinued Operations, net |
— |
936,671 |
|||||
Total Property, Plant and Equipment—Net |
8,140,439 |
9,669,377 |
|||||
Other Assets: |
|||||||
Deferred Income Taxes |
4,290 |
— |
|||||
Investment in Affiliates |
190,964 |
237,330 |
|||||
Other |
222,149 |
214,388 |
|||||
Other Assets of Discontinued Operations |
— |
4,044 |
|||||
Total Other Assets |
417,403 |
455,762 |
|||||
TOTAL ASSETS |
$ |
9,183,981 |
$ |
10,929,902 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands, except per share data) |
December 31, |
December 31, | |||||
LIABILITIES AND EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts Payable |
$ |
241,616 |
$ |
250,609 |
|||
Short-Term Notes Payable |
— |
952,000 |
|||||
Current Portion of Long-Term Debt |
12,000 |
9,409 |
|||||
Other Accrued Liabilities |
680,348 |
421,827 |
|||||
Current Liabilities of Discontinued Operations |
6,050 |
51,514 |
|||||
Total Current Liabilities |
940,014 |
1,685,359 |
|||||
Long-Term Debt: |
|||||||
Long-Term Debt |
2,722,995 |
2,703,899 |
|||||
Capital Lease Obligations |
39,074 |
34,884 |
|||||
Long-Term Debt of Discontinued Operations |
— |
5,001 |
|||||
Total Long-Term Debt |
2,762,069 |
2,743,784 |
|||||
Deferred Credits and Other Liabilities: |
|||||||
Deferred Income Taxes |
— |
74,629 |
|||||
Postretirement Benefits Other Than Pensions |
659,474 |
630,892 |
|||||
Pneumoconiosis Benefits |
108,073 |
111,903 |
|||||
Mine Closing |
218,631 |
227,339 |
|||||
Gas Well Closing |
223,352 |
163,842 |
|||||
Workers' Compensation |
67,277 |
69,812 |
|||||
Salary Retirement |
112,543 |
91,596 |
|||||
Reclamation |
— |
25 |
|||||
Other |
151,660 |
166,957 |
|||||
Deferred Credits and Other Liabilities of Discontinued Operations |
— |
107,988 |
|||||
Total Deferred Credits and Other Liabilities |
1,541,010 |
1,644,983 |
|||||
TOTAL LIABILITIES |
5,243,093 |
6,074,126 |
|||||
Stockholders' Equity: |
|||||||
Common Stock, $0.01 Par Value; 500,000,000 Shares Authorized, 229,443,008 Issued and Outstanding at December 31, 2016; 229,054,236 Issued and Outstanding at December 31, 2015 |
2,298 |
2,294 |
|||||
Capital in Excess of Par Value |
2,460,864 |
2,435,497 |
|||||
Preferred Stock, 15,000,000 Shares Authorized, None Issued and Outstanding |
— |
— |
|||||
Retained Earnings |
1,727,789 |
2,579,834 |
|||||
Accumulated Other Comprehensive Loss |
(392,556) |
(315,598) |
|||||
Common Stock in Treasury, at Cost—No Shares at December 31, 2016 and 2015 |
— |
— |
|||||
Total CONSOL Energy Inc. Stockholders' Equity |
3,798,395 |
4,702,027 |
|||||
Noncontrolling Interest |
142,493 |
153,749 |
|||||
TOTAL EQUITY |
3,940,888 |
4,855,776 |
|||||
TOTAL LIABILITIES AND EQUITY |
$ |
9,183,981 |
$ |
10,929,902 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) |
Common Stock |
Capital in Excess of Par Value |
Retained Earnings (Deficit) |
Accumulated Other Comprehensive (Loss) |
Common Stock in Treasury |
Total CONSOL Energy Inc. Stockholders' Equity |
Non- Controlling Interest |
Total Equity | |||||||||||||||||||||||
December 31, 2015 |
$ |
2,294 |
$ |
2,435,497 |
$ |
2,579,834 |
$ |
(315,598) |
$ |
— |
$ |
4,702,027 |
$ |
153,749 |
$ |
4,855,776 |
|||||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||||||
Net (Loss) Income |
— |
— |
(848,102) |
— |
— |
(848,102) |
8,954 |
(839,148) |
|||||||||||||||||||||||
Gas Cash Flow Hedge (Net of $25,011 Tax) |
— |
— |
— |
(43,470) |
— |
(43,470) |
— |
(43,470) |
|||||||||||||||||||||||
Actuarially Determined Long-Term Liability Adjustments (Net of $16,281 Tax) |
— |
— |
— |
(33,488) |
— |
(33,488) |
262 |
(33,226) |
|||||||||||||||||||||||
Comprehensive (Loss) Income |
— |
— |
(848,102) |
(76,958) |
— |
(925,060) |
9,216 |
(915,844) |
|||||||||||||||||||||||
Issuance of Common Stock |
4 |
— |
— |
— |
— |
4 |
— |
4 |
|||||||||||||||||||||||
Treasury Stock Activity |
— |
— |
(1,649) |
— |
— |
(1,649) |
— |
(1,649) |
|||||||||||||||||||||||
Tax Cost From Stock-Based Compensation |
— |
(4,931) |
— |
— |
— |
(4,931) |
— |
(4,931) |
|||||||||||||||||||||||
Amortization of Stock-Based Compensation Awards |
— |
30,298 |
— |
— |
— |
30,298 |
1,185 |
31,483 |
|||||||||||||||||||||||
Distributions to Noncontrolling Interest |
— |
— |
— |
— |
— |
— |
(21,657) |
(21,657) |
|||||||||||||||||||||||
Dividends ($0.01 per share) |
— |
— |
(2,294) |
— |
— |
(2,294) |
— |
(2,294) |
|||||||||||||||||||||||
December 31, 2016 |
$ |
2,298 |
$ |
2,460,864 |
$ |
1,727,789 |
$ |
(392,556) |
$ |
— |
$ |
3,798,395 |
$ |
142,493 |
$ |
3,940,888 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||
(Dollars in Thousands) |
Three Months Ended |
Year Ended | |||||||||||||||
December 31, |
December 31, | ||||||||||||||||
2016 |
2015 |
2016 |
2015 | ||||||||||||||
Cash Flows from Operating Activities |
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) | |||||||||||||
Net (Loss) Income |
$ |
(301,634) |
$ |
34,325 |
$ |
(839,148) |
$ |
(364,475) |
|||||||||
Adjustments to Reconcile Net (Loss) Income to Cash Provided By |
|||||||||||||||||
Net (Income) Loss from Discontinued Operations |
(19,564) |
11,017 |
303,183 |
14,209 |
|||||||||||||
Depreciation, Depletion and Amortization |
156,583 |
139,988 |
598,503 |
567,120 |
|||||||||||||
Impairment of Exploration and Production Properties |
— |
— |
— |
828,905 |
|||||||||||||
Non-Cash Other Post-Employment Benefits |
— |
(109,879) |
— |
(261,750) |
|||||||||||||
Stock-Based Compensation |
7,658 |
4,664 |
31,483 |
24,513 |
|||||||||||||
Gain on Sale of Assets |
(5,957) |
(19,844) |
(19,498) |
(74,173) |
|||||||||||||
Loss on Debt Extinguishment |
— |
— |
— |
67,751 |
|||||||||||||
Loss (Gain) on Commodity Derivative Instruments |
194,893 |
(141,869) |
141,021 |
(392,942) |
|||||||||||||
Net Cash Received in Settlement of Commodity Derivative Instruments |
41,909 |
79,480 |
245,212 |
196,348 |
|||||||||||||
Deferred Income Taxes |
193,171 |
133,025 |
120,305 |
(140,472) |
|||||||||||||
Return on Equity Investment |
— |
4,355 |
22,268 |
35,466 |
|||||||||||||
Equity in Earnings of Affiliates |
(11,839) |
(16,059) |
(53,078) |
(54,897) |
|||||||||||||
Changes in Operating Assets: |
|||||||||||||||||
Accounts and Notes Receivable |
(52,569) |
41,306 |
(48,014) |
160,370 |
|||||||||||||
Inventories |
(2,839) |
15,495 |
1,330 |
5,573 |
|||||||||||||
Prepaid Expenses |
12,603 |
24,939 |
84,026 |
128,405 |
|||||||||||||
Changes in Other Assets |
(84,331) |
(19,172) |
(98,572) |
3,311 |
|||||||||||||
Changes in Operating Liabilities: |
|||||||||||||||||
Accounts Payable |
(14,717) |
(22,704) |
(27,371) |
(145,875) |
|||||||||||||
Accrued Interest |
(37,025) |
(37,230) |
(1,040) |
26,649 |
|||||||||||||
Other Operating Liabilities |
1,014 |
(41,418) |
(20,356) |
(147,110) |
|||||||||||||
Changes in Other Liabilities |
(7,104) |
2,444 |
(9,724) |
(9,916) |
|||||||||||||
Other |
16,887 |
23,299 |
28,820 |
32,667 |
|||||||||||||
Net Cash Provided by Continuing Operating Activities |
87,139 |
106,162 |
459,350 |
499,677 |
|||||||||||||
Net Cash (Used In) Provided by Discontinued Operating Activities |
(4,492) |
(4,596) |
9,935 |
6,172 |
|||||||||||||
Net Cash Provided by Operating Activities |
82,647 |
101,566 |
469,285 |
505,849 |
|||||||||||||
Cash Flows from Investing Activities: |
|||||||||||||||||
Capital Expenditures |
(47,431) |
(118,672) |
(226,820) |
(982,934) |
|||||||||||||
Proceeds from Sales of Assets |
20,925 |
27,527 |
59,902 |
110,571 |
|||||||||||||
Proceeds from Noble Exchange Settlement |
213,295 |
— |
213,295 |
— |
— |
||||||||||||
Net Investment in Equity Affiliates |
78,298 |
(13,997) |
73,743 |
(84,221) |
|||||||||||||
Net Cash Provided by (Used in) Continuing Investing Activities |
265,087 |
(105,142) |
120,120 |
(956,584) |
|||||||||||||
Net Cash Provided by (Used in) Discontinued Investing Activities |
1,000 |
(8,739) |
367,251 |
(39,633) |
|||||||||||||
Net Cash Provided by (Used in) Investing Activities |
266,087 |
(113,881) |
487,371 |
(996,217) |
|||||||||||||
Cash Flows from Financing Activities: |
|||||||||||||||||
(Payments on) Proceeds from Short-Term Borrowings |
(354,000) |
7,000 |
(952,000) |
952,000 |
|||||||||||||
Payments on Miscellaneous Borrowings |
(2,090) |
(2,759) |
(8,312) |
(4,282) |
|||||||||||||
Payments on Long-Term Notes, including Redemption Premium |
— |
— |
— |
(1,263,719) |
|||||||||||||
Proceeds from Issuance of Long-Term Notes |
— |
— |
— |
492,760 |
|||||||||||||
Net (Payments on) Proceeds from Revolver - MLP |
(7,000) |
5,000 |
16,000 |
185,000 |
|||||||||||||
Distributions to Noncontrolling Interest |
(5,416) |
(5,060) |
(21,657) |
(5,060) |
|||||||||||||
Proceeds from Sale of MLP Interests |
— |
— |
— |
148,359 |
|||||||||||||
Tax Benefit from Stock-Based Compensation |
— |
— |
— |
208 |
|||||||||||||
Dividends Paid |
— |
(2,290) |
(2,294) |
(33,281) |
|||||||||||||
Proceeds from Issuance of Common Stock |
— |
— |
4 |
8,288 |
|||||||||||||
Purchases of Treasury Stock |
— |
— |
— |
(71,674) |
|||||||||||||
Debt Issuance and Financing Fees |
— |
— |
(482) |
(22,586) |
|||||||||||||
Net Cash (Used in) Provided by Continuing Financing Activities |
(368,506) |
1,891 |
(968,741) |
386,013 |
|||||||||||||
Net Cash Used in Discontinued Financing Activities |
— |
(17) |
(14) |
(56) |
|||||||||||||
Net Cash (Used in) Provided by Financing Activities |
(368,506) |
1,874 |
(968,755) |
385,957 |
|||||||||||||
Net Decrease in Cash and Cash Equivalents |
(19,772) |
(10,441) |
(12,099) |
(104,411) |
|||||||||||||
Cash and Cash Equivalents at Beginning of Period |
80,247 |
83,015 |
72,574 |
176,985 |
|||||||||||||
Cash and Cash Equivalents at End of Period |
$ |
60,475 |
$ |
72,574 |
$ |
60,475 |
$ |
72,574 |
|||||||||
Logo - http://photos.prnewswire.com/prnh/20120416/NE87957LOGO
SOURCE CONSOL Energy Inc.
PITTSBURGH, Jan. 30, 2017 /PRNewswire/ -- CNX Coal Resources LP (NYSE: CNXC) today reported financial and operating results for the quarter ended December 31, 2016.
Fourth Quarter 2016 Results
Highlights of the CNXC fourth quarter 2016 results include:
Management Comments
"I am very excited to report that the CNXC team performed extremely well on multiple fronts during the fourth quarter of 2016," said Jimmy Brock, Chief Executive Officer of CNX Coal Resources GP LLC (the "General Partner"). "The operational team responded to the opportunities created in the domestic and seaborne markets and produced record volumes this quarter for the Pennsylvania mining complex (the "PAMC"). Our marketing team delivered these record production volumes to our customers as coal regained market share from natural gas and coal export markets remained strong. From a financial standpoint, these record shipments helped us achieve a distribution coverage ratio of 1.0x and generated net cash provided by operating activities of $25.8 million during the quarter."
"On the safety front, I am pleased to announce that our central preparation plant delivered another full quarter without any safety exceptions. This is the seventh consecutive exception-free quarter for the preparation plant. For the PAMC in its entirety, we were also successful in reducing the severity of our exceptions compared to the same period last year. Safety remains our top core value and we continue to strive for further improvements."
Sales & Marketing
We sold a record 1.8 million tons of coal during the quarter, of which approximately 8.5% was ultimately delivered to end users in the high-vol metallurgical coal markets in Asia and South America. More importantly, we also improved the average realized price by approximately 2% compared to the previous quarter. For the full year 2016, we sold 6.2 million tons of coal, which was above our previously announced guidance range of 5.9-6.1 million tons. The fourth quarter marked our highest quarter for both sales volume and average revenue per ton during 2016. This was achieved by shipping more coal to our domestic customers and also by taking advantage of select export opportunities that opened as a result of strengthening demand for both thermal and metallurgical coal. Additionally, record shipments from the complex were enabled by our experienced logistics team and by strong performance from our transportation partners, including both eastern railroads and the coal terminals in Baltimore.
During the fourth quarter, our domestic customers demonstrated a strong demand for coal driven by higher natural gas prices and coal inventory restocking following 2016's strong summer burn. We expect this trend to be sustained heading into 2017 as coal-fired generation continues to benefit from the onset of winter heating demand and favorable economics relative to natural gas-fired generation. Coal stockpiles remain below target levels at several of our customer power plants as they benefit from these demand dynamics. According to our internal analysis, our top 15 domestic power plant customers, which accounted for approximately 82% of our 2016 domestic power plant shipments, operated at a weighted average capacity factor of 66% during the peak summer demand season of June-September, which was up from their weighted average capacity factor of 61% during the same period last year. The U.S. Energy Information Administration (the "EIA") forecasts that after reaching a low point in 2016, coal-fired generation will increase from 2017-2020 as coal recaptures share from natural gas in the U.S. electric power generation mix. Specifically for 2017, the EIA projects that coal consumption from the U.S. electric power sector will improve by 41 million tons compared to 2016, helping to draw down power plant coal inventories by an additional 16 million tons from year-end 2016 levels. We believe this stronger coal burn and continued destocking should sustain improvements in coal supply-demand fundamentals for the upcoming contracting periods.
In the export market, the global coking coal benchmark for the first quarter of 2017 settled at $285/metric ton. However, international spot prices have since experienced a pullback and spot prices are now in $170-$180/metric ton range. While changes to China's policy on local mining will likely continue to create volatility in seaborne pricing, we believe the overall value proposition of our product remains very strong for coke producers. We plan to continue to secure additional volume in the international high-vol market as realizations there remain more attractive than in the domestic and export thermal markets.
During the quarter, we contracted 325 thousand additional tons for 2017 across all of our markets, bringing our total sold position to 6.4 million tons or 98% of the estimated total sales volumes based on the midpoint of our guidance range. In addition to a strong 2017 sold position, we have a solid position of approximately 66% sold for 2018, based on 6.5 million tons of total sales. With our planned coal production in 2017 largely sold out, our focus now has shifted to maximizing realizations for any additional production and booking additional sales for contract years 2018 and 2019. We are currently active in negotiations with several customers to expand our crossover metallurgical coal portfolio, and we continue to pursue select domestic customers that fit with our long-term market strategy.
1"Adjusted EBITDA" and "Distribution coverage ratio" are non-GAAP financial measures, which are reconciled to GAAP net income under the caption Non-GAAP Financial Measures" |
Quarterly Distribution
During the fourth quarter, CNXC generated net cash provided by operating activities of $25.8 million and distributable cash flow2 of $12.6 million, yielding a distribution coverage ratio of 1.0x. We note that our distribution coverage ratio calculation is based on the estimated maintenance capital expenditure of $8.6 million, while our actual cash maintenance capital expenditure for the fourth quarter was $3.1 million. Based on our current outlook for the coal markets and distributable cash flow generated during the quarter, the Board of Directors of the general partner, has elected to pay a cash distribution $0.5125 per unit to all limited partner unitholders and the holder of the general partner interest. The Board of Directors has also approved a full cash distribution of approximately $1.85 million in the aggregate to the holders of the convertible Class A Preferred Units. The distribution to all unitholders of the Partnership will be made on February 15, 2017 to such holders of record at the close of business on February 9, 2017.
Operations Summary
Our operations team delivered record production for the quarter despite two longwall moves. With domestic and international demand remaining strong throughout the quarter, our marketing team was successful in lining up a record shipment schedule. The operations team took advantage of this opportunity and mobilized additional shifts during the weekends and typical holiday shutdown periods.
We sold 1.8 million tons of coal during the fourth quarter of 2016 compared to 1.2 million tons in the year ago period. The average realized price declined by 14.3% compared to the year-ago period, as some higher-priced coal contracts rolled off and were replaced by lower-priced sales. Our total cost of coal sold increased to $60.4 million during the quarter compared to $49.6 million in the year-ago period driven by higher coal sales volume. However, the average cost of coal sold3 in the quarter declined 14.6% to $33.90 per ton, compared to $39.70 per ton in the year-earlier quarter, primarily driven by various cost reduction measures.
2"Distributable Cash Flow" is a non-GAAP financial measure which is reconciled to GAAP net income under the caption "Non-GAAP Financial Measures" |
Three Months Ended | ||||
December 31, 2016 |
December 31, 2015 | |||
Coal Production |
million tons |
1.8 |
1.2 | |
Coal Sales |
million tons |
1.8 |
1.2 | |
Average Realized Price |
per ton |
$45.05 |
$52.57 | |
Average Cost of Coal Sold |
per ton |
$33.90 |
$39.70 |
Note: The Partnership has recast the above table to retrospectively reflect the additional 5% |
Guidance and Outlook
Heading into the first quarter of 2017, we expect production and sales volume to return to a more typical annual run-rate than we saw in the fourth quarter. We also expect unit margins to increase compared to the fourth quarter. Based on our current contracted position, production plans and outlook for the coal markets, we are re-affirming our previously announced guidance ranges for 2017 as follows:
Fourth Quarter Earnings Conference Call
A conference call and webcast, during which management will discuss the fourth quarter of 2016 financial and operational results, is scheduled for January 30, 2017 at 5:00 PM ET. Prepared remarks by members of management will be followed by a question and answer session. Interested parties may listen via webcast on the Events page of our website, www.cnxlp.com. An archive of the webcast will be available for 30 days after the event.
Participant dial in (toll free) |
1-855-656-0928 |
Participant international dial in |
1-412-902-4112 |
About CNX Coal Resources LP
CNX Coal Resources is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active coal operations in Pennsylvania. Its assets include a 25% undivided interest in, and operational control over, CONSOL's Pennsylvania mining complex, which consists of three underground mines and related infrastructure. More information is available on our website www.cnxlp.com.
Contacts:
Investor:
Mitesh Thakkar, (724) 485-3133
miteshthakkar@cnxlp.com
Media:
Brian Aiello, (724) 485-3078
brianaiello@cnxlp.com
Non-GAAP Financial Measures
Adjusted EBITDA, distributable cash flow, distribution coverage ratio and average cost of coal sold are not Generally Accepted Accounting Principles ("GAAP") measures.
We define adjusted EBITDA as (i) net income (loss) before net interest expense, depreciation, depletion and amortization, as adjusted for (ii) certain non-cash items, such as Unit Based Compensation. The GAAP measure most directly comparable to adjusted EBITDA is net income. Management believes that the presentation of adjusted EBITDA in this report provides information useful to investors in assessing our financial condition and results of operations. Adjusted EBITDA should not be considered an alternative to net income or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income and our presentation of adjusted EBITDA may not be comparable to similarly titled measures of other companies.
We define distributable cash flow as (i) net income (loss) before net interest expense, depreciation, depletion and amortization, as adjusted for (ii) certain non-cash items, such as unit based compensation, less net cash interest paid, distribution to the preferred units and estimated maintenance capital expenditures, to analyze our performance. Distributable cash flow will not reflect changes in working capital balances. Management believes that the presentation of distributable cash flow in this report provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to distributable cash flow are net income and net cash provided by operating activities. Distributable cash flow should not be considered an alternative to net income, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Distributable cash flow excludes some, but not all, items that affect net income or net cash, and our presentation may not be comparable to similarly titled measures of other companies. The distribution coverage ratio is the ratio of distributable cash flow and expected distribution payments. .
We define average cost of coal sold as our costs of coal sold divided by the tons of coal we sell. We define cost of coal sold as operating and other production costs related to produced tons sold, along with changes in coal inventory, both in volumes and carrying values. The cost of coal sold per ton includes items such as direct operating costs, royalty and production taxes, direct administration, and depreciation, depletion and amortization costs. Our costs exclude any indirect costs such as general and administrative costs and other costs not directly attributable to the production of coal. Management believes that the presentation of average cost of coal sold in this report provides information useful to investors in assessing our results of operations. The GAAP measure most directly comparable to cost of coal sold is total costs. Average cost of coal sold should not be considered an alternative to total costs, or any other measure of financial or operational performance presented in accordance with GAAP. Average cost of coal sold excludes some, but not all, items that affect total costs and our presentation of average cost of coal sold may not be comparable to similarly titled measures of other companies
The following table presents a reconciliation of adjusted EBITDA to net income, the most directly comparable GAAP financial measure, on a historical basis for each period indicated. The table also presents a reconciliation of distributable cash flow to net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, on a historical basis for each period indicated.
4CNXC is unable to provide a reconciliation of adjusted EBITDA guidance to Net Income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing and potential significance of certain income statement items. |
(Dollars in thousands) |
Three Months Ended December 31, 2016 | ||
Net Income |
$ |
11,727 | |
Plus: |
|||
Interest Expense |
2,442 | ||
Depreciation, Depletion and Amortization |
10,662 | ||
Stock/Unit Based Compensation |
281 | ||
Adjusted EBITDA |
$ |
25,112 | |
Less: |
|||
Cash Interest |
2,112 | ||
Distributions to Preferred Units |
1,851 | ||
Estimated Maintenance Capital Expenditures |
8,583 | ||
Distributable Cash Flow |
$ |
12,566 | |
Net Cash Provided by Operating Activities |
$ |
25,775 | |
Less: |
|||
Interest Expense |
2,442 | ||
Other, Including Working Capital |
(1,779) | ||
Adjusted EBITDA |
$ |
25,112 | |
Less: |
|||
Cash Interest |
2,112 | ||
Distributions to Preferred Units |
1,851 | ||
Estimated Maintenance Capital Expenditures |
8,583 | ||
Distributable Cash Flow |
$ |
12,566 | |
Distributions Declared |
$ |
12,148 | |
Distribution Coverage |
1.0 |
The following table presents a reconciliation of average cost of coal sold to total costs, the most directly comparable GAAP financial measure, on a historical basis for each period indicated.
(Amounts in thousands, except for per ton) |
Three Months Ended | ||||||
2016 |
2015 | ||||||
Total Costs |
$ |
72,560 |
$ |
56,520 | |||
Freight Expense |
(3,130) |
(2,238) | |||||
Selling, General and Administrative Expenses |
(3,391) |
(2,018) | |||||
Interest Expense |
(2,442) |
(1,878) | |||||
Other Costs (Non-Production) |
(2,627) |
(295) | |||||
Depreciation, Depletion and Amortization (Non-Production) |
(549) |
(541) | |||||
Cost of Coal Sold |
$ |
60,421 |
$ |
49,550 | |||
Total Tons Sold |
1,782 |
1,248 | |||||
Average Cost Per Ton Sold |
$ |
33.90 |
$ |
39.70 |
Note: The above table reflects the additional 5% ownership of PAMC completed September 30, 2016 |
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: generation of sufficient distributable cash flow to support the payment of minimum quarterly distributions; changes in coal prices or the costs of mining or transporting coal; uncertainty in estimating economically recoverable coal reserves and replacement of reserves; our ability to develop our existing coal reserves and successfully execute our mining plans; changes in general economic conditions, both domestically and globally; competitive conditions within the coal industry; changes in the consumption patterns of coal-fired power plants and steelmakers and other factors affecting the demand for coal by coal-fired power plants and steelmakers; the availability and price of coal to the consumer compared to the price of alternative and competing fuels; competition from the same and alternative energy sources; energy efficiency and technology trends; our ability to successfully implement our business plan; the price and availability of debt and equity financing; operating hazards and other risks incidental to coal mining; major equipment failures and difficulties in obtaining equipment, parts and raw materials; availability, reliability and costs of transporting coal; adverse or abnormal geologic conditions, which may be unforeseen; natural disasters, weather-related delays, casualty losses and other matters beyond our control; interest rates; labor availability, relations and other workforce factors; defaults by our sponsor under our operating agreement and employee services agreement; changes in availability and cost of capital; changes in our tax status; delays in the receipt of, failure to receive or revocation of necessary governmental permits; defects in title or loss of any leasehold interests with respect to our properties; the effect of existing and future laws and government regulations, including the enforcement and interpretation of environmental laws thereof; the effect of new or expanded greenhouse gas regulations; the effects of litigation; and other factors discussed in our 2015 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
CNX COAL RESOURCES LP | |||||||||||||
EARNINGS SUMMARY | |||||||||||||
(Dollars in thousands) | |||||||||||||
(unaudited) | |||||||||||||
Three Months Ended December 31, |
Years Ended December 31, | ||||||||||||
2016 |
2015 |
2016 |
2015 | ||||||||||
Revenue: |
|||||||||||||
Coal Revenue |
$ |
80,292 |
$ |
65,610 |
$ |
266,395 |
$ |
322,261 | |||||
Freight Revenue |
3,130 |
2,238 |
11,603 |
3,809 | |||||||||
Other Income |
865 |
128 |
3,119 |
941 | |||||||||
Total Revenue and Other Income |
84,287 |
67,976 |
281,117 |
327,011 | |||||||||
Cost of Coal Sold: |
|||||||||||||
Operating Costs |
50,308 |
40,012 |
172,671 |
197,224 | |||||||||
Depreciation, Depletion and Amortization |
10,113 |
9,538 |
38,594 |
41,675 | |||||||||
Total Cost of Coal Sold |
60,421 |
49,550 |
211,265 |
238,899 | |||||||||
Other Costs: |
|||||||||||||
Other Costs |
2,627 |
295 |
10,330 |
(3,263) | |||||||||
Depreciation, Depletion and Amortization |
549 |
541 |
3,400 |
2,461 | |||||||||
Total Other Costs |
3,176 |
836 |
13,730 |
(802) | |||||||||
Freight Expense |
3,130 |
2,238 |
11,603 |
3,809 | |||||||||
Selling, General and Administrative Expenses |
3,391 |
2,018 |
9,949 |
10,931 | |||||||||
Interest Expense |
2,442 |
1,878 |
8,719 |
9,636 | |||||||||
Total Costs |
72,560 |
56,520 |
255,266 |
262,473 | |||||||||
Net Income |
$ |
11,727 |
$ |
11,456 |
$ |
25,851 |
$ |
64,538 | |||||
Net Income Allocable to Limited Partner Units - Basic & Diluted |
$ |
9,679 |
$ |
8,499 |
$ |
19,487 |
$ |
22,888 | |||||
Adjusted EBITDA |
$ |
25,112 |
$ |
23,438 |
$ |
77,749 |
$ |
115,964 | |||||
Distributable Cash Flow |
$ |
12,566 |
$ |
9,757 |
$ |
28,613 |
$ |
54,994 | |||||
Net Income per Limited Partner Unit - Basic |
$ |
0.41 |
$ |
0.37 |
$ |
0.84 |
$ |
0.99 | |||||
Net Income per Limited Partner Unit - Diluted |
$ |
0.41 |
$ |
0.37 |
$ |
0.83 |
$ |
0.99 | |||||
Note: The Partnership has recast its consolidated financial statements to retrospectively reflect the additional 5% ownership of |
CNX COAL RESOURCES LP | |||||
CONSOLIDATED BALANCE SHEETS | |||||
(Dollars in thousands) | |||||
(unaudited) | |||||
December 31, |
December 31, | ||||
ASSETS |
|||||
Current Assets: |
|||||
Cash |
$ |
9,785 |
$ |
6,534 | |
Trade Receivables |
23,418 |
19,398 | |||
Other Receivables |
515 |
471 | |||
Inventories |
11,491 |
12,238 | |||
Prepaid Expenses |
3,512 |
5,089 | |||
Total Current Assets |
48,721 |
43,730 | |||
Property, Plant and Equipment: |
|||||
Property, Plant and Equipment |
876,690 |
865,527 | |||
Less—Accumulated Depreciation, Depletion and Amortization |
442,178 |
400,911 | |||
Total Property, Plant and Equipment—Net |
434,512 |
464,616 | |||
Other Assets: |
|||||
Other |
21,063 |
17,598 | |||
Total Other Assets |
21,063 |
17,598 | |||
TOTAL ASSETS |
$ |
504,296 |
$ |
525,944 |
December 31, |
December 31, | ||||
LIABILITIES AND EQUITY |
|||||
Current Liabilities: |
|||||
Accounts Payable |
$ |
18,797 |
$ |
17,405 | |
Accounts Payable—Related Party |
1,666 |
4,310 | |||
Other Accrued Liabilities |
44,318 |
37,281 | |||
Total Current Liabilities |
64,781 |
58,996 | |||
Long-Term Debt: |
|||||
Revolver, net of Debt Issuance and Financing Fees |
197,843 |
180,946 | |||
Capital Lease Obligations |
146 |
124 | |||
Total Long-Term Debt |
197,989 |
181,070 | |||
Other Liabilities: |
|||||
Pneumoconiosis Benefits |
2,057 |
1,934 | |||
Workers' Compensation |
3,090 |
2,929 | |||
Asset Retirement Obligations |
9,346 |
8,499 | |||
Other |
463 |
713 | |||
Total Other Liabilities |
14,956 |
14,075 | |||
TOTAL LIABILITIES |
277,726 |
254,141 | |||
Partners' Capital: |
|||||
Class A Preferred Units (3,956,496 Units Outstanding at December 31, 2016; |
69,151 |
— | |||
Common Units (11,618,456 Units Outstanding at December 31, 2016; 11,611,067 |
140,967 |
154,309 | |||
Subordinated Units (11,611,067 Units Outstanding at December 31, 2016 and |
(7,631) |
6,188 | |||
General Partner Interest |
12,274 |
13,081 | |||
Parent Net Investment |
— |
87,234 | |||
Accumulated Other Comprehensive Income |
11,809 |
10,991 | |||
Total Partners' Capital |
226,570 |
271,803 | |||
TOTAL LIABILITIES AND PARTNERS' CAPITAL |
$ |
504,296 |
$ |
525,944 |
Note: The Partnership has recast its consolidated financial statements to retrospectively reflect the additional 5% ownership of |
CNX COAL RESOURCES LP | |||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(Dollars in thousands) | |||||||||||
(unaudited) | |||||||||||
Three Months Ended December 31, |
Years Ended December 31, | ||||||||||
2016 |
2015 |
2016 |
2015 | ||||||||
Cash Flows from Operating Activities: |
|||||||||||
Net Income |
$ |
11,727 |
$ |
11,456 |
$ |
25,851 |
$ |
64,538 | |||
Adjustments to Reconcile Net Income to Net Cash |
|||||||||||
Depreciation, Depletion and Amortization |
10,662 |
10,079 |
41,994 |
44,136 | |||||||
(Gain) Loss on Sale of Assets |
(1) |
(16) |
9 |
(61) | |||||||
Unit Based Compensation |
281 |
25 |
1,185 |
40 | |||||||
Other Adjustments to Net Income |
219 |
575 |
898 |
777 | |||||||
Changes in Operating Assets: |
|||||||||||
Accounts and Notes Receivable |
(2,732) |
9,585 |
(4,064) |
(19,389) | |||||||
Inventories |
89 |
3,582 |
747 |
1,061 | |||||||
Prepaid Expenses |
1,227 |
1,186 |
1,577 |
(186) | |||||||
Changes in Other Assets |
239 |
4,751 |
(3,465) |
(3,246) | |||||||
Changes in Operating Liabilities: |
|||||||||||
Accounts Payable |
500 |
(297) |
1,968 |
(416) | |||||||
Accounts Payable—Related Party |
346 |
3,075 |
(2,644) |
3,430 | |||||||
Other Operating Liabilities |
3,134 |
(12,620) |
7,010 |
(7,244) | |||||||
Changes in Other Liabilities |
84 |
(1,938) |
2,032 |
(6,532) | |||||||
Net Cash Provided by Operating Activities |
25,775 |
29,443 |
73,098 |
76,908 | |||||||
Cash Flows from Investing Activities: |
|||||||||||
Capital Expenditures |
(3,135) |
(8,361) |
(12,704) |
(34,073) | |||||||
PA Mining Acquisition |
— |
— |
(21,500) |
— | |||||||
Proceeds from Sales of Assets |
1 |
1 |
23 |
71 | |||||||
Net Cash Used in Investing Activities |
(3,134) |
(8,360) |
(34,181) |
(34,002) | |||||||
Cash Flows from Financing Activities: |
|||||||||||
Payments on Miscellaneous Borrowings |
(22) |
(19) |
(79) |
(53) | |||||||
Payments on Related Party Long-Term Notes |
— |
— |
— |
(10,951) | |||||||
Proceeds from Related Party Long-Term Notes |
— |
— |
— |
16,990 | |||||||
Proceeds from Revolver, Net of Payments |
(7,000) |
5,000 |
16,000 |
185,000 | |||||||
Proceeds from Issuance of Common Units, Net of |
— |
— |
— |
148,359 | |||||||
Distribution of Proceeds |
— |
— |
— |
(342,711) | |||||||
Payments for Unitholder Distributions |
(12,148) |
(11,353) |
(42,634) |
(11,353) | |||||||
Debt Issuance and Financing Fees |
— |
— |
— |
(4,329) | |||||||
Net Change in Parent Advances |
— |
(11,184) |
(8,953) |
(17,328) | |||||||
Net Cash Used In Financing Activities |
(19,170) |
(17,556) |
(35,666) |
(36,376) | |||||||
Net Increase in Cash |
3,471 |
3,527 |
3,251 |
6,530 | |||||||
Cash at Beginning of Period |
6,314 |
3,007 |
6,534 |
4 | |||||||
Cash at End of Period |
$ |
9,785 |
$ |
6,534 |
$ |
9,785 |
$ |
6,534 |
Note: The Partnership has recast its consolidated financial statements to retrospectively reflect the additional 5% ownership of |
SOURCE CNX Coal Resources LP
PITTSBURGH, Jan. 4, 2017 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) will issue its fourth quarter earnings release at 6:45 a.m. Eastern Time on Tuesday, January 31. This will be followed by a conference call at 10:00 a.m. Eastern Time. A live webcast will be available on the 'Investor Relations' page of the company's website, www.consolenergy.com. Also, earnings call slides will be available at 6:45 a.m. Eastern Time on Tuesday, January 31, on the 'Investor Relations' page of the company's website.
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, Dec. 13, 2016 /PRNewswire/ -- CNX Coal Resources LP (NYSE: CNXC) today announced, in conjunction with its participation in CONSOL Energy Inc.'s (NYSE: CNX) Analyst and Investor Day event today in Pittsburgh, PA, that it is reaffirming full-year 2016 guidance and providing its initial 2017 guidance.
Guidance and Outlook
Guidance |
2016 |
2017 | |
Coal sales |
million tons |
5.90-6.10 |
6.25-6.75 |
Adjusted EBITDA1 |
$ million |
$74-$82 |
$90-$110 |
Maintenance capital expenditures |
$ million |
$15-$19 |
$30-$36 |
Analyst and Investor Day
Jimmy Brock, Chief Executive Officer and Lori Ritter, Chief Financial and Accounting Officer of CNX Coal Resources GP LLC, along with certain other members of our management team will participate today in an Analyst and Investor Day event hosted by CONSOL Energy Inc. The management team will provide an overview of the Pennsylvania mining complex, discuss the business outlook and take questions from the analyst and investor community during a breakout session.
A live audio webcast of the Analyst and Investor Day will begin today at 8.30 am ET and can be accessed by visiting the "Events and Webcasts" section of "Investors" tab of the company's website at www.cnxlp.com. The replay of the webcast will be available on the company's website for approximately 30 days. Additionally, a slide deck will be posted to the website to coincide with the onset of the meeting.
About CNX Coal Resources LP
CNX Coal Resources is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active coal operations in Pennsylvania. Its assets include a 25% undivided interest in, and operational control over, CONSOL's Pennsylvania mining complex, which consists of three underground mines and related infrastructure. More information is available on our website www.cnxlp.com.
Contacts:
Investor:
Mitesh Thakkar, (724) 485-3133
miteshthakkar@cnxlp.com
Media:
Brian Aiello, (724) 485-3078
brianaiello@cnxlp.com
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: generation of sufficient distributable cash flow to support the payment of minimum quarterly distributions; changes in coal prices or the costs of mining or transporting coal; uncertainty in estimating economically recoverable coal reserves and replacement of reserves; our ability to develop our existing coal reserves and successfully execute our mining plans; changes in general economic conditions, both domestically and globally; competitive conditions within the coal industry; changes in the consumption patterns of coal-fired power plants and steelmakers and other factors affecting the demand for coal by coal-fired power plants and steelmakers; the availability and price of coal to the consumer compared to the price of alternative and competing fuels; competition from the same and alternative energy sources; energy efficiency and technology trends; our ability to successfully implement our business plan; the price and availability of debt and equity financing; operating hazards and other risks incidental to coal mining; major equipment failures and difficulties in obtaining equipment, parts and raw materials; availability, reliability and costs of transporting coal; adverse or abnormal geologic conditions, which may be unforeseen; natural disasters, weather-related delays, casualty losses and other matters beyond our control; interest rates; labor availability, relations and other workforce factors; defaults by our sponsor under our operating agreement and employee services agreement; changes in availability and cost of capital; changes in our tax status; delays in the receipt of, failure to receive or revocation of necessary governmental permits; defects in title or loss of any leasehold interests with respect to our properties; the effect of existing and future laws and government regulations, including the enforcement and interpretation of environmental laws thereof; the effect of new or expanded greenhouse gas regulations; the effects of litigation; and other factors discussed in our 2015 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
(1) CNX Coal Resources LP is unable to provide a reconciliation of adjusted EBITDA guidance to net income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing and potential significance of certain income statement items.
SOURCE CNX Coal Resources LP
PITTSBURGH, Nov. 16, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) today announced that it will host an Analyst and Investor Day in Pittsburgh, Pennsylvania on Tuesday, December 13, 2016.
The Analyst and Investor Day, which is expected to last approximately three hours, will feature presentations from members of CONSOL Energy's senior leadership team followed by a question and answer session.
A live audio webcast of CONSOL Energy's Analyst and Investor Day will begin at 8:30 a.m. Eastern Time and can be accessed by visiting the investor relations portion of the company's website, at www.consolenergy.com. The replay of the webcast will be available on the company's website for approximately 30 days. Additionally, a comprehensive slide deck will be posted to the website (under Presentations to Analysts tab) to coincide with the onset of the meeting.
Following the conclusion of CONSOL Energy's Analyst and Investor Day, certain members of the management teams from CNX Coal Resources (NYSE: CNXC) and CONE Midstream Partners LP (NYSE: CNNX), CONSOL Energy's affiliates, will hold separate breakout sessions to answer questions related to each respective entity. The breakout sessions will not be webcast.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
Company invites individual and institutional investors as well as advisors to log-on to VirtualInvestorConferences.com to view presentation
PITTSBURGH, Nov. 7, 2016 /PRNewswire/ -- CNX Coal Resources LP (NYSE: CNXC), based in Pittsburgh, focused on managing and further developing Northern Appalachian coal operations, today announced that the November 3 presentation from Lori Ritter, Chief Financial Officer is now available for on-demand viewing at VirtualInvestorConferences.com.
LINK: http://tinyurl.com/1103postpr
CNX Coal Resources LP presentation will be available 24/7 for 90 days. Investors and advisors may download shareholder materials from the "virtual trade booth" for the next three weeks.
Learn more about the event at www.VirtualInvestorConferences.com.
About CNX Coal Resources LP
CNX Coal Resources is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active thermal coal operations in Pennsylvania. Its assets include a 25% undivided interest in, and operational control over, CONSOL's Pennsylvania mining complex, which consists of three underground mines and related infrastructure. More Information is available on their website www.cnxlp.com
About VirtualInvestorConferences.com
Since 2010, VirtualInvestorConferences.com, created by BetterInvesting (NAIC) and PRNewswire, has been the only monthly virtual investor conference series that provides an interactive forum for presenting companies to meet directly with investors using a graphically-enhanced online platform.
Designed to replicate the look and feel of location-based investor conferences, Virtual Investor Conferences unites PR Newswire's leading-edge online conferencing and investor communications capabilities with BetterInvesting's extensive retail investor audience network.
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SOURCE CNX Coal Resources LP
PITTSBURGH, Nov. 1, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) reported net cash provided by operating activities in the just-ended quarter of $163 million, compared to $110 million in the year-earlier quarter, which includes $3 million and $37 million of net cash used in discontinued operating activities, respectively. For the nine months ended September 30, 2016, CONSOL Energy reported net cash provided by operating activities of $387 million, compared to $404 million for the nine months ended September 30, 2015, which includes $14 million and $11 million of net cash provided by discontinued operating activities, respectively.
"During the quarter, CONSOL continued to execute its plan and generated approximately $103 million in organic free cash flow from continuing operations1, which, along with a portion of the $97.6 million of the cash on hand from June 30, 2016, was used to further reduce CONSOL's revolver by approximately $112 million, and to improve liquidity to $1.4 billion," commented Nicholas J. DeIuliis, president and CEO. "With a track record over the past three quarters of reducing debt through generating total free cash flow of approximately $608 million, and, beginning this quarter, restarting drilling activity in the dry Utica in Monroe County, Ohio, our focus remains unchanged: continue to generate free cash flow and prudently allocate capital with the goal of increasing our company's net asset value (NAV) per share over the long-term. This is the cornerstone of our company and what drives our corporate and operational decision-making."
On a GAAP basis, the third quarter earnings included the following pre-tax items attributable to continuing operations:
Taking these items into account, the company reported net income from continuing operations of $63 million for the quarter, or $0.26 per diluted share. Including the loss from discontinued operations, net of tax, of $35 million, less $2 million of net income attributable to noncontrolling interest, the company reported net income attributable to CONSOL Energy shareholders of $25 million or $0.11 per diluted share.
(Dollars in thousands) |
Q3 2016 | ||
Income From Continuing Operations Before Income Tax |
$ |
115,426 |
|
Income Taxes |
52,858 |
||
Income From Continuing Operations |
62,568 |
||
Loss From Discontinued Operations, net |
(34,975) |
||
Net Income |
27,593 |
||
Less: Net Income Attributable to Noncontrolling Interest |
2,248 |
||
Net Income Attributable to CONSOL Energy Shareholders |
$ |
25,345 |
Earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization (EBITDA), from continuing operations1 were $314 million for the 2016 third quarter, compared to $390 million in the year-earlier quarter.
After adjusting for certain items, which are listed in the EBITDA reconciliation table, the company had an adjusted net loss from continuing operations1 in the 2016 third quarter of $36 million, or a loss of $0.15 per diluted share. Adjusted EBITDA from continuing operations1 was $156 million for the 2016 third quarter, compared to $146 million in the year-earlier quarter.
Yesterday, CONSOL Energy and Noble Energy, Inc. jointly announced that the two companies have entered into a definitive agreement to separate their Marcellus Shale 50-50 joint venture.
"Even though we have seen much success together, we have agreed that we must both have the ability to adapt to a changing energy landscape, which has resulted in changing priorities among the parties," commented Nicholas J. DeIuliis, president and CEO. "The separation of the joint venture is consistent with CONSOL's transitional journey to a pure-play exploration and development company, and the company's commitment to future growth, in what is now a more robust and actionable stacked pay opportunity set."
Investors and analysts can view details in the transaction release and slides, which are posted on the company website, at www.consolenergy.com.
1The terms "adjusted net loss from continuing operations," "EBITDA from continuing operations," and "adjusted EBITDA from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP net income below, under the caption "Non-GAAP Financial Measures." The terms "free cash flow," and "organic free cash flow from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP Net Cash Provided by Operating Activities, also under the caption "Non-GAAP Financial Measures."
E&P Division:
During the third quarter of 2016, CONSOL's E&P Division produced 96.4 Bcfe, or an increase of 12% from the 86.1 Bcfe produced in the year-earlier quarter. The E&P Division's total unit cash costs declined during the quarter to $1.31 per Mcfe, compared to $1.49 per Mcfe during the year-earlier quarter, or an improvement of approximately 12%, driven by reductions to lease operating and gathering, transportation, and compression expenses.
E&P Division capital expenditures increased in the third quarter to $48.7 million, compared to $23.4 million spent in the second quarter of 2016, primarily due to the restart of drilling activity.
Marcellus Shale production volumes, including liquids, in the 2016 third quarter were 51.8 Bcfe, or approximately 13% higher than the 45.9 Bcfe produced in the 2015 third quarter. Marcellus Shale total unit cash costs were $1.35 per Mcfe in the just-ended quarter, which is a $0.17 per Mcfe improvement from the third quarter of 2015 cash costs of $1.52 per Mcfe.
CONSOL Energy's Utica Shale production volumes, including liquids, in the 2016 third quarter were 22.5 Bcfe, or up approximately 47% from 15.3 Bcfe in the year-earlier quarter. Utica Shale total unit cash costs were $0.88 per Mcfe in the just-ended quarter, which is a $0.16 per Mcfe improvement from the third quarter of 2015 total unit cash costs of $1.04 per Mcfe. The cost improvements across the Utica Shale were primarily driven by reductions to lease operating expenses.
The company continues to see impressive results with its Gaut 4IH well in Westmoreland County, Pennsylvania, which maintains its position as the second strongest Utica well in the basin. The Gaut 4IH well has cumulatively produced 6.04 Bcf since it was turned-in-line at the end of the third quarter in 2015.
In addition to continuing to see strong performance from Gaut 4IH, the company has added to its Utica database.
"Over the past quarter, eight wells have been added to our earth model, which now includes 112 wells, and our production database has now grown to 32 wells," commented Tim Dugan, chief operating officer. "Our extensive database allows us to create a detailed geologic earth model, perform hydraulic fracture modeling and then production modeling in one package. This allows us to rank these dozens of locations to create a "heat map" of the Utica. Each new data point we get helps us to paint a clearer picture of the play and has confirmed our enthusiasm for the Utica and CONSOL's future within it."
E&P Division Third Quarter Operations Summary:
Since the company made the decision to idle its rig activity in mid-2015, the E&P Division has focused on maintaining and improving proficiencies across all key areas of operations. CONSOL's goal was to bring well costs in Monroe County, Ohio, down to approximately $10 million per well, assuming a 7,000 foot lateral. Through continued efficiency improvements, the company now expects Monroe County well costs to be approximately $9.3 million, assuming a 9,700 foot lateral. Utilizing these well costs, current strip pricing, and EUR's of 2.8 Bcfe per 1,000 feet of lateral, Monroe County, Ohio, dry Utica remains CONSOL's highest rate of return project at approximately 50%.
In August, CONSOL brought back two rigs to begin drilling in Monroe County, Ohio. Since then, the company drilled two dry Utica wells at an average lateral length of approximately 8,600 feet with drilling costs of $1,040 per foot of lateral, which is better than the company's previously stated expectation of $1,060 per foot of lateral. After the end of the quarter, the company drilled its third Monroe County well and further improved drilling costs to $950 per foot of lateral. Also, the first dry Utica well drilled in the quarter was drilled seven days faster than the last well that the company drilled back in 2015. The second well met the previously stated expectation of drilling a Monroe County dry Utica well in 26 days, from spud to total depth.
CONSOL modified its schedule in order to create a one-pad buffer between drilling and completion activity in Monroe County. As a result, CONSOL decided to delay drilling the two Southwest Pennsylvania Marcellus wells that were originally planned for the second half of 2016. The company now expects to drill nine dry Utica wells in Monroe County in the second half of 2016, compared to the company's previous guidance of ten wells, which consisted of eight dry Utica wells in Monroe County and two Southwest Pennsylvania Marcellus wells.
During the quarter, CONSOL continued to complete its Marcellus Shale drilled but uncompleted well (DUC) inventory. Specifically, the company completed the six-well GH58 pad located in Greene County, Pennsylvania. These wells are within the Green Hill field where the company continues to see an increase in EURs to now be between 3.6-3.8 Bcfe per 1,000 feet of lateral, an increase over the company's previous type curve analysis of 3.0-3.5 Bcfe per 1,000 feet of lateral; with some wells performing at over 5.0 Bcfe per 1,000 feet of lateral. CONSOL expects to turn-in-line the GH58 pad during the fourth quarter of 2016.
At the end of the second quarter, CONSOL turned-in-line the six-well ACAA2 Marcellus pad located in Allegheny County, Pennsylvania. During the third quarter, CONSOL turned-in-line the GH53K well located in Greene County, Pennsylvania.
Following the Exchange Agreement with Noble Energy, the company expects to enter 2017 with a DUC inventory of 68 wells, of which CONSOL Energy maintains a 100% working interest in 63 wells.
E&P DIVISION RESULTS — Quarter-to-Quarter Comparison | |||||||||||||
Quarter |
Quarter |
Quarter | |||||||||||
Ended |
Ended |
Ended | |||||||||||
September 30, |
September 30, |
June 30, | |||||||||||
Sales - Gas |
$ |
170.8 |
$ |
137.7 |
$ |
140.3 |
|||||||
Gain on Commodity Derivative Instruments - Cash Settlement |
38.6 |
44.5 |
80.3 |
||||||||||
Sales - Oil |
0.7 |
1.7 |
0.7 |
||||||||||
Sales - NGLs |
27.0 |
7.6 |
19.2 |
||||||||||
Sales - Condensate |
7.5 |
10.8 |
7.8 |
||||||||||
Total Sales Revenue ($ MM) |
$ |
244.6 |
$ |
202.3 |
$ |
248.3 |
|||||||
Earnings (Loss) Before Income Tax ($ MM) |
$ |
161.1 |
1 |
$ |
50.2 |
2 |
$ |
(294.5) |
|||||
Net Cash Provided by Operating Activities ($ MM) |
$ |
28.3 |
$ |
54.0 |
$ |
19.1 |
|||||||
Total Period Production (Bcfe) |
96.4 |
86.1 |
99.3 |
||||||||||
Average Daily Production (MMcfe) |
1,047.7 |
935.6 |
1,090.9 |
||||||||||
Capital Expenditures ($ MM) |
$ |
48.7 |
$ |
209.6 |
$ |
23.4 |
1 Adjusted earnings before income tax for the E&P Division of $1.6 million for the three months ended September 30, 2016 is calculated as GAAP earnings before income tax of $161.1 million less total pre-tax adjustments of $159.5 million. The $159.5 million adjustment is the $159.6 million pre-tax gain related to the unrealized gain on commodity derivative instruments and a pre-tax loss of $0.1 million related to severance expense. |
2 Adjusted loss before income tax for the E&P Division of $45.9 million for the three months ended September 30, 2015 is calculated as GAAP earnings before income tax of $50.2 million less total pre-tax adjustments of $96.1 million. The $96.1 million adjustment is the $99.1 million pre-tax gain related to the unrealized gain on commodity derivative instruments and a pre-tax loss of $3.0 million related to severance expense. |
CONSOL's E&P Division production in the quarter came from the following categories: | |||||||||||||||
Quarter |
Quarter |
Quarter |
|||||||||||||
Ended |
Ended |
Ended |
|||||||||||||
September 30, |
September 30, |
% Increase/ |
June 30, |
% Increase/ | |||||||||||
GAS |
|||||||||||||||
Marcellus Sales Volumes (Bcf) |
43.0 |
39.1 |
10.0 |
% |
47.2 |
(8.9)% |
|||||||||
Utica Sales Volumes (Bcf) |
17.7 |
10.2 |
73.5 |
% |
18.7 |
(5.3)% |
|||||||||
CBM Sales Volumes (Bcf) |
17.0 |
18.5 |
(8.1)% |
17.1 |
(0.6)% |
||||||||||
Other Sales Volumes (Bcf)1 |
5.0 |
6.2 |
(19.4)% |
5.7 |
(12.3)% |
||||||||||
LIQUIDS2 |
|||||||||||||||
NGLs Sales Volumes (Bcfe) |
12.4 |
9.6 |
29.2 |
% |
9.0 |
37.8 |
% | ||||||||
Oil Sales Volumes (Bcfe) |
0.1 |
0.2 |
(50.0)% |
0.1 |
— |
% | |||||||||
Condensate Sales Volumes (Bcfe) |
1.2 |
2.3 |
(47.8)% |
1.5 |
(20.0)% |
||||||||||
TOTAL |
96.4 |
86.1 |
12.0 |
% |
99.3 |
(2.9)% |
Note: The increase in Marcellus sales volumes represents only the gas portion of production. When including liquids, the increase in Marcellus volumes was 13% compared to the year-earlier quarter. Production results are net of royalties. |
1. Other Sales Volumes: primarily related to shallow oil and gas production and the Chattanooga shale in Tennessee. |
2. Liquids: NGLs, Oil, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas. |
In the quarter, liquids production increased to 13.6 Bcfe, or approximately 14% of the total production of 96.4 Bcfe. These liquids volumes were 12% greater when compared to the year-earlier quarter. CONSOL expects improved NGL prices in the fourth quarter of 2016 due to expected strong demand for propane from crop drying and continued growth in exports.
E&P PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison: | ||||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
(Per Mcfe) |
September 30, |
September 30, |
June 30, | |||||||||
Average Sales Price - Gas |
$ |
2.06 |
$ |
1.86 |
$ |
1.58 |
||||||
Average Gain on Commodity Derivative Instruments - Cash Settlement- Gas |
$ |
0.47 |
$ |
0.60 |
$ |
0.91 |
||||||
Average Sales Price - Oil* |
$ |
7.01 |
$ |
9.03 |
$ |
5.62 |
||||||
Average Sales Price - NGLs* |
$ |
2.19 |
$ |
0.80 |
$ |
2.14 |
||||||
Average Sales Price - Condensate* |
$ |
6.21 |
$ |
4.64 |
$ |
5.28 |
||||||
Average Sales Price - Total Company |
$ |
2.54 |
$ |
2.35 |
$ |
2.50 |
||||||
Costs - Production |
||||||||||||
Lifting |
$ |
0.23 |
$ |
0.34 |
$ |
0.24 |
||||||
Ad Valorem, Severance and Other Taxes |
0.10 |
0.10 |
0.07 |
|||||||||
DD&A |
0.97 |
0.96 |
0.96 |
|||||||||
Total Production Costs |
$ |
1.30 |
$ |
1.40 |
$ |
1.27 |
||||||
Costs - Gathering |
||||||||||||
Transportation |
$ |
0.81 |
$ |
0.82 |
$ |
0.74 |
||||||
Operating Costs |
0.17 |
0.23 |
0.18 |
|||||||||
DD&A |
0.08 |
0.09 |
0.08 |
|||||||||
Total Gathering Costs |
$ |
1.06 |
$ |
1.14 |
$ |
1.00 |
||||||
Total Costs |
$ |
2.36 |
$ |
2.54 |
$ |
2.27 |
||||||
Margin |
$ |
0.18 |
$ |
(0.19) |
$ |
0.23 |
*Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices. |
Note: "Total Costs" excludes selling, general administration, incentive compensation, and other corporate expenses. |
The average sales price of $2.54 per Mcfe, when combined with unit costs of $2.36 per Mcfe, resulted in a margin of $0.18 per Mcfe. This was an increase when compared to the year-earlier quarter, with the improvements in both unit costs and price realizations.
During the quarter, total unit costs decreased to $2.36 per Mcfe, compared to the year-earlier quarter of $2.54 per Mcfe, driven primarily from reductions to lifting and gathering expenses.
E&P Marketing Update:
For the third quarter of 2016, CONSOL's average sales price for natural gas, natural gas liquids (NGL), oil, and condensate was $2.54 per Mcfe. CONSOL's average price for natural gas was $2.06 per Mcf for the quarter and, including cash settlements from hedging, was $2.53 per Mcf. The average realized price for all liquids for the third quarter of 2016 was $15.48 per barrel.
During the third quarter, CONSOL's weighted average differential from NYMEX was ($0.86) per MMBtu. Despite a wider differential, CONSOL's price for natural gas before hedging improved from $1.58 per Mcf last quarter due to an improved Henry Hub price that more than offset the wider differential.
During the third quarter, CONSOL increased its recovery and sale of discretionary ethane. Directly-marketed ethane volumes were 612,000 barrels in the third quarter of 2016, an increase of 132% from the second quarter, and, on an equivalent basis, yielded a premium over the Texas Eastern M2 gas market where sales would generally have occurred had the volumes been rejected into the natural gas stream. Beginning in October 2016, an additional contract for ethane commenced with volumes priced significantly above the value the ethane would receive if rejected into the gas stream.
E&P Division Guidance:
CONSOL Energy expects its 2016 E&P Division production to increase to 390-395 Bcfe, which includes increased production as a result of the Exchange Agreement with Noble Energy that is expected to be effective as of October 1, 2016. CONSOL is currently working to establish 2017 activity levels and associated capital, which the company's board of directors normally approves in December.
Total hedged natural gas production in the 2016 fourth quarter is 63.6 Bcf. The annual gas hedge position is shown in the table below:
E&P DIVISION GUIDANCE | |||||
2016 |
2017 | ||||
Total Yearly Production (Bcfe) |
390-395 |
TBD* | |||
Volumes Hedged (Bcf), as of 10/13/16 |
271.8** |
237.8 |
* 2017 production will be a function of the second half of 2016 capital program, continued debottlenecking initiatives, and the company's drilled but uncompleted (DUC) well inventory. |
** Includes actual settlements of 225.3 Bcf. |
CONSOL Energy's hedged gas volumes include a combination of NYMEX financial hedges and index financial hedges (NYMEX plus basis). In addition, to protect the NYMEX hedge volumes from basis exposure, CONSOL enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CONSOL Energy's gas hedge position is shown in the table below:
GAS HEDGES | ||||||||||||
Q4 2016 |
2016 |
2017 | ||||||||||
Total NYMEX + Basis* (Bcf) |
61.8 |
264.5 |
207.5 |
|||||||||
Average Hedge Price ($/Mcf) |
$ |
3.16 |
$ |
3.03 |
$ |
2.61 |
||||||
NYMEX Only Hedges Exposed to Basis (Bcf) |
1.8 |
- |
30.3 |
|||||||||
Average Hedge Price ($/Mcf) |
$ |
3.41 |
- |
$ |
3.02 |
|||||||
Physical Sales With Fixed Basis Exposed to NYMEX (Bcf) |
- |
7.3 |
- |
|||||||||
Average Hedge Basis Value ($/Mcf) |
- |
$ |
(0.06) |
- |
* Includes physical sales with fixed basis in Q4 2016, 2016, and 2017 of 17.0 Bcf, 76.6 Bcf, and 34.6 Bcf, respectively. |
During the third quarter of 2016, CONSOL Energy added additional NYMEX natural gas hedges of 7.7 Bcf for 2017. To help mitigate basis exposure on NYMEX hedges, in the third quarter, CONSOL added 2.6 Bcf and 22.7 Bcf of basis hedges for 2016 and 2017, respectively. Based on CONSOL's view of regional pricing during 2017, CONSOL focused primarily on regional hedging. Of the 22.7 Bcf of basis hedges added for 2017, 12.1 Bcf is applicable to Texas Eastern M2 and Dominion South sales points. CONSOL also has hedges in place for a portion of its 2018, 2019, and 2020 production.
CONSOL's 2016 NYMEX plus basis natural gas hedge position has increased to 264.5 Bcf at an average hedge price of $3.03 per Mcf. NYMEX plus basis hedge volumes are not exposed to basis differentials but instead have protected revenue. As a result, in 2016, NYMEX plus basis gas hedges should lock in revenue of approximately $801 million.
During the third quarter of 2016, CONSOL Energy continued to add NGL (propane) hedges. Excluding actual 2016 settlements of 6.8 million gallons, CONSOL currently has 10.7 million gallons of propane directly hedged through March of 2017 at an average price of $0.48 per gallon. CONSOL also has direct, term sales contracts with counterparties for NGLs.
Pennsylvania (PA) Mining Operations Division:
As previously announced, CONSOL completed two coal transactions during the quarter: the sale of its Miller Creek and Fola Mining Complexes to Southeastern Land LLC and the sale of an additional 5.0% undivided interest in its PA Mining Complex to CNX Coal Resources LP ("CNXC").
"The sale of the Miller Creek and Fola Complexes completes CONSOL's exit from Central Appalachia and surface mining, significantly reducing our operational and regulatory risk profile," commented Nicholas J. DeIuliis, president and CEO. The transaction was symbolic in that it represented one of the final steps in our coal divestment strategy--a strategy that has netted the company over $5 billion in value through 23 transactions since 2012. In addition to the sale of the Miller Creek and Fola Complexes during the quarter, CONSOL announced that CNX Coal Resources LP acquired an additional 5% undivided interest in the PA Mining Complex and associated infrastructure from CONSOL for total value of $88.8 million, including $21.5 million in cash, which marks one more step towards accomplishing the goal of separating the businesses."
Based on CNXC's current outlook for the coal markets, net cash provided by operating activities during the third quarter and expectations of increased net cash from operating activities and related distributable cash flow from the recently concluded drop down acquisition, the Board of Directors of CNXC's general partner has elected to pay distributions to the holders of the common and subordinated units and the holder of the general partner interest. Accordingly, a cash distribution of $0.5125 per unit will be paid to all unitholders of CNXC and the general partner interest for the third quarter of 2016. The cash distribution will be paid on November 15, 2016 to the common unitholders of record at the close of business on November 10, 2016. The cash impact to CONSOL Energy is approximately $6 million.
Third Quarter Operations Summary:
CONSOL Energy's PA Mining Operations sold 6.0 million tons in the 2016 third quarter, compared to 5.7 million tons during the year-earlier quarter. Total unit costs were $35.79 per ton, compared to $40.26 per ton in the year-earlier quarter.
As reported by CNXC in its third quarter 2016 earnings press release, dated October 31, 2016, "We were able to improve revenue per ton by 9%, compared to the second quarter. This was achieved by selling more coal to our domestic customers, who have seen their coal stockpiles drawn down as coal-fired generation improved. During the third quarter, customers demonstrated a strong demand for coal given higher natural gas prices and above-normal summer temperatures. This translated into a boost in thermal coal prices this summer after they had reached extreme lows in May. During the quarter, we exported approximately 10% of our coal sales."
During the quarter, on a total consolidated basis, PA Mining Operations Division generated $90 million of cash flow before capital expenditures.
PA MINING OPERATIONS RESULTS - Quarter-To-Quarter Comparison | ||||||||||||
PA Mining Ops |
PA Mining Ops |
PA Mining Ops | ||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
September 30, |
September 30, |
June 30, | ||||||||||
2016 |
2015 |
2016 | ||||||||||
Beginning Inventory (millions of tons) |
0.1 |
0.3 |
0.3 |
|||||||||
Coal Production (millions of tons) |
6.2 |
5.8 |
6.0 |
|||||||||
Ending Inventory (millions of tons) |
0.2 |
0.5 |
0.1 |
|||||||||
Sales - Company Produced (millions of tons) |
6.0 |
5.7 |
6.2 |
|||||||||
Sales Per Ton |
$ |
44.30 |
$ |
56.99 |
$ |
40.61 |
||||||
Total Production Costs Per Ton |
$ |
35.79 |
$ |
40.26 |
$ |
34.46 |
||||||
Average Margin Per Ton Sold |
$ |
8.51 |
$ |
16.73 |
$ |
6.15 |
||||||
Addback: DD&A Per Ton |
$ |
6.50 |
$ |
7.05 |
$ |
6.50 |
||||||
Average Margin Per Ton, before DD&A |
$ |
15.01 |
$ |
23.78 |
$ |
12.65 |
||||||
Cash Flow before Cap. Ex ($ MM) |
$ |
90 |
$ |
136 |
$ |
78 |
The PA Mining Operations include Bailey, Enlow Fork, and Harvey mines. Total Production Costs per Ton include: operating costs, royalty and production taxes and depreciation, depletion and amortization. Sales tons times Average Margin Per Ton, before DD&A is meant to approximate the amount of cash generated by PA Mining Operations. This cash generation will be offset by maintenance of production (MOP) capital expenditures. Table may not sum due to rounding. |
Coal and Other Segment Guidance:
CONSOL Energy's pro rata total Coal and Other Segment 2016 Adjusted EBITDA is shown in the table below:
2016 | ||||||||
CNX Coal Resources LP ("CNXC") Adjusted EBITDA (25% undivided interest of PA Mining Operations) |
$ |
74 |
- |
$ |
82 |
|||
x4 (@ 100% interest) |
$ |
296 |
- |
$ |
328 |
|||
Less: EBITDA attributable to Noncontrolling Interest |
(26) |
- |
(30) |
|||||
Plus: CONSOL's Other Coal EBITDA1 |
15 |
- |
16 |
|||||
Plus: CONSOL's Other Miscellaneous Coal EBITDA2 |
24 |
- |
30 |
|||||
Less: CONSOL's Miscellaneous Operating Expenses (including Legacy Liabilities' Costs)3 |
(104) |
- |
(109) |
|||||
CONSOL Energy's Pro Rata Coal and Other Segment Adjusted EBITDA |
$ |
205 |
- |
$ |
235 |
Note: CONSOL Energy is unable to provide a reconciliation of projected CNXC Adjusted EBITDA, CONSOL's Other Coal Division EBITDA, and CONSOL's Other Miscellaneous Coal EBITDA to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing and potential significance of certain income statement items. |
(1) Includes estimated contribution from Miller Creek and Other Coal Operations for fiscal year 2016 and 1Q16 for Buchanan, and excludes Loss on Sale of Buchanan and the Loss on Sale for the Miller Creek and Fola mines. |
(2) Includes miscellaneous other income (net of applicable expenses) associated with the company's Terminal Operations, Rental Income, Coal Royalty Income, Water Operations, and other Miscellaneous Land Income. |
(3) Includes Legacy Liability Costs of approximately $80-85 million; Other Coal-Related Corporate Expenses, and other miscellaneous items. Excludes stock-based compensation and pension settlement charges. |
CONSOL Energy's Pro Rata Coal and Other Segment Adjusted EBITDA for 2016 is net of all legacy liabilities associated with the PA Mining Operations Division and Other Segment, which are comprised of the following: long-term disability (LTD), workers compensation (WC), Coal Workers' Pneumoconiosis (CWP), Other Post-Employment Benefits (OPEB-retiree medical), salary retirement and pension, and asset retirement obligations (ARO).
CONSOL Energy now expects total consolidated annual 2016 PA Mining Operations sales to be approximately 23.6-24.4 million tons, compared to previous quarter's guidance of approximately 22.5-25.5 million tons.
CONSOL Energy's 2016 total consolidated PA Mining Operations capital expenditures is reduced to now be between $60-$76 million. The reduction to PA Mining Operations capital expenditures was primarily driven by the company's ongoing efforts to manage spending levels in 2016. On a normalized basis, the PA Mining Operations Division expects maintenance of production capital of $5-$6 per ton.
Liquidity:
As of September 30, 2016, CONSOL Energy had $1,396.2 million in total liquidity, which is comprised of $73.9 million of cash, excluding the CNXC cash balance, and $1,322.3 million available to be borrowed under its $2.0 billion bank facility. During the quarter, CONSOL's liquidity improved $82.5 million primarily due to an increase in net cash provided by operating activities. In addition, CONSOL holds 16.6 million CNXC limited partnership units, including 3.9 million class A preferred units, with a current market value of approximately $290 million and 19.1 million CONE Midstream Partners LP ("CNNX") limited partnership units with a current market value of approximately $397 million, in each case as of October 21, 2016.
CONSOL Energy used the $92.2 million of free cash flow generated during the quarter, and a portion of the $97.6 million of the cash on hand from June 30, 2016, to reduce outstanding borrowings on the revolving credit facility. The company continues to execute its strategy of increasing liquidity and de-levering the balance sheet.
The company is currently in the borrowing base reaffirmation process and expects it to be complete in November.
About CONSOL
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
Non-GAAP Financial Measures
Definition: 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. Adjusted EBITDA is defined as EBITDA after adjusting for the discrete items listed below. Although EBIT, EBITDA, and Adjusted 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 to evaluate a company's operating performance. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDA, or Adjusted EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies.
Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial net income attributable to CONSOL Energy Shareholders is as follows (dollars in 000):
Three Months Ended | ||||||||||||||||||||
September 30, | ||||||||||||||||||||
2016 |
2016 |
2016 |
2016 |
2015 | ||||||||||||||||
Dollars in thousands |
E&P |
PA Mining |
Other1 |
Total |
Total | |||||||||||||||
Net Income (Loss) |
$ |
161,075 |
$ |
34,741 |
$ |
(168,223) |
$ |
27,593 |
$ |
125,470 |
||||||||||
Less: Loss from Discontinued Operations |
— |
— |
34,975 |
34,975 |
3,842 |
|||||||||||||||
Add: Interest Expense |
669 |
2,309 |
44,339 |
47,317 |
48,558 |
|||||||||||||||
Less: Interest Income |
— |
— |
(214) |
(214) |
(361) |
|||||||||||||||
Add: Income Taxes |
— |
— |
52,858 |
52,858 |
65,868 |
|||||||||||||||
Earnings Before Interest & Taxes (EBIT) |
161,744 |
37,050 |
(36,265) |
162,529 |
243,377 |
|||||||||||||||
Add: Depreciation, Depletion & Amortization |
101,257 |
42,370 |
8,085 |
151,712 |
146,844 |
|||||||||||||||
Earnings Before Interest, Taxes and DD&A (EBITDA) from Continuing Operations |
$ |
263,001 |
$ |
79,420 |
$ |
(28,180) |
$ |
314,241 |
$ |
390,221 |
||||||||||
Adjustments: |
||||||||||||||||||||
Unrealized Gain on Commodity Derivative Instruments |
(159,555) |
— |
— |
(159,555) |
(99,138) |
|||||||||||||||
Severance Expense |
129 |
14 |
86 |
229 |
7,683 |
|||||||||||||||
Pension Settlement |
— |
— |
3,651 |
3,651 |
3,132 |
|||||||||||||||
Gain on Sale of Western Allegheny |
— |
— |
— |
— |
(48,468) |
|||||||||||||||
OPEB Plan Changes |
— |
— |
— |
— |
(100,947) |
|||||||||||||||
Total Pre-tax Adjustments |
(159,426) |
14 |
3,737 |
(155,675) |
(237,738) |
|||||||||||||||
Adjusted EBITDA |
$ |
103,575 |
$ |
79,434 |
$ |
(24,443) |
$ |
158,566 |
$ |
152,483 |
||||||||||
Less: Net Income Attributable to Noncontrolling Interest |
— |
(2,248) |
— |
(2,248) |
(6,490) |
|||||||||||||||
Adjusted EBITDA Attributable to Continuing Operations |
$ |
103,575 |
$ |
77,186 |
$ |
(24,443) |
$ |
156,318 |
$ |
145,993 |
Note: Income tax effect of Total Pre-tax Adjustments was ($57,599) and ($54,680) for the three months ended September 30, 2016 and September 30, 2015, respectively. Adjusted net income attributable to CONSOL Energy shareholders for the three months ended September 30, 2016 is calculated as GAAP net income from continuing operations of $62,568 less total pre-tax adjustments of $155,675, plus the tax expense of $57,599, equals the adjusted net loss from continuing operations of $35,508. |
(1) CONSOL Energy's Other Division includes expenses from various other corporate and diversified business unit activities including legacy liabilities costs and income tax expense that are not allocated to E&P or PA Mining Operations Divisions. |
Free cash flow and organic free cash flow from continuing operations are non-GAAP financial measures. Management believes that these measures are meaningful to investors because management reviews cash flows generated from operations and non-core asset sales after taking into consideration capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand CONSOL's asset base and are expected to generate future cash flows from operations. It is important to note that free cash flow and organic free cash flow from continuing operations do not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure.
Organic Cash Flow From Continuing Operations |
Three Months Ended |
Nine Months Ended | |||||
Net Cash Provided by Continuing Operations |
$ |
166,064 |
$ |
372,211 |
|||
Capital Expenditures |
(64,132) |
(179,389) |
|||||
Net Investment in Equity Affiliates |
1,023 |
(4,555) |
|||||
Organic Free Cash Flow from Continuing Operations |
$ |
102,955 |
$ |
188,267 |
|||
Free Cash Flow |
Three Months Ended |
Nine Months Ended | |||||
Net Cash Provided by Operating Activities |
$ |
162,897 |
$ |
386,638 |
|||
Capital Expenditures |
(64,132) |
(179,389) |
|||||
Capital Expenditures of Discontinued Operations |
11 |
(8,284) |
|||||
Net Investment in Equity Affiliates |
1,023 |
(4,555) |
|||||
Proceeds From Sales of Assets |
20,693 |
38,977 |
|||||
Payments on Sale of Miller Creek and Fola Complexes |
(28,271) |
(28,271) |
|||||
Proceeds From Sale of Buchanan Mine |
— |
402,806 |
|||||
Free Cash Flow |
$ |
92,221 |
$ |
607,922 |
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas and other liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our natural gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current natural gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan exceeding total service and interest cost in a plan year; divestitures we anticipate may not occur or produce anticipated benefits; the terms of our existing joint ventures restrict our flexibility, actions taken by the other party in our natural gas joint ventures may impact our financial position and various circumstances could cause us not to realize the benefits we anticipate receiving from these joint ventures; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC - disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating results; with respect to the proposed termination of the joint venture with Noble, risks that the conditions to closing may not be satisfied and the transaction may not occur, including our ability to obtain regulatory approvals on the proposed terms and schedule, disruption to our business, including customer and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating and financial results and liquidity; other factors discussed in the 2015 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible oil and gas reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by application of development projects to known accumulations. We may use certain terms in this press release, such as EUR (estimated ultimate recovery), unproved reserves and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. These measures are by their nature more speculative than estimates of reserves prepared in accordance with SEC definitions and guidelines and accordingly are less certain. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category.
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(Dollars in thousands, except per share data) |
Three Months Ended |
Nine Months Ended | |||||||||||||
(Unaudited) |
September 30, |
September 30, | |||||||||||||
Revenues and Other Income: |
2016 |
2015 |
2016 |
2015 | |||||||||||
Natural Gas, NGLs and Oil Sales |
$ |
205,913 |
$ |
157,538 |
$ |
555,101 |
$ |
541,630 |
|||||||
Gain on Commodity Derivative Instruments |
198,192 |
143,606 |
53,872 |
251,073 |
|||||||||||
Coal Sales |
267,685 |
323,171 |
744,411 |
1,026,596 |
|||||||||||
Other Outside Sales |
4,714 |
5,129 |
20,687 |
24,596 |
|||||||||||
Purchased Gas Sales |
12,086 |
2,535 |
28,633 |
7,649 |
|||||||||||
Freight-Outside Coal |
9,392 |
2,436 |
33,949 |
10,204 |
|||||||||||
Miscellaneous Other Income |
32,393 |
38,475 |
114,159 |
111,279 |
|||||||||||
Gain on Sale of Assets |
15,203 |
48,043 |
13,541 |
54,329 |
|||||||||||
Total Revenue and Other Income |
745,578 |
720,933 |
1,564,353 |
2,027,356 |
|||||||||||
Costs and Expenses: |
|||||||||||||||
Exploration and Production Costs |
|||||||||||||||
Lease Operating Expense |
22,602 |
29,452 |
73,996 |
96,229 |
|||||||||||
Transportation, Gathering and Compression |
94,796 |
89,965 |
279,753 |
248,682 |
|||||||||||
Production, Ad Valorem, and Other Fees |
9,027 |
8,475 |
23,732 |
24,605 |
|||||||||||
Depreciation, Depletion and Amortization |
101,257 |
92,083 |
312,122 |
269,377 |
|||||||||||
Exploration and Production Related Other Costs |
384 |
3,332 |
5,036 |
7,695 |
|||||||||||
Purchased Gas Costs |
11,940 |
1,921 |
28,692 |
5,939 |
|||||||||||
Other Corporate Expenses |
21,760 |
20,953 |
65,980 |
47,088 |
|||||||||||
Impairment of Exploration and Production Properties |
— |
— |
— |
828,905 |
|||||||||||
Selling, General, and Administrative Costs |
26,198 |
23,919 |
74,067 |
80,396 |
|||||||||||
Total Exploration and Production Costs |
287,964 |
270,100 |
863,378 |
1,608,916 |
|||||||||||
PA Mining Operations Costs |
|||||||||||||||
Operating and Other Costs |
182,717 |
137,759 |
521,277 |
564,604 |
|||||||||||
Depreciation, Depletion and Amortization |
42,370 |
43,459 |
125,334 |
136,536 |
|||||||||||
Freight Expense |
9,392 |
2,436 |
33,949 |
10,204 |
|||||||||||
Selling, General, and Administrative Costs |
7,653 |
9,044 |
20,207 |
34,231 |
|||||||||||
Total PA Mining Operations Costs |
242,132 |
192,698 |
700,767 |
745,575 |
|||||||||||
Other Costs |
|||||||||||||||
Miscellaneous Operating Expense |
40,085 |
(3,078) |
127,531 |
70,554 |
|||||||||||
Selling, General, and Administrative Costs |
4,569 |
6,173 |
10,173 |
9,946 |
|||||||||||
Depreciation, Depletion and Amortization |
8,085 |
11,302 |
4,463 |
21,219 |
|||||||||||
Loss on Debt Extinguishment |
— |
— |
— |
67,751 |
|||||||||||
Interest Expense |
47,317 |
48,558 |
144,609 |
150,185 |
|||||||||||
Total Other Costs |
100,056 |
62,955 |
286,776 |
319,655 |
|||||||||||
Total Costs And Expenses |
630,152 |
525,753 |
1,850,921 |
2,674,146 |
|||||||||||
Income (Loss) From Continuing Operations Before Income Tax |
115,426 |
195,180 |
(286,568) |
(646,790) |
|||||||||||
Income Taxes |
52,858 |
65,868 |
(71,798) |
(251,181) |
|||||||||||
Income (Loss) From Continuing Operations |
62,568 |
129,312 |
(214,770) |
(395,609) |
|||||||||||
Loss From Discontinued Operations, net |
(34,975) |
(3,842) |
(322,747) |
(3,192) |
|||||||||||
Net Income (Loss) |
27,593 |
125,470 |
(537,517) |
(398,801) |
|||||||||||
Less: Net Income Attributable to Noncontrolling Interest |
2,248 |
6,490 |
4,541 |
6,490 |
|||||||||||
Net Income (Loss) Attributable to CONSOL Energy Shareholders |
$ |
25,345 |
$ |
118,980 |
$ |
(542,058) |
$ |
(405,291) |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (CONTINUED) | |||||||||||||||
(Dollars in thousands, except per share data) |
Three Months Ended |
Nine Months Ended | |||||||||||||
(Unaudited) |
September 30, |
September 30, | |||||||||||||
Earnings (Loss) Per Share |
2016 |
2015 |
2016 |
2015 | |||||||||||
Basic |
|||||||||||||||
Income (Loss) from Continuing Operations |
$ |
0.26 |
$ |
0.54 |
$ |
(0.96) |
$ |
(1.75) |
|||||||
Loss from Discontinued Operations |
(0.15) |
(0.02) |
(1.40) |
(0.02) |
|||||||||||
Total Basic Earnings (Loss) Per Share |
$ |
0.11 |
$ |
0.52 |
$ |
(2.36) |
$ |
(1.77) |
|||||||
Dilutive |
|||||||||||||||
Income (Loss) from Continuing Operations |
$ |
0.26 |
$ |
0.54 |
$ |
(0.96) |
$ |
(1.75) |
|||||||
Loss from Discontinued Operations |
(0.15) |
(0.02) |
(1.40) |
(0.02) |
|||||||||||
Total Dilutive Earnings (Loss) Per Share |
$ |
0.11 |
$ |
0.52 |
$ |
(2.36) |
$ |
(1.77) |
|||||||
Dividends Paid Per Share |
$ |
— |
$ |
0.0100 |
$ |
0.0100 |
$ |
0.1350 |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
Three Months Ended |
Nine Months Ended | ||||||||||||||
(Dollars in thousands) |
September 30, |
September 30, | |||||||||||||
(Unaudited) |
2016 |
2015 |
2016 |
2015 | |||||||||||
Net Income (Loss) |
$ |
27,593 |
$ |
125,470 |
$ |
(537,517) |
$ |
(398,801) |
|||||||
Other Comprehensive Loss: |
|||||||||||||||
Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($1,043), $29,720, ($5,369), $24,935) |
1,305 |
(49,353) |
6,866 |
(40,036) |
|||||||||||
Reclassification of Cash Flow Hedges from OCI to Earnings (Net of tax: $7,139, $11,807, $19,284, $35,123) |
(12,458) |
(20,602) |
(33,475) |
(60,720) |
|||||||||||
Other Comprehensive Loss |
(11,153) |
(69,955) |
(26,609) |
(100,756) |
|||||||||||
Comprehensive Income (Loss) |
16,440 |
55,515 |
(564,126) |
(499,557) |
|||||||||||
Less: Comprehensive Income Attributable to Noncontrolling Interests |
2,248 |
6,490 |
4,541 |
6,490 |
|||||||||||
Comprehensive Income (Loss) Attributable to CONSOL Energy Inc. Shareholders |
$ |
14,192 |
$ |
49,025 |
$ |
(568,667) |
$ |
(506,047) |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands) |
September 30, |
December 31, | |||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash and Cash Equivalents |
$ |
80,247 |
$ |
72,574 |
|||
Accounts and Notes Receivable: |
|||||||
Trade |
163,955 |
151,383 |
|||||
Other Receivables |
80,490 |
121,735 |
|||||
Inventories |
62,622 |
66,792 |
|||||
Recoverable Income Taxes |
— |
13,887 |
|||||
Prepaid Expenses |
125,490 |
297,287 |
|||||
Current Assets of Discontinued Operations |
2,111 |
81,106 |
|||||
Total Current Assets |
514,915 |
804,764 |
|||||
Property, Plant and Equipment: |
|||||||
Property, Plant and Equipment |
13,920,715 |
13,794,907 |
|||||
Less—Accumulated Depreciation, Depletion and Amortization |
5,506,096 |
5,062,201 |
|||||
Property, Plant, and Equipment of Discontinued Operations, Net |
— |
936,670 |
|||||
Total Property, Plant and Equipment—Net |
8,414,619 |
9,669,376 |
|||||
Other Assets: |
|||||||
Deferred Income Taxes |
149,680 |
— |
|||||
Investment in Affiliates |
257,423 |
237,330 |
|||||
Other |
228,857 |
214,388 |
|||||
Other Assets of Discontinued Operations |
— |
4,044 |
|||||
Total Other Assets |
635,960 |
455,762 |
|||||
TOTAL ASSETS |
$ |
9,565,494 |
$ |
10,929,902 |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands, except per share data) |
September 30, |
December 31, | |||||
LIABILITIES AND EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts Payable |
$ |
197,479 |
$ |
250,609 |
|||
Current Portion of Long-Term Debt |
4,470 |
4,988 |
|||||
Short-Term Notes Payable |
354,000 |
952,000 |
|||||
Accrued Income Taxes |
5,485 |
— |
|||||
Other Accrued Liabilities |
508,144 |
421,827 |
|||||
Current Liabilities of Discontinued Operations |
664 |
51,514 |
|||||
Total Current Liabilities |
1,070,242 |
1,680,938 |
|||||
Long-Term Debt: |
|||||||
Long-Term Debt |
2,734,004 |
2,708,320 |
|||||
Capital Lease Obligations |
29,805 |
34,884 |
|||||
Long-Term Debt of Discontinued Operations |
— |
5,001 |
|||||
Total Long-Term Debt |
2,763,809 |
2,748,205 |
|||||
Deferred Credits and Other Liabilities: |
|||||||
Deferred Income Taxes |
— |
74,629 |
|||||
Postretirement Benefits Other Than Pensions |
613,233 |
630,892 |
|||||
Pneumoconiosis Benefits |
117,586 |
111,903 |
|||||
Mine Closing |
216,232 |
227,339 |
|||||
Gas Well Closing |
164,115 |
163,842 |
|||||
Workers' Compensation |
68,587 |
69,812 |
|||||
Salary Retirement |
89,305 |
91,596 |
|||||
Reclamation |
— |
25 |
|||||
Other |
172,218 |
166,957 |
|||||
Deferred Credits and Other Liabilities of Discontinued Operations |
— |
107,988 |
|||||
Total Deferred Credits and Other Liabilities |
1,441,276 |
1,644,983 |
|||||
TOTAL LIABILITIES |
5,275,327 |
6,074,126 |
|||||
Stockholders' Equity: |
|||||||
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 229,438,910 Issued and Outstanding at September 30, 2016; 229,054,236 Issued and Outstanding at December 31, 2015 |
2,298 |
2,294 |
|||||
Capital in Excess of Par Value |
2,453,275 |
2,435,497 |
|||||
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding |
— |
— |
|||||
Retained Earnings |
2,033,849 |
2,579,834 |
|||||
Accumulated Other Comprehensive Loss |
(342,207) |
(315,598) |
|||||
Total CONSOL Energy Inc. Stockholders' Equity |
4,147,215 |
4,702,027 |
|||||
Noncontrolling Interest |
142,952 |
153,749 |
|||||
TOTAL EQUITY |
4,290,167 |
4,855,776 |
|||||
TOTAL LIABILITIES AND EQUITY |
$ |
9,565,494 |
$ |
10,929,902 |
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 |
Accumulated Other Comprehensive Loss |
Total CONSOL Energy Inc. |
Non- Controlling Interest |
Total Equity | ||||||||||||||||||||
December 31, 2015 |
$ |
2,294 |
$ |
2,435,497 |
$ |
2,579,834 |
$ |
(315,598) |
$ |
4,702,027 |
$ |
153,749 |
$ |
4,855,776 |
|||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||
Net (Loss) Income |
— |
— |
(542,058) |
— |
(542,058) |
4,541 |
(537,517) |
||||||||||||||||||||
Other Comprehensive Loss |
— |
— |
— |
(26,609) |
(26,609) |
— |
(26,609) |
||||||||||||||||||||
Comprehensive (Loss) Income |
— |
— |
(542,058) |
(26,609) |
(568,667) |
4,541 |
(564,126) |
||||||||||||||||||||
Issuance of Common Stock |
4 |
— |
— |
— |
4 |
— |
4 |
||||||||||||||||||||
Treasury Stock Activity |
— |
— |
(1,633) |
— |
(1,633) |
— |
(1,633) |
||||||||||||||||||||
Tax Cost From Stock-Based Compensation |
— |
(5,144) |
— |
— |
(5,144) |
— |
(5,144) |
||||||||||||||||||||
Amortization of Stock-Based Compensation Awards |
— |
22,922 |
— |
— |
22,922 |
903 |
23,825 |
||||||||||||||||||||
Distributions to Noncontrolling Interest |
— |
— |
— |
— |
— |
(16,241) |
(16,241) |
||||||||||||||||||||
Dividends ($0.01 per share) |
— |
— |
(2,294) |
— |
(2,294) |
— |
(2,294) |
||||||||||||||||||||
Balance at September 30, 2016 |
$ |
2,298 |
$ |
2,453,275 |
$ |
2,033,849 |
$ |
(342,207) |
$ |
4,147,215 |
$ |
142,952 |
$ |
4,290,167 |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||
(Dollars in thousands) |
Three Months Ended |
Nine Months Ended | |||||||||||||||
(Unaudited) |
September 30, |
September 30, | |||||||||||||||
Operating Activities: |
2016 |
2015 |
2016 |
2015 | |||||||||||||
Net Income (Loss) |
$ |
27,593 |
$ |
125,470 |
$ |
(537,517) |
$ |
(398,801) |
|||||||||
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By Operating Activities: |
|||||||||||||||||
Net Loss from Discontinued Operations |
34,975 |
3,842 |
322,747 |
3,192 |
|||||||||||||
Depreciation, Depletion and Amortization |
151,712 |
146,844 |
441,919 |
427,132 |
|||||||||||||
Impairment of Exploration and Production Properties |
— |
— |
— |
828,905 |
|||||||||||||
Non-Cash Other Post-Employment Benefits |
— |
(100,946) |
— |
(151,871) |
|||||||||||||
Stock-Based Compensation |
7,771 |
5,720 |
23,825 |
19,849 |
|||||||||||||
Gain on Sale of Assets |
(15,203) |
(48,043) |
(13,541) |
(54,329) |
|||||||||||||
Loss on Debt Extinguishment |
— |
— |
— |
67,751 |
|||||||||||||
Gain on Commodity Derivative Instruments |
(198,192) |
(143,606) |
(53,872) |
(251,073) |
|||||||||||||
Net Cash Received in Settlement of Commodity Derivative Instruments |
38,637 |
44,469 |
203,303 |
116,868 |
|||||||||||||
Deferred Income Taxes |
52,711 |
39,134 |
(72,866) |
(273,497) |
|||||||||||||
Equity in Earnings of Affiliates |
(15,355) |
(15,588) |
(41,239) |
(38,838) |
|||||||||||||
Return on Equity Investment |
13,076 |
22,949 |
22,268 |
31,111 |
|||||||||||||
Changes in Operating Assets: |
|||||||||||||||||
Accounts and Notes Receivable |
(2,656) |
25,884 |
4,555 |
119,064 |
|||||||||||||
Inventories |
(1,804) |
(1,804) |
4,169 |
(9,922) |
|||||||||||||
Prepaid Expenses |
17,093 |
19,896 |
71,423 |
103,466 |
|||||||||||||
Changes in Other Assets |
(10,976) |
5,540 |
(14,241) |
22,483 |
|||||||||||||
Changes in Operating Liabilities: |
|||||||||||||||||
Accounts Payable |
33,127 |
(29,301) |
(12,654) |
(123,171) |
|||||||||||||
Accrued Interest |
36,792 |
37,730 |
35,985 |
63,879 |
|||||||||||||
Other Operating Liabilities |
812 |
12,364 |
(21,370) |
(105,692) |
|||||||||||||
Changes in Other Liabilities |
(6,338) |
43,980 |
(2,620) |
(12,360) |
|||||||||||||
Other |
2,289 |
(47,431) |
11,937 |
9,369 |
|||||||||||||
Net Cash Provided by Continuing Operations |
166,064 |
147,103 |
372,211 |
393,515 |
|||||||||||||
Net Cash (Used in) Provided by Discontinued Operating Activities |
(3,167) |
(37,035) |
14,427 |
10,768 |
|||||||||||||
Net Cash Provided by Operating Activities |
162,897 |
110,068 |
386,638 |
404,283 |
|||||||||||||
Cash Flows from Investing Activities: |
|||||||||||||||||
Capital Expenditures |
(64,132) |
(247,778) |
(179,389) |
(864,262) |
|||||||||||||
Proceeds from Sales of Assets |
20,693 |
76,113 |
38,977 |
83,044 |
|||||||||||||
Net Investments in Equity Affiliates |
1,023 |
(26,463) |
(4,555) |
(70,224) |
|||||||||||||
Net Cash Used in Continuing Operations |
(42,416) |
(198,128) |
(144,967) |
(851,442) |
|||||||||||||
Net Cash (Used in) Provided by Discontinued Investing Activities |
(28,260) |
(11,593) |
366,251 |
(30,894) |
|||||||||||||
Net Cash (Used in) Provided by Investing Activities |
(70,676) |
(209,721) |
221,284 |
(882,336) |
|||||||||||||
Cash Flows from Financing Activities: |
|||||||||||||||||
(Payments on) Proceeds from Short-Term Borrowings |
(112,000) |
(113,000) |
(598,000) |
945,000 |
|||||||||||||
(Payments on) Proceeds from Miscellaneous Borrowings |
(1,763) |
2,506 |
(6,222) |
(1,523) |
|||||||||||||
Payments on Long-Term Notes, including Redemption Premium |
— |
— |
— |
(1,263,719) |
|||||||||||||
Net Proceeds from Revolver - CNX Coal Resources LP |
10,000 |
180,000 |
23,000 |
180,000 |
|||||||||||||
Proceeds from Sale of MLP Interest |
— |
148,359 |
— |
148,359 |
|||||||||||||
Distributions to Noncontrolling Interest |
(5,416) |
— |
(16,241) |
— |
|||||||||||||
Payments on Securitization Facility |
— |
(38,669) |
— |
— |
|||||||||||||
Proceeds from Issuance of Long-Term Notes |
— |
— |
— |
492,760 |
|||||||||||||
Tax Benefit from Stock-Based Compensation |
— |
10 |
— |
208 |
|||||||||||||
Dividends Paid |
— |
(2,280) |
(2,294) |
(30,991) |
|||||||||||||
Issuance of Common Stock |
— |
— |
4 |
8,288 |
|||||||||||||
Purchases of Treasury Stock |
— |
— |
— |
(71,674) |
|||||||||||||
Debt Issuance and Financing Fees |
(482) |
(4,329) |
(482) |
(22,586) |
|||||||||||||
Net Cash (Used in) Provided by Continuing Operations |
(109,661) |
172,597 |
(600,235) |
384,122 |
|||||||||||||
Net Cash Provided by (Used in) Discontinued Financing Activities |
61 |
44 |
(14) |
(39) |
|||||||||||||
Net Cash (Used in) Provided by Financing Activities |
(109,600) |
172,641 |
(600,249) |
384,083 |
|||||||||||||
Net (Decrease) Increase in Cash and Cash Equivalents |
(17,379) |
72,988 |
7,673 |
(93,970) |
|||||||||||||
Cash and Cash Equivalents at Beginning of Period |
97,626 |
10,027 |
72,574 |
176,985 |
|||||||||||||
Cash and Cash Equivalents at End of Period |
$ |
80,247 |
$ |
83,015 |
$ |
80,247 |
$ |
83,015 |
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SOURCE CONSOL Energy Inc.
PITTSBURGH and HOUSTON, Oct. 31, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) and Noble Energy, Inc. (NYSE: NBL) (the "Joint Venture") jointly announced today that the two companies have entered into a definitive agreement to separate their Marcellus Shale 50-50 Joint Venture (the "Exchange Agreement"). The two companies have negotiated a separation of the Joint Venture that was formed in 2011 for the exploration, development, and operation of primarily Marcellus Shale properties in Pennsylvania and West Virginia. Highlights of the Exchange Agreement include:
"This agreement with Noble Energy to separate our Joint Venture is bitter sweet for CONSOL Energy," commented Nicholas J. DeIuliis, president and CEO. "Noble has been a top-notch partner, and we have enjoyed the collaborative relationship that we have shared over the past five years. Even though we have seen much success together, we have agreed that we must both have the ability to adapt to a changing energy landscape. The separation of the Joint Venture is consistent with CONSOL's transitional journey to a pure-play exploration and development company, and the company's commitment to future growth, in what is now a more robust and actionable stacked pay opportunity set. As the parties work towards closing, CONSOL will remain focused on conducting operations in a safe and environmentally compliant manner to maximize value to our shareholders."
David L. Stover, Chairman, President and CEO of Noble Energy, Inc., added, "The accomplishments of our Joint Venture over the last five years are outstanding, including significant increases in combined production and recoverable resources. These outcomes are a direct result of the high-quality nature of the acreage, but even more so a result of the combined technical leadership and coordination between our two companies. Today's agreement between CONSOL Energy and Noble sets a clear path for both companies into the future. It provides us with greater control and flexibility over the future pace of development in the Marcellus. I'd like to personally thank all of the CONSOL Energy team for their hard work and congratulate them on the successes we have had together."
Prior to the Exchange Agreement, the Joint Venture collectively operated approximately 669,000 Marcellus acres. CONSOL Energy and Noble Energy, Inc. each held 50% working interest. As of the effective date of the Exchange Agreement on October 1, 2016, total flowing production to the Joint Venture was 1.07 billion cubic feet per day of natural gas equivalents.
Subsequent to closing of the Exchange Agreement, the acreage and production of the prior Joint Venture will be as follows:
Maps reflecting the new acreage positions for each company are available on each Company's website.
In addition to the acreage and production realignment between the two companies, Noble Energy, Inc. will also remit a cash payment of approximately $205 million to CONSOL Energy at closing. The exchange of properties and cash result in the elimination of the remaining outstanding carry cost obligation due from Noble Energy, Inc. to CONSOL Energy.
While the Exchange Agreement creates independent ownership interests in the acreage and production currently gathered by CONE, it does not change the total acreage dedicated to CONE, the gathering rates, or other fundamental terms for the services provided by CONE. CONSOL Energy and Noble Energy, Inc. remain as co-sponsors of CONE and shippers on CONE's gathering systems, while retaining their respective general partnership and limited partner ownership interests in CONE.
Completion of the Exchange Agreement is subject to a number of conditions, including expiration of the Hart Scott Rodino Antitrust Improvements Act waiting period and other customary conditions. The closing of the Exchange Agreement is not subject to a financing condition and is expected to close in the fourth quarter of 2016.
Conference Call Information
CONSOL Energy will host a conference call today at 10:00am ET. A live webcast of the conference call can be accessed at the investor relations section of the company's website, at www.consolenergy.com. Security analysts and institutional investors may also listen by dialing (US) 800-230-1074 or (Intl.) 612-234-9960, with access code 405600. A slide presentation summarizing the transaction may be accessed at www.consolenergy.com.
Third Quarter Earnings Call Information
CONSOL Energy will hold its third quarter earnings webcast on November 1, 2016, at 10:00am ET (9:00 a.m. CT), which can be accessed through its website.
Noble Energy, Inc. will hold its third quarter earnings webcast on November 2, 2016, at 9:00am ET (8:00 a.m. CT), which can be accessed through its website.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
About Noble Energy
Noble Energy (NYSE: NBL) is an independent oil and natural gas exploration and production company with a diversified high-quality portfolio of both U.S. unconventional and global offshore conventional assets spanning three continents. Founded more than 80 years ago, the company is committed to safely and responsibly delivering its purpose: Energizing the World, Bettering People's Lives®. For more information, visit www.nobleenergyinc.com.
Cautionary Statements
This press release contains certain "forward-looking statements" within the meaning of federal securities laws. Words such as "anticipates", "believes," "expects", "intends", "will", "should", "may", and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect CONSOL Energy's and Noble Energy's current views about future events. Such forward-looking statements include, but are not limited to, statements about CONSOL Energy's and Noble Energy's plans, objectives, expectations and intentions, the expected timing of completion of the transaction, and other statements that are not historical facts, including business strategy and other plans and objectives for future operations. No assurances can be given that the forward-looking statements contained in this press release will occur as projected and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, without limitation, the risk that CONSOL Energy or Noble Energy may be unable to obtain regulatory approvals required for the transaction, the risk that regulatory approvals or restructuring of arrangements with third parties may delay the transaction or result in the imposition of conditions that could cause the parties to abandon the transaction, the risk that a condition to closing of the transaction may not be satisfied, the timing to complete the transaction, disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers, the diversion of management time on transaction-related issues, the volatility in commodity prices for natural gas and crude oil, the presence or recoverability of estimated reserves, the ability to replace reserves, environmental risks, drilling and operating risks, exploration and development risks, competition, government regulation or other actions, the ability of management to execute its plans to meet its goals and other risks inherent in CONSOL Energy's and Noble Energy's businesses that are discussed in CONSOL Energy's and Noble Energy's most recent annual reports on Form 10-K, respectively, and in other CONSOL Energy and Noble Energy reports on file with the Securities and Exchange Commission . Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Neither CONSOL Energy nor Noble Energy undertakes any obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
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SOURCE CONSOL Energy Inc.; Noble Energy, Inc.
CANONSBURG, Pa., Oct. 12, 2016 /PRNewswire/ -- CONE Midstream Partners LP (NYSE: CNNX) today announced that it will release financial results for the third quarter 2016 before market opening on Friday, November 4, 2016 and hold a conference call to discuss those results on the same day at 10:00 a.m. Eastern Time. The conference call will be publicly available via webcast on a live and replay basis.
Interested parties are invited to listen to the conference call, during which prepared remarks by John T. Lewis, Chairman and Chief Executive Officer, and other members of management will be followed by a question and answer session. Participants who would like to ask questions during the conference call may join by phone. Individuals who intend to listen only are encouraged to join the conference via the Internet.
Event: |
Conference call to discuss third quarter 2016 financial and operating results. |
Time: |
November 4, 2016 at 10:00 a.m. Eastern Time. |
Internet: |
The webcast may be accessed directly at http://services.choruscall.com/links/cnnx161104.html or from the link posted on the "Events" page of our website, www.conemidstream.com. |
Phone: |
Dial 888-317-6016 (international 412-317-6016) five to ten minutes before the scheduled start of the conference call and reference the CONE Midstream Partners call. |
Replay: |
An on-demand replay of the webcast will also be available shortly after the webcast at http://services.choruscall.com/links/cnnx161104.html. A telephonic replay of the call will be available through November 11, 2016. The replay can be accessed by dialing toll free |
CONE Midstream Partners is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE:CNX) and Noble Energy Inc. (NYSE: NBL), referred to as our Sponsors, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service our Sponsors' production in the Marcellus Shale in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available at our website www.conemidstream.com.
Contact: |
Stephen R. Milbourne |
CONE Midstream Partners Investor Relations | |
Phone: 724-485-4408 | |
Email: smilbourne@conemidstream.com |
SOURCE CONE Midstream Partners LP
PITTSBURGH, Oct. 7, 2016 /PRNewswire/ -- CNX Coal Resources LP (NYSE: CNXC) will issue its third quarter earnings release after the market close on Monday, October 31. This will be followed by a conference call hosted by members of the management team at 05:00 p.m. Eastern Time. The webcast will be accessible on the 'Investor Relations' page of the company's website, www.cnxlp.com. An archive of the webcast will be available for at least 30 days after the event.
Participant dial in (toll free) |
1-855-656-0928 |
Participant international dial in |
1-412-902-4112 |
Participants should ask to be joined into the CNX Coal Resources LP call. |
CNX Coal Resources is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active thermal coal operations in Pennsylvania. Its assets include a 25% undivided interest in, and operational control over, CONSOL's Pennsylvania mining complex, which consists of three underground mines and related infrastructure. More Information is available on our website www.cnxlp.com
Contacts: |
|
Investor: |
Mitesh Thakkar, at (724) 485-3133 |
Media: |
Brian Aiello, at (724) 485-3078 |
SOURCE CNX Coal Resources LP
PITTSBURGH, Oct. 4, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) will issue its third quarter earnings release at 6:45 a.m. Eastern Time on Tuesday, November 1. This will be followed by a conference call at 10:00 a.m. Eastern Time. A live webcast will be available on the 'Investor Relations' page of the company's website, www.consolenergy.com. Also, earnings call slides will be available at 6:45 a.m. Eastern Time on Tuesday, November 1, on the 'Investor Relations' page of the company's website.
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, Oct. 3, 2016 /PRNewswire/ -- CNX Coal Resources LP (NYSE: CNXC) (the "Partnership") and CONSOL Energy Inc. (NYSE: CNX) (the "Sponsor"), announced that the Partnership has acquired an additional 5% undivided interest in the Pennsylvania Mining Complex ("PAMC") and associated infrastructure from the Sponsor for $88.8 million. The transaction is effective September 30, 2016. The acquisition increased the Partnership's undivided interest in the PAMC to 25%.
CNXC funded the transaction with a combination of available borrowings under its credit facility in the amount of $21.5 million and the issuance of convertible preferred units representing limited partner interests (the "Preferred Units") to the Sponsor valued at $67.3 million. The Preferred Units were issued at a price of $17.01 per unit, a 15% premium to the volume weighted average price of CNXC's common units over the fifteen trading days ending on September 29, 2016. The Preferred Units will pay quarterly distributions in additional Preferred Units or cash, at the Partnership's election, equal to an annual rate of 11.00% of the issue price, subject to certain adjustments. The Partnership has the right to cause the conversion of all outstanding Preferred Units into common units, subject to certain conditions, at any time after September 30, 2019. In addition, the Preferred Units will be convertible into common units, generally on a one-for-one basis, subject to certain adjustments, at the holder's option after September 30, 2017.
"I am very excited about this acquisition as we increase our ownership of the premier coal mining assets in the U.S. These assets are very familiar to our unitholders and this transaction supports our previously outlined growth strategy," said Jimmy Brock, chief executive officer of CNX Coal Resources GP LLC, the General Partner of the Partnership. "With coal markets beginning to recover, we believe the timing is right for us to consummate this acquisition. The transaction has been structured to allow more balance sheet flexibility for CNXC as well as create a larger base of cash flow to support ongoing partnership distributions."
"This is a win-win for both CONSOL Energy and CNX Coal Resources," commented Nicholas J. DeIuliis, president and chief executive officer of CONSOL Energy Inc. "This transaction moves CONSOL one step closer to executing our strategic goal of fully separating the coal and gas businesses, while generating cash proceeds from the sale. All in, this deal strengthens CNXC's balance sheet and liquidity position, while benefitting CONSOL."
The terms of the acquisition and financing were approved by the conflicts committee of the board of directors of CNX Coal Resources GP LLC. Evercore acted as the financial advisor and Andrews Kurth Kenyon LLP acted as the legal advisor to the conflicts committee. Stifel, Nicolaus and Company, Incorporated acted as financial advisor to the management teams of the Sponsor and the Partnership. Latham & Watkins LLP acted as legal counsel to the Sponsor.
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While the management of the Sponsor and the Partnership consider these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond the control of the Sponsor and the Partnership. These risks, contingencies and uncertainties relate to, among other matters, the following: generation of sufficient distributable cash flow to support the payment by the Partnership of minimum quarterly distributions; changes in coal prices or the costs of mining or transporting coal; uncertainty in estimating economically recoverable coal reserves and replacement of reserves; the Partnership's ability to develop existing coal reserves and successfully execute its mining plans; changes in general economic conditions, both domestically and globally; competitive conditions within the coal industry; changes in the consumption patterns of coal-fired power plants and steelmakers and other factors affecting the demand for coal by coal-fired power plants and steelmakers; the availability and price of coal to the consumer compared to the price of alternative and competing fuels; competition from the same and alternative energy sources; energy efficiency and technology trends; the ability of the Sponsor and the Partnership to successfully implement their business plans; the price and availability of debt and equity financing; operating hazards and other risks incidental to coal mining; major equipment failures and difficulties in obtaining equipment, parts and raw materials; availability, reliability and costs of transporting coal; adverse or abnormal geologic conditions, which may be unforeseen; natural disasters, weather-related delays, casualty losses and other matters beyond the control of the Sponsor and the Partnership; interest rates; labor availability, relations and other workforce factors; defaults by the Sponsor under the operating agreement and employee services agreement between the Sponsor and the Partnership; changes in availability and cost of capital; changes in the Partnership's tax status; delays in the receipt of, failure to receive or revocation of necessary governmental permits; defects in title or loss of any leasehold interests with respect to our properties; the effect of existing and future laws and government regulations, including the enforcement and interpretation of environmental laws thereof; the effect of new or expanded greenhouse gas regulations; the effects of litigation; and other factors discussed in the Sponsor's and the Partnership's Annual Reports on Form 10-K under "Risk Factors," as updated by any subsequent Quarterly Reports on Form 10-Q, which are on file at the Securities and Exchange Commission.
About CNX Coal Resources LP
CNX Coal Resources is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active thermal coal operations in Pennsylvania. Its assets include, after the closing of the acquisition, a 25% undivided interest in and operational control over, the PAMC, which consists of three underground mines and related infrastructure. More information is available on our website www.cnxlp.com.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
Contacts:
CNX Coal Resources Investor:
Mitesh Thakkar, at (724) 485-3133 and miteshthakkar@cnxlp.com
CONSOL Energy Investor:
Tyler Lewis, at (724) 485-3157 and tylerlewis@consolenergy.com
Media:
Brian Aiello, at (724) 485-3078 and brianaiello@consolenergy.com
SOURCE CNX Coal Resources LP; CONSOL Energy
PITTSBURGH, Sept. 1, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) announced today that it will participate in the Barclays CEO Energy-Power Conference in New York on Wednesday and Thursday, September 7-8, 2016.
CONSOL Energy's President and Chief Executive Officer, Nicholas J. DeIuliis, and Chief Operating Officer, Timothy C. Dugan, will meet with investors at the conference on Wednesday and Thursday, September 7-8, 2016. Also, on Thursday, September 8, 2016 at 10:25am ET, Mr. DeIuliis will present at the conference.
The company's presentation materials will be available on the investor relations portion of the company's website, www.consolenergy.com, at 6:45 a.m. ET on Wednesday, September 7, 2016. The presentation will not be webcast.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
CANONSBURG, Pa., Aug. 4, 2016 /PRNewswire/ -- CONE Midstream Partners LP (NYSE: CNNX) ("CONE Midstream" or the "Partnership") today reported financial and operational results for the three months ended June 30, 2016.(1) The Partnership also increased guidance for full year 2016 financial results.
Second Quarter Results
Highlights of second quarter 2016 results attributable to the Partnership as compared to the second quarter of 2015 include:
Management Comment
"CONE Midstream is pleased to report another strong quarter of financial and operational results," said John T. Lewis, Chairman of the Board and Chief Executive Officer of CONE Midstream GP LLC (the "General Partner"). "Our net throughput volumes grew by 51% from the second quarter of 2015. This volume increase, combined with our operating team's continued success in reducing unit operating costs, resulted in a 56% increase in net income attributable to the partnership from a year ago. Adjusted EBITDA and Distributable Cash Flow both increased by approximately 58% as compared to second quarter last year.
"We were free-cash-flow positive again during the second quarter, with cash from operations exceeding our total capital investments and cash distribution payments," continued Mr. Lewis. "We paid down $27 million of debt, which reduced our debt to trailing-twelve months EBITDA ratio to under 0.5x.
Mr. Lewis concluded, "Based on our solid performance for the first six months and our current outlook for the remainder of the year, we have increased our guidance for our full year 2016 results."
Quarterly Distribution
As previously announced, the Board of Directors of the General Partner declared a quarterly cash distribution of $0.254 per unit with respect to the second quarter of 2016. The distribution payment will be made on August 12, 2016 to unitholders of record at the close of business on August 4, 2016. The distribution, which equates to an annual rate of $1.016 per unit, represents an increase of 3.7% over the prior quarter and an increase of 15.5% over the distribution paid with respect to the second quarter of 2015.
Capital Investment and Resources
CONE Midstream's allocated second quarter 2016 share of investment in expansion projects was $2.3 million. Total expansion capital investment at the three development companies in which CONE Midstream holds controlling interests was $4.2 million. CONE Midstream's respective share of maintenance capital expenditures for the three development companies for the second quarter 2016 was $3.1 million. Maintenance capital expenditures in the aggregate for the development companies in which CONE Midstream holds controlling interests totaled $5.1 million.
As of June 30, 2016, CONE Midstream had outstanding borrowings of $47.0 million under its $250 million revolving credit facility and a cash balance of $5.1 million.
2016 Guidance Update
Based on current expectations, management is providing the following updated guidance for 2016. Full year 2016 Adjusted EBITDA attributable to the Partnership, previously projected to be in the range of $93 - $103 million, is now expected to be in the range of $96 - $106 million. Full year Distributable Cash Flow attributable to the Partnership, previously projected to be in the range of $79 - $89 million, is now expected to be in the range of $82 - $92 million. CONE Midstream's financial guidance is based on numerous assumptions about future events and conditions and, therefore, could vary materially from actual results. These estimates are meant to provide guidance only and are subject to revision for acquisitions or operating environment changes.
Second Quarter Financial and Operational Results Conference Call
A conference call and webcast, during which management will discuss second quarter 2016 financial and operational results, is scheduled for August 4, 2016 at 11:00 a.m. Eastern Time. Reference material for the call will be available on the "Events" page of our website, www.conemidstream.com, shortly before the start of the call. Prepared remarks by members of management will be followed by a question and answer period. Interested parties may listen via webcast by using the link posted on the "Events" page of our website or at www.webcaster4.com/Webcast/Page/998/16154. Participants who would like to ask questions may join the conference by phone at 888-349-0097 (international 412-902-0126) five to ten minutes prior to the scheduled start time (reference the CONE Midstream call). An on-demand replay of the webcast will be also be available at www.webcaster4.com/Webcast/Page/998/16154 shortly after the conclusion of the conference call. A telephonic replay will be available through August 11, 2016 by dialing 877-344-7529 (international: 412-317-0088) and using the conference playback number 10089549.
_______________
(1) Unless otherwise indicated, the reporting measures included in this news release reflect the unallocated total activity of the three development companies jointly owned by the Partnership and CONE Gathering LLC ("CONE Gathering"). Because the Partnership owns a controlling interest in each of the three development companies, it fully consolidates their financial results. The Partnership's current economic interests in the development companies are: 75% in the Anchor Systems, 5% in the Growth Systems, and 5% in the Additional Systems. CONE Gathering is a midstream joint venture formed by CONSOL Energy Inc. and Noble Energy, Inc. and owns non-controlling interests in the Partnership's development companies.
(2) Adjusted EBITDA and DCF are not measures that are recognized under accounting principles generally accepted in the U.S. ("GAAP"). Definitions and reconciliations of these non-GAAP measures to GAAP reporting measures appear in the financial tables which follow.
Contact: |
Stephen R. Milbourne |
CONE Investor Relations | |
Phone: |
724-485-4408 |
Email: |
smilbourne@conemidstream.com |
* * * * *
CONE Midstream Partners is a master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) and Noble Energy, Inc. (NYSE: NBL), referred to as our Sponsors, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service our Sponsors' production in the Marcellus Shale in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on our website www.conemidstream.com.
* * * * *
This press release is intended to be a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of CONE Midstream's distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business. Accordingly, CONE Midstream's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not CONE Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.
* * * * *
This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, and there can be no assurance that actual outcomes and results will not differ materially from those expected by our management. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include, among others: the effects of changes in market prices of natural gas, NGLs and crude oil on our Sponsors' drilling and development plan on our dedicated acreage and the volumes of natural gas and condensate that are produced on our dedicated acreage; changes in our Sponsors' drilling and development plan in the Marcellus Shale and Utica Shale; our Sponsors' ability to meet their drilling and development plan in the Marcellus Shale and Utica Shale; the demand for natural gas and condensate gathering services; changes in general economic conditions; competitive conditions in our industry; actions taken by third-party operators, gatherers, processors and transporters; our ability to successfully implement our business plan; and our ability to complete internal growth projects on time and on budget. You should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs at the time they are made, forward-looking statements involve known and unknown risks, uncertainties and other factors, including the factors described under "Risk Factors" and "Forward-Looking Statements" in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.
CONE MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per unit data) (unaudited) | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
2016 |
2015 |
2016 |
2015 | ||||||||||||
Revenue |
|||||||||||||||
Gathering revenue — related party |
$ |
58,407 |
$ |
47,717 |
$ |
120,655 |
$ |
90,885 |
|||||||
Total Revenue |
58,407 |
47,717 |
120,655 |
90,885 |
|||||||||||
Expenses |
|||||||||||||||
Operating expense — third party |
7,879 |
8,940 |
16,553 |
17,470 |
|||||||||||
Operating expense — related party |
7,078 |
6,940 |
15,422 |
13,984 |
|||||||||||
General and administrative expense — third party |
1,153 |
1,223 |
2,147 |
2,565 |
|||||||||||
General and administrative expense — related party |
2,213 |
1,995 |
3,897 |
3,972 |
|||||||||||
Inventory revaluation |
10,083 |
— |
10,083 |
— |
|||||||||||
Depreciation expense |
5,152 |
3,667 |
9,992 |
6,661 |
|||||||||||
Interest expense |
381 |
47 |
800 |
112 |
|||||||||||
Total Expense |
33,939 |
22,812 |
58,894 |
44,764 |
|||||||||||
Net Income |
24,468 |
24,905 |
61,761 |
46,121 |
|||||||||||
Less: Net income attributable to noncontrolling interest |
1,251 |
9,993 |
13,755 |
16,997 |
|||||||||||
Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
23,217 |
$ |
14,912 |
$ |
48,006 |
$ |
29,124 |
|||||||
Calculation of Limited Partner Interest in Net Income: |
|||||||||||||||
Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
23,217 |
$ |
14,912 |
$ |
48,006 |
$ |
29,124 |
|||||||
Less: General partner interest in net income |
464 |
298 |
960 |
582 |
|||||||||||
Limited partner interest in net income |
$ |
22,753 |
$ |
14,614 |
$ |
47,046 |
$ |
28,542 |
|||||||
Net income per Limited Partner unit - Basic |
$ |
0.39 |
$ |
0.25 |
$ |
0.81 |
$ |
0.49 |
|||||||
Net Income per Limited Partner unit - Diluted |
$ |
0.39 |
$ |
0.25 |
$ |
0.81 |
$ |
0.49 |
|||||||
Limited Partner units outstanding - Basic |
58,343 |
58,326 |
58,343 |
58,326 |
|||||||||||
Limited Partner unit outstanding - Diluted |
58,415 |
58,364 |
58,397 |
58,365 |
|||||||||||
Cash distributions declared per unit (*) |
$ |
0.2540 |
$ |
0.2200 |
$ |
0.4990 |
$ |
0.4325 |
(*) Represents the cash distributions declared during the month following the respective quarterly reporting period ends.
CONE MIDSTREAM PARTNERS LP CONSOLIDATED BALANCE SHEETS (in thousands, except number of units) (unaudited) | |||||||
June 30, |
December 31, | ||||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash |
$ |
5,096 |
$ |
217 |
|||
Receivables — related party |
17,422 |
36,418 |
|||||
Inventory |
— |
18,916 |
|||||
Other current assets |
1,215 |
2,037 |
|||||
Total Current Assets |
23,733 |
57,588 |
|||||
Property and Equipment: |
|||||||
Property and equipment |
921,420 |
897,918 |
|||||
Less — accumulated depreciation |
41,398 |
31,609 |
|||||
Property and Equipment — Net |
880,022 |
866,309 |
|||||
Other assets |
9,280 |
528 |
|||||
TOTAL ASSETS |
$ |
913,035 |
$ |
924,425 |
|||
LIABILITIES AND EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts payable |
$ |
23,889 |
$ |
46,155 |
|||
Accounts payable — related party |
1,461 |
1,628 |
|||||
Total Current Liabilities |
25,350 |
47,783 |
|||||
Other Liabilities: |
|||||||
Revolving credit facility |
47,000 |
73,500 |
|||||
Total Liabilities |
72,350 |
121,283 |
|||||
Partners' Capital: |
|||||||
Common units (29,180,217 units issued and outstanding at June 30, 2016 and 29,163,121 |
409,219 |
399,399 |
|||||
Subordinated units (29,163,121 units issued and outstanding at June 30, 2016 and |
(73,417) |
(82,900) |
|||||
General partner interest |
(3,005) |
(3,389) |
|||||
Partners' capital attributable to CONE Midstream Partners LP |
332,797 |
313,110 |
|||||
Noncontrolling interest |
507,888 |
490,032 |
|||||
Total Partners' Capital |
840,685 |
803,142 |
|||||
TOTAL LIABILITIES AND PARTNERS' CAPITAL |
$ |
913,035 |
$ |
924,425 |
CONE MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) | |||||||
Three Months Ended June 30, | |||||||
2016 |
2015 | ||||||
Cash Flows from Operating Activities: |
|||||||
Net Income |
$ |
24,468 |
$ |
24,905 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation expense and amortization of debt issuance costs |
5,193 |
3,708 |
|||||
Unit-based compensation |
219 |
96 |
|||||
Inventory revaluation |
10,083 |
— |
|||||
Other |
151 |
— |
|||||
Changes in assets and liabilities: |
|||||||
Receivables — related party |
4,434 |
6,330 |
|||||
Other current and non-current assets |
453 |
310 |
|||||
Accounts payable |
(3,347) |
14,291 |
|||||
Accounts payable — related party |
123 |
614 |
|||||
Net Cash Provided by Operating Activities |
41,777 |
50,254 |
|||||
Cash Flows from Investing Activities: |
|||||||
Capital expenditures |
(9,338) |
(76,363) |
|||||
Net Cash Used in Investing Activities |
(9,338) |
(76,363) |
|||||
Cash Flows from Financing Activities: |
|||||||
Contributions by partners and noncontrolling interest holders |
— |
22,957 |
|||||
Distributions to unitholders |
(14,593) |
(12,647) |
|||||
Net payment on revolver |
(27,000) |
15,500 |
|||||
Issuance of common units |
(23) |
— |
|||||
Net Cash (Used In) Provided By Financing Activities |
(41,616) |
25,810 |
|||||
Net Decrease in Cash |
(9,177) |
(299) |
|||||
Cash at Beginning of Period |
14,273 |
460 |
|||||
Cash at End of Period |
$ |
5,096 |
$ |
161 |
CONE MIDSTREAM PARTNERS LP
RECONCILIATION OF NET INCOME TO EBITDA AND DISTRIBUTABLE CASH FLOW
(in thousands)
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
We define EBITDA as net income (loss) before net interest expense, depreciation and amortization, and Adjusted EBITDA as EBITDA adjusted for non-cash items which should not be included in the calculation of distributable cash flow. EBITDA and Adjusted EBITDA are used as supplemental financial measures by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
We believe that the presentation of EBITDA and Adjusted EBITDA provides information that is useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to EBITDA and Adjusted EBITDA are net income and net cash provided by operating activities. EBITDA and Adjusted EBITDA should not be considered an alternative to net income, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, EBITDA and Adjusted EBITDA as presented below may not be comparable to similarly titled measures of other companies.
Distributable Cash Flow
We define distributable cash flow as Adjusted EBITDA less net income attributable to noncontrolling interest, net cash interest paid and maintenance capital expenditures. Distributable cash flow does not reflect changes in working capital balances.
Distributable cash flow is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
We believe that the presentation of distributable cash flow in this report provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to distributable cash flow are net income and net cash provided by operating activities. Distributable cash flow should not be considered an alternative to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Distributable cash flow excludes some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, our distributable cash flow may not be comparable to similarly titled measures of other companies.
The following table presents a reconciliation of the non-GAAP measures of EBITDA, Adjusted EBITDA and distributable cash flow to the most directly comparable GAAP financial measures of net income and net cash provided by operating activities.
Three Months Ended |
Six Months Ended | |||||||||||||||
(unaudited) |
2016 |
2015 |
2016 |
2015 | ||||||||||||
Net Income |
$ |
24,468 |
$ |
24,905 |
$ |
61,761 |
$ |
46,121 |
||||||||
Interest expense |
381 |
47 |
800 |
112 |
||||||||||||
Depreciation expense |
5,152 |
3,667 |
9,992 |
6,661 |
||||||||||||
EBITDA |
30,001 |
28,619 |
72,553 |
52,894 |
||||||||||||
Non-cash unit-based compensation expense |
219 |
96 |
355 |
192 |
||||||||||||
Inventory revaluation |
10,083 |
— |
10,083 |
— |
||||||||||||
Adjusted EBITDA |
40,303 |
28,715 |
82,991 |
53,086 |
||||||||||||
Less: |
||||||||||||||||
Net income attributable to noncontrolling interest |
1,251 |
9,993 |
13,755 |
16,997 |
||||||||||||
Interest expense attributable to noncontrolling interest |
127 |
14 |
316 |
33 |
||||||||||||
Depreciation expense attributable to noncontrolling interest |
2,409 |
1,659 |
4,694 |
2,825 |
||||||||||||
Inventory revaluation attributable to noncontrolling interest |
9,579 |
— |
9,579 |
— |
||||||||||||
Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
26,937 |
$ |
17,049 |
$ |
54,647 |
$ |
33,231 |
||||||||
Less: cash interest paid, net |
254 |
33 |
484 |
78 |
||||||||||||
Less: ongoing maintenance capital expenditures, net of expected reimbursements |
3,112 |
2,148 |
5,951 |
4,139 |
||||||||||||
Distributable Cash Flow |
$ |
23,571 |
$ |
14,868 |
$ |
48,212 |
$ |
29,014 |
||||||||
Net Cash Provided by Operating Activities |
$ |
41,777 |
$ |
50,254 |
$ |
82,957 |
$ |
60,460 |
||||||||
Interest expense |
381 |
47 |
800 |
112 |
||||||||||||
Inventory revaluation |
10,083 |
— |
10,083 |
— |
||||||||||||
Other, including changes in working capital |
(11,938) |
(21,586) |
(10,849) |
(7,486) |
||||||||||||
Adjusted EBITDA |
40,303 |
28,715 |
82,991 |
53,086 |
||||||||||||
Less: |
||||||||||||||||
Net income attributable to noncontrolling interest |
1,251 |
9,993 |
13,755 |
16,997 |
||||||||||||
Interest expense attributable to noncontrolling interest |
127 |
14 |
316 |
33 |
||||||||||||
Depreciation expense attributable to noncontrolling interest |
2,409 |
1,659 |
4,694 |
2,825 |
||||||||||||
Inventory revaluation attributable to noncontrolling interest |
9,579 |
— |
9,579 |
— |
||||||||||||
Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
26,937 |
$ |
17,049 |
$ |
54,647 |
$ |
33,231 |
||||||||
Less: cash interest paid, net |
254 |
33 |
484 |
78 |
||||||||||||
Less: ongoing maintenance capital expenditures, net of expected reimbursements |
3,112 |
2,148 |
5,951 |
4,139 |
||||||||||||
Distributable Cash Flow |
$ |
23,571 |
$ |
14,868 |
$ |
48,212 |
$ |
29,014 |
The following table presents a reconciliation of the non-GAAP measures adjusted EBITDA and distributable cash flow by quarter and for the most recently completed twelve month period with the most directly comparable GAAP financial measures, which are net income and net cash provided by operating activities.
(unaudited) |
Q3 2015 |
Q4 2015 |
Q1 2016 |
Q2 2016 |
Twelve | |||||||||||||||
Net Income |
$ |
33,614 |
$ |
35,796 |
$ |
37,295 |
$ |
24,468 |
$ |
131,173 |
||||||||||
Interest expense |
158 |
565 |
419 |
381 |
1,523 |
|||||||||||||||
Depreciation expense |
3,769 |
4,623 |
4,839 |
5,152 |
18,383 |
|||||||||||||||
EBITDA |
37,541 |
40,984 |
42,553 |
30,001 |
151,079 |
|||||||||||||||
Non-cash unit-based compensation expense |
118 |
92 |
136 |
219 |
565 |
|||||||||||||||
Inventory revaluation |
— |
— |
— |
10,083 |
10,083 |
|||||||||||||||
Adjusted EBITDA |
37,659 |
41,076 |
42,689 |
40,303 |
161,727 |
|||||||||||||||
Less: |
||||||||||||||||||||
Net income attributable to noncontrolling interest |
13,957 |
13,330 |
12,505 |
1,251 |
41,043 |
|||||||||||||||
Interest expense attributable to noncontrolling interest |
63 |
331 |
189 |
127 |
710 |
|||||||||||||||
Depreciation expense attributable to noncontrolling interest |
1,728 |
2,246 |
2,286 |
2,409 |
8,669 |
|||||||||||||||
Inventory revaluation attributable to noncontrolling interest |
— |
— |
— |
9,579 |
9,579 |
|||||||||||||||
Adjusted EBITDA Attributable to General and Limited Partner |
$ |
21,911 |
$ |
25,169 |
$ |
27,709 |
$ |
26,937 |
$ |
101,726 |
||||||||||
Less: cash interest paid, net |
95 |
234 |
230 |
254 |
813 |
|||||||||||||||
Less: ongoing maintenance capital expenditures, net of expected reimbursements |
2,291 |
2,554 |
2,839 |
3,112 |
10,796 |
|||||||||||||||
Distributable Cash Flow |
$ |
19,525 |
$ |
22,381 |
$ |
24,640 |
$ |
23,571 |
$ |
90,117 |
||||||||||
Net Cash Provided by Operating Activities |
$ |
38,808 |
$ |
16,749 |
$ |
41,180 |
$ |
41,777 |
$ |
138,514 |
||||||||||
Interest expense |
158 |
565 |
419 |
381 |
1,523 |
|||||||||||||||
Inventory revaluation |
— |
— |
— |
10,083 |
10,083 |
|||||||||||||||
Other, including changes in working capital |
(1,307) |
23,762 |
1,090 |
(11,938) |
11,607 |
|||||||||||||||
Adjusted EBITDA |
37,659 |
41,076 |
42,689 |
40,303 |
161,727 |
|||||||||||||||
Less: |
||||||||||||||||||||
Net income attributable to noncontrolling interest |
13,957 |
13,330 |
12,505 |
1,251 |
41,043 |
|||||||||||||||
Interest expense attributable to noncontrolling interest |
63 |
331 |
189 |
127 |
710 |
|||||||||||||||
Depreciation expense attributable to noncontrolling interest |
1,728 |
2,246 |
2,286 |
2,409 |
8,669 |
|||||||||||||||
Inventory revaluation attributable to noncontrolling interest |
— |
— |
— |
9,579 |
9,579 |
|||||||||||||||
Adjusted EBITDA Attributable to General and Limited Partner |
$ |
21,911 |
$ |
25,169 |
$ |
27,709 |
$ |
26,937 |
$ |
101,726 |
||||||||||
Less: cash interest paid, net |
95 |
234 |
230 |
254 |
813 |
|||||||||||||||
Less: ongoing maintenance capital expenditures, net of expected reimbursements |
2,291 |
2,554 |
2,839 |
3,112 |
10,796 |
|||||||||||||||
Distributable Cash Flow |
$ |
19,525 |
$ |
22,381 |
$ |
24,640 |
$ |
23,571 |
$ |
90,117 |
||||||||||
Distributions Declared |
$ |
13,570 |
$ |
14,062 |
$ |
14,591 |
$ |
15,209 |
$ |
57,432 |
||||||||||
Distribution Coverage Ratio - Declared |
1.44 |
x |
1.59 |
x |
1.69 |
x |
1.55 |
x |
1.57 |
x | ||||||||||
Distributable Cash Flow |
$ |
19,525 |
$ |
22,381 |
$ |
24,640 |
$ |
23,571 |
$ |
90,117 |
||||||||||
Distributions Paid |
$ |
13,094 |
$ |
13,570 |
$ |
14,062 |
$ |
14,591 |
$ |
55,317 |
||||||||||
Distribution Coverage Ratio - Paid |
1.49 |
x |
1.65 |
x |
1.75 |
x |
1.62 |
x |
1.63 |
x |
Development Companies Jointly Owned by CONE Midstream Partners LP Operating Income Summary, Selected Operating Statistics and Capital Investment (in thousands) (unaudited) | |||||||||||||||
Three Months Ended June 30, 2016 | |||||||||||||||
Development Company | |||||||||||||||
Anchor |
Growth |
Additional |
TOTAL | ||||||||||||
Income Summary |
|||||||||||||||
Revenue |
$ |
48,855 |
$ |
2,708 |
$ |
6,844 |
$ |
58,407 |
|||||||
Expenses |
17,437 |
11,959 |
4,543 |
33,939 |
|||||||||||
Net Income |
31,418 |
(9,251) |
2,301 |
24,468 |
|||||||||||
Less: Net income attributable to noncontrolling interest |
7,854 |
(8,789) |
2,186 |
1,251 |
|||||||||||
Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
23,564 |
$ |
(462) |
$ |
115 |
$ |
23,217 |
|||||||
Operating Statistics - Gathered Volumes |
|||||||||||||||
Dry gas (BBtu/d) |
775 |
64 |
16 |
855 |
|||||||||||
Wet gas (BBtu/d) |
347 |
6 |
132 |
485 |
|||||||||||
Condensate (MMcfe/d) |
6 |
— |
6 |
12 |
|||||||||||
Total Gathered Volumes |
1,128 |
70 |
154 |
1,352 |
|||||||||||
Total Volumes Net to CONE Midstream Partners LP |
846 |
4 |
8 |
857 |
|||||||||||
Capital Investment |
|||||||||||||||
Maintenance capital |
$ |
4,080 |
$ |
159 |
$ |
898 |
$ |
5,137 |
|||||||
Expansion capital |
2,990 |
— |
1,211 |
4,201 |
|||||||||||
Total Capital Investment |
$ |
7,070 |
$ |
159 |
$ |
2,109 |
$ |
9,338 |
|||||||
Capital Investment Net to CONE Midstream Partners LP |
|||||||||||||||
Maintenance capital |
$ |
3,059 |
$ |
8 |
$ |
45 |
$ |
3,112 |
|||||||
Expansion capital |
2,243 |
— |
61 |
2,304 |
|||||||||||
Total Capital Investment Net to CONE Midstream Partners LP |
$ |
5,302 |
$ |
8 |
$ |
106 |
$ |
5,416 |
Development Companies Jointly Owned by CONE Midstream Partners LP Operating Income Summary, Selected Operating Statistics and Capital Investment (in thousands) (unaudited) | |||||||||||||||
Three Months Ended June 30, 2015 | |||||||||||||||
Development Company | |||||||||||||||
Anchor |
Growth |
Additional |
TOTAL | ||||||||||||
Income Summary |
|||||||||||||||
Revenue |
$ |
35,351 |
$ |
3,913 |
$ |
8,453 |
$ |
47,717 |
|||||||
Expenses |
15,827 |
2,980 |
4,005 |
22,812 |
|||||||||||
Net Income |
19,524 |
933 |
4,448 |
24,905 |
|||||||||||
Less: Net income attributable to noncontrolling interest |
4,881 |
886 |
4,226 |
9,993 |
|||||||||||
Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
14,643 |
$ |
47 |
$ |
222 |
$ |
14,912 |
|||||||
Operating Statistics - Gathered Volumes |
|||||||||||||||
Dry gas (BBtu/d) |
395 |
92 |
8 |
495 |
|||||||||||
Wet gas (BBtu/d) |
334 |
11 |
163 |
508 |
|||||||||||
Condensate (MMcfe/d) |
9 |
— |
14 |
23 |
|||||||||||
Total Gathered Volumes |
738 |
103 |
185 |
1,026 |
|||||||||||
Total Volumes Net to CONE Midstream Partners LP |
554 |
5 |
9 |
568 |
|||||||||||
Capital Investment |
|||||||||||||||
Maintenance capital |
$ |
2,813 |
$ |
319 |
$ |
448 |
$ |
3,580 |
|||||||
Expansion capital |
36,941 |
7,014 |
28,828 |
72,783 |
|||||||||||
Total Capital Investment |
$ |
39,754 |
$ |
7,333 |
$ |
29,276 |
$ |
76,363 |
|||||||
Capital Investment Net to CONE Midstream Partners LP |
|||||||||||||||
Maintenance capital |
$ |
2,110 |
$ |
16 |
$ |
22 |
$ |
2,148 |
|||||||
Expansion capital |
27,706 |
351 |
1,441 |
29,498 |
|||||||||||
Total Capital Investment Net to CONE Midstream Partners LP |
$ |
29,816 |
$ |
367 |
$ |
1,463 |
$ |
31,646 |
SOURCE CONE Midstream Partners LP
PITTSBURGH, Aug. 2, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) announced today that it has closed on its previously announced agreement to sell the Miller Creek and Fola mine complexes in southern West Virginia to Southeastern Land LLC.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, July 26, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) reported net cash provided by operating activities in the just-ended quarter of $95 million, compared to $66 million in the year-earlier quarter, which includes $12 million and $24 million of net cash provided by discontinued operating activities, respectively.
"During the quarter, CONSOL drove down E&P unit costs by 18%, compared to the prior-year quarter, generated $46 million in organic free cash flow from continuing operations1, paid down approximately $390 million in debt, and increased estimated ultimate recoveries (EURs) in its prolific Marcellus Shale Green Hill field to 3.0-3.5 Bcfe," commented Nicholas J. DeIuliis, president and CEO. "These accomplishments not only helped us exceed our internal 18-month free cash flow plan, but also drove our NAV per share and liquidity position higher. As a result, we have made the decision to employ a two-rig program in the second half of 2016 since expected rates of return nicely exceed our cost of capital, while supporting our free cash flow plan and liquidity goals. Despite the decision to resume modest drilling activity, which will add approximately $25 million of capital expenditures in 2016, CONSOL expects the annual E&P Division capital budget to decrease to $190-$205 million due to continued capital efficiency improvements. CONSOL's main focus remains staying disciplined on deploying capital in order to grow our NAV per share."
On a GAAP basis, the second quarter earnings included the following pre-tax items attributable to continuing operations:
Taking these items into account, the company reported a net loss from continuing operations of $233 million for the quarter, or ($1.02) per diluted share. Including the loss from discontinued operations, net of tax, of $236 million, less net income attributable to noncontrolling interest, the company reported a net loss attributable to CONSOL Energy shareholders of $470 million or ($2.05) per diluted share.
(Dollars in thousands) |
Q2 2016 | ||
Loss Before Income Tax |
$ |
(333,364) |
|
Income Taxes |
(100,354) |
||
Loss From Continuing Operations |
(233,010) |
||
Loss From Discontinued Operations, net |
(235,639) |
||
Net Loss |
(468,649) |
||
Less: Net Income Attributable to Noncontrolling Interest |
1,179 |
||
Net Loss Attributable to CONSOL Energy Shareholders |
$ |
(469,828) |
Earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization (EBITDA), from continuing operations1 were a negative $151 million for the 2016 second quarter, compared to a negative $695 million in the year-earlier quarter.
After adjusting for certain items, which are listed in the EBITDA reconciliation table, the company had an adjusted net loss from continuing operations1 in the 2016 second quarter of $49 million, or ($0.21) per diluted share. Adjusted EBITDA from continuing operations1 was $136 million for the 2016 second quarter, compared to $138 million in the year-earlier quarter.
CONSOL Energy's Miller Creek Mining Complex and Fola Mining Complex subsidiaries have entered into agreements for the sale of those Central Appalachia mining operations. The Miller Creek Complex, located in West Virginia, has an active surface mining operation, which produced 2.1 million tons in 2015, and two underground mines, which are idle. The Fola Mining Complex is a closed surface mining operation in West Virginia. The Miller Creek and Fola Mining Complexes each have 114 million tons of owned and leased coal reserves, and they have a total of $103 million of mine closing and reclamation liabilities on CONSOL's Consolidated Balance Sheets. These assets and liabilities are classified as held for sale in discontinued operations on the company's Consolidated Balance Sheets, their results of operations are included in discontinued operations on the Consolidated Statement of Income, and the reclassification of these assets resulted in an impairment charge of $356 million in the quarter.
In the transaction, the buyer will acquire the Miller Creek and Fola assets and will assume the Miller Creek and Fola mine closing and reclamation liabilities; in order to equalize the value exchange, CONSOL will pay the buyer $27 million cash at the closing, of which a portion will be held in escrow for purposes of obtaining the surety bonds required for the permits to transfer, and an additional $17 million in installments over the next four years. These payments will result in an additional loss of $44 million that CONSOL expects to record during the third quarter of 2016. CONSOL Energy estimated a negative EBITDA contribution for full year 2016 associated with these assets. The transaction is expected to close in the third quarter.
1The terms "adjusted net loss from continuing operations," "EBITDA from continuing operations," "adjusted EBITDA from continuing operations," "free cash flow," and "organic free cash from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP net income below, under the caption "Non-GAAP Financial Measures."
E&P Division:
CONSOL plans to add back two horizontal rigs to resume drilling starting in August 2016. The company expects to drill 8 dry Utica Shale wells, located in Monroe County, Ohio, where CONSOL maintains a 100% working interest, and 2 Marcellus Shale wells, located in Washington County, Pennsylvania, which fall within the joint venture where CONSOL maintains a 50% working interest. The 2 new Marcellus Shale wells are located on a 6-well pad that contains 4 existing drilled but uncompleted (DUC) wells. CONSOL expects to finish drilling the remaining 2 wells in order to complete the pad. CONSOL expects that the lateral length for the 10 wells to average approximately 8,700 feet. Despite the planned increased drilling activity, due to continued capital efficiency improvements, the company reduced its E&P Division capital budget to $190-$205 million. CONSOL expects to see a partial year production benefit from these new wells starting in April 2017. Also, the company anticipates its DUC well inventory to grow to 91 gross Marcellus and Utica shale wells exiting 2016, which includes 76 wells that are located in the wet areas.
During the second quarter of 2016, CONSOL's E&P Division achieved record production of 99.3 Bcfe, or an increase of 32% from the 75.5 Bcfe produced in the year-earlier quarter. The E&P Division's total unit cash costs declined during the quarter to $1.23 per Mcfe, compared to $1.58 per Mcfe during the year-earlier quarter, or an improvement of approximately 22%, driven by reductions to lease operating and gathering, transportation, and compression expenses.
Marcellus Shale production volumes, including liquids, in the 2016 second quarter were 53.1 Bcfe, or 33% higher than the 39.9 Bcfe produced in the 2015 second quarter. Marcellus Shale total unit cash costs were $1.27 per Mcfe in the just-ended quarter, which is a $0.31 per Mcfe improvement from the second quarter of 2015 cash costs of $1.58 per Mcfe, which benefited in part from the company requiring less processing by shifting more towards drier gas.
CONSOL Energy's Utica Shale production volumes, including liquids, in the 2016 second quarter were 23.3 Bcfe, up from 10.7 Bcfe in the year-earlier quarter. Utica Shale total unit cash costs were $0.83 per Mcfe in the just-ended quarter, which is a $0.39 per Mcfe improvement from the second quarter of 2015 total unit cash costs of $1.22 per Mcfe. The significant cost improvements across the Utica Shale were primarily driven by reductions to lease operating expenses and gathering and transportation.
E&P Division capital expenditures declined further in the second quarter to $23.4 million, when compared to the first quarter of 2016, due to further efficiency improvements and reduced activity.
E&P Division Second Quarter Operations Summary:
CONSOL's E&P activity continued to focus on completing the company's DUC inventory in the second quarter.
During the quarter, CONSOL began completion operations on a 6-well pad in Greene County, completing two of the wells. Also, CONSOL turned-in-line (TIL) 16 Marcellus Shale wells in Greene, Washington, and Allegheny counties, Pennsylvania, which included the first pad located at the company's Pittsburgh International Airport project. CONSOL's Green Hill Marcellus Shale wells located in Greene County, Pennsylvania, continue to outperform, with EURs now at 3.0-3.5 Bcfe per 1,000 feet of lateral. In the Utica Shale CONSOL's joint venture partner completed two wells and TIL five wells in Harrison County, Ohio.
CONSOL's previously completed 10-well GH53 pad, which was completed in the first quarter of 2016 and incorporated plugless completion technology, has now cumulatively produced over 4.8 Bcfe in its first 60 days of production with 9 out of 10 wells in-line, with one well shut-in due to an offset well completion. The strongest well on the GH53 pad, the GH53F, has produced 0.83 Bcfe in its first 60 days. Lastly, CONSOL's 12-well GH46 pad located in Greene County, Pennsylvania, which was previously completed and TIL in the first quarter of 2016, has cumulatively produced 10.5 Bcfe in the first 90 days of production.
CONSOL's confidence in the dry Utica program grows as time progresses and as the company continues to monitor the performance of the dry Utica Shale wells in Monroe County, Ohio, and Greene and Westmoreland counties, Pennsylvania. CONSOL's Gaut 4I well, in Westmoreland County, Pennsylvania, remains the second strongest producing well in the dry Utica across the industry. The Gaut 4I well has cumulatively produced 3.4 Bcfe in its first six months.
E&P DIVISION RESULTS — Quarter-to-Quarter Comparison | |||||||||||||
Quarter |
Quarter |
Quarter | |||||||||||
Ended |
Ended |
Ended | |||||||||||
June 30, 2016 |
June 30, 2015 |
March 31, 2016 | |||||||||||
Sales - Gas |
$ |
140.3 |
$ |
135.1 |
$ |
157.4 |
|||||||
Gain on Commodity Derivative Instruments - Cash Settlement |
80.3 |
42.3 |
84.3 |
||||||||||
Sales - Oil |
0.7 |
1.2 |
0.5 |
||||||||||
Sales - NGLs |
19.2 |
15.0 |
19.9 |
||||||||||
Sales - Condensate |
7.8 |
8.7 |
3.9 |
||||||||||
Total Sales Revenue ($ MM) |
$ |
248.3 |
$ |
202.3 |
$ |
266.0 |
|||||||
Loss Before Income Tax |
$ |
(294.5) |
1 |
$ |
(891.4) |
2 |
$ |
(23.5) |
|||||
Net Cash Provided by Operating Activities ($ MM) |
$ |
19.1 |
$ |
297.9 |
$ |
58.6 |
|||||||
Total Period Production (Bcfe) |
99.3 |
75.5 |
97.5 |
||||||||||
Average Daily Production (MMcfe) |
1,090.9 |
829.6 |
1,071.0 |
||||||||||
Capital Expenditures ($ MM) |
$ |
23.4 |
$ |
289.2 |
$ |
62.9 |
|||||||
1 Adjusted loss before income tax for the E&P Division of $14.3 million for the three months ended June 30, 2016 is calculated as GAAP loss before income tax of $294.5 million plus total pre-tax adjustments of $280.2 million. The $280.2 million adjustment is the pre-tax loss related to the unrealized loss on commodity derivative instruments and a pre-tax loss of $0.5 million related to severance expense.
2 Includes an $828.9 million pre-tax impairment loss on shallow oil and gas properties and a $24.9 million pre-tax loss related to the unrealized loss on commodity derivative instruments. Adjusted loss before income tax for the E&P Division for the three months ended June 30, 2015 is calculated as GAAP loss before income tax of $891.4 million plus total pre-tax adjustments of $853.8 million equals the adjusted loss before income tax of $37.6 million.
CONSOL's E&P Division production in the quarter came from the following categories: | |||||||||||||||
Quarter |
Quarter |
Quarter |
|||||||||||||
Ended |
Ended |
Ended |
|||||||||||||
June 30, 2016 |
June 30, 2015 |
% Increase/(Decrease) |
March 31, 2016 |
% Increase/(Decrease) | |||||||||||
GAS |
|||||||||||||||
Marcellus Sales Volumes (Bcf) |
47.2 |
34.6 |
36.4 |
% |
45.1 |
4.7 |
% | ||||||||
Utica Sales Volumes (Bcf) |
18.7 |
7.1 |
163.4 |
% |
17.7 |
5.6 |
% | ||||||||
CBM Sales Volumes (Bcf) |
17.1 |
18.8 |
(9.0)% |
17.6 |
(2.8)% |
||||||||||
Other Sales Volumes (Bcf)1 |
5.7 |
5.9 |
(3.4)% |
5.7 |
— |
% | |||||||||
LIQUIDS2 |
|||||||||||||||
NGLs Sales Volumes (Bcfe) |
9.0 |
7.2 |
25.0 |
% |
9.7 |
(7.2)% |
|||||||||
Oil Sales Volumes (Bcfe) |
0.1 |
0.2 |
(50.0)% |
0.1 |
— |
% | |||||||||
Condensate Sales Volumes (Bcfe) |
1.5 |
1.7 |
(11.8)% |
1.6 |
(6.3)% |
||||||||||
TOTAL |
99.3 |
75.5 |
31.5 |
% |
97.5 |
1.8 |
% |
Note: The increase in Marcellus sales volumes represents only the gas portion of production. When including liquids, the increase in Marcellus volumes was 33% compared to the year-earlier quarter. Production results are net of royalties.
1. Other Sales Volumes: primarily related to shallow oil and gas production and the Chattanooga shale in Tennessee.
2. Liquids: NGLs, Oil, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas.
As a result of continuing to high-grade production away from wet areas and shift more towards dry gas areas, in the quarter, liquids production decreased to 10.6 Bcfe, or 11% of the total production of 99.3 Bcfe.
E&P PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison: | ||||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
(Per Mcfe) |
June 30, 2016 |
June 30, 2015 |
March 31, 2016 | |||||||||
Average Sales Price - Gas |
$ |
1.58 |
$ |
2.03 |
$ |
1.83 |
||||||
Average Gain on Commodity Derivative Instruments - Cash Settlement- Gas |
$ |
0.91 |
$ |
0.64 |
$ |
0.98 |
||||||
Average Sales Price - Oil* |
$ |
5.62 |
$ |
7.69 |
$ |
5.14 |
||||||
Average Sales Price - NGLs* |
$ |
2.14 |
$ |
2.08 |
$ |
2.05 |
||||||
Average Sales Price - Condensate* |
$ |
5.28 |
$ |
5.21 |
$ |
2.44 |
||||||
Average Sales Price - Total Company |
$ |
2.50 |
$ |
2.68 |
$ |
2.73 |
||||||
Costs - Production |
||||||||||||
Lifting |
$ |
0.24 |
$ |
0.39 |
$ |
0.28 |
||||||
Ad Valorem, Severance and Other Taxes |
0.07 |
0.09 |
0.09 |
|||||||||
DD&A |
0.96 |
1.07 |
1.00 |
|||||||||
Total Production Costs |
$ |
1.27 |
$ |
1.55 |
$ |
1.37 |
||||||
Costs - Gathering |
||||||||||||
Transportation |
$ |
0.74 |
$ |
0.85 |
$ |
0.79 |
||||||
Operating Costs |
0.18 |
0.25 |
0.17 |
|||||||||
DD&A |
0.08 |
0.11 |
0.08 |
|||||||||
Total Gathering Costs |
$ |
1.00 |
$ |
1.21 |
$ |
1.04 |
||||||
Total Costs |
$ |
2.27 |
$ |
2.76 |
$ |
2.41 |
||||||
Margin |
$ |
0.23 |
$ |
(0.08) |
$ |
0.32 |
*Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.
Note: "Total Costs" excludes selling, general administration, incentive compensation, and other corporate expenses.
The average sales price per Mcfe within the E&P Division was impaired in the just-ended quarter, when compared to the year-earlier quarter due to depressed commodity prices.
The average sales price of $2.50 per Mcfe, when combined with unit costs of $2.27 per Mcfe, resulted in a margin of $0.23 per Mcfe. This was an increase when compared to the year-earlier quarter, with the improvements in unit costs more than offsetting the decline in price realizations.
During the quarter, total unit costs decreased to $2.27 per Mcfe, compared to the year-earlier quarter of $2.76 per Mcfe, driven primarily from reductions to lifting and gathering expenses.
E&P Marketing Update:
For the second quarter of 2016, CONSOL's average sales price for natural gas, natural gas liquids (NGL), oil, and condensate was $2.50 per Mcfe. CONSOL's average price for natural gas was $1.58 per Mcf for the quarter and, including cash settlements from hedging, was $2.49 per Mcf. The average realized price for all liquids for the second quarter of 2016 was $15.73 per barrel.
In April, CONSOL began recovering and selling ethane primarily via Sunoco Logistics' Mariner East project, which ships ethane to the Marcus Hook Industrial Complex for export. Such ethane sales are expected to improve NGL netbacks. On an equivalent basis, during the second quarter of 2016 these ethane sales yielded a significantly higher price than the Texas Eastern M2 market where sales would generally have occurred had the volumes been rejected into the natural gas stream. CONSOL expects further revenue enhancement in 2016 and beyond as its recovered ethane volumes grow and as the Mariner East project expands in 2017.
Coal Division:
CONSOL Energy's Pennsylvania Operations sold 6.2 million tons in the 2016 second quarter, compared to 5.7 million tons during the year-earlier quarter. The Board of Directors of CNX Coal Resources' LP (NYSE: CNXC) General Partner declared a cash distribution of $0.5125 per unit to the Partnership's common unitholders for the second quarter of 2016. The distribution will be made on August 15, 2016 to the common unitholders of record at the close of business on August 8, 2016. The General Partner has elected to not pay a distribution to holders of subordinated units, as a result of the current distribution coverage shortfall, to preserve liquidity and maintain balance sheet strength. The expected cash impact to CONSOL Energy is approximately $6 million starting in the third quarter of 2016.
Coal Division Second Quarter Summary:
During the second quarter of 2016, the Pennsylvania Operations total unit costs were $34.46 per ton, compared to $44.15 per ton in the year-earlier quarter.
As reported by CNX Coal Resources LP (CNXC) in their second quarter 2016 earnings press release, dated July 25, 2016, "From an operational standpoint, the second quarter came in ahead of our expectations primarily due to higher shipments. Our operational team delivered those tons despite four longwall moves, difficult mining conditions at the Enlow Fork Mine, and difficult longwall recovery conditions during one of the Bailey longwall moves. The Harvey Mine, which was idled in January 2016, was brought back online during the second quarter to meet customer demands, while the Bailey and Enlow Fork mines were undergoing longwall moves. Based on our current outlook for shipment volumes, we expect to run all five longwalls for the rest of 2016. Productivity for the second quarter, as measured by tons per employee-hour, improved by 17% compared to the year-ago period, despite the higher number of longwall moves negatively impacting production. For the third quarter, CNXC expects coal shipments and average realized price per ton to increase slightly, and cost of coal sold per ton to decrease compared to the second quarter."
During the quarter, CONSOL's active coal operations generated $78 million of cash from continuing operations before capital expenditures.
COAL DIVISION RESULTS BY PRODUCT CATEGORY - Quarter-To-Quarter Comparison | ||||||||||||
PA Ops |
PA Ops |
PA Ops | ||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
June 30, |
June 30, |
March 31, | ||||||||||
2016 |
2015 |
2016 | ||||||||||
Beginning Inventory (millions of tons) |
0.3 |
0.2 |
0.1 |
|||||||||
Coal Production (millions of tons) |
6.0 |
5.9 |
5.4 |
|||||||||
Ending Inventory (millions of tons) |
0.1 |
0.3 |
0.3 |
|||||||||
Sales - Company Produced (millions of tons) |
6.2 |
5.7 |
5.3 |
|||||||||
Sales Per Ton |
$ |
40.61 |
$ |
56.21 |
$ |
42.99 |
||||||
Total Production Costs Per Ton |
$ |
34.46 |
$ |
44.15 |
$ |
33.16 |
||||||
Average Margin Per Ton Sold |
$ |
6.15 |
$ |
12.06 |
$ |
9.83 |
||||||
Addback: DD&A Per Ton |
$ |
6.50 |
$ |
7.55 |
$ |
6.45 |
||||||
Average Margin Per Ton, before DD&A |
$ |
12.65 |
$ |
19.61 |
$ |
16.28 |
||||||
Cash Flow before Cap. Ex ($ MM) |
$ |
78 |
$ |
112 |
$ |
86 |
The Pennsylvania Operations include Bailey, Enlow Fork, and Harvey mines. Total Production Costs per Ton include: operating costs, royalty and production taxes and depreciation, depletion and amortization. Sales tons times Average Margin Per Ton, before DD&A is meant to approximate the amount of cash generated by the Pennsylvania Operations. This cash generation will be offset by maintenance of production (MOP) capital expenditures. Table may not sum due to rounding.
E&P Division Guidance:
CONSOL Energy increases its annual 2016 E&P Division production to 380-385 Bcfe, compared to previous quarter's guidance of approximately 378 Bcfe.
Total hedged natural gas production in the 2016 third quarter is 75.6 Bcf. The annual gas hedge position is shown in the table below:
E&P DIVISION GUIDANCE | |||||
2016 |
2017 | ||||
Total Yearly Production (Bcfe) |
380-385 |
TBD* | |||
Volumes Hedged (Bcf), as of 7/13/16 |
268.5** |
224.2 |
* 2017 production will be a function of the second half of 2016 capital program, continued debottlenecking initiatives, and the company's drilled but uncompleted (DUC) well inventory.
** Includes actual settlements of 128.1 Bcf.
CONSOL Energy's hedged gas volumes include a combination of NYMEX financial hedges and index financial hedges (NYMEX plus basis). In addition, to protect the NYMEX hedge volumes from basis exposure, CONSOL enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CONSOL Energy's gas hedge position is shown in the table below:
GAS HEDGES | ||||||||||||
Q3 2016 |
2016 |
2017 | ||||||||||
Total NYMEX + Basis* (Bcf) |
72.1 |
263.6 |
187.1 |
|||||||||
Average Hedge Price ($/Mcf) |
$ |
2.79 |
$ |
3.04 |
$ |
2.61 |
||||||
NYMEX Only Hedges Exposed to Basis (Bcf) |
- |
- |
37.1 |
|||||||||
Average Hedge Price ($/Mcf) |
- |
- |
$ |
3.01 |
||||||||
Physical Sales With Fixed Basis Exposed to NYMEX (Bcf) |
3.5 |
4.9 |
- | |||||||||
Average Hedge Basis Value ($/Mcf) |
$ |
(0.29) |
$ |
(0.09) |
- |
* Includes physical sales with fixed basis in Q3 2016, 2016, and 2017 of 18.3 Bcf, 77.0 Bcf, and 28.3 Bcf, respectively.
During the second quarter of 2016, CONSOL Energy added additional NYMEX natural gas hedges of 17.6 Bcf for 2016 and 14.0 Bcf for 2017. In addition, to help mitigate basis exposure on NYMEX hedges, in the second quarter, CONSOL added 18.8 Bcf and 70.6 Bcf of basis hedges for 2016 and 2017, respectively. CONSOL also has hedges in place for a portion of its 2018, 2019, and 2020 production.
CONSOL's 2016 NYMEX plus basis natural gas hedge position has increased to 263.6 Bcf at an average hedge price of $3.04 per Mcf. NYMEX plus basis hedge volumes are not exposed to basis differentials but instead have protected revenue. As a result, in 2016, NYMEX plus basis gas hedges should lock in revenue of approximately $800 million.
During the second quarter of 2016, CONSOL Energy continued to add NGL (propane) hedges, along with direct sales contracts to counterparties. Excluding actual 2016 settlements of 2.3 million gallons, CONSOL currently has 10.4 million gallons of propane directly hedged through March of 2017 at an average price of $0.48 per gallon.
Coal Division Guidance:
CONSOL Energy's pro rata total Coal Division 2016 Adjusted EBITDA is shown in the table below:
COAL DIVISION GUIDANCE | ||||||||
2016 | ||||||||
CNX Coal Resources LP ("CNXC") Adjusted EBITDA (20% undivided interest of PA Operations) |
$ |
59 |
- |
$ |
69 |
|||
x5 (@ 100% interest) |
$ |
295 |
- |
$ |
345 |
|||
Less: EBITDA attributable to Noncontrolling Interest |
(26) |
- |
(31) |
|||||
Plus: CONSOL's Other Coal Division EBITDA1 |
23 |
- |
28 |
|||||
Plus: CONSOL's Other Miscellaneous Coal EBITDA2 |
16 |
- |
24 |
|||||
Less: CONSOL's Other Coal Division Costs and Expenses (including Legacy Liabilities' Costs)3 |
(108) |
- |
(116) |
|||||
CONSOL Energy's Pro Rata Coal Division Adjusted EBITDA |
$ |
200 |
- |
$ |
250 |
Note: CONSOL Energy is unable to provide a reconciliation of projected CNXC Adjusted EBITDA, CONSOL's Other Coal Division EBITDA, and CONSOL's Other Miscellaneous Coal EBITDA to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing and potential significance of certain income statement items.
(1) Includes estimated contribution from Miller Creek and Other Coal Operations for fiscal year 2016 and 1Q16 for Buchanan, and excludes Loss on Sale of Buchanan and the expected Loss on Sale for the Miller Creek and Fola mines.
(2) Includes miscellaneous other income (net of applicable expenses) associated with the company's Terminal Operations, Rental Income, Coal Royalty Income, and other miscellaneous land income.
(3) Includes Legacy Liability Costs of approximately $80-85 million; Other Coal-Related Corporate Expenses, and other miscellaneous items. Excludes stock-based compensation and pension settlement charges.
CONSOL Energy's Pro Rata Coal Division Adjusted EBITDA for 2016 is net of all legacy liabilities associated with the Coal Division, which are comprised of the following: long-term disability (LTD), workers compensation (WC), Coal Workers' Pneumoconiosis (CWP), Other Post-Employment Benefits (OPEB-retiree medical), salary retirement and pension, and asset retirement obligations (ARO).
CONSOL Energy expects annual 2016 Pennsylvania Operations sales to be approximately 22.5-25.5 million tons.
CONSOL Energy expects 2016 total Coal Division capital expenditures to be between $105-$125 million, which includes Pennsylvania Operations capital expenditures of $90-$100 million On a normalized basis, the Coal Division expects maintenance of production capital of $5-$6 per ton.
Liquidity:
As of June 30, 2016, CONSOL Energy had $1,313.7 million in total liquidity, which is comprised of $88.7 million of cash, excluding the CNXC cash balance, and $1,225.0 million available to be borrowed under its $2.0 billion bank facility. During the quarter, CONSOL's liquidity improved $34.0 million due to $56.6 million of cash generated from operations offset by an increase of $22.6 million in outstanding letters of credit. In addition, CONSOL holds 12.7 million CNXC limited partnership units with a current market value of approximately $138 million and 19.1 million CONE Midstream Partners LP ("CNNX") limited partnership units with a current market value of approximately $325 million, as of July 19, 2016.
CONSOL Energy used the $66.3 million of free cash flow generated during the quarter and the $426.7 million of the cash on hand from March 31, 2016 to reduce outstanding borrowings on the revolving credit facility, which increased liquidity and de-levered the balance sheet.
"While we have seen the industry issue equity to improve liquidity and manage leverage ratios, CONSOL has focused on cutting costs, improving capital efficiencies, and monetizing assets," commented David M. Khani, executive vice president and CFO. "Over the past two years, the company has reduced administrative costs and legacy liabilities by several hundred million dollars per year, reduced E&P operating cash costs on a per unit basis by approximately 34%, and sold over $1.3 billion of assets. Also, since implementing our free cash flow plan in the second quarter of 2015, we have paid down debt by approximately $650 million, which excludes approximately $200 million of CNXC revolver borrowings that are consolidated on CONSOL's balance sheet."
About CONSOL
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
Non-GAAP Financial Measures
Definition: 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. Adjusted EBITDA is defined as EBITDA after adjusting for the discrete items listed below. Although EBIT, EBITDA, and Adjusted 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 to evaluate a company's operating performance. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDA, or Adjusted EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies.
Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial net income attributable to CONSOL Energy Shareholders is as follows (dollars in 000):
Three Months Ended | ||||||||||||||||||||
June 30, | ||||||||||||||||||||
2016 |
2016 |
2016 |
2016 |
2015 | ||||||||||||||||
Dollars in thousands |
E&P Division |
COAL Division |
Other1 |
Total Company |
Total Company | |||||||||||||||
Net (Loss) Income |
$ |
(294,499) |
$ |
(212,235) |
$ |
38,085 |
$ |
(468,649) |
$ |
(603,301) |
||||||||||
Less: Loss from Discontinued Operations |
— |
235,639 |
— |
235,639 |
26,078 |
|||||||||||||||
Add: Interest Expense |
755 |
2,153 |
44,519 |
47,427 |
46,506 |
|||||||||||||||
Less: Interest Income |
(320) |
— |
(227) |
(547) |
(364) |
|||||||||||||||
Add: Income Taxes |
— |
— |
(100,354) |
(100,354) |
(301,669) |
|||||||||||||||
Earnings Before Interest & Taxes (EBIT) |
(294,064) |
25,557 |
(17,977) |
(286,484) |
(832,750) |
|||||||||||||||
Add: Depreciation, Depletion & Amortization |
105,151 |
30,069 |
1 |
135,221 |
138,135 |
|||||||||||||||
Earnings Before Interest, Taxes and DD&A (EBITDA) from Continuing Operations |
$ |
(188,913) |
$ |
55,626 |
$ |
(17,976) |
$ |
(151,263) |
$ |
(694,615) |
||||||||||
Adjustments: |
||||||||||||||||||||
Unrealized Loss(Gain) on Commodity Derivative Instruments |
279,715 |
— |
— |
279,715 |
24,936 |
|||||||||||||||
Coal Contract Buyout |
— |
(6,288) |
— |
(6,288) |
— |
|||||||||||||||
Severance Expense |
525 |
26 |
900 |
1,451 |
— |
|||||||||||||||
Pension Settlement |
— |
— |
13,696 |
13,696 |
— |
|||||||||||||||
Impairment of E&P Properties |
— |
— |
— |
— |
828,905 |
|||||||||||||||
Backstop Loan Fees |
— |
— |
— |
— |
7,334 |
|||||||||||||||
Other Transaction Fees |
— |
— |
— |
— |
4,968 |
|||||||||||||||
OPEB Plan Changes |
— |
— |
— |
— |
(33,649) |
|||||||||||||||
Loss on Debt Extinguishment |
— |
— |
— |
— |
17 |
|||||||||||||||
Total Pre-tax Adjustments |
280,240 |
(6,262) |
14,596 |
288,574 |
832,511 |
|||||||||||||||
Adjusted EBITDA |
$ |
91,327 |
$ |
49,364 |
$ |
(3,380) |
$ |
137,311 |
$ |
137,896 |
||||||||||
Less: Net Income Attributable to Noncontrolling Interest |
— |
(1,179) |
— |
(1,179) |
— |
|||||||||||||||
Adjusted EBITDA Attributable to Continuing Operations |
$ |
91,327 |
$ |
48,185 |
$ |
(3,380) |
$ |
136,132 |
$ |
137,896 |
Note: Income tax effect of Total Pre-tax Adjustments was $104,855 and $313,327 for the three months ended June 30, 2016 and June 30, 2015, respectively. Adjusted net income attributable to CONSOL Energy shareholders for the three months ended June 30, 2016 is calculated as GAAP net loss from continuing operations of $233,010 plus total pre-tax adjustments of $288,574, less the tax benefit of $104,855, equals the adjusted net loss from continuing operations of $49,291.
(1) CONSOL Energy's Other Division includes expenses from various other corporate activities including income tax expense that are not allocated to E&P or Coal Divisions.
Free cash flow and organic free cash flow from continuing operations are non-GAAP financial measures. Management believes that these measures are meaningful to investors because management reviews cash flows generated from operations and non-core asset sales after taking into consideration capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand CONSOL's asset base and are expected to generate future cash flows from operations. It is important to note that free cash flow and organic free cash flow from continuing operations do not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure.
Organic Cash Flow From Continuing Operations |
Three Months Ended | ||
Net Cash Provided by Continuing Operations |
$ |
83,571 |
|
Capital Expenditures |
(37,593) |
||
Net Investment in Equity Affiliates |
— |
||
Organic Free Cash Flow from Continuing Operations |
$ |
45,978 |
Free Cash Flow |
Three Months Ended | ||
Net Cash Provided by Operating Activities |
$ |
95,299 |
|
Capital Expenditures |
(37,593) |
||
Capital Expenditures of Discontinued Operations |
(1,254) |
||
Net Investment in Equity Affiliates |
— |
||
Proceeds From Sales of Assets |
9,831 |
||
Free Cash Flow |
$ |
66,283 |
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas and other liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our natural gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current natural gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan exceeding total service and interest cost in a plan year; divestitures we anticipate may not occur or produce anticipated benefits; the terms of our existing joint ventures restrict our flexibility, actions taken by the other party in our natural gas joint ventures may impact our financial position and various circumstances could cause us not to realize the benefits we anticipate receiving from these joint ventures; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC - disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating results; other factors discussed in the 2015 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible oil and gas reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by application of development projects to known accumulations. We may use certain terms in this press release, such as EUR (estimated ultimate recovery), unproved reserves and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. These measures are by their nature more speculative than estimates of reserves prepared in accordance with SEC definitions and guidelines and accordingly are less certain. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category.
CONSOL ENERGY INC. AND SUBSIDIARIES
| |||||||||||||||
(Dollars in thousands, except per share data) |
Three Months Ended |
Six Months Ended | |||||||||||||
(Unaudited) |
June 30, |
June 30, | |||||||||||||
Revenues and Other Income: |
2016 |
2015 |
2016 |
2015 | |||||||||||
Natural Gas, NGLs and Oil Sales |
$ |
167,933 |
$ |
159,654 |
$ |
349,188 |
$ |
384,092 |
|||||||
(Loss) Gain on Commodity Derivative Instruments |
(199,380) |
17,322 |
(144,320) |
107,467 |
|||||||||||
Coal Sales |
251,166 |
318,995 |
477,330 |
705,021 |
|||||||||||
Other Outside Sales |
8,059 |
6,337 |
15,768 |
19,467 |
|||||||||||
Purchased Gas Sales |
7,929 |
1,517 |
16,547 |
5,114 |
|||||||||||
Freight-Outside Coal |
11,447 |
2,750 |
24,557 |
7,768 |
|||||||||||
Miscellaneous Other Income |
33,032 |
34,687 |
81,163 |
71,208 |
|||||||||||
Gain (Loss) on Sale of Assets |
5,614 |
4,312 |
(1,662) |
6,286 |
|||||||||||
Total Revenue and Other Income |
285,800 |
545,574 |
818,571 |
1,306,423 |
|||||||||||
Costs and Expenses: |
|||||||||||||||
Exploration and Production Costs |
|||||||||||||||
Lease Operating Expense |
23,655 |
29,521 |
51,394 |
66,777 |
|||||||||||
Transportation, Gathering and Compression |
90,983 |
83,196 |
184,957 |
158,717 |
|||||||||||
Production, Ad Valorem, and Other Fees |
6,402 |
6,938 |
14,705 |
16,130 |
|||||||||||
Depreciation, Depletion and Amortization |
105,151 |
89,850 |
210,866 |
177,294 |
|||||||||||
Exploration and Production Related Other Costs |
2,823 |
2,324 |
5,231 |
4,364 |
|||||||||||
Purchased Gas Costs |
8,884 |
1,061 |
16,752 |
4,018 |
|||||||||||
Other Corporate Expenses |
30,656 |
20,622 |
58,350 |
39,718 |
|||||||||||
Impairment of Exploration and Production Properties |
— |
828,905 |
— |
828,905 |
|||||||||||
Selling, General, and Administrative Costs |
16,175 |
21,070 |
33,738 |
42,894 |
|||||||||||
Total Exploration and Production Costs |
284,729 |
1,083,487 |
575,993 |
1,338,817 |
|||||||||||
Coal Costs |
|||||||||||||||
Operating and Other Costs |
217,465 |
213,022 |
401,834 |
474,765 |
|||||||||||
Depreciation, Depletion and Amortization |
30,069 |
48,280 |
79,342 |
102,982 |
|||||||||||
Freight Expense |
11,447 |
2,750 |
24,557 |
7,768 |
|||||||||||
Selling, General, and Administrative Costs |
6,174 |
6,147 |
10,660 |
12,678 |
|||||||||||
Other Corporate Expenses |
4,355 |
10,207 |
7,498 |
16,282 |
|||||||||||
Total Coal Costs |
269,510 |
280,406 |
523,891 |
614,475 |
|||||||||||
Other Costs |
|||||||||||||||
Miscellaneous Operating Expense |
17,497 |
14,045 |
20,686 |
24,420 |
|||||||||||
Depreciation, Depletion and Amortization |
1 |
5 |
1 |
12 |
|||||||||||
Loss on Debt Extinguishment |
— |
17 |
— |
67,751 |
|||||||||||
Interest Expense |
47,427 |
46,506 |
97,292 |
101,627 |
|||||||||||
Total Other Costs |
64,925 |
60,573 |
117,979 |
193,810 |
|||||||||||
Total Costs And Expenses |
619,164 |
1,424,466 |
1,217,863 |
2,147,102 |
|||||||||||
Loss From Continuing Operations Before Income Tax |
(333,364) |
(878,892) |
(399,292) |
(840,679) |
|||||||||||
Income Taxes |
(100,354) |
(301,669) |
(123,571) |
(316,652) |
|||||||||||
Loss From Continuing Operations |
(233,010) |
(577,223) |
(275,721) |
(524,027) |
|||||||||||
Loss From Discontinued Operations, net |
(235,639) |
(26,078) |
(289,391) |
(244) |
|||||||||||
Net Loss |
(468,649) |
(603,301) |
(565,112) |
(524,271) |
|||||||||||
Less: Net Income Attributable to Noncontrolling Interest |
1,179 |
— |
2,293 |
— |
|||||||||||
Net Loss Attributable to CONSOL Energy Shareholders |
$ |
(469,828) |
$ |
(603,301) |
$ |
(567,405) |
$ |
(524,271) |
CONSOL ENERGY INC. AND SUBSIDIARIES
| |||||||||||||||
(Dollars in thousands, except per share data) |
Three Months Ended |
Six Months Ended | |||||||||||||
(Unaudited) |
June 30, |
June 30, | |||||||||||||
Loss Per Share |
2016 |
2015 |
2016 |
2015 | |||||||||||
Basic |
|||||||||||||||
Loss from Continuing Operations |
$ |
(1.02) |
$ |
(2.52) |
$ |
(1.21) |
$ |
(2.29) |
|||||||
Loss from Discontinued Operations |
(1.03) |
(0.12) |
(1.26) |
— |
|||||||||||
Total Basic Loss Per Share |
$ |
(2.05) |
$ |
(2.64) |
$ |
(2.47) |
$ |
(2.29) |
|||||||
Dilutive |
|||||||||||||||
Loss from Continuing Operations |
$ |
(1.02) |
$ |
(2.52) |
$ |
(1.21) |
$ |
(2.29) |
|||||||
Loss from Discontinued Operations |
(1.03) |
(0.12) |
(1.26) |
— |
|||||||||||
Total Dilutive Loss Per Share |
$ |
(2.05) |
$ |
(2.64) |
$ |
(2.47) |
$ |
(2.29) |
|||||||
Dividends Paid Per Share |
$ |
— |
$ |
0.0625 |
$ |
0.0100 |
$ |
0.1250 |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
(Dollars in thousands) |
June 30, |
June 30, | |||||||||||||
(Unaudited) |
2016 |
2015 |
2016 |
2015 | |||||||||||
Net Loss |
$ |
(468,649) |
$ |
(603,301) |
$ |
(565,112) |
$ |
(524,271) |
|||||||
Other Comprehensive Loss: |
|||||||||||||||
Actuarially Determined Long-Term Liability Adjustments (Net of tax: |
8,045 |
9,467 |
5,561 |
9,318 |
|||||||||||
Reclassification of Cash Flow Hedges from OCI to Earnings (Net of tax: $6,521, $12,103, $12,145, $23,316) |
(11,203) |
(20,804) |
(21,017) |
(40,118) |
|||||||||||
Other Comprehensive Loss |
(3,158) |
(11,337) |
(15,456) |
(30,800) |
|||||||||||
Comprehensive Loss |
(471,807) |
(614,638) |
(580,568) |
(555,071) |
|||||||||||
Less: Net Income Attributable to Noncontrolling Interests |
1,179 |
— |
2,293 |
— |
|||||||||||
Comprehensive Loss Attributable to CONSOL Energy Inc. Shareholders |
$ |
(472,986) |
$ |
(614,638) |
$ |
(582,861) |
$ |
(555,071) |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
| |||||||
(Unaudited) |
|||||||
(Dollars in thousands) |
June 30, |
December 31, | |||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash and Cash Equivalents |
$ |
97,626 |
$ |
72,574 |
|||
Accounts and Notes Receivable: |
|||||||
Trade |
153,977 |
151,383 |
|||||
Other Receivables |
94,125 |
121,735 |
|||||
Inventories |
60,818 |
66,792 |
|||||
Recoverable Income Taxes |
— |
13,887 |
|||||
Prepaid Expenses |
103,526 |
297,287 |
|||||
Current Assets of Discontinued Operations |
16,168 |
81,106 |
|||||
Total Current Assets |
526,240 |
804,764 |
|||||
Property, Plant and Equipment: |
|||||||
Property, Plant and Equipment |
13,866,137 |
13,794,907 |
|||||
Less—Accumulated Depreciation, Depletion and Amortization |
5,360,046 |
5,062,201 |
|||||
Property, Plant, and Equipment of Discontinued Operations, Net |
103,085 |
936,670 |
|||||
Total Property, Plant and Equipment—Net |
8,609,176 |
9,669,376 |
|||||
Other Assets: |
|||||||
Deferred Income Taxes |
175,929 |
— |
|||||
Investment in Affiliates |
256,167 |
237,330 |
|||||
Other |
214,079 |
214,388 |
|||||
Other Assets of Discontinued Operations |
3,166 |
4,044 |
|||||
Total Other Assets |
649,341 |
455,762 |
|||||
TOTAL ASSETS |
$ |
9,784,757 |
$ |
10,929,902 |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands, except per share data) |
June 30, |
December 31, | |||||
LIABILITIES AND EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts Payable |
$ |
171,359 |
$ |
250,609 |
|||
Current Portion of Long-Term Debt |
4,368 |
4,988 |
|||||
Short-Term Notes Payable |
466,000 |
952,000 |
|||||
Accrued Income Taxes |
5,459 |
— |
|||||
Other Accrued Liabilities |
479,255 |
421,827 |
|||||
Current Liabilities of Discontinued Operations |
24,938 |
51,514 |
|||||
Total Current Liabilities |
1,151,379 |
1,680,938 |
|||||
Long-Term Debt: |
|||||||
Long-Term Debt |
2,723,004 |
2,708,320 |
|||||
Capital Lease Obligations |
31,494 |
34,884 |
|||||
Long-Term Debt of Discontinued Operations |
1,254 |
5,001 |
|||||
Total Long-Term Debt |
2,755,752 |
2,748,205 |
|||||
Deferred Credits and Other Liabilities: |
|||||||
Deferred Income Taxes |
— |
74,629 |
|||||
Postretirement Benefits Other Than Pensions |
619,220 |
630,892 |
|||||
Pneumoconiosis Benefits |
117,984 |
111,903 |
|||||
Mine Closing |
214,344 |
227,339 |
|||||
Gas Well Closing |
164,195 |
163,842 |
|||||
Workers' Compensation |
68,687 |
69,812 |
|||||
Salary Retirement |
87,321 |
91,596 |
|||||
Reclamation |
246 |
25 |
|||||
Other |
244,354 |
166,957 |
|||||
Deferred Credits and Other Liabilities of Discontinued Operations |
89,845 |
107,988 |
|||||
Total Deferred Credits and Other Liabilities |
1,606,196 |
1,644,983 |
|||||
TOTAL LIABILITIES |
5,513,327 |
6,074,126 |
|||||
Stockholders' Equity: |
|||||||
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 229,433,854 Issued and Outstanding at June 30, 2016; 229,054,236 Issued and Outstanding at December 31, 2015 |
2,298 |
2,294 |
|||||
Capital in Excess of Par Value |
2,445,840 |
2,435,497 |
|||||
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding |
— |
— |
|||||
Retained Earnings |
2,008,514 |
2,579,834 |
|||||
Accumulated Other Comprehensive Loss |
(331,054) |
(315,598) |
|||||
Total CONSOL Energy Inc. Stockholders' Equity |
4,125,598 |
4,702,027 |
|||||
Noncontrolling Interest |
145,832 |
153,749 |
|||||
TOTAL EQUITY |
4,271,430 |
4,855,776 |
|||||
TOTAL LIABILITIES AND EQUITY |
$ |
9,784,757 |
$ |
10,929,902 |
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 |
Accumulated Other Comprehensive Loss |
Total CONSOL Energy Inc. |
Non- Controlling Interest |
Total Equity | ||||||||||||||||||||
December 31, 2015 |
$ |
2,294 |
$ |
2,435,497 |
$ |
2,579,834 |
$ |
(315,598) |
$ |
4,702,027 |
$ |
153,749 |
$ |
4,855,776 |
|||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||
Net (Loss) Income |
— |
— |
(567,405) |
— |
(567,405) |
2,293 |
(565,112) |
||||||||||||||||||||
Other Comprehensive Loss |
— |
— |
— |
(15,456) |
(15,456) |
— |
(15,456) |
||||||||||||||||||||
Comprehensive (Loss) Income |
— |
— |
(567,405) |
(15,456) |
(582,861) |
2,293 |
(580,568) |
||||||||||||||||||||
Issuance of Common Stock |
4 |
— |
— |
— |
4 |
— |
4 |
||||||||||||||||||||
Treasury Stock Activity |
— |
— |
(1,621) |
— |
(1,621) |
— |
(1,621) |
||||||||||||||||||||
Tax Cost From Stock-Based Compensation |
— |
(5,096) |
— |
— |
(5,096) |
— |
(5,096) |
||||||||||||||||||||
Amortization of Stock-Based Compensation Awards |
— |
15,439 |
— |
— |
15,439 |
615 |
16,054 |
||||||||||||||||||||
Distributions to Noncontrolling Interest |
— |
— |
— |
— |
— |
(10,825) |
(10,825) |
||||||||||||||||||||
Dividends ($0.01 per share) |
— |
— |
(2,294) |
— |
(2,294) |
— |
(2,294) |
||||||||||||||||||||
Balance at June 30, 2016 |
$ |
2,298 |
$ |
2,445,840 |
$ |
2,008,514 |
$ |
(331,054) |
$ |
4,125,598 |
$ |
145,832 |
$ |
4,271,430 |
CONSOL ENERGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
| |||||||||||||||
(Dollars in thousands) |
Three Months Ended |
Six Months Ended | |||||||||||||
(Unaudited) |
June 30, |
June 30, | |||||||||||||
Operating Activities: |
2016 |
2015 |
2016 |
2015 | |||||||||||
Net Loss |
$ |
(468,649) |
$ |
(603,301) |
$ |
(565,112) |
$ |
(524,271) |
|||||||
Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities: |
|||||||||||||||
Net Loss from Discontinued Operations |
235,639 |
26,078 |
289,391 |
244 |
|||||||||||
Depreciation, Depletion and Amortization |
135,221 |
138,135 |
290,209 |
280,288 |
|||||||||||
Impairment of Exploration and Production Properties |
— |
828,905 |
— |
828,905 |
|||||||||||
Non-Cash Other Post-Employment Benefits |
— |
(40,559) |
— |
(50,925) |
|||||||||||
Stock-Based Compensation |
10,430 |
6,648 |
16,054 |
14,129 |
|||||||||||
(Gain) Loss on Sale of Assets |
(5,614) |
(4,312) |
1,662 |
(6,286) |
|||||||||||
Loss on Debt Extinguishment |
— |
17 |
— |
67,751 |
|||||||||||
Loss (Gain) on Commodity Derivative Instruments |
199,380 |
(17,322) |
144,320 |
(107,467) |
|||||||||||
Net Cash Received in Settlement of Commodity Derivative Instruments |
80,335 |
42,258 |
164,666 |
72,399 |
|||||||||||
Deferred Income Taxes |
(100,934) |
(301,654) |
(124,516) |
(312,234) |
|||||||||||
Equity in Earnings of Affiliates |
(9,219) |
(11,927) |
(25,884) |
(23,250) |
|||||||||||
Return on Equity Investment |
4,680 |
2,059 |
9,192 |
8,162 |
|||||||||||
Changes in Operating Assets: |
|||||||||||||||
Accounts and Notes Receivable |
32,934 |
65,415 |
18,101 |
93,180 |
|||||||||||
Inventories |
10,511 |
(9,228) |
(7,947) |
(8,118) |
|||||||||||
Prepaid Expenses |
28,156 |
45,315 |
47,136 |
83,570 |
|||||||||||
Changes in Other Assets |
(5,434) |
10,082 |
(15,298) |
16,943 |
|||||||||||
Changes in Operating Liabilities: |
|||||||||||||||
Accounts Payable |
(35,955) |
(82,433) |
(45,781) |
(93,870) |
|||||||||||
Accrued Interest |
(36,674) |
(16,570) |
(807) |
26,149 |
|||||||||||
Other Operating Liabilities |
(15,448) |
(38,403) |
(14,069) |
(118,056) |
|||||||||||
Changes in Other Liabilities |
18,656 |
(46,182) |
15,343 |
(56,340) |
|||||||||||
Other |
5,556 |
48,892 |
9,648 |
56,800 |
|||||||||||
Net Cash Provided by Continuing Operations |
83,571 |
41,913 |
206,308 |
247,703 |
|||||||||||
Net Cash Provided by Discontinued Operating Activities |
11,728 |
23,932 |
17,433 |
46,512 |
|||||||||||
Net Cash Provided by Operating Activities |
95,299 |
65,845 |
223,741 |
294,215 |
|||||||||||
Cash Flows from Investing Activities: |
|||||||||||||||
Capital Expenditures |
(37,593) |
(329,878) |
(115,257) |
(616,484) |
|||||||||||
Proceeds from Sales of Assets |
9,831 |
4,823 |
18,284 |
6,931 |
|||||||||||
Net Investments in Equity Affiliates |
— |
(15,769) |
(5,578) |
(43,761) |
|||||||||||
Net Cash Used in Continuing Operations |
(27,762) |
(340,824) |
(102,551) |
(653,314) |
|||||||||||
Net Cash (Used in) Provided by Discontinued Investing Activities |
(1,254) |
(11,888) |
394,511 |
(19,301) |
|||||||||||
Net Cash (Used in) Provided by Investing Activities |
(29,016) |
(352,712) |
291,960 |
(672,615) |
|||||||||||
Cash Flows from Financing Activities: |
|||||||||||||||
(Payments on) Proceeds from Short-Term Borrowings |
(385,500) |
297,500 |
(486,000) |
1,058,000 |
|||||||||||
Payments on Miscellaneous Borrowings |
(2,364) |
(1,592) |
(4,459) |
(4,029) |
|||||||||||
Payments on Long-Term Notes, including Redemption Premium |
— |
(2,710) |
— |
(1,263,719) |
|||||||||||
Net (Payments on) Proceeds from Revolver - CNX Coal Resources LP |
(2,000) |
— |
13,000 |
— |
|||||||||||
Distributions to Noncontrolling Interest |
(5,412) |
— |
(10,825) |
— |
|||||||||||
Proceeds from Securitization Facility |
— |
6,000 |
— |
38,669 |
|||||||||||
Proceeds from Issuance of Long-Term Notes |
— |
— |
— |
492,760 |
|||||||||||
Tax Benefit from Stock-Based Compensation |
— |
183 |
— |
198 |
|||||||||||
Dividends Paid |
— |
(14,311) |
(2,294) |
(28,711) |
|||||||||||
Issuance of Common Stock |
1 |
6,552 |
4 |
8,288 |
|||||||||||
Purchases of Treasury Stock |
— |
— |
— |
(71,674) |
|||||||||||
Debt Issuance and Financing Fees |
— |
— |
— |
(18,257) |
|||||||||||
Net Cash (Used in) Provided by Continuing Operations |
(395,275) |
291,622 |
(490,574) |
211,525 |
|||||||||||
Net Cash Used in Discontinued Financing Activities |
(28) |
(42) |
(75) |
(83) |
|||||||||||
Net Cash (Used in) Provided by Financing Activities |
(395,303) |
291,580 |
(490,649) |
211,442 |
|||||||||||
Net (Decrease) Increase in Cash and Cash Equivalents |
(329,020) |
4,713 |
25,052 |
(166,958) |
|||||||||||
Cash and Cash Equivalents at Beginning of Period |
426,646 |
5,314 |
72,574 |
176,985 |
|||||||||||
Cash and Cash Equivalents at End of Period |
$ |
97,626 |
$ |
10,027 |
$ |
97,626 |
$ |
10,027 |
Logo - http://photos.prnewswire.com/prnh/20120416/NE87957LOGO
SOURCE CONSOL Energy Inc.
CANONSBURG, Pa., July 22, 2016 /PRNewswire/ -- The Board of Directors of CONE Midstream GP LLC, the general partner of CONE Midstream Partners LP (NYSE: CNNX), today announced the declaration of a cash distribution of $0.254 per unit with respect to the second quarter of 2016. The distribution will be made on August 12, 2016 to unitholders of record as of the close of business on August 4, 2016. The distribution, which equates to an annual rate of $1.016 per unit, represents an increase of 3.7% over the prior quarter, and an increase of 15.5% over the distribution paid with respect to the second quarter of 2015.
CONE Midstream Partners is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) and Noble Energy, Inc. (NYSE: NBL), whom we refer to as our Sponsors, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service our Sponsors' production in the Marcellus Shale in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available at our website www.conemidstream.com.
This press release is intended to be a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of CONE Midstream's distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business. Accordingly, CONE Midstream's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not CONE Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.
Contact:
Stephen R. Milbourne
CONE Midstream Partners Investor Relations
Phone: 724-485-4408
Email: smilbourne@conemidstream.com
SOURCE CONE Midstream Partners LP
PITTSBURGH, July 7, 2016 /PRNewswire/ -- CNX Coal Resources LP (NYSE: CNXC) will issue its second quarter earnings release after the market close on Monday, July 25. This will be followed by a conference call hosted by members of the management team at 05:00 p.m. Eastern Time. The webcast will be accessible on the 'Investor Relations' page of the company's website, www.cnxlp.com. An archive of the webcast will be available for at least 30 days after the event.
Participant dial in (toll free) |
1-855-656-0928 |
Participant international dial in |
1-412-902-4112 |
Participants should ask to be joined into the CNX Coal Resources LP call. |
CNX Coal Resources is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active thermal coal operations in Pennsylvania. Its initial assets include a 20% undivided interest in, and operational control over, CONSOL's Pennsylvania mining complex, which consists of three underground mines and related infrastructure. More Information is available on our website www.cnxlp.com
Contacts: |
|
Investor: |
Mitesh Thakkar, at (724) 485-3133 |
Media: |
Brian Aiello, at (724) 485-3078 |
SOURCE CNX Coal Resources LP
PITTSBURGH, June 30, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) will issue its second quarter earnings release at 6:45 a.m. Eastern Time on Tuesday, July 26. This will be followed by a conference call at 10:00 a.m. Eastern Time. A live webcast will be available on the 'Investor Relations' page of the company's website, www.consolenergy.com. Also, earnings call slides will be available at 6:45 a.m. Eastern Time on Tuesday, July 26, on the 'Investor Relations' page of the company's website.
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
CANONSBURG, Pa., June 20, 2016 /PRNewswire/ -- CONE Midstream Partners LP (NYSE: CNNX) today announced that members of its executive management team will participate in the Credit Suisse MLP & Energy Logistics Conference.
John T. Lewis, Chairman of the Board and Chief Executive Officer of CONE Midstream GP LLC (the "General Partner"), will give a presentation of the company's operations and recent activities on Tuesday, June 21, at 11:45 a.m. Eastern Time. An audio webcast of the presentation will be available at https://cc.talkpoint.com/cred001/062116a_ae/?entity=4_WV3PUST. A link to the webcast and the slides used in the presentation will be posted on the "Events and Presentations" page of the CNNX website, www.conemidstream.com, prior to the start of the conference.
* * * * *
CONE Midstream Partners is a master limited partnership formed by CONSOL Energy, Inc. (NYSE: CNX) and Noble Energy, Inc. (NYSE: NBL), referred to as our Sponsors, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service our Sponsors' production in the Marcellus Shale in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on our website www.conemidstream.com.
Contact:
Stephen R. Milbourne
CONE Investor Relations
Phone: 724-485-4408
Email: smilbourne@conemidstream.com
SOURCE CONE Midstream Partners LP
PITTSBURGH, June 20, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) announced today that it will participate in the 2016 DUG East Conference in Pittsburgh, Pennsylvania on Wednesday, June 22, 2016.
CONSOL Energy's Chief Operating Officer, Timothy C. Dugan, will make the opening keynote presentation (Big Wells Deliver) at 8:35 am ET.
Mr. Dugan's presentation materials will be available on the investor relations portion of the company's website at 6:45 a.m. ET on Wednesday, June 22, 2016. The presentation will not be webcast.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
Logo - http://photos.prnewswire.com/prnh/20120416/NE87957LOGO
SOURCE CONSOL Energy Inc.
PITTSBURGH, June 2, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) today announced the release of its fifth annual Corporate Responsibility Report, which details execution against Key Performance Indicators (KPIs), and outlines activities and new initiatives undertaken during the past year toward the Company's comprehensive corporate responsibility goals.
CONSOL Energy President and Chief Executive Officer Nicholas J. DeIuliis commented, "I am very proud of the work of our dedicated employees and contractors who, even in the face of very challenging market conditions and other potential distractions, remained focused on our core values and performed exceptionally well during 2015." Mr. DeIuliis continued, "Our employees embody our core values of safety and environmental compliance each and every day, as evidenced by the outstanding results contained within this report. Though we are certainly pleased with these outcomes, we remain as determined as ever to continue to improve on our performance in these critical areas."
Following are key highlights included in the 2015 report:
Safety: During the year, CONSOL achieved its best performance on record with regard to severity. Severity was a key focus of the behavior-based training initiative known as Positively CONSOL, which was originally introduced in 2014. Additionally, 98% of the Company's employees worked the entire year without a reportable accident. The overall recordable incident rate for 2015 was 1.35, a 17% reduction from the previous year.
Environmental: A recent Susquehanna University study rated CONSOL best in environmental performance out of 20 peer E&P companies. The study utilized a formula developed to rank the nation's E&P companies based on environmental impact. Through its recycling initiatives, CONSOL sold more than 5,179 tons of metal, 1,039 tons of mine belt and 244 tons of other miscellaneous items as scrap. The company also repurposed used materials, saved landfill space and generated additional revenue as a result of these efforts. In addition to the industrial materials recycled, nearly 79 tons of paper was recycled at CONSOL's corporate offices.
Community: In 2015, CONSOL made monetary grants totaling nearly $3.3 million. Investments were made in human services and educational organizations focusing on sustainable change and building strong, healthy communities.
To learn more, please visit CONSOL Energy's 2015 corporate responsibility website at, http://2015crr.consolenergy.com/
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
Logo - http://photos.prnewswire.com/prnh/20120416/NE87957LOGO
SOURCE CONSOL Energy Inc.
CANONSBURG, Pa., May 5, 2016 /PRNewswire/ -- CONE Midstream Partners LP (NYSE: CNNX) ("CONE Midstream" or the "Partnership") today reported financial and operational results for the three months ended March 31, 2016.(1)
First Quarter Results
Highlights of first quarter 2016 results attributable to the Partnership as compared to the first quarter of 2015 include:
Management Comment
"CONE Midstream is pleased to report very strong financial and operational results for the first quarter," said John T. Lewis, Chairman of the Board and Chief Executive Officer of CONE Midstream GP LLC (the "General Partner"). "Net throughput volumes increased by 55% from the first quarter of 2015, and net income attributable to the partnership grew by 75% from a year ago. Adjusted EBITDA and distributable cash flow increased by 71% and 74%, respectively, as compared to first quarter last year.
"We view our strong balance sheet and distribution coverage as positive differentiators for CNNX," continued Mr. Lewis. "With a debt to trailing-twelve months EBITDA ratio of 0.8x, we have the financial capacity to sustain our growth through an appropriate combination of investment in organic projects, third party business development, and asset dropdowns or acquisitions. I'd also like to point out that we were free-cash-flow positive during the first quarter, as cash from operations exceeded our total capital investments and cash distribution payments. Our balance sheet and robust distribution coverage have us well positioned for the future."
Quarterly Distribution
As previously announced, the Board of Directors of the General Partner declared a quarterly cash distribution of $0.245 per unit with respect to the first quarter of 2016. The distribution payment will be made on May 13, 2016 to unitholders of record at the close of business on May 4, 2016. The distribution, which equates to an annual rate of $0.98 per unit, represents an increase of 3.7% over the prior quarter and an increase of 15.3% over the distribution paid with respect to the first quarter of 2015.
Capital Investment and Resources
CONE Midstream's allocated first quarter 2016 share of investment in expansion projects was $9.0 million. Total expansion capital investment at the three development companies in which CONE Midstream holds controlling interests was $19.6 million. CONE Midstream's respective share of maintenance capital expenditures for the three development companies for the first quarter 2016 was $2.8 million. Maintenance capital expenditures in the aggregate for the development companies in which CONE Midstream holds controlling interests totaled $4.8 million.
As of March 31, 2016, CONE Midstream had outstanding borrowings of $74.0 million under its $250 million revolving credit facility and a cash balance of $14.3 million.
First Quarter Financial and Operational Results Conference Call
A conference call and webcast, during which management will discuss first quarter 2016 financial and operational results, is scheduled for May 5, 2016 at 11:00 a.m. Eastern Time. Reference material for the call will be available on the "Events" page of our website, www.conemidstream.com, shortly before the start of the call. Prepared remarks by members of management will be followed by a question and answer period. Interested parties may listen via webcast by using the link posted on the "Events" page of our website or at www.webcaster4.com/Webcast/Page/998/14490. Participants who would like to ask questions may join the conference by phone at 888-349-0097 (international 412-902-0126) five to ten minutes prior to the scheduled start time (reference the CONE Midstream call). An on-demand replay of the webcast will be also be available at www.webcaster4.com/Webcast/Page/998/14490 shortly after the conclusion of the conference call. A telephonic replay will be available through May 12, 2016 by dialing 877-344-7529 (international: 412-317-0088) and using the conference playback number 10084060.
_______________
(1) |
Unless otherwise indicated, the reporting measures included in this news release reflect the unallocated total activity of the three development companies jointly owned by the Partnership and CONE Gathering LLC ("CONE Gathering"). Because the Partnership owns a controlling interest in each of the three development companies, it fully consolidates their financial results. The Partnership's current economic interests in the development companies are: 75% in the Anchor Systems, 5% in the Growth Systems, and 5% in the Additional Systems. CONE Gathering is a midstream joint venture formed by CONSOL Energy Inc. and Noble Energy, Inc. and owns non-controlling interests in the Partnership's development companies. |
(2) |
Adjusted EBITDA and DCF are not measures that are recognized under accounting principles generally accepted in the U.S. ("GAAP"). Definitions and reconciliations of these non-GAAP measures to GAAP reporting measures appear in the financial tables which follow. |
Contact: |
Stephen R. Milbourne |
CONE Investor Relations | |
Phone: |
724-485-4408 |
Email: |
smilbourne@conemidstream.com |
* * * * *
CONE Midstream Partners is a master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) and Noble Energy, Inc. (NYSE: NBL), referred to as our Sponsors, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service our Sponsors' production in the Marcellus Shale in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on our website www.conemidstream.com.
* * * * *
This press release is intended to be a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of CONE Midstream's distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business. Accordingly, CONE Midstream's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not CONE Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.
* * * * *
This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, and there can be no assurance that actual outcomes and results will not differ materially from those expected by our management. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include, among others: the effects of changes in market prices of natural gas, NGLs and crude oil on our Sponsors' drilling and development plan on our dedicated acreage and the volumes of natural gas and condensate that are produced on our dedicated acreage; changes in our Sponsors' drilling and development plan in the Marcellus Shale and Utica Shale; our Sponsors' ability to meet their drilling and development plan in the Marcellus Shale and Utica Shale; the demand for natural gas and condensate gathering services; changes in general economic conditions; competitive conditions in our industry; actions taken by third-party operators, gatherers, processors and transporters; our ability to successfully implement our business plan; and our ability to complete internal growth projects on time and on budget. You should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs at the time they are made, forward-looking statements involve known and unknown risks, uncertainties and other factors, including the factors described under "Risk Factors" and "Forward-Looking Statements" in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.
CONE MIDSTREAM PARTNERS LP | |||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(in thousands, except per unit data) | |||||||
(unaudited) | |||||||
Three Months Ended | |||||||
2016 |
2015 | ||||||
Revenue |
|||||||
Gathering revenue — related party |
$ |
62,248 |
$ |
43,168 |
|||
Total Revenue |
62,248 |
43,168 |
|||||
Expenses |
|||||||
Operating expense — third party |
8,674 |
8,530 |
|||||
Operating expense — related party |
8,344 |
7,044 |
|||||
General and administrative expense — third party |
993 |
1,342 |
|||||
General and administrative expense — related party |
1,684 |
1,977 |
|||||
Depreciation expense |
4,839 |
2,994 |
|||||
Interest expense |
419 |
65 |
|||||
Total Expense |
24,953 |
21,952 |
|||||
Net Income |
37,295 |
21,216 |
|||||
Less: Net income attributable to noncontrolling interest |
12,505 |
7,004 |
|||||
Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
24,790 |
$ |
14,212 |
|||
Calculation of Limited Partner Interest in Net Income: |
|||||||
Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
24,790 |
$ |
14,212 |
|||
Less: General partner interest in net income |
496 |
284 |
|||||
Limited partner interest in net income |
$ |
24,294 |
$ |
13,928 |
|||
Net income per Limited Partner unit - Basic |
$ |
0.42 |
$ |
0.24 |
|||
Net Income per Limited Partner unit - Diluted |
$ |
0.42 |
$ |
0.24 |
|||
Limited Partner units outstanding - Basic |
58,343 |
58,326 |
|||||
Limited Partner unit outstanding - Diluted |
58,365 |
58,360 |
|||||
Cash distributions declared per unit (*) |
$ |
0.2450 |
$ |
0.2125 |
|||
(*) Represents the cash distributions declared in April of each year relating to the period presented. |
CONE MIDSTREAM PARTNERS LP
RECONCILIATION OF NET INCOME TO EBITDA AND DISTRIBUTABLE CASH FLOW
(in thousands)
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
We define EBITDA as net income (loss) before net interest expense, depreciation and amortization, and Adjusted EBITDA as EBITDA adjusted for non-cash items which should not be included in the calculation of distributable cash flow. EBITDA and Adjusted EBITDA are used as supplemental financial measures by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
We believe that the presentation of EBITDA and Adjusted EBITDA provides information that is useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to EBITDA and Adjusted EBITDA are net income and net cash provided by operating activities. EBITDA and Adjusted EBITDA should not be considered an alternative to net income, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, EBITDA and Adjusted EBITDA as presented below may not be comparable to similarly titled measures of other companies.
Distributable Cash Flow
We define distributable cash flow as Adjusted EBITDA less net income attributable to noncontrolling interest, net cash interest paid and maintenance capital expenditures. Distributable cash flow does not reflect changes in working capital balances.
Distributable cash flow is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
We believe that the presentation of distributable cash flow in this report provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to distributable cash flow are net income and net cash provided by operating activities. Distributable cash flow should not be considered an alternative to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Distributable cash flow excludes some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, our distributable cash flow may not be comparable to similarly titled measures of other companies.
The following table presents a reconciliation of the non-GAAP measures of EBITDA, Adjusted EBITDA and distributable cash flow to the most directly comparable GAAP financial measures of net income and net cash provided by operating activities.
Three Months Ended | ||||||||
(unaudited) |
2016 |
2015 | ||||||
Net Income |
$ |
37,295 |
$ |
21,216 |
||||
Interest expense |
419 |
65 |
||||||
Depreciation expense |
4,839 |
2,994 |
||||||
EBITDA |
42,553 |
24,275 |
||||||
Non-cash unit-based compensation expense |
136 |
96 |
||||||
Adjusted EBITDA |
42,689 |
24,371 |
||||||
Less: |
||||||||
Net income attributable to noncontrolling interest |
12,505 |
7,004 |
||||||
Interest expense attributable to noncontrolling interest |
189 |
20 |
||||||
Depreciation expense attributable to noncontrolling interest |
2,286 |
1,166 |
||||||
Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
27,709 |
$ |
16,181 |
||||
Less: cash interest paid, net |
230 |
45 |
||||||
Less: ongoing maintenance capital expenditures, net of expected reimbursements |
2,839 |
1,991 |
||||||
Distributable Cash Flow |
$ |
24,640 |
$ |
14,145 |
||||
Net Cash Provided by Operating Activities |
$ |
41,180 |
$ |
10,206 |
||||
Interest expense |
419 |
65 |
||||||
Other, including changes in working capital |
1,090 |
14,100 |
||||||
Adjusted EBITDA |
42,689 |
24,371 |
||||||
Less: |
||||||||
Net income attributable to noncontrolling interest |
12,505 |
7,004 |
||||||
Interest expense attributable to noncontrolling interest |
189 |
20 |
||||||
Depreciation expense attributable to noncontrolling interest |
2,286 |
1,166 |
||||||
Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
27,709 |
$ |
16,181 |
||||
Less: cash interest paid, net |
230 |
45 |
||||||
Less: ongoing maintenance capital expenditures, net of expected reimbursements |
2,839 |
1,991 |
||||||
Distributable Cash Flow |
$ |
24,640 |
$ |
14,145 |
The following table presents a reconciliation of the non-GAAP measures adjusted EBITDA and distributable cash flow by quarter and for the most recently completed twelve month period with the most directly comparable GAAP financial measures, which are net income and net cash provided by operating activities.
(unaudited) |
Q2 2015 |
Q3 2015 |
Q4 2015 |
Q1 2016 |
Twelve | |||||||||||||||
Net Income |
$ |
24,905 |
$ |
33,614 |
$ |
35,796 |
$ |
37,295 |
$ |
131,610 |
||||||||||
Interest expense |
47 |
158 |
565 |
419 |
1,189 |
|||||||||||||||
Depreciation expense |
3,667 |
3,769 |
4,623 |
4,839 |
16,898 |
|||||||||||||||
EBITDA |
28,619 |
37,541 |
40,984 |
42,553 |
149,697 |
|||||||||||||||
Non-cash unit-based compensation expense |
96 |
118 |
92 |
136 |
442 |
|||||||||||||||
Adjusted EBITDA |
28,715 |
37,659 |
41,076 |
42,689 |
150,139 |
|||||||||||||||
Less: |
||||||||||||||||||||
Net income attributable to noncontrolling interest |
9,993 |
13,957 |
13,330 |
12,505 |
49,785 |
|||||||||||||||
Interest expense attributable to noncontrolling interest |
14 |
63 |
331 |
189 |
597 |
|||||||||||||||
Depreciation expense attributable to noncontrolling interest |
1,659 |
1,728 |
2,246 |
2,286 |
7,919 |
|||||||||||||||
Adjusted EBITDA Attributable to General and Limited |
$ |
17,049 |
$ |
21,911 |
$ |
25,169 |
$ |
27,709 |
$ |
91,838 |
||||||||||
Less: cash interest paid, net |
33 |
95 |
234 |
230 |
592 |
|||||||||||||||
Less: ongoing maintenance capital expenditures, net of |
2,148 |
2,291 |
2,554 |
2,839 |
9,832 |
|||||||||||||||
Distributable Cash Flow |
$ |
14,868 |
$ |
19,525 |
$ |
22,381 |
$ |
24,640 |
$ |
81,414 |
||||||||||
Net Cash Provided by Operating Activities |
$ |
50,254 |
$ |
38,808 |
$ |
16,749 |
$ |
41,180 |
$ |
146,991 |
||||||||||
Interest expense |
47 |
158 |
565 |
419 |
1,189 |
|||||||||||||||
Other, including changes in working capital |
(21,586) |
(1,307) |
23,762 |
1,090 |
1,959 |
|||||||||||||||
Adjusted EBITDA |
28,715 |
37,659 |
41,076 |
42,689 |
150,139 |
|||||||||||||||
Less: |
||||||||||||||||||||
Net income attributable to noncontrolling interest |
9,993 |
13,957 |
13,330 |
12,505 |
49,785 |
|||||||||||||||
Interest expense attributable to noncontrolling interest |
14 |
63 |
331 |
189 |
597 |
|||||||||||||||
Depreciation expense attributable to noncontrolling interest |
1,659 |
1,728 |
2,246 |
2,286 |
7,919 |
|||||||||||||||
Adjusted EBITDA Attributable to General and Limited |
$ |
17,049 |
$ |
21,911 |
$ |
25,169 |
$ |
27,709 |
$ |
91,838 |
||||||||||
Less: cash interest paid, net |
33 |
95 |
234 |
230 |
592 |
|||||||||||||||
Less: ongoing maintenance capital expenditures, net of |
2,148 |
2,291 |
2,554 |
2,839 |
9,832 |
|||||||||||||||
Distributable Cash Flow |
$ |
14,868 |
$ |
19,525 |
$ |
22,381 |
$ |
24,640 |
$ |
81,414 |
||||||||||
Distributions Declared |
$ |
13,094 |
$ |
13,570 |
$ |
14,062 |
$ |
14,591 |
$ |
55,317 |
||||||||||
Distribution Coverage Ratio - Declared |
1.14 |
x |
1.44 |
x |
1.59 |
x |
1.69 |
x |
1.47 |
x | ||||||||||
Distributable Cash Flow |
$ |
14,868 |
$ |
19,525 |
$ |
22,381 |
$ |
24,640 |
$ |
81,414 |
||||||||||
Distributions Paid |
$ |
12,647 |
$ |
13,094 |
$ |
13,570 |
$ |
14,062 |
$ |
53,373 |
||||||||||
Distribution Coverage Ratio - Paid |
1.18 |
x |
1.49 |
x |
1.65 |
x |
1.75 |
x |
1.53 |
x |
CONE MIDSTREAM PARTNERS LP | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands, except number of units) | |||||||
(unaudited) |
|||||||
March 31, |
December 31, | ||||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash |
$ |
14,273 |
$ |
217 |
|||
Receivables — related party |
21,847 |
36,418 |
|||||
Inventory |
18,916 |
18,916 |
|||||
Other current assets |
1,669 |
2,037 |
|||||
Total Current Assets |
56,705 |
57,588 |
|||||
Property and Equipment: |
|||||||
Property and equipment |
914,470 |
897,918 |
|||||
Less — accumulated depreciation |
36,337 |
31,609 |
|||||
Property and Equipment — Net |
878,133 |
866,309 |
|||||
Other non-current assets |
487 |
528 |
|||||
TOTAL ASSETS |
$ |
935,325 |
$ |
924,425 |
|||
LIABILITIES AND EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts payable |
$ |
29,158 |
$ |
46,155 |
|||
Accounts payable — related party |
1,574 |
1,628 |
|||||
Total Current Liabilities |
30,732 |
47,783 |
|||||
Other Liabilities: |
|||||||
Revolving credit facility |
74,000 |
73,500 |
|||||
Total Liabilities |
104,732 |
121,283 |
|||||
Partners' Capital: |
|||||||
Common units (29,180,217 units issued and outstanding at March 31, 2016 and |
404,767 |
399,399 |
|||||
Subordinated units (29,163,121 units issued and outstanding at March 31, 2016 and December 31, 2015) |
(77,641) |
(82,900) |
|||||
General partner interest |
(3,171) |
(3,389) |
|||||
Partners' capital attributable to CONE Midstream Partners LP |
323,955 |
313,110 |
|||||
Noncontrolling interest |
506,638 |
490,032 |
|||||
Total Partners' Capital |
830,593 |
803,142 |
|||||
TOTAL LIABILITIES AND PARTNERS' CAPITAL |
$ |
935,325 |
$ |
924,425 |
CONE MIDSTREAM PARTNERS LP | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
Three Months Ended March 31, | |||||||
2016 |
2015 | ||||||
Cash Flows from Operating Activities: |
|||||||
Net Income |
$ |
37,295 |
$ |
21,216 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation expense and amortization of debt issuance costs |
4,880 |
2,994 |
|||||
Unit-based compensation |
136 |
96 |
|||||
Changes in operating assets: |
|||||||
Receivables — related party |
7,851 |
3,462 |
|||||
Other current and non-current assets |
369 |
253 |
|||||
Changes in operating liabilities: |
|||||||
Accounts payable |
(9,188) |
(17,616) |
|||||
Accounts payable — related party |
(163) |
(199) |
|||||
Net Cash Provided by Operating Activities |
41,180 |
10,206 |
|||||
Cash Flows from Investing Activities: |
|||||||
Capital expenditures |
(24,386) |
(61,806) |
|||||
Net Cash Used in Investing Activities |
(24,386) |
(61,806) |
|||||
Cash Flows from Financing Activities: |
|||||||
Contributions by general & limited partners and noncontrolling interest holders |
10,823 |
85,392 |
|||||
Distributions to unitholders |
(14,061) |
(12,784) |
|||||
Net proceeds from (payment on) revolver |
500 |
(23,800) |
|||||
Net Cash Provided By Financing Activities |
(2,738) |
48,808 |
|||||
Net Increase (Decrease) in Cash |
14,056 |
(2,792) |
|||||
Cash at Beginning of Period |
217 |
3,252 |
|||||
Cash at End of Period |
$ |
14,273 |
$ |
460 |
Development Companies Jointly Owned by CONE Midstream Partners LP and CONE Gathering LLC | |||||||||||||||
Operating Income Summary, Selected Operating Statistics and Capital Investment | |||||||||||||||
(in thousands) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended March 31, 2016 | |||||||||||||||
Development Company | |||||||||||||||
Anchor |
Growth |
Additional |
TOTAL | ||||||||||||
Income Summary |
|||||||||||||||
Revenue |
$ |
50,290 |
$ |
2,891 |
$ |
9,067 |
$ |
62,248 |
|||||||
Expenses |
17,539 |
1,954 |
5,460 |
24,953 |
|||||||||||
Net Income |
32,751 |
937 |
3,607 |
37,295 |
|||||||||||
Less: Net income attributable to noncontrolling interest |
8,188 |
890 |
3,427 |
12,505 |
|||||||||||
Net Income Attributable to General and Limited |
$ |
24,563 |
$ |
47 |
$ |
180 |
$ |
24,790 |
|||||||
Operating Statistics - Gathered Volumes |
|||||||||||||||
Dry gas (BBtu/d) |
650 |
68 |
24 |
742 |
|||||||||||
Wet gas (BBtu/d) |
457 |
6 |
176 |
639 |
|||||||||||
Condensate (MMcfe/d) |
7 |
— |
7 |
14 |
|||||||||||
Total Gathered Volumes |
1,114 |
74 |
207 |
1,395 |
|||||||||||
Total Volumes Net to CONE Midstream Partners LP |
836 |
4 |
10 |
850 |
|||||||||||
Capital Investment |
|||||||||||||||
Maintenance capital |
$ |
3,710 |
$ |
69 |
$ |
1,057 |
$ |
4,836 |
|||||||
Expansion capital |
11,461 |
— |
8,089 |
19,550 |
|||||||||||
Total Capital Investment |
$ |
15,171 |
$ |
69 |
$ |
9,146 |
$ |
24,386 |
|||||||
Capital Investment Net to CONE Midstream Partners LP |
|||||||||||||||
Maintenance capital |
$ |
2,783 |
$ |
3 |
$ |
53 |
$ |
2,839 |
|||||||
Expansion capital |
8,596 |
— |
404 |
9,000 |
|||||||||||
Total Capital Investment Net to CONE Midstream |
$ |
11,379 |
$ |
3 |
$ |
457 |
$ |
11,839 |
Development Companies Jointly Owned by CONE Midstream Partners LP and CONE Gathering LLC | |||||||||||||||
Operating Income Summary, Selected Operating Statistics and Capital Investment | |||||||||||||||
(in thousands) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended March 31, 2015 | |||||||||||||||
Development Company | |||||||||||||||
Anchor |
Growth |
Additional |
TOTAL | ||||||||||||
Income Summary |
|||||||||||||||
Revenue |
$ |
34,533 |
$ |
2,975 |
$ |
5,660 |
$ |
43,168 |
|||||||
Expenses |
15,746 |
2,174 |
4,032 |
21,952 |
|||||||||||
Net Income |
18,787 |
801 |
1,628 |
21,216 |
|||||||||||
Less: Net income attributable to noncontrolling interest |
4,697 |
761 |
1,546 |
7,004 |
|||||||||||
Net Income Attributable to General and Limited |
$ |
14,090 |
$ |
40 |
$ |
82 |
$ |
14,212 |
|||||||
Operating Statistics - Gathered Volumes |
|||||||||||||||
Dry gas (BBtu/d) |
381 |
77 |
12 |
470 |
|||||||||||
Wet gas (BBtu/d) |
326 |
3 |
109 |
438 |
|||||||||||
Condensate (MMcfe/d) |
11 |
— |
2 |
13 |
|||||||||||
Total Gathered Volumes |
718 |
80 |
123 |
921 |
|||||||||||
Total Volumes Net to CONE Midstream Partners LP |
539 |
4 |
6 |
549 |
|||||||||||
Capital Investment |
|||||||||||||||
Maintenance capital |
$ |
2,619 |
$ |
258 |
$ |
273 |
$ |
3,150 |
|||||||
Expansion capital |
26,680 |
11,379 |
20,597 |
58,656 |
|||||||||||
Total Capital Investment |
$ |
29,299 |
$ |
11,637 |
$ |
20,870 |
$ |
61,806 |
|||||||
Capital Investment Net to CONE Midstream Partners LP |
|||||||||||||||
Maintenance capital |
$ |
1,964 |
$ |
13 |
$ |
14 |
$ |
1,991 |
|||||||
Expansion capital |
20,010 |
569 |
1,030 |
21,609 |
|||||||||||
Total Capital Investment Net to CONE Midstream |
$ |
21,974 |
$ |
582 |
$ |
1,044 |
$ |
23,600 |
SOURCE CONE Midstream Partners LP
PITTSBURGH, April 26, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) reported a net loss from continuing operations of $50 million for the quarter, or ($0.22) per diluted share. When including the loss from discontinued operations, net of tax, of $46 million, less net income attributable to noncontrolling interest, the company reported a net loss attributable to CONSOL Energy shareholders of $98 million or ($0.43) per diluted share.
(Dollars in thousands) |
Q1 2016 | ||
Loss Before Income Tax |
$ |
(77,133) |
|
Income Taxes |
(26,847) |
||
Loss From Continuing Operations |
(50,286) |
||
Loss From Discontinued Operations, net |
(46,172) |
||
Net Loss |
(96,458) |
||
Less: Net Income Attributable to Noncontrolling Interest |
1,114 |
||
Net Loss Attributable to CONSOL Energy Shareholders |
$ |
(97,572) |
Earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization (EBITDA), from continuing operations were $133 million for the 2016 first quarter, compared to $234 million in the year-earlier quarter.
After adjusting for certain items, which are listed in the EBITDA reconciliation table, the company had an adjusted net loss1 attributable to continuing operations in the 2016 first quarter of $16 million, or ($0.07) per diluted share. Adjusted EBITDA1 from continuing operations was $176 million for the 2016 first quarter, compared to $242 million in the year-earlier quarter. Cash flow from operations in the just-ended quarter was $128 million, compared to $228 million in the year-earlier quarter.
The first quarter earnings results included the following pre-tax items related to recent transactions attributable to continuing operations:
"CONSOL continues to focus on executing its free cash flow plan," commented Nicholas J. DeIuliis, president and CEO. "Through continuing to reduce unit costs, benefiting from capital efficiency improvements, and selectively monetizing assets, CONSOL generated $449 million of free cash flow1, which includes $35 million of organic free cash flow from continuing operations1 when excluding the recent sale of the Buchanan Mine. Our free cash flow plan has further strengthened our liquidity position and balance sheet, while positioning us for future success."
1 The terms "adjusted net loss," "adjusted EBITDA," "free cash flow," and "organic free cash from continuing operations" are non-GAAP financial measures, which are defined and reconciled to the GAAP net income below, under the caption "Non-GAAP Financial Measures."
During the quarter, CONSOL Energy announced the sale of the Buchanan Mine, along with certain other metallurgical coal reserves. The total transaction value was approximately $460 million: $425 million in cash, including $403 million of cash received at closing and $22 million of cash held in an escrow account for up to two years; $23 million in net accounts receivable/payables that CONSOL will receive following the close of the transaction; and $12 million associated with legacy liabilities that the buyer assumed. In addition, for Buchanan Mine coal sold outside the U.S. and Canada during the five years following closing, the buyer agreed to pay CONSOL Energy a royalty of 20% of any excess of the gross sales price per ton over the following amounts: (1) year one, $75 per ton; (2) year two, $78.75 per ton; (3) year three, $82.69 per ton; (4) year four, $86.82 per ton; and (5) year five, $91.16 per ton. This earn-out provision provides CONSOL the opportunity to capture future upside if metallurgical coal prices recover. Since the transaction effectively closed on the last day of the first quarter, transaction proceeds reside as cash on CONSOL Energy's balance sheet. Following the end of the first quarter, CONSOL used the cash proceeds to pay down its revolving debt in an effort to increase liquidity and further de-lever the company. CONSOL Energy estimated the full year 2016 EBITDA contribution associated with the Buchanan Mine, net of the carrying costs of the other metallurgical coal assets included in the transaction, to be approximately $20-$25 million.
"The Buchanan sale is significant for a number of reasons," commented Nicholas J. DeIuliis, president and CEO. "Not only does this divestiture support our corporate strategy, it also brought forward substantial value, at a premium multiple valuation. That said, this transaction was a win-win for both us and the buyer, who will benefit from this premier mine becoming their flagship operation. For CONSOL, the sale of Buchanan marks another large step towards executing our strategy of becoming a pure-play E&P company."
On April 20, 2016, the company's lending group reaffirmed the bank facility's $2.0 billion borrowing base. "The reaffirmation marks another step to further maintain our already strong liquidity position," commented David M. Khani, executive vice president and CFO. "We appreciate the support of our lenders who have recognized how we have differentiated ourselves through our strong asset base and organic free cash flow plan."
During the first quarter of 2016, CONSOL's E&P Division achieved record production of 97.5 Bcfe, or an increase of 36% from the 71.6 Bcfe produced in the year-earlier quarter. The E&P Division's total unit cash costs declined during the quarter to $1.33 per Mcfe, compared to $1.70 per Mcfe during the year-earlier quarter, or an improvement of approximately 22%, which benefited in part from the company's dry Utica wells.
Marcellus Shale production volumes, including liquids, in the 2016 first quarter were 51.2 Bcfe, or 39% higher than the 36.8 Bcfe produced in the 2015 first quarter. Marcellus Shale total unit cash costs were $1.44 per Mcfe in the just-ended quarter, which is a $0.11 per Mcfe improvement from the first quarter of 2015 costs of $1.55 per Mcfe.
CONSOL Energy's Utica Shale production volumes, including liquids, in the 2016 first quarter were 22.9 Bcfe, up substantially from 9.6 Bcfe in the year-earlier quarter. Utica Shale total unit cash costs were $0.85 per Mcfe in the just-ended quarter, which is a $0.46 per Mcfe improvement from the first quarter of 2015 total unit cash costs of $1.31 per Mcfe. The significant cost improvements across the Utica Shale were primarily driven by reductions to lease operating expenses.
CONSOL Energy's total Coal Division sold 5.7 million tons from continuing operations in the 2016 first quarter, compared to 7.0 million tons during the year-earlier quarter. The Board of Directors of CNX Coal Resources' LP (NYSE: CNXC) General Partner declared a cash distribution of $0.5125 per unit to all unitholders for the first quarter of 2016. The distribution will be made on May 12, 2016 to unitholders of record at the close of business on May 5, 2016.
The unrealized loss on commodity derivative instruments represents changes in fair value of all existing commodity hedges on a mark-to-market basis.
The company recorded a loss related to the sale of a gathering pipeline, located in Monroe County, Ohio, to a third party. During the quarter, CONSOL executed a gathering agreement and midstream asset sale for $7.7 million of cash received at closing. CONSOL expects the sale and the gathering agreement, which was secured at favorable prices and terms, to eliminate future capital expenditures and reduce operating expenses as they relate to Monroe County, Ohio.
During the quarter, the company also recorded an expense related to severance, in connection with the company's continuing effort to reduce operating expenses.
Starting this quarter, CONSOL Energy has made certain adjustments to the financial statements to reflect the sale of the Buchanan Mine, which is now reflected under "Discontinued Operations." CONSOL Energy also made reclassifications within our financial statements to better align our financial reporting with our peer group. These reclassifications impacted the "Lease Operating Expense," "Transportation, Gathering and Compression," "Direct Administrative and Selling," "Production Royalty Interests and Purchased Gas Sales," "Production Royalty Interests and Purchased Gas Costs," "Operating and Other Costs" and "Selling, General and Administrative" line items on our Consolidated Statements of Income. These changes are reflected in our current and historic Consolidated Statements of Income, with no effect on previously reported net income or stockholders' equity. To reflect these changes, CONSOL Energy has recast historic income statements that can be found on the CONSOL Energy website (www.consolenergy.com), or click here.
E&P Division:
E&P Division First Quarter Summary:
E&P production increased by over 36% in the just-ended quarter, compared to the year-earlier quarter. Despite increased production, the E&P Division realized a net loss of $14.2 million in the first quarter of 2016 due primarily to lower commodity price realizations.
CONSOL's E&P activity continued to focus primarily on completing its high quality Marcellus Shale wells in Greene and Washington Counties in Pennsylvania. The company's Green Hill Marcellus Shale wells in Greene County, Pennsylvania, have exceeded original expectations, with estimated ultimate recoveries (EURs) now between 2.8-3.0 Bcfe per 1,000 feet of lateral. During the quarter, CONSOL completed 11 wells: the 10-well GH53 pad and the 7,900 foot NV36F Marcellus Shale well, which incorporated testing plugless completions. CONSOL averaged 16 days per well for all completion operations, which is a 38% improvement compared to 2015, and a 50% improvement compared to 2014. CONSOL realized these improvements while utilizing 100% recycled water, which eliminates disposal expense. Also, during the quarter, CONSOL's joint venture partner in the Ohio Utica Shale completed 4 wells in Harrison County, Ohio.
CONSOL turned in line 35 Marcellus and Utica shale wells in the first quarter, including the GH9 dry Utica well in Greene County, Pennsylvania, which was turned in line in January with a 30-day average sales volume of 15 MMcf per day. CONSOL turned in line 17 Marcellus Shale wells in Greene and Washington Counties. The 12-well GH46 pad averaged 119 MMcf per day for a 30-day period, or 2.2 MMcf per day per 1,000 lateral feet. The 5-well NV61 pad averaged 34.5 MMcf per day for a 30-day period. Also, CONSOL's Marcellus and Utica shale joint venture partners turned in line an additional 13 wells. Due to the company's wells continuing to outperform, CONSOL pushed two additional Southwest Pennsylvania wells out of its 2016 turned in line (TIL) plan. As a result, CONSOL Energy estimates its gross inventory of both drilled but uncompleted (DUC) and drilled completed (DC) wells entering 2017 to be 79 Marcellus and Utica shale wells, an increase from the inventory of 77 gross wells reported at the start of 2016.
CONSOL Energy's Utica Shale development program continues to focus in the dry gas areas. In January, CONSOL turned in line its sixth dry Utica well, the GH9, located in Greene County, Pennsylvania, which has a lateral length of 6,141 feet and was completed with 30 frac stages. Although still early, results from the GH9 are positive, while the Gaut 4I well, located in Westmoreland County, Pennsylvania, continues to outperform expectations and may warrant an increase in EUR in the near future. The Gaut 4I has cumulative production of 2.79 Bcf through the end of the first quarter at a casing pressure of 6,758 psi. CONSOL continues to evaluate the managed pressure drawdown methodology in the Pennsylvania dry Utica. CONSOL's Switz 6 pad located in Monroe County, OH, has produced 5.69 Bcf through the end of the quarter from the four Utica wells, with the best performing well accounting for 1.77 Bcf of the production. Also, the non-operated Moundsville 6H, located in Marshall County, West Virginia, has produced 2.51 Bcf in 130 days, with a 24-hour initial production (IP) rate of 39.1 MMcf per day at 7,126 psi casing pressure. This well has a completed lateral length of 9,394 feet with 300 foot stage spacing.
E&P Division capital expenditures declined further in the first quarter to $62.9 million, compared to the fourth quarter of 2015, due to efficiency improvements and reduced activity.
E&P DIVISION RESULTS — Quarter-to-Quarter Comparison | ||||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
March 31, 2016 |
March 31, 2015 |
December 31, 2015 | ||||||||||
Sales - Gas |
$ |
157.4 |
$ |
196.5 |
$ |
152.9 |
||||||
Gain on Commodity Derivative Instruments - Cash Settlement |
84.3 |
30.1 |
79.5 |
|||||||||
Sales - Oil |
0.5 |
1.1 |
0.6 |
|||||||||
Sales - NGLs |
19.9 |
22.2 |
23.2 |
|||||||||
Sales - Condensate |
3.9 |
5.2 |
8.9 |
|||||||||
Total Sales Revenue ($ MM) |
$ |
266.0 |
$ |
255.1 |
$ |
265.1 |
||||||
Net (Loss) Income Attributable to CONSOL Energy Shareholders |
$ |
(14.2) |
$ |
30.9 |
$ |
57.1 |
||||||
Net Cash Provided by Operating Activities ($ MM) |
$ |
58.6 |
$ |
177.8 |
$ |
95.2 |
||||||
Total Period Production (Bcfe) |
97.5 |
71.6 |
95.5 |
|||||||||
Average Daily Production (MMcfe) |
1,071.0 |
795.7 |
1,037.8 |
|||||||||
Capital Expenditures ($ MM) |
$ |
62.9 |
$ |
250.3 |
$ |
83.4 |
CONSOL's E&P Division production in the quarter came from the following categories:
Quarter |
Quarter |
Quarter |
|||||||||||||
Ended |
Ended |
Ended |
|||||||||||||
March 31, 2016 |
March 31, 2015 |
% Increase/ (Decrease) |
December 31, 2015 |
% Increase/(Decrease) | |||||||||||
GAS |
|||||||||||||||
Marcellus Sales Volumes (Bcf) |
45.1 |
32.1 |
40.5 |
% |
43.7 |
3.2 |
% | ||||||||
Utica Sales Volumes (Bcf) |
17.7 |
6.2 |
185.5 |
% |
14.8 |
19.6 |
% | ||||||||
CBM Sales Volumes (Bcf) |
17.6 |
18.9 |
(6.9) |
% |
18.7 |
(5.9) |
% | ||||||||
Other Sales Volumes (Bcf)1 |
5.7 |
6.3 |
(9.5) |
% |
6.3 |
(9.5) |
% | ||||||||
LIQUIDS2 |
|||||||||||||||
NGLs Sales Volumes (Bcfe) |
9.7 |
6.5 |
49.2 |
% |
9.8 |
(1.0) |
% | ||||||||
Oil Sales Volumes (Bcfe) |
0.1 |
0.1 |
— |
% |
0.1 |
— |
% | ||||||||
Condensate Sales Volumes (Bcfe) |
1.6 |
1.5 |
6.7 |
% |
2.1 |
(23.8) |
% | ||||||||
TOTAL |
97.5 |
71.6 |
36.2 |
% |
95.5 |
2.1 |
% |
Note: The increase in Marcellus sales volumes represents only the gas portion of production. When including liquids, the increase in Marcellus volumes was 39% compared to the year-earlier quarter. Production results are net of royalties.
1. Other Sales Volumes: primarily related to shallow oil and gas production.
2. Liquids: NGLs, Oil, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas.
Liquids production of 11.4 Bcfe, as a percentage of the total of 97.5 Bcfe, was approximately 12% in the just-ended quarter. As a result of continuing to high-grade production away from wet areas and shift more towards dry gas areas, liquids production decreased by 0.6 Bcfe, or approximately 5% during the quarter, compared to the fourth quarter of 2015.
E&P PRICE AND COST DATA PER MCFE — Quarter-to-Quarter Comparison: | ||||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
(Per Mcfe) |
March 31, 2016 |
March 31, 2015 |
December 31, 2015 | |||||||||
Average Sales Price - Gas |
$ |
1.83 |
$ |
3.10 |
$ |
1.83 |
||||||
Average Gain on Commodity Derivative Instruments - Cash Settlement- Gas |
$ |
0.98 |
$ |
0.48 |
$ |
0.95 |
||||||
Average Sales Price - Oil* |
$ |
5.14 |
$ |
7.97 |
$ |
6.51 |
||||||
Average Sales Price - NGLs* |
$ |
2.05 |
$ |
3.40 |
$ |
2.36 |
||||||
Average Sales Price - Condensate* |
$ |
2.44 |
$ |
3.47 |
$ |
4.23 |
||||||
Average Sales Price - Total Company |
$ |
2.73 |
$ |
3.56 |
$ |
2.78 |
||||||
Costs - Production |
||||||||||||
Lifting |
$ |
0.28 |
$ |
0.52 |
$ |
0.27 |
||||||
Ad Valorem, Severance and Other Taxes |
0.09 |
0.13 |
0.06 |
|||||||||
DD&A |
1.00 |
1.09 |
0.97 |
|||||||||
Total Production Costs |
$ |
1.37 |
$ |
1.74 |
$ |
1.30 |
||||||
Costs - Gathering |
||||||||||||
Transportation |
$ |
0.79 |
$ |
0.75 |
$ |
0.79 |
||||||
Operating Costs |
0.17 |
0.30 |
0.20 |
|||||||||
DD&A |
0.08 |
0.12 |
0.08 |
|||||||||
Total Gathering Costs |
$ |
1.04 |
$ |
1.17 |
$ |
1.07 |
||||||
Total Costs |
$ |
2.41 |
$ |
2.91 |
$ |
2.37 |
||||||
Margin |
$ |
0.32 |
$ |
0.65 |
$ |
0.41 |
*Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.
Note: "Total Costs" excludes selling, general administration, incentive compensation, and other corporate expenses.
The average sales price per Mcfe within the E&P Division was impaired in the just-ended quarter, when compared to the year-earlier quarter due to depressed commodity prices.
The average sales price of $2.73 per Mcfe, when combined with unit costs of $2.41 per Mcfe, resulted in a margin of $0.32 per Mcfe. This was a decrease when compared to the year-earlier quarter, with the improvements in unit costs partially offsetting the decline in price realizations.
Total E&P Division unit costs continued to improve in the just-ended quarter, compared to the year-earlier quarter, as fixed costs were spread over higher production volumes. Also, low-cost Marcellus and Utica Shale production represented a much higher proportion of total production, which benefited unit costs.
E&P Marketing, Transportation, and Processing Update:
For the first quarter of 2016, CONSOL's average sales price for natural gas, natural gas liquids (NGL), oil, and condensate was $2.73 per Mcfe. CONSOL's average price for natural gas was $1.83 per Mcf for the quarter and, including cash settlements from hedging, was $2.81 per Mcf. During the first quarter, CONSOL produced NGL, oil, and condensate volumes of 11.4 Bcfe, or 12% of the company's total gas equivalent volumes. These liquids volumes were 40% greater than those of the year-earlier quarter, which then comprised 11% of the company's total gas equivalent volumes. The average realized price for all liquids for the first quarter of 2016 was $12.78 per barrel.
The company currently has a total of 1.2 Bcf per day of available firm transportation capacity. This is composed of 0.9 Bcf per day of firm capacity on existing pipelines and an additional 0.3 Bcf per day of long-term firm sales with major customers having their own firm capacity. Additionally, CONSOL has contracted volumes of approximately 0.5 Bcf per day on several pipeline projects that will be completed over the next several years. Even with the future expiration of certain transportation contracts, the company's effective firm transportation capacity will increase to approximately 1.5 Bcf per day. The average demand cost for the existing firm capacity is approximately $0.24 per MMBtu. The average demand cost for the existing and committed firm capacity is approximately $0.33 per MMBtu.
In addition to firm transportation capacity, CONSOL has developed a processing portfolio to support the projected volumes from its wet production areas. The company has agreements in place to support the processing of approximately 0.5 Bcf per day of gross natural gas volumes.
In April, CONSOL began recovering and selling ethane primarily via Sunoco Logistics' Mariner East project, which ships ethane to the Marcus Hook Industrial Complex for export. Such ethane sales are expected to improve NGL netbacks in the second quarter. On an equivalent basis, these ethane sales currently yield a price in excess of the Texas Eastern M2 market where sales would generally have occurred had the volumes been rejected into the natural gas stream. CONSOL expects further revenue enhancement in 2016 and beyond as its recovered ethane volumes grow and as the Mariner East project expands in 2017.
Coal Division Results:
Coal Division First Quarter Summary:
During the first quarter of 2016, the Pennsylvania Operations total unit costs were $33.16 per ton, compared to $42.62 per ton in the year-earlier quarter, despite sales tons declining by approximately 18% over the same period.
As reported by CNX Coal Resources LP (CNXC) in their first quarter 2016 earnings press release, dated April 25, 2016, "In January 2016, we returned to running our mines on a more consistent schedule to achieve productivity improvements, despite running the risk of potentially selling some lower-priced tons in the export markets. Our strategy worked as expected, leading to improved mine consistency and better margins as the quarter advanced, with exports being able to absorb surplus mine production. During the first quarter of 2016, CNXC also made several operational adjustments including idling one longwall, reducing staffing levels and realigning employee benefits. All of these steps resulted in a more consistent operating schedule at the mines, reduced labor costs and improved productivity. Productivity for the first quarter, as measured by tons per employee-hour, improved by 14% compared to the year-ago period, despite the reduced number of longwalls in operation. Looking forward, CNXC expects a slight improvement in coal shipments in the second quarter coupled with a slight increase in cost of coal sold, compared to the first quarter, due to four expected longwall moves."
During the quarter, CONSOL's active coal operations generated $89 million of cash from continuing operations before capital expenditures.
COAL DIVISION RESULTS BY PRODUCT CATEGORY - Quarter-To-Quarter Comparison | ||||||||||||||||
PA Ops |
PA Ops |
Other |
Other | |||||||||||||
Quarter |
Quarter |
Quarter |
Quarter | |||||||||||||
Ended |
Ended |
Ended |
Ended | |||||||||||||
March 31, |
March 31, |
March 31, |
March 31, | |||||||||||||
2016 |
2015 |
2016 |
2015 | |||||||||||||
Beginning Inventory (millions of tons) |
0.1 |
0.2 |
0.3 |
0.1 |
||||||||||||
Coal Production (millions of tons) |
5.4 |
6.5 |
0.3 |
0.6 |
||||||||||||
Ending Inventory (millions of tons) |
0.3 |
0.2 |
— |
0.1 |
||||||||||||
Sales - Company Produced (millions of tons) |
5.3 |
6.5 |
0.4 |
0.5 |
||||||||||||
Sales Per Ton |
$ |
42.99 |
$ |
58.82 |
$ |
54.81 |
$ |
61.54 |
||||||||
Total Production Costs Per Ton |
$ |
33.16 |
$ |
42.62 |
$ |
51.58 |
$ |
54.05 |
||||||||
Average Margin Per Ton Sold |
$ |
9.83 |
$ |
16.20 |
$ |
3.23 |
$ |
7.49 |
||||||||
Addback: DD&A Per Ton |
$ |
6.45 |
$ |
6.66 |
$ |
3.03 |
$ |
3.32 |
||||||||
Average Margin Per Ton, before DD&A |
$ |
16.28 |
$ |
22.86 |
$ |
6.26 |
$ |
10.81 |
||||||||
Cash Flow before Cap. Ex ($ MM) |
$ |
86 |
$ |
149 |
$ |
3 |
$ |
5 |
The Pennsylvania Operations include Bailey, Enlow Fork, and Harvey mines. Other includes the Miller Creek Complex. Total Production Costs per Ton include: operating costs, royalty and production taxes and depreciation, depletion and amortization. Sales tons times Average Margin Per Ton, before DD&A is meant to approximate the amount of cash generated for the Pennsylvanian Operations and Other coal categories. This cash generation will be offset by maintenance of production (MOP) capital expenditures. Table may not sum due to rounding.
E&P Division Guidance:
CONSOL Energy continues to expect annual 2016 E&P Division production to grow by approximately 15%, compared to 2015 total production volumes.
Total hedged natural gas production in the 2016 second quarter is 70.7 Bcf. The annual gas hedge position is shown in the table below:
E&P DIVISION GUIDANCE |
||||||
2016 |
2017 | |||||
Total Yearly Production (Bcfe) / % growth |
~15% |
TBD* |
||||
Volumes Hedged (Bcf), as of 4/14/16 |
262.6 |
210.8 |
||||
* Yearly 2017 production will be a function of the second half of 2016 capital program, continued debottlenecking initiatives, and the company's drilled but uncompleted (DUC) well inventory.
CONSOL Energy's hedged gas volumes include a combination of NYMEX financial hedges and index financial hedges (NYMEX plus basis). In addition, to protect the NYMEX hedge volumes from basis exposure, CONSOL enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CONSOL Energy's gas hedge position is shown in the table below:
GAS HEDGES |
||||||||||||
Q2 2016 |
2016 |
2017 | ||||||||||
Total NYMEX + Basis* (Bcf) |
67.3 |
259.7 |
122.5 |
|||||||||
Average Hedge Price ($/Mcf) |
$ |
2.87 |
$ |
3.07 |
$ |
2.67 |
||||||
NYMEX Only Hedges Exposed to Basis (Bcf) |
- |
- |
88.3 |
|||||||||
Average Hedge Price ($/Mcf) |
- |
- |
$ |
2.98 |
||||||||
Physical Sales With Fixed Basis Exposed to NYMEX (Bcf) |
3.4 |
2.9 |
- |
|||||||||
Average Hedge Basis Value ($/Mcf) |
$ |
(0.20) |
$ |
(0.04) |
- |
* Includes physical sales with fixed basis in Q2 2016, 2016, and 2017 of 16.1 Bcf, 74.5 Bcf, and 24.1 Bcf, respectively.
During the first quarter of 2016, CONSOL Energy added additional NYMEX natural gas hedges of 22.3 Bcf for 2016 and 54.8 Bcf for 2017. In addition, to help mitigate basis exposure on NYMEX hedges, in the first quarter, CONSOL added 25.1 Bcf and 42.5 Bcf of basis hedges for 2016 and 2017, respectively.
CONSOL's 2016 NYMEX plus basis natural gas hedge position has increased to 259.7 Bcf at an average hedge price of $3.07 per Mcf. NYMEX plus basis hedge volumes are not exposed to basis differentials but instead have protected revenue. As a result, in 2016, NYMEX plus basis gas hedges should lock in revenue of approximately $797 million.
As previously stated on last quarter's earnings call, in accordance with the company's hedging program, CONSOL added longer duration hedges, which were layered in over time. The company's confidence in maintaining, or even further improving, its already low-cost structure, has enabled CONSOL to layer on these additional hedges, which will help provide downside protection.
During the first quarter of 2016, CONSOL Energy continued to evolve its hedging program and added NGL (propane) hedges, along with direct sales contracts to other counterparties. CONSOL currently has 7.5 million gallons of propane directly hedged from April of 2016 through March of 2017 at an average price of $0.43 per gallon.
Coal Division Guidance:
As stated in CONSOL Energy's press release on April 7, 2016, as part of the corporate reorganization resulting from the sale of the Buchanan Mine, CNX Coal Resources LP, which operates the Pennsylvania mining complex, will manage all human resources, land, marketing and external communications matters related to CONSOL's Pennsylvania Operations. As such, CONSOL Energy will adopt and expand upon CNX Coal Resources 2016 Adjusted EBITDA guidance that they provide in their press release through now providing guidance for CONSOL's pro rata total Coal Division 2016 Adjusted EBITDA.
COAL DIVISION GUIDANCE | ||||||||
2016 | ||||||||
CNX Coal Resources LP ("CNXC") Adjusted EBITDA (20% undivided interest of PA Operations) |
$ |
59 |
- |
$ |
69 |
|||
x5 (@ 100% interest) |
$ |
295 |
- |
$ |
345 |
|||
Less: Noncontrolling Interest |
(26) |
- |
(31) |
|||||
Plus: CONSOL's Other Coal Division EBITDA1 |
22 |
- |
27 |
|||||
Plus: CONSOL's Other Miscellaneous Coal EBITDA2 |
15 |
- |
20 |
|||||
Less: CONSOL's Other Coal Division Costs and Expenses (including Legacy Liabilities' Costs)3 |
(126) |
- |
(131) |
|||||
CONSOL Energy's Pro Rata Coal Division Adjusted EBITDA |
$ |
180 |
- |
$ |
230 |
Note: CONSOL Energy is unable to provide a reconciliation of projected CNXC Adjusted EBITDA, CONSOL's Other Coal Division EBITDA, and CONSOL's Other Miscellaneous Coal EBITDA to projected operating income, the most comparable financial measure calculated in accordance with GAAP, due to the unknown effect, timing and potential significance of certain income statement items.
(1) Includes fiscal year 2016 for Miller Creek and Other Coal Operations and 1Q16 for Buchanan, and excludes Loss on Sale of Buchanan.
(2) Includes miscellaneous other income (net of applicable expenses) associated with the company's Terminal Operations, Rental Income, Coal Royalty Income, and other miscellaneous land income.
(3) Includes Legacy Liability Costs of approximately $90-95 million; Other Coal-Related Corporate Expenses (STIC, stock-based compensation), and other miscellaneous items (coal reserve holding costs).
CONSOL Energy's Pro Rata Coal Division Adjusted EBITDA for 2016 is net of all legacy liabilities associated with the Coal Division, which are comprised of the following: long-term disability (LTD), workers compensation (WC), Coal Workers' Pneumoconiosis (CWP), Other Post-Employment Benefits (OPEB-retiree medical), salary retirement/pension, and asset retirement obligations (ARO).
Excluding the discontinued Virginia Operation's (the Buchanan Mine) 1.1 million tons sold in the first quarter, CONSOL Energy now expects annual 2016 consolidated total Coal Division sales to be approximately 23.9-27.4 million tons, which includes 2016 estimated consolidated total sales for Pennsylvania Operations of 22.5-25.5 million tons.
CONSOL Energy expects 2016 total consolidated Coal Division capital expenditures to now be between $105-$125 million, which includes Pennsylvania Operations capital expenditures of $90-$100 million. The Coal Division's reduction in capital expenditures were driven primarily from the deferral of spending associated with the coal refuse disposal area for one year, due to existing capacity and timing needed for construction. On a normalized basis, the Coal Division expects maintenance of production capital of $5-$6 per ton.
Liquidity:
As of March 31, 2016, CONSOL Energy had $1,279.7 million in total liquidity, which is comprised of $417.6 million of cash, excluding the CNXC cash balance, and $862.1 million available to be borrowed under its $2.0 billion bank facility. During the quarter, CONSOL's liquidity improved $423.8 million due to the sale of the Buchanan Mine and related metallurgical coal assets plus $49.2 million of cash generated from operations offset by an increase of $28.2 million in outstanding letters of credit. In addition, CONSOL holds 12.7 million CNXC limited partnership units with a current market value of approximately $101 million and 19.1 million CONE Midstream Partners LP ("CNNX") limited partnership units with a current market value of approximately $266 million, as of April 19, 2016.
CONSOL Energy used the sale proceeds and the cash generated from operations during the quarter to reduce outstanding debt, less cash and cash equivalents, by $445.2 million.
About CONSOL
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
Non-GAAP Financial Measures
Definition: 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. Adjusted EBITDA is defined as EBITDA after adjusting for the discrete items listed below. Although EBIT, EBITDA, and Adjusted 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 to evaluate a company's operating performance. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDA, or Adjusted EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies.
Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial net income attributable to CONSOL Energy Shareholders is as follows (dollars in 000):
Three Months Ended | ||||||||||||||||||||
March 31, | ||||||||||||||||||||
2016 |
2016 |
2016 |
2016 |
2015 | ||||||||||||||||
Dollars in thousands |
E&P Division |
COAL Division |
Other1 |
Total Company |
Total Company | |||||||||||||||
Net (Loss) Income |
$ |
(23,541) |
$ |
(49,015) |
$ |
(23,902) |
$ |
(96,458) |
$ |
79,030 |
||||||||||
Less: Loss (Income) from Discontinued Operations |
— |
46,172 |
— |
46,172 |
(244,317) |
|||||||||||||||
Add: Interest Expense |
653 |
1,733 |
47,480 |
49,866 |
55,122 |
|||||||||||||||
Less: Interest Income |
— |
— |
(214) |
(214) |
(1,143) |
|||||||||||||||
Add: Income Taxes |
— |
— |
(26,847) |
(26,847) |
195,898 |
|||||||||||||||
Earnings Before Interest & Taxes (EBIT) |
(22,888) |
(1,110) |
(3,483) |
(27,481) |
84,590 |
|||||||||||||||
Add: Depreciation, Depletion & Amortization |
105,715 |
54,352 |
— |
160,067 |
149,709 |
|||||||||||||||
Earnings Before Interest, Taxes and DD&A (EBITDA) from Continuing Operations |
$ |
82,827 |
$ |
53,242 |
$ |
(3,483) |
$ |
132,586 |
$ |
234,299 |
||||||||||
Adjustments: |
||||||||||||||||||||
Unrealized Loss(Gain) on Commodity Derivative Instruments |
29,271 |
— |
— |
29,271 |
(60,004) |
|||||||||||||||
Loss on Sale of Gathering Pipeline |
12,636 |
— |
— |
12,636 |
— |
|||||||||||||||
Severance Expense |
— |
2,251 |
667 |
2,918 |
— |
|||||||||||||||
Loss on Debt Extinguishment |
— |
— |
— |
— |
67,734 |
|||||||||||||||
Total Pre-tax Adjustments |
41,907 |
2,251 |
667 |
44,825 |
7,730 |
|||||||||||||||
Adjusted EBITDA |
$ |
124,734 |
$ |
55,493 |
$ |
(2,816) |
$ |
177,411 |
$ |
242,029 |
||||||||||
Less: Noncontrolling Interest |
— |
(1,114) |
— |
(1,114) |
— |
|||||||||||||||
Adjusted EBITDA Attributable to Continuing Operations |
$ |
124,734 |
$ |
54,379 |
$ |
(2,816) |
$ |
176,297 |
$ |
242,029 |
Note: Income tax effect of Total Pre-tax Adjustments was $10,310 and $1,778 for the three months ended March 31, 2016 and March 31, 2015, respectively. Adjusted net income attributable to CONSOL Energy shareholders for the three months ended March 31, 2016 is calculated as GAAP net loss from continuing operations of $50,286 plus total pre-tax adjustments of $44,825, less the tax benefit of $10,310, equals the adjusted net loss from continuing operations of $15,771.
(1) CONSOL Energy's Other Division includes expenses from various other corporate activities including income tax expense that are not allocated to E&P or Coal Divisions.
Free cash flow and organic free cash flow from continuing operations are non-GAAP financial measures. Management believes that these measures are meaningful to investors because management reviews cash flows generated from operations and non-core asset sales after taking into consideration capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand CONSOL's asset base and are expected to generate future cash flows from operations. It is important to note that free cash flow and organic free cash flow from continuing operations do not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure.
Organic Cash Flow From Continuing Operations |
Three Months Ended March 31, 2016 | ||
Net Cash Provided by Continuing Operations |
$ |
119,808 |
|
Capital Expenditures |
(78,968) |
||
Net Investment in Equity Affiliates |
(5,578) |
||
Organic Free Cash Flow from Continuing Operations |
$ |
35,262 |
Free Cash Flow |
Three Months Ended March 31, 2016 | ||
Net Cash Provided by Operating Activities |
$ |
128,442 |
|
Capital Expenditures |
(78,968) |
||
Capital Expenditures of Discontinued Operations |
(5,737) |
||
Net Investment in Equity Affiliates |
(5,578) |
||
Proceeds From Sales of Assets |
8,453 |
||
Proceeds From Sale of Buchanan Mine |
402,806 |
||
Free Cash Flow |
$ |
449,418 |
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas and other liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan exceeding total service and interest cost in a plan year; divestitures we anticipate may not occur or produce anticipated benefits; the terms of our existing joint ventures restrict our flexibility, actions taken by the other party in our gas joint ventures may impact our financial position and various circumstances could cause us not to realize the benefits we anticipate receiving from these joint ventures; risks associated with our debt; replacing our gas and oil reserves, which if not replaced, will cause our gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC - disruption to our business, including customer, employee and supplier relationships resulting from this transaction, and the impact of the transaction on our future operating results; other factors discussed in the 2015 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible oil and gas reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by application of development projects to known accumulations. We may use certain terms in this press release, such as EUR (estimated ultimate recovery), unproved reserves and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. These measures are by their nature more speculative than estimates of reserves prepared in accordance with SEC definitions and guidelines and accordingly are less certain. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category.
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||
(Dollars in thousands, except per share data) |
Three Months Ended | ||||||
(Unaudited) |
March 31, | ||||||
Revenues and Other Income: |
2016 |
2015 | |||||
Natural Gas, NGLs and Oil Sales |
$ |
181,255 |
$ |
224,438 |
|||
Gain on Commodity Derivative Instruments |
55,060 |
90,145 |
|||||
Coal Sales |
251,895 |
416,151 |
|||||
Other Outside Sales |
7,709 |
13,130 |
|||||
Purchased Gas Sales |
8,618 |
3,597 |
|||||
Freight-Outside Coal |
13,110 |
6,525 |
|||||
Miscellaneous Other Income |
48,132 |
36,523 |
|||||
(Loss) Gain on Sale of Assets |
(7,265) |
2,145 |
|||||
Total Revenue and Other Income |
558,514 |
792,654 |
|||||
Costs and Expenses: |
|||||||
Exploration and Production Costs |
|||||||
Lease Operating Expense |
27,739 |
37,256 |
|||||
Transportation, Gathering and Compression |
93,974 |
75,521 |
|||||
Production, Ad Valorem, and Other Fees |
8,303 |
9,192 |
|||||
Depreciation, Depletion and Amortization |
105,715 |
87,444 |
|||||
Exploration and Production Related Other Costs |
2,408 |
2,040 |
|||||
Purchased Gas Costs |
7,868 |
2,957 |
|||||
Other Corporate Expenses |
27,694 |
19,096 |
|||||
Selling, General, and Administrative Costs |
17,563 |
21,824 |
|||||
Total Exploration and Production Costs |
291,264 |
255,330 |
|||||
Coal Costs |
|||||||
Operating and Other Costs |
215,074 |
291,407 |
|||||
Depreciation, Depletion and Amortization |
54,352 |
62,258 |
|||||
Freight Expense |
13,110 |
6,525 |
|||||
Selling, General, and Administrative Costs |
5,650 |
7,202 |
|||||
Other Corporate Expenses |
3,143 |
6,074 |
|||||
Total Coal Costs |
291,329 |
373,466 |
|||||
Other Costs |
|||||||
Miscellaneous Operating Expense |
3,188 |
10,384 |
|||||
Depreciation, Depletion and Amortization |
— |
7 |
|||||
Loss on Debt Extinguishment |
— |
67,734 |
|||||
Interest Expense |
49,866 |
55,122 |
|||||
Total Other Costs |
53,054 |
133,247 |
|||||
Total Costs And Expenses |
635,647 |
762,043 |
|||||
(Loss) Earnings Before Income Tax |
(77,133) |
30,611 |
|||||
Income Taxes |
(26,847) |
195,898 |
|||||
Loss From Continuing Operations |
(50,286) |
(165,287) |
|||||
(Loss) Income From Discontinued Operations, net |
(46,172) |
244,317 |
|||||
Net (Loss) Income |
(96,458) |
79,030 |
|||||
Less: Net Income Attributable to Noncontrolling Interest |
1,114 |
— |
|||||
Net (Loss) Income Attributable to CONSOL Energy Shareholders |
$ |
(97,572) |
$ |
79,030 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF INCOME (CONTINUED) | |||||||
(Dollars in thousands, except per share data) |
Three Months Ended | ||||||
(Unaudited) |
March 31, | ||||||
Earnings Per Share |
2016 |
2015 | |||||
Basic |
|||||||
Loss from Continuing Operations |
$ |
(0.22) |
$ |
(0.72) |
|||
(Loss) Income from Discontinued Operations |
(0.21) |
1.06 |
|||||
Total Basic (Loss) Earnings Per Share |
$ |
(0.43) |
$ |
0.34 |
|||
Dilutive |
|||||||
Loss from Continuing Operations |
$ |
(0.22) |
$ |
(0.72) |
|||
(Loss) Income from Discontinued Operations |
(0.21) |
1.06 |
|||||
Total Dilutive (Loss) Earnings Per Share |
$ |
(0.43) |
$ |
0.34 |
|||
Dividends Paid Per Share |
$ |
0.01 |
$ |
0.0625 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||
Three Months Ended | |||||||
(Dollars in thousands) |
March 31, | ||||||
(Unaudited) |
2016 |
2015 | |||||
Net (Loss) Income |
$ |
(96,458) |
$ |
79,030 |
|||
Other Comprehensive Loss: |
|||||||
Actuarially Determined Long-Term Liability Adjustments (Net of tax: $682, $90) |
(2,484) |
(149) |
|||||
Reclassification of Cash Flow Hedges from OCI to Earnings (Net of tax: $5,624, $11,213) |
(9,814) |
(19,314) |
|||||
Other Comprehensive Loss |
(12,298) |
(19,463) |
|||||
Comprehensive (Loss) Income |
(108,756) |
59,567 |
|||||
Less: Net Income Attributable to Noncontrolling Interests |
1,114 |
— |
|||||
Comprehensive (Loss) Income Attributable to CONSOL Energy Inc. Shareholders |
$ |
(109,870) |
$ |
59,567 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands) |
March 31, |
December 31, | |||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash and Cash Equivalents |
$ |
426,650 |
$ |
72,578 |
|||
Accounts and Notes Receivable: |
|||||||
Trade |
165,941 |
157,162 |
|||||
Other Receivables |
149,490 |
121,881 |
|||||
Inventories |
77,230 |
83,674 |
|||||
Recoverable Income Taxes |
1,871 |
13,887 |
|||||
Prepaid Expenses |
282,214 |
297,421 |
|||||
Current Assets of Discontinued Operations |
43,047 |
58,160 |
|||||
Total Current Assets |
1,146,443 |
804,763 |
|||||
Property, Plant and Equipment: |
|||||||
Property, Plant and Equipment |
14,639,990 |
14,595,952 |
|||||
Less—Accumulated Depreciation, Depletion and Amortization |
5,549,599 |
5,396,295 |
|||||
Property, Plant, and Equipment of Discontinued Operations, Net |
— |
469,720 |
|||||
Total Property, Plant and Equipment—Net |
9,090,391 |
9,669,377 |
|||||
Other Assets: |
|||||||
Investment in Affiliates |
251,628 |
237,330 |
|||||
Other |
227,396 |
217,585 |
|||||
Other Assets of Discontinued Operations |
12 |
847 |
|||||
Total Other Assets |
479,036 |
455,762 |
|||||
TOTAL ASSETS |
$ |
10,715,870 |
$ |
10,929,902 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands, except per share data) |
March 31, |
December 31, | |||||
LIABILITIES AND EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts Payable |
$ |
221,625 |
$ |
257,288 |
|||
Current Portion of Long-Term Debt |
5,316 |
5,855 |
|||||
Short-Term Notes Payable |
851,500 |
952,000 |
|||||
Other Accrued Liabilities |
486,906 |
440,523 |
|||||
Current Liabilities of Discontinued Operations |
19,584 |
25,272 |
|||||
Total Current Liabilities |
1,584,931 |
1,680,938 |
|||||
Long-Term Debt: |
|||||||
Long-Term Debt |
2,725,471 |
2,709,444 |
|||||
Capital Lease Obligations |
33,490 |
35,008 |
|||||
Long-Term Debt of Discontinued Operations |
— |
3,753 |
|||||
Total Long-Term Debt |
2,758,961 |
2,748,205 |
|||||
Deferred Credits and Other Liabilities: |
|||||||
Deferred Income Taxes |
52,844 |
74,629 |
|||||
Postretirement Benefits Other Than Pensions |
623,525 |
630,892 |
|||||
Pneumoconiosis Benefits |
118,178 |
111,903 |
|||||
Mine Closing |
290,108 |
289,785 |
|||||
Gas Well Closing |
164,124 |
163,842 |
|||||
Workers' Compensation |
68,846 |
69,812 |
|||||
Salary Retirement |
86,369 |
91,596 |
|||||
Reclamation |
34,490 |
34,150 |
|||||
Other |
194,406 |
166,957 |
|||||
Deferred Credits and Other Liabilities of Discontinued Operations |
— |
11,417 |
|||||
Total Deferred Credits and Other Liabilities |
1,632,890 |
1,644,983 |
|||||
TOTAL LIABILITIES |
5,976,782 |
6,074,126 |
|||||
Stockholders' Equity: |
|||||||
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 229,363,247 Issued and Outstanding at March 31, 2016; 229,054,236 Issued and Outstanding at December 31, 2015 |
2,297 |
2,294 |
|||||
Capital in Excess of Par Value |
2,436,436 |
2,435,497 |
|||||
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding |
— |
— |
|||||
Retained Earnings |
2,478,493 |
2,579,834 |
|||||
Accumulated Other Comprehensive Loss |
(327,896) |
(315,598) |
|||||
Total CONSOL Energy Inc. Stockholders' Equity |
4,589,330 |
4,702,027 |
|||||
Noncontrolling Interest |
149,758 |
153,749 |
|||||
TOTAL EQUITY |
4,739,088 |
4,855,776 |
|||||
TOTAL LIABILITIES AND EQUITY |
$ |
10,715,870 |
$ |
10,929,902 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||
(Dollars in thousands, except per share data) |
Common Stock |
Capital in Excess of Par Value |
Retained Earnings (Deficit) |
Accumulated Other Comprehensive Loss |
Total CONSOL Energy Inc. |
Non- Controlling Interest |
Total Equity | ||||||||||||||||||||
December 31, 2015 |
$ |
2,294 |
$ |
2,435,497 |
$ |
2,579,834 |
$ |
(315,598) |
$ |
4,702,027 |
$ |
153,749 |
$ |
4,855,776 |
|||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||
Net (Loss) Income |
— |
— |
(97,572) |
— |
(97,572) |
1,114 |
(96,458) |
||||||||||||||||||||
Other Comprehensive Loss |
— |
— |
— |
(12,298) |
(12,298) |
— |
(12,298) |
||||||||||||||||||||
Comprehensive (Loss) Income |
— |
— |
(97,572) |
(12,298) |
(109,870) |
1,114 |
(108,756) |
||||||||||||||||||||
Issuance of Common Stock |
3 |
— |
— |
— |
3 |
— |
3 |
||||||||||||||||||||
Treasury Stock Activity |
— |
— |
(1,475) |
— |
(1,475) |
— |
(1,475) |
||||||||||||||||||||
Tax Cost From Stock-Based Compensation |
— |
(4,377) |
— |
— |
(4,377) |
— |
(4,377) |
||||||||||||||||||||
Amortization of Stock-Based Compensation Awards |
— |
5,316 |
— |
— |
5,316 |
308 |
5,624 |
||||||||||||||||||||
Distributions to Noncontrolling Interest |
— |
— |
— |
— |
— |
(5,413) |
(5,413) |
||||||||||||||||||||
Dividends ($0.01 per share) |
— |
— |
(2,294) |
— |
(2,294) |
— |
(2,294) |
||||||||||||||||||||
Balance at March 31, 2016 |
$ |
2,297 |
$ |
2,436,436 |
$ |
2,478,493 |
$ |
(327,896) |
$ |
4,589,330 |
$ |
149,758 |
$ |
4,739,088 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Dollars in thousands) |
Three Months Ended | ||||||
(Unaudited) |
March 31, | ||||||
Operating Activities: |
2016 |
2015 | |||||
Net (Loss) Income |
$ |
(96,458) |
$ |
79,030 |
|||
Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities: |
|||||||
Net Loss (Income) from Discontinued Operations |
46,172 |
(244,317) |
|||||
Depreciation, Depletion and Amortization |
160,067 |
149,709 |
|||||
Non-Cash Other Post-Employment Benefits |
— |
(10,366) |
|||||
Stock-Based Compensation |
5,624 |
7,481 |
|||||
Loss (Gain) on Sale of Assets |
7,265 |
(2,145) |
|||||
Loss on Debt Extinguishment |
— |
67,734 |
|||||
Gain on Commodity Derivative Instruments |
(55,060) |
(90,145) |
|||||
Net Cash Received in Settlement of Commodity Derivative Instruments |
84,331 |
30,141 |
|||||
Deferred Income Taxes |
(27,127) |
200,300 |
|||||
Equity in Earnings of Affiliates |
(16,665) |
(11,323) |
|||||
Return on Equity Investment |
4,512 |
6,103 |
|||||
Changes in Operating Assets: |
|||||||
Accounts and Notes Receivable |
(19,911) |
26,664 |
|||||
Inventories |
(7,476) |
(2,002) |
|||||
Prepaid Expenses |
19,104 |
38,356 |
|||||
Changes in Other Assets |
(9,751) |
7,037 |
|||||
Changes in Operating Liabilities: |
|||||||
Accounts Payable |
(11,487) |
(12,619) |
|||||
Accrued Interest |
35,867 |
42,719 |
|||||
Other Operating Liabilities |
849 |
(80,808) |
|||||
Changes in Other Liabilities |
(4,147) |
(11,569) |
|||||
Other |
4,099 |
7,909 |
|||||
Net Cash Provided by Continuing Operations |
119,808 |
197,889 |
|||||
Net Cash Provided by Discontinued Operating Activities |
8,634 |
30,481 |
|||||
Net Cash Provided by Operating Activities |
128,442 |
228,370 |
|||||
Cash Flows from Investing Activities: |
|||||||
Capital Expenditures |
(78,968) |
(287,804) |
|||||
Proceeds from Sales of Assets |
8,453 |
2,108 |
|||||
Net Investments in Equity Affiliates |
(5,578) |
(27,992) |
|||||
Net Cash Used in Continuing Operations |
(76,093) |
(313,688) |
|||||
Net Cash Provided by (Used in) Discontinued Investing Activities |
397,069 |
(6,215) |
|||||
Net Cash Provided by (Used in) Investing Activities |
320,976 |
(319,903) |
|||||
Cash Flows from Financing Activities: |
|||||||
(Payments on) Proceeds from Short-Term Borrowings |
(100,500) |
760,500 |
|||||
Payments on Miscellaneous Borrowings |
(2,128) |
(2,464) |
|||||
Payments on Long-Term Notes, including Redemption Premium |
— |
(1,261,009) |
|||||
Net Proceeds from Revolver - CNX Coal Resources LP |
15,000 |
— |
|||||
Distributions to Noncontrolling Interest |
(5,413) |
— |
|||||
Proceeds from Securitization Facility |
— |
32,669 |
|||||
Proceeds from Issuance of Long-Term Notes |
— |
492,760 |
|||||
Tax Benefit from Stock-Based Compensation |
— |
15 |
|||||
Dividends Paid |
(2,294) |
(14,400) |
|||||
Issuance of Common Stock |
3 |
1,736 |
|||||
Purchases of Treasury Stock |
— |
(71,674) |
|||||
Debt Issuance and Financing Fees |
— |
(18,257) |
|||||
Net Cash Used in Continuing Operations |
(95,332) |
(80,124) |
|||||
Net Cash Used in Discontinued Financing Activities |
(14) |
(14) |
|||||
Net Cash Used in Financing Activities |
(95,346) |
(80,138) |
|||||
Net Increase (Decrease) in Cash and Cash Equivalents |
354,072 |
(171,671) |
|||||
Cash and Cash Equivalents at Beginning of Period |
72,578 |
176,989 |
|||||
Cash and Cash Equivalents at End of Period |
$ |
426,650 |
$ |
5,318 |
Logo - http://photos.prnewswire.com/prnh/20120416/NE87957LOGO
SOURCE CONSOL Energy Inc.
PITTSBURGH, April 25, 2016 /PRNewswire/ -- CNX Coal Resources LP (NYSE: CNXC) today reported financial and operating results for the quarter ended March 31, 2016.
First Quarter 2016 Results
Highlights of the CNXC first quarter of 2016 results include:
Management Comments
"The CNXC team delivered excellent operational performance during the first quarter of 2016 and helped offset declining cash margins in the face of challenging coal markets and further deterioration in coal prices." said Jimmy Brock, Chief Executive Officer of CNX Coal Resources GP LLC (the "General Partner"). "Specifically, the cash cost per ton in the first quarter was the lowest since first quarter of 2009, despite the inconsistent customer shipments that we noted in January. Our performance not only highlights the ability of the Pennsylvania mining complex to adapt in a challenging commodity price environment, but also to remain competitive as the U.S. coal market continues to reshape. As expected, the first quarter of 2016 began with abnormally low shipment volumes in January and February. However, we saw some improvements in March, which allowed us to have near-record production at some of our longwalls. Our cost structure allowed us to continue to remain profitable in spite of less than favorable pricing during the quarter."
"On the safety and compliance side, we had a mixed first quarter. While we were able to reduce the severity of the incidents compared to the same period last year, there was an increase in the number of recordable incidents. We continue to remain focused on our core values of safety and compliance and continue our efforts to improve on both of these key measures."
1"Adjusted EBITDA" and "Distributable Cash Flow" are non-GAAP financial measures, which are reconciled to GAAP net income and net cash provided by operating activities, under the caption "Non-GAAP Financial Measures"
Sales & Marketing
Despite the challenging coal market backdrop and high customer inventories, our marketing team was successful in improving overall coal shipments throughout the quarter. As expected, some customer deliveries have been slower than usual but our marketing team continues to work with those accounts. In the first quarter of 2016, we successfully tested Bailey coal at two new customer plants and are currently in active negotiations for additional term business. During the first quarter of 2016, we sold 1.1 million tons to 39 different end users domestically and internationally. For the remainder of 2016, we continue to expect a gradual recovery in shipments at some of our customers as they normalize their inventories while competing with low natural gas prices. This could result in us selling some coal in the spot market, which could weigh on our realizations due to the changing customer mix. According to the most recent estimates published by the EIA in its short term energy outlook, U.S. coal demand declined approximately 15%, while industry-wide coal production declined almost 31% in the first quarter of 2016 compared to year-earlier quarter. We believe that given a normal summer, this decline in industry-wide production may help normalize inventory and set the stage for a recovery in coal prices. In the interim, we will continue to focus on building our contract book and running our mines as safely and efficiently as possible. To that extent and including our expectations of carryover tons from 2016, CNXC has solid contractual sales positions for 2017 and 2018 of 70% and 52%, respectively, based on a 5.2 million ton production run rate.
Organizational Appointment
CNXC has named Jim McCaffrey to lead our Coal Sales & Marketing team. In this role, Mr. McCaffrey will have sole responsibility for the coal sales and marketing for the Pennsylvania mining complex. Mr. McCaffrey has led the marketing efforts for coal from the Pennsylvania mining complex since 2009. Mr. McCaffrey joined CONSOL Energy Inc. in 1976 and spent 27 years in operations before transitioning to the corporate coal sales and marketing team in 2003.
Operational Update and Outlook
In January 2016, we returned to running our mines on a more consistent schedule to achieve productivity improvements, even if it resulted in some lower-priced sales in the export markets. Our strategy worked as expected, leading to improved mine consistency and improving margins as the quarter advanced, with exports being able to absorb surplus mine production. During the first quarter of 2016, CNXC also made several operational adjustments including idling of one longwall, reducing staffing levels and realigning employee benefits. All of these steps resulted in a more consistent operating schedule at the mines, reduced labor cost and improved productivity. Productivity for the first quarter, as measured by tons per employee-hour, improved by 14% compared to the year-ago period, despite the reduced number of longwalls in operation. Looking forward, CNXC expects slight improvement in the coal shipments in the second quarter coupled with a slight increase in cost of coal sold, compared to the first quarter, due to four scheduled longwall moves.
Quarterly Distribution
During first quarter of 2016, CNXC generated distributable cash flow1 of $4.4 million and distribution coverage of 0.36x. The Board of Directors of our General Partner declared a cash distribution of $0.5125 per unit to all unitholders for the first quarter of 2016. The distribution will be made on May 12, 2016 to unitholders of record at the close of business on May 5, 2016.
First Quarter Summary
For its 20% undivided interest in the Pennsylvania mining complex, CNXC sold 1.1 million tons of coal during the first quarter of 2016. Total production declined to 1.1 million tons compared to 1.3 million tons produced in the same quarter of 2015 as CNXC aligned production with market conditions. During the first quarter, CNXC sold approximately 0.3 million tons of coal in export market compared to 0.4 million tons in same quarter of 2015. As previously announced overall sales were impacted by weak winter burn and reduced coal generation weighing on the timing of shipments. Our total unit costs for coal sold in the quarter were $33.16 per ton, compared to $42.62 per ton in the year-earlier quarter. The improved cost performance was driven by improved productivity, reduced staffing levels and realignment of employee benefits, offset by lower production due to inconsistent shipment schedules.
Three Months Ended | ||||
March 31, 2016 |
March 31, 2015 | |||
Coal Production |
million tons |
1.1 |
1.3 | |
Coal Sales |
million tons |
1.1 |
1.3 | |
Average Realized Price |
per ton |
$42.99 |
$58.82 | |
Average Cost of Coal Sold |
per ton |
$33.16 |
$42.62 |
Guidance and Outlook
Based on its current expectations, CNXC is providing the following updated 2016 outlook for coal sales, adjusted EBITDA and maintenance capital expenditures.
First Quarter Earnings Conference Call
A conference call and webcast, during which management will discuss the first quarter of 2016 financial and operational results, is scheduled for April 25, 2016 at 5:00 PM ET. Prepared remarks by members of management will be followed by a question and answer session. Interested parties may listen via webcast on the Events page of our website, www.cnxlp.com. An archive of the webcast will be available for 30 days after the event.
Participant dial in (toll free) |
1-855-656-0928 |
Participant international dial in |
1-412-902-4112 |
About CNX Coal Resources LP
CNX Coal Resources is a growth-oriented master limited partnership recently formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active thermal coal operations in Pennsylvania. Its initial assets include a 20% undivided interest in, and operational control over, CONSOL's Pennsylvania mining complex, which consists of three underground mines and related infrastructure. More information is available on our website www.cnxlp.com.
Contacts:
Investor:
Mitesh Thakkar, (724) 485-3133
miteshthakkar@cnxlp.com
Media:
Brian Aiello, (724) 485-3078
brianaiello@cnxlp.com
Non-GAAP Financial Measures
Adjusted EBITDA and distributable cash flow are not Generally Accepted Accounting Principles ("GAAP") measures. Adjusted EBITDA is defined as (i) net income (loss) before net interest expense, depreciation, depletion and amortization, as adjusted for (ii) material nonrecurring and other items which may not reflect the trend of our future results. Management believes that the presentation of adjusted EBITDA in this report provides information useful to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to adjusted EBITDA is net income. Adjusted EBITDA should not be considered an alternative to net income or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income and our presentation of adjusted EBITDA may vary from that presented by other companies. As a result, adjusted EBITDA as presented below may not be comparable to similarly titled measures of other companies. Distributable cash flow is defined as adjusted EBITDA less net cash interest paid and estimated maintenance capital expenditures. Management believes that the presentation of distributable cash flow in this report provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to distributable cash flow are net income and net cash provided by operating activities. Distributable cash flow should not be considered an alternative to net income, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Distributable cash flow excludes some, but not all, items that affect net income or net cash, and our presentation may vary from the presentations of other companies. As a result, our distributable cash flow may not be comparable to similarly titled measures of other companies.
The following table presents a reconciliation of adjusted EBITDA to net income, the most directly comparable GAAP financial measure, on a historical basis for each period indicated. The table also presents a reconciliation of distributable cash flow to net income and operating cash flows, the most directly comparable GAAP financial measures, on a historical basis for each period indicated.
(Dollars in thousands) |
Three Months Ended | |||
Net income |
$ |
2,499 | ||
Plus: |
||||
Interest expense |
1,994 | |||
Depreciation, depletion and amortization |
8,253 | |||
Stock/Unit based compensation |
308 | |||
Adjusted EBITDA |
$ |
13,054 | ||
Less: |
||||
Cash Interest |
1,967 | |||
Estimated Maintenance Capital Expenditures |
6,700 | |||
Distributable Cash Flow |
$ |
4,387 | ||
Net Cash Provided by Operating Activities |
$ |
2,285 | ||
Less: |
||||
Interest Expense, Net |
1,994 | |||
Other, Including Working Capital |
(12,763) | |||
Adjusted EBITDA |
$ |
13,054 | ||
Less: |
||||
Cash Interest |
1,967 | |||
Estimated Maintenance Capital Expenditures |
6,700 | |||
Distributable Cash Flow |
$ |
4,387 |
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: generation of sufficient distributable cash flow to support the payment of minimum quarterly distributions; estimated adjusted EBITDA and distributable cash flow are subject to various inherent uncertainties; our acquiring additional undivided interests in the Pennsylvania mining complex or other assets from our sponsor may not occur; uncertainties exist in estimating our economically recoverable coal reserves; our ability to acquire additional coal reserves that are economically recoverable; deterioration in the global economic conditions in any of the industries in which our customers operate, a worldwide financial downturn or negative credit market conditions; decreases in demand for electricity and changes in coal consumption patterns of U.S. electric power generators; a substantial or extended decline in prices we receive for our coal due to volatility, oversupply, weather, availability of alternative fuels or other factors; increased competition within the coal industry, a loss of our competitive position or foreign currency fluctuations affecting the competitiveness of our coal abroad; the risks inherent in coal operations, including the occurrence of unexpected disruptions, geological conditions, environmental hazards, equipment failure, fires, explosions, accidents, security breaches or terroristic acts and weather conditions and we may not be insured or fully insured against such the losses from events; our mines being part of a single mining complex and located in a single geographic area; the delay or disruption of rail services transporting our coal or increased transportation costs for our coal; the occurrence of significant downtime of our major pieces of mining equipment including our preparation plant; our customers extending existing contracts or entering into new long-term contracts for coal; the loss of or significant reduction in purchases by our largest customers; provisions in our multi-year sales contracts may provide limited protection to us during adverse economic conditions, may result in economic penalties to us or permit customer termination of these contracts; our inability to collect payments from customers if their creditworthiness declines; our ability to raise on satisfactory terms the capital or financing needed for our portion of the substantial capital expenditures associated with our mines; our inability to obtain equipment, parts and raw materials in timely manner, in sufficient quantities or at reasonable costs in our coal mining and transportation operations; our inability to integrate future acquisitions and achieve anticipated benefits; restrictions in our revolving credit facility could adversely affect our business, financial condition, results of operation and ability to make quarterly cash distributions; future debt we incur may limit our flexibility to obtain financing and pursue other business opportunities; increases in interest rates; our ability to make distributions depends upon our cash flow; we may have to coordinate our mining operations with oil and natural gas drillers; we may incur additional costs and delays associated with perfecting title for our coal rights; we rely upon our general partner and employees of our sponsor for management; our mines are operated by a work force that is employed exclusively by our sponsor and our sponsors employees could unionize; we depend upon cash flow generated by our subsidiaries; terrorist attacks or cyber incidents could result in information theft, data corruption and/or financial loss; the impact of potential, as well as any adopted regulations, relating to greenhouse gas emissions on the market for coal, on our operating costs and on the value of our coal assets; electric power generators and other coal users switching to alternative fuels in order to comply with various environmental standards related to coal combustion emissions or due to various incentives to generate electricity from renewable energy sources; our costs could increase and our coal operations could be restricted by the effects of existing and future government environmental regulation; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current coal operations; our obtaining and renewing governmental permits and approvals for our coal operations; the effects of stringent federal and state employee health and safety regulations of our mines, including the ability of regulators to shut down a mine; the effects of our mine closing and reclamation obligations; any termination of our tax treatment as a partnership including as a result of a sale of 50% or more of our capital and profits interests during any 12 month period; our tax positions; the elimination of current U.S. federal income tax preferences available for coal exploration and development; and other factors discussed in the "Risk Factors" section of the prospectus included in our registration statement on Form S-1, in the form last filed with the SEC, as well as any periodic report on Forms 10-K and 10-Q that we file with the SEC.
CNX COAL RESOURCES LP | |||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(Dollars in thousands, except unit data) | |||||||
(unaudited) | |||||||
Three Months Ended | |||||||
2016 |
2015 | ||||||
Coal Revenue |
$ |
45,233 |
$ |
76,887 | |||
Freight Revenue |
2,615 |
474 | |||||
Other Income (Loss) |
(9) |
231 | |||||
Total Revenue and Other Income |
47,839 |
77,592 | |||||
Operating and Other Costs |
30,794 |
46,114 | |||||
Depreciation, Depletion and Amortization |
8,253 |
9,149 | |||||
Freight Expense |
2,615 |
474 | |||||
Selling, General and Administrative Expenses |
1,684 |
2,125 | |||||
Interest Expense |
1,994 |
2,381 | |||||
Total Costs |
45,340 |
60,243 | |||||
Net Income |
$ |
2,499 |
$ |
17,349 | |||
Calculation of Limited Partner Interest in Net Income: |
|||||||
Net Income Attributable to General and Limited Partner Ownership Interest in CNX Coal Resources |
$ |
2,499 |
N/A | ||||
Less: General Partner Interest in Net Income |
51 |
N/A | |||||
Limited Partner Interest in Net Income |
$ |
2,448 |
N/A | ||||
Net Income per Limited Partner Unit - Basic |
$ |
0.11 |
N/A | ||||
Net Income per Limited Partner Unit - Diluted |
$ |
0.11 |
N/A | ||||
Limited Partner Units Outstanding - Basic |
23,222,134 |
N/A | |||||
Limited Partner Units Outstanding - Diluted |
23,223,540 |
N/A | |||||
Cash Distributions Declared per Unit |
$ |
0.5125 |
N/A |
Effective first quarter of 2016, CNXC will report selling related expense as part of selling, general & administrative expenses. For historical reconciliation of this change, please refer to the investor section of our website.
CNX COAL RESOURCES LP | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Dollars in thousands) | |||||||
(Unaudited) |
|||||||
March 31, |
December 31, | ||||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash |
$ |
9,095 |
$ |
6,531 | |||
Trade Receivables |
19,145 |
15,518 | |||||
Other Receivables |
372 |
377 | |||||
Inventories |
10,901 |
9,791 | |||||
Prepaid Expenses |
3,643 |
4,080 | |||||
Total Current Assets |
43,156 |
36,297 | |||||
Property, Plant and Equipment: |
|||||||
Property, Plant and Equipment |
694,369 |
692,482 | |||||
Less—Accumulated Depreciation, Depletion and Amortization |
328,783 |
320,729 | |||||
Total Property, Plant and Equipment—Net |
365,586 |
371,753 | |||||
Other Assets: |
|||||||
Other |
16,021 |
14,079 | |||||
Total Other Assets |
16,021 |
14,079 | |||||
TOTAL ASSETS |
$ |
424,763 |
$ |
422,129 | |||
LIABILITIES AND PARTNERS' CAPITAL |
|||||||
Current Liabilities: |
|||||||
Accounts Payable |
$ |
12,645 |
$ |
14,023 | |||
Accounts Payable—Related Party |
1,280 |
3,452 | |||||
Other Accrued Liabilities |
29,969 |
29,978 | |||||
Total Current Liabilities |
43,894 |
47,453 | |||||
Long-Term Debt: |
|||||||
Revolver, net of debt issuance and financing fees |
196,170 |
180,946 | |||||
Capital Lease Obligations |
95 |
100 | |||||
Total Long-Term Debt |
196,265 |
181,046 | |||||
Deferred Credits and Other Liabilities: |
|||||||
Pneumoconiosis Benefits |
1,701 |
1,547 | |||||
Workers' Compensation |
2,395 |
2,343 | |||||
Asset Retirement Obligations |
6,943 |
6,799 | |||||
Other |
552 |
571 | |||||
Total Deferred Credits and Other Liabilities |
11,591 |
11,260 | |||||
TOTAL LIABILITIES |
251,750 |
239,759 | |||||
Partners' Capital: |
|||||||
Common Units (11,611,067 Units Outstanding at March 31, 2016 and December 31, 2015) |
149,890 |
154,309 | |||||
Subordinated Units (11,611,067 Units Outstanding at March 31, 2016 and December 31, 2015) |
1,461 |
6,188 | |||||
General Partner Interest |
12,890 |
13,081 | |||||
Accumulated Other Comprehensive Income |
8,772 |
8,792 | |||||
Total Partners' Capital |
173,013 |
182,370 | |||||
TOTAL LIABILITIES AND PARTNERS' CAPITAL |
$ |
424,763 |
$ |
422,129 |
CNX COAL RESOURCES LP | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Dollars in thousands) | |||||||
(unaudited) | |||||||
Three Months Ended March 31, | |||||||
2016 |
2015 | ||||||
Cash Flows from Operating Activities: |
|||||||
Net Income |
$ |
2,499 |
$ |
17,349 | |||
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: |
|||||||
Depreciation, Depletion and Amortization |
8,253 |
9,149 | |||||
(Gain) Loss on Sale of Assets |
10 |
(15) | |||||
Unit Based Compensation |
308 |
— | |||||
Other Adjustments to Net Income |
221 |
38 | |||||
Changes in Operating Assets: |
|||||||
Accounts and Notes Receivable |
(3,622) |
(726) | |||||
Inventories |
(1,110) |
422 | |||||
Prepaid Expenses |
437 |
299 | |||||
Changes in Other Assets |
(1,942) |
(123) | |||||
Changes in Operating Liabilities: |
|||||||
Accounts Payable |
(736) |
1,115 | |||||
Accounts Payable—Related Party |
(2,172) |
— | |||||
Other Operating Liabilities |
(7) |
726 | |||||
Changes in Other Liabilities |
146 |
(790) | |||||
Net Cash Provided by Operating Activities |
2,285 |
27,444 | |||||
Cash Flows from Investing Activities: |
|||||||
Capital Expenditures |
(2,581) |
(6,510) | |||||
Proceeds from Sales of Assets |
14 |
19 | |||||
Net Cash Used in Investing Activities |
(2,567) |
(6,491) | |||||
Cash Flows from Financing Activities: |
|||||||
Payments for Miscellaneous Borrowings |
(10) |
(8) | |||||
Proceeds from Revolver, Net of Payments |
15,000 |
— | |||||
Payments for Unitholder Distributions |
(12,144) |
— | |||||
Debt Issuance and Financing Fees |
— |
(2,401) | |||||
Net Change in Parent Advances |
— |
(18,543) | |||||
Net Cash Used In Financing Activities |
2,846 |
(20,952) | |||||
Net Increase in Cash |
2,564 |
1 | |||||
Cash at Beginning of Period |
6,531 |
3 | |||||
Cash at End of Period |
$ |
9,095 |
$ |
4 |
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SOURCE CNX Coal Resources LP
CANONSBURG, Pa., April 11, 2016 /PRNewswire/ -- CONE Midstream Partners LP (NYSE: CNNX) today announced that it will release financial results for the first quarter 2016 before market opening on Thursday, May 5, 2016 and hold a conference call to discuss those results on the same day at 11:00 a.m. Eastern Time. The conference call will be publicly available via webcast on a live and replay basis.
Interested parties are invited to listen to the conference call, during which prepared remarks by John T. Lewis, Chairman and Chief Executive Officer, and other members of management will be followed by a question and answer session. Participants who would like to ask questions during the conference call may join by phone. Individuals who intend to listen only are encouraged to join the conference via the Internet.
Event: |
Conference call to discuss first quarter 2016 financial and operating results. |
Time: |
May 5, 2016 at 11:00 a.m. Eastern Time. |
Internet: |
The webcast may be accessed directly at https://www.webcaster4.com/Webcast/Page/998/14490 or from the link posted on the "Events" page of our website, www.conemidstream.com. |
Phone: |
Dial 888-349-0097 (international 412-902-0126) five to ten minutes before the scheduled start of the conference call and reference the CONE Midstream Partners call. |
Replay: |
An on-demand replay of the webcast will also be available shortly after the webcast at https://www.webcaster4.com/Webcast/Page/998/14490. A telephonic replay of the call will be available through May 12, 2016. The replay can be accessed by dialing toll free 877-344-7529 (international: 412-317-0088) and using the replay code 10084060. |
CONE Midstream Partners is a growth-oriented master limited partnership formed by CONSOL Energy Inc. (NYSE:CNX) and Noble Energy Inc. (NYSE: NBL), referred to as our Sponsors, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service our Sponsors' production in the Marcellus Shale in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available at our website www.conemidstream.com.
Contact: |
Stephen R. Milbourne |
CONE Midstream Partners Investor Relations | |
Phone: 724-485-4408 | |
Email: smilbourne@conemidstream.com |
SOURCE CONE Midstream Partners LP
PITTSBURGH, April 7, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) announced today that James C. Grech, Executive Vice President and Chief Commercial Officer, has retired. As a result of CONSOL's recent sale of the Buchanan Mine and other remaining metallurgical coal assets, the company has continued with its corporate reorganization efforts to further align the administrative and commercial functions within its natural gas exploration and production (E&P) division and its thermal coal division.
As part of the corporate reorganization, CNX Coal Resources LP (NYSE: CNXC), who operates the Pennsylvania mining complex, will manage all human resources, land, marketing and external communications matters related to CONSOL's Pennsylvania Operations.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, April 4, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) will issue its first quarter earnings release at 6:45 a.m. Eastern Time on Tuesday, April 26. This will be followed by a conference call at 10:00 a.m. Eastern Time. A live webcast will be available on the 'Investor Relations' page of the company's website, www.consolenergy.com. Also, earnings call slides will be available at 6:45 a.m. Eastern Time on Tuesday, April 26, on the 'Investor Relations' page of the company's website.
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based energy producer, and one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on developing its substantial resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, April 1, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) announced today that it has closed on its previously announced agreement to sell the Buchanan Mine in southwestern Virginia and certain other metallurgical coal reserves to Coronado IV LLC for total consideration to CONSOL of $420 million in value, including $402.8 million cash paid at the closing.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based producer of natural gas and coal. The company is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CONSOL Energy deploys an organic growth strategy focused on rapidly developing its resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. The company's premium coals are sold to electricity generators and steel makers, both domestically and internationally. CONSOL Energy is a member of the Standard & Poor's Midcap 400 Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
CANONSBURG, Pa., Feb. 29, 2016 /PRNewswire/ -- CONE Midstream Partners LP (NYSE: CNNX) today announced that members of its executive management team will being participating in four upcoming investor conferences:
March 1 – Morgan Stanley's MLP/Diversified Natural Gas, Utilities & Clean Tech Conference |
March 2 – Barclays' MLP Corporate Access Day |
March 3 – Capital Link 3rd Annual Master Limited Partnership Investing Forum |
March 31 – J.P. Morgan's Energy Infrastructure/MLP Forum |
A slide presentation, which may be referenced during investor meetings at these conferences, has been posted on the "Events and Presentations" page of the CNNX website, www.conemidstream.com.
CONE Midstream Partners is a master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) and Noble Energy, Inc. (NYSE: NBL), referred to as our Sponsors, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service our Sponsors' production in the Marcellus Shale in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on our website www.conemidstream.com.
Contact: |
Stephen R. Milbourne |
CONE Investor Relations | |
Phone: 724-485-4408 | |
Email: smilbourne@conemidstream.com |
SOURCE CONE Midstream Partners LP
PITTSBURGH, Feb. 29, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) announced today that it has entered into an agreement for the sale of its Buchanan Mine in southwestern Virginia and certain other metallurgical coal reserves to Coronado IV LLC for total consideration to CONSOL of $420 million, including $398 million cash payable at the closing. The transaction is not subject to a financing condition and is being funded by Energy and Minerals Group (EMG), which is the management company for a series of specialized private equity funds. EMG has approximately $16.5 billion of regulatory assets under management.
"This is another significant event in the execution of CONSOL Energy's strategy, as well as a meaningful step in continuing to strengthen our balance sheet," said Nicholas J. DeIuliis, President and Chief Executive Officer. "The Buchanan Mine fits into Coronado's portfolio as a pure play metallurgical coal producer, and, in the end, this transaction bolsters the strategic position of both companies."
Also included in the transaction are CONSOL Energy's idled Amonate Mine in southern West Virginia and southwestern Virginia, its greenfield Russell County coal reserves in southwestern Virginia and its greenfield Pangburn-Shaner-Fallowfield coal reserves in southwestern Pennsylvania. The transaction includes approximately 400 million tons of proved coal reserves which includes approximately 88 million tons associated with the Buchanan Mine.
The transaction does not include any gas rights, and CONSOL will retain the right to extract and sell gas at the mines and other properties.
The agreement contains customary representations, warranties and covenants, among other provisions, including a customary escrow provision. The completion of the sale is subject to customary conditions, including regulatory approvals. The final purchase price is subject to a limited working capital adjustment.
CONSOL expects to utilize transaction proceeds in order to pay down debt. The transaction is expected to close in the first quarter of 2016.
Also in conjunction with the sale, CONSOL Energy is realigning its dividend policy to further reflect the company's increased emphasis on growth. Beginning with the first declared quarterly dividend after the transaction closes, CONSOL Energy intends to suspend its regular quarterly dividend.
Deutsche Bank acted as financial advisor to CONSOL Energy, while Buchanan Ingersoll & Rooney PC and Steptoe & Johnson PLLC acted as legal counsel.
For additional details regarding the representations, terms, conditions and other provisions of the agreement, see the Form 8-K which CONSOL is filing today with the Securities and Exchange Commission.
The foregoing summary of the agreement is not complete and is subject to and qualified in its entirety by reference to the complete text of the agreement, a copy of which is being filed as an exhibit to the Form 8-K.
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels. an extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan exceeding total service and interest cost in a plan year; divestitures we anticipate may not occur or produce anticipated benefits; the terms of our existing joint ventures restrict our flexibility, actions taken by the other party in our gas joint ventures may impact our financial position and various circumstances could cause us not to realize the benefits we anticipate receiving from these joint ventures; risks associated with our debt; replacing our gas and oil reserves, which if not replaced, will cause our gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; with respect to the proposed sale of the Buchanan and Amonate mines and other coal assets to Coronado IV LLC - the ability to obtain regulatory approvals for the transaction on the proposed terms and schedule, disruption to our business, including customer, employee and supplier relationships resulting from this transaction, risks that the conditions to closing may not be satisfied and the sale may not occur, and the impact of the transaction on our future operating results; and other factors discussed in the 2015 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based producer of natural gas and coal. The company is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CONSOL Energy deploys an organic growth strategy focused on rapidly developing its resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves. The company's premium coals are sold to electricity generators and steel makers, both domestically and internationally. CONSOL Energy is a member of the Standard & Poor's 500 Equity Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
CANONSBURG, Pa., Feb. 19, 2016 /PRNewswire/ -- CONE Midstream Partners LP (NYSE: CNNX) (the "Partnership") today announced the filing of its Annual Report on Form 10-K for the fiscal year ending December 31, 2015 with the Securities and Exchange Commission (SEC).
A copy of the Annual Report on Form 10-K, which contains the Partnership's audited financial statements, is available for download at www.conemidstream.com and on the SEC website at www.sec.gov.
The Partnership's unitholders may receive, free of charge, printed copies of our Annual Report on Form 10-K by writing to Investor Relations, CONE Midstream Partners, 1000 CONSOL Energy Drive, Canonsburg, PA 15317.
CONE Midstream Partners LP is a master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) and Noble Energy, Inc. (NYSE: NBL), referred to as our Sponsors, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service our Sponsors' production in the Marcellus Shale in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on our website www.conemidstream.com.
Contact: Stephen R. Milbourne
CONE Investor Relations
Phone: 724-485-4408
Email: smilbourne@conemidstream.com
SOURCE CONE Midstream Partners LP
CANONSBURG, Pa., Feb. 17, 2016 /PRNewswire/ -- CONE Midstream Partners LP (NYSE: CNNX) ("CONE Midstream" or the "Partnership") today reported financial and operational results for the three months and the full year ending December 31, 2015.(1) The Partnership also announced financial guidance for 2016.
Fourth Quarter Results
Highlights of fourth quarter 2015 results attributable to the Partnership as compared to the fourth quarter of 2014 include:
Full Year 2015 Results
Highlights of full year 2015 results attributable to the Partnership include:
Management Comment
"We are pleased to report another quarter of excellent financial and operational results for CONE Midstream," said John T. Lewis, Chairman of the Board and Chief Executive Officer of CONE Midstream GP LLC (the "General Partner"). "Our throughput volume, net income, adjusted EBITDA and DCF all exhibited strong and steady growth during each consecutive quarter of 2015. Fourth quarter average throughput increased by 215 BBtu/d which equates to volume growth of 39% over fourth quarter 2014. Our focus on operational efficiencies and cost control boosted our financial results, with net income for the quarter increasing by 47% over last year, and fourth quarter adjusted EBITDA and DCF each growing by more than 50% from a year ago.
Mr. Lewis continued, "Based on these strong results and our current outlook, the Partnership paid a quarterly cash distribution of $0.2362 per unit on February 12th. The distribution rate represents a sequential quarterly increase of 3.6% which equates to an annual growth rate of 15.2%. Our distribution coverage during 2015 also increased steadily each quarter and reached 1.59x for the fourth quarter on an as declared basis.
"We have maintained our strong financial position during 2015," concluded Mr. Lewis. "Our business model was built for measured growth driven by a strong balance sheet, underlying organic growth with stacked pays, and potentially supplemented by the drop down of additional interests in our three different development companies. In addition, CONE's business development function should help supplement sponsor driven revenues. While commodity prices have receded and the MLP space faces various challenges, our robust balance sheet and distribution coverage ratio has CONE Midstream Partners advantageously positioned."
Quarterly Distribution
As previously announced, the Board of Directors of the General Partner declared a quarterly cash distribution of $0.2362 per unit with respect to the fourth quarter of 2015. The distribution payment was made on February 12, 2016 to unitholders of record on February 4, 2016. The distribution, which equates to an annual rate of $0.9448 per unit, represents an increase of 3.6% over the prior quarter and an increase of 11.2% over the Minimum Quarterly Distribution as defined in our Partnership Agreement.
Capital Investment and Resources
CONE Midstream's allocated fourth quarter 2015 share of investment in expansion projects was $23.0 million. Total expansion capital investment at the three development companies in which CONE Midstream holds controlling interests was $53.9 million,(3) with individual development company totals as follows:
CONE Midstream's respective share of maintenance capital expenditures for the three development companies for fourth quarter 2015 was $2.6 million. Maintenance capital expenditures in the aggregate for the development companies in which CONE Midstream holds controlling interests totaled $4.4 million.
As of December 31, 2015, CONE Midstream had outstanding borrowings of $73.5 million under its $250.0 million revolving credit facility.
2016 Guidance
Based on current expectations, management is providing the following guidance for 2016. Full year 2016 adjusted EBITDA attributable to the Partnership is expected to be in the range of $93 - $103 million and full year Distributable Cash Flow attributable to the Partnership is expected to be in the range of $79 - $89 million. Management currently anticipates that total 2016 capital expenditures attributable to the Partnership will be in the range of $30 to $35 million, of which approximately $10 to $12 million will be for maintenance capital.
CONE Midstream's financial guidance is based on numerous assumptions about future events and conditions and, therefore, could vary materially from actual results. These estimates, including capital expenditure plans, are meant to provide guidance only and are subject to revision for acquisitions or operating environment changes.
Fourth Quarter Financial and Operational Results Conference Call
A conference call and webcast, during which management will discuss fourth quarter 2015 financial and operational results, is scheduled for February 17, 2016 at 1:00 p.m. Eastern Time. Prepared remarks by members of management will be followed by a question and answer period. Interested parties may listen via webcast at https://www.webcaster4.com/webcast/page/998/12905. Participants who would like to ask questions may join the conference by phone at 888-349-0097 (international 412-902-0126) five to ten minutes prior to the scheduled start time (reference the CONE Midstream call). An on-demand replay of the webcast will be also be available at https://www.webcaster4.com/webcast/page/998/12905 shortly after the conclusion of the conference. A telephonic replay will be available through February 24, 2016 by dialing 877-344-7529 (international: 412-317-0088) and using the conference playback number 10079438.
_______________ | |
(1) |
Unless otherwise indicated, the reporting measures included in this news release reflect the unallocated total activity of the three development companies jointly owned by the Partnership and CONE Gathering LLC ("CONE Gathering"). Because the Partnership owns a controlling interest in each of the three development companies, it fully consolidates their financial results. The Partnership's current financial interests in the development companies are: 75% in the Anchor Systems, 5% in the Growth Systems, and 5% in the Additional Systems. CONE Gathering is a midstream joint venture formed by CONSOL Energy Inc. and Noble Energy, Inc. and owns non-controlling interests in the Partnership's development companies. |
(2) |
Adjusted EBITDA and DCF are not Generally Accepted Accounting Principles ("GAAP") measures. Definitions and reconciliations of these non-GAAP measures to GAAP reporting measures appear in the financial tables which follow. |
(3) |
Detail may not foot due to rounding. |
Contact: |
Stephen R. Milbourne |
CONE Investor Relations | |
Phone: |
724-485-4408 |
Email: |
|
* * * * *
CONE Midstream Partners is a master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) and Noble Energy, Inc. (NYSE: NBL), referred to as our Sponsors, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service our Sponsors' production in the Marcellus Shale in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities.
* * * * *
This press release is intended to be a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of CONE Midstream's distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business. Accordingly, CONE Midstream's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not CONE Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.
* * * * *
This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, and there can be no assurance that actual outcomes and results will not differ materially from those expected by our management. These forward-looking statements involve certain risks and uncertainties, including, among others, that our business plans may change as circumstances warrant. For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, please refer to the "Risk Factors" section of our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.
CONE MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per unit data) (unaudited) | ||||||||||||||||
Three Months Ended |
Twelve Months Ended | |||||||||||||||
2015 |
2014 |
2015 |
2014 | |||||||||||||
Revenue |
||||||||||||||||
Gathering Revenue — Related Party |
$ |
58,785 |
$ |
42,400 |
$ |
203,423 |
$ |
130,087 |
||||||||
Other Income |
— |
85 |
— |
85 |
||||||||||||
Total Revenue |
58,785 |
42,485 |
203,423 |
130,172 |
||||||||||||
Expenses |
||||||||||||||||
Operating Expense — Third Party |
6,781 |
9,035 |
28,987 |
27,371 |
||||||||||||
Operating Expense — Related Party |
7,858 |
5,519 |
29,937 |
24,072 |
||||||||||||
General and Administrative Expense — Third Party |
911 |
886 |
4,444 |
1,822 |
||||||||||||
General and Administrative Expense — Related Party |
2,251 |
1,769 |
8,636 |
4,726 |
||||||||||||
Depreciation Expense |
4,623 |
2,225 |
15,053 |
7,330 |
||||||||||||
Interest Expense |
565 |
24 |
835 |
24 |
||||||||||||
Total Expense |
22,989 |
19,458 |
87,892 |
65,345 |
||||||||||||
Net Income |
35,796 |
23,027 |
115,531 |
64,827 |
||||||||||||
Less: Net Income Attributable to Noncontrolling Interest |
13,330 |
7,776 |
44,284 |
7,858 |
||||||||||||
Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
22,466 |
$ |
15,251 |
$ |
71,247 |
$ |
56,969 |
||||||||
Calculation of Limited Partner Interest in Net Income: |
||||||||||||||||
Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP (1) |
$ |
22,466 |
$ |
15,251 |
$ |
71,247 |
$ |
15,378 |
||||||||
Less: General Partner Interest in Net Income |
449 |
305 |
1,425 |
308 |
||||||||||||
Limited Partner Interest in Net Income |
$ |
22,017 |
$ |
14,946 |
$ |
69,822 |
$ |
15,070 |
||||||||
Net Income per Limited Partner Unit - Basic |
$ |
0.38 |
$ |
0.26 |
$ |
1.20 |
$ |
0.26 |
||||||||
Net Income per Limited Partner Unit - Diluted |
$ |
0.38 |
$ |
0.26 |
$ |
1.20 |
$ |
0.26 |
||||||||
Limited Partner Units Outstanding - Basic |
58,326 |
58,326 |
58,326 |
58,326 |
||||||||||||
Limited Partner Unit Outstanding - Diluted |
58,337 |
58,326 |
58,340 |
58,326 |
||||||||||||
(1) |
Reflective of general and limited partner interest in net income since closing of the IPO. |
CONE MIDSTREAM PARTNERS LP
RECONCILIATION OF NET INCOME TO EBITDA AND DISTRIBUTABLE CASH FLOW
(in thousands)
(unaudited)
Definition of Non-GAAP Financial Measures
Adjusted EBITDA
We define adjusted EBITDA as net income (loss) before net interest expense, depreciation and amortization, as adjusted for non-cash items which should not be included in the calculation of distributable cash flow. Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
We believe that the presentation of adjusted EBITDA provides information that is useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to adjusted EBITDA are net income and net cash provided by operating activities. Adjusted EBITDA should not be considered an alternative to net income, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, adjusted EBITDA as presented below may not be comparable to similarly titled measures of other companies.
Distributable Cash Flow
We define distributable cash flow as adjusted EBITDA less net income attributable to noncontrolling interest, net cash interest paid and maintenance capital expenditures. Distributable cash flow does not reflect changes in working capital balances.
Distributable cash flow is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
We believe that the presentation of distributable cash flow in this report provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to distributable cash flow are net income and net cash provided by operating activities. Distributable cash flow should not be considered an alternative to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Distributable cash flow excludes some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, our distributable cash flow may not be comparable to similarly titled measures of other companies.
CONE MIDSTREAM PARTNERS LP | |||||||||||||||||
The following table presents a reconciliation of the non-GAAP measures adjusted EBITDA and distributable cash flow with the most directly comparable GAAP financial measures of net income and net cash provided by operating activities. | |||||||||||||||||
Three Months Ended |
Twelve Months Ended | ||||||||||||||||
2015 |
2014 |
2015 |
2014 | ||||||||||||||
Net Income |
$ |
35,796 |
$ |
23,027 |
$ |
115,531 |
$ |
64,827 |
|||||||||
Interest Expense |
565 |
24 |
835 |
24 |
|||||||||||||
Depreciation Expense |
4,623 |
2,225 |
15,053 |
7,330 |
|||||||||||||
EBITDA |
40,984 |
25,276 |
131,419 |
72,181 |
|||||||||||||
Non-Cash Unit-Based Compensation |
92 |
— |
402 |
— |
|||||||||||||
Adjusted EBITDA |
41,076 |
25,276 |
131,821 |
72,181 |
|||||||||||||
Less: |
|||||||||||||||||
Net Income Attributable to Noncontrolling Interest |
13,330 |
7,776 |
44,284 |
7,858 |
|||||||||||||
Interest Expense Attributable to Noncontrolling Interest |
331 |
— |
428 |
— |
|||||||||||||
Depreciation Expense Attributable to Noncontrolling Interest |
2,246 |
857 |
6,799 |
863 |
|||||||||||||
Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
25,169 |
$ |
16,643 |
$ |
80,310 |
$ |
63,460 |
|||||||||
Less: Cash Interest Paid, net |
234 |
— |
407 |
— |
|||||||||||||
Less: Ongoing Maintenance Capital Expenditures, Net of Expected Reimbursements |
2,554 |
1,799 |
8,984 |
6,008 |
|||||||||||||
Distributable Cash Flow |
$ |
22,381 |
$ |
14,844 |
$ |
70,919 |
$ |
57,452 |
|||||||||
Net Cash Provided by Operating Activities |
$ |
16,749 |
$ |
22,331 |
$ |
116,017 |
$ |
84,694 |
|||||||||
Interest Expense |
565 |
24 |
835 |
24 |
|||||||||||||
Other, Including Changes in Working Capital |
23,762 |
2,921 |
14,969 |
(12,537) |
|||||||||||||
Adjusted EBITDA |
41,076 |
25,276 |
131,821 |
72,181 |
|||||||||||||
Less: |
|||||||||||||||||
Net Income Attributable to Noncontrolling Interest |
13,330 |
7,776 |
44,284 |
7,858 |
|||||||||||||
Interest Expense Attributable to Noncontrolling Interest |
331 |
— |
428 |
— |
|||||||||||||
Depreciation Expense Attributable to Noncontrolling Interest |
2,246 |
857 |
6,799 |
863 |
|||||||||||||
Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
25,169 |
$ |
16,643 |
$ |
80,310 |
$ |
63,460 |
|||||||||
Less: Cash Interest Paid, net |
234 |
— |
407 |
— |
|||||||||||||
Less: Ongoing Maintenance Capital Expenditures, Net of Expected Reimbursements |
2,554 |
1,799 |
8,984 |
6,008 |
|||||||||||||
Distributable Cash Flow |
$ |
22,381 |
$ |
14,844 |
$ |
70,919 |
$ |
57,452 |
|||||||||
The following table presents a reconciliation of the non-GAAP measures adjusted EBITDA and distributable cash flow by quarter and for the most recently completed twelve month period with the most directly comparable GAAP financial measures, which are net income and net cash provided by operating activities. | |||||||||||||||||||
(unaudited) |
Q1 2015 |
Q2 2015 |
Q3 2015 |
Q4 2015 |
Twelve | ||||||||||||||
Net Income |
$ |
21,216 |
$ |
24,905 |
$ |
33,614 |
$ |
35,796 |
$ |
115,531 |
|||||||||
Interest Expense |
65 |
47 |
158 |
565 |
835 |
||||||||||||||
Depreciation Expense |
2,994 |
3,667 |
3,769 |
4,623 |
15,053 |
||||||||||||||
EBITDA |
24,275 |
28,619 |
37,541 |
40,984 |
131,419 |
||||||||||||||
Non-Cash Unit-Based Compensation Expense |
96 |
96 |
118 |
92 |
402 |
||||||||||||||
Adjusted EBITDA |
24,371 |
28,715 |
37,659 |
41,076 |
131,821 |
||||||||||||||
Less: |
|||||||||||||||||||
Net Income Attributable to Noncontrolling Interest |
7,004 |
9,993 |
13,957 |
13,330 |
44,284 |
||||||||||||||
Interest Expense Attributable to Noncontrolling Interest |
20 |
14 |
63 |
331 |
428 |
||||||||||||||
Depreciation Expense Attributable to Noncontrolling Interest |
1,166 |
1,659 |
1,728 |
2,246 |
6,799 |
||||||||||||||
Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
16,181 |
$ |
17,049 |
$ |
21,911 |
$ |
25,169 |
$ |
80,310 |
|||||||||
Less: Cash Interest Paid, net |
45 |
33 |
95 |
234 |
407 |
||||||||||||||
Less: Ongoing Maintenance Capital Expenditures, Net of |
1,991 |
2,148 |
2,291 |
2,554 |
8,984 |
||||||||||||||
Distributable Cash Flow |
$ |
14,145 |
$ |
14,868 |
$ |
19,525 |
$ |
22,381 |
$ |
70,919 |
|||||||||
Net Cash Provided by Operating Activities |
$ |
10,206 |
$ |
50,254 |
$ |
38,808 |
$ |
16,749 |
$ |
116,017 |
|||||||||
Interest Expense |
65 |
47 |
158 |
565 |
835 |
||||||||||||||
Other, Including Changes in Working Capital |
14,100 |
(21,586) |
(1,307) |
23,762 |
14,969 |
||||||||||||||
Adjusted EBITDA |
24,371 |
28,715 |
37,659 |
41,076 |
131,821 |
||||||||||||||
Less: |
|||||||||||||||||||
Net Income Attributable to Noncontrolling Interest |
7,004 |
9,993 |
13,957 |
13,330 |
44,284 |
||||||||||||||
Interest Expense Attributable to Noncontrolling Interest |
20 |
14 |
63 |
331 |
428 |
||||||||||||||
Depreciation Expense Attributable to Noncontrolling Interest |
1,166 |
1,659 |
1,728 |
2,246 |
6,799 |
||||||||||||||
Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
16,181 |
$ |
17,049 |
$ |
21,911 |
$ |
25,169 |
$ |
80,310 |
|||||||||
Less: Cash Interest Paid, net |
45 |
33 |
95 |
234 |
407 |
||||||||||||||
Less: Ongoing Maintenance Capital Expenditures, Net of |
1,991 |
2,148 |
2,291 |
2,554 |
8,984 |
||||||||||||||
Distributable Cash Flow |
$ |
14,145 |
$ |
14,868 |
$ |
19,525 |
$ |
22,381 |
$ |
70,919 |
|||||||||
Distributions Declared |
$ |
12,647 |
$ |
13,094 |
$ |
13,570 |
$ |
14,062 |
$ |
53,373 |
|||||||||
Distribution Coverage Ratio - Declared |
1.12 |
x |
1.14 |
x |
1.44 |
x |
1.59 |
x |
1.33 |
x | |||||||||
Distributable Cash Flow |
$ |
14,145 |
$ |
14,868 |
$ |
19,525 |
$ |
22,381 |
$ |
70,919 |
|||||||||
Distributions Paid |
$ |
12,784 |
$ |
12,647 |
$ |
13,094 |
$ |
13,570 |
$ |
52,095 |
|||||||||
Distribution Coverage Ratio - Paid |
1.11 |
x |
1.18 |
x |
1.49 |
x |
1.65 |
x |
1.36 |
x |
CONE MIDSTREAM PARTNERS LP CONSOLIDATED BALANCE SHEETS (in thousands, except number of units) (Unaudited) | |||||||
December 31, |
December 31, | ||||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash |
$ |
217 |
$ |
3,252 |
|||
Receivables — Related Party |
36,418 |
58,749 |
|||||
Inventory |
18,916 |
— |
|||||
Prepaid Expenses |
1,873 |
1,280 |
|||||
Other Current Assets |
164 |
164 |
|||||
Total Current Assets |
57,588 |
63,445 |
|||||
Property and Equipment: |
|||||||
Property and Equipment |
897,918 |
639,735 |
|||||
Less — Accumulated Depreciation |
31,609 |
16,989 |
|||||
Property and Equipment — Net |
866,309 |
622,746 |
|||||
Other Non-Current Assets |
528 |
613 |
|||||
TOTAL ASSETS |
$ |
924,425 |
$ |
686,804 |
|||
LIABILITIES AND EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts Payable |
$ |
46,155 |
$ |
70,635 |
|||
Accounts Payable — Related Party |
1,628 |
2,106 |
|||||
Total Current Liabilities |
47,783 |
72,741 |
|||||
Other Liabilities: |
|||||||
Revolving Credit Facility |
73,500 |
31,300 |
|||||
Total Liabilities |
121,283 |
104,041 |
|||||
Partners' Capital: |
|||||||
Common Units - (29,163,121 Units Issued and Outstanding at December 31, 2015 and 2014) |
399,399 |
389,612 |
|||||
Subordinated Units (29,163,121 Units Issued and Outstanding at December 31, 2015 and 2014) |
(82,900) |
(92,285) |
|||||
General Partner Interest |
(3,389) |
(3,772) |
|||||
Capital Attributable to CONE Midstream Partners LP |
313,110 |
293,555 |
|||||
Noncontrolling Interest |
490,032 |
289,208 |
|||||
Total Partners' Capital |
803,142 |
582,763 |
|||||
TOTAL LIABILITIES AND PARTNERS' CAPITAL |
$ |
924,425 |
$ |
686,804 |
CONE MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) | |||||||
Twelve Months Ended | |||||||
2015 |
2014 | ||||||
Cash Flows from Operating Activities: |
|||||||
Net Income |
$ |
115,531 |
$ |
64,827 |
|||
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: |
|||||||
Depreciation Expense and Amortization of Debt Issuance Costs |
15,217 |
7,330 |
|||||
Gain on Disposition of Equipment |
— |
(85) |
|||||
Unit Based Compensation |
402 |
— |
|||||
Changes in Operating Assets: |
|||||||
Receivables — Related Party |
(3,148) |
(9,029) |
|||||
Inventory |
(2,284) |
— |
|||||
Prepaid Expenses |
(663) |
(1,280) |
|||||
Non-Current Assets |
(10) |
— |
|||||
Changes in Operating Liabilities: |
|||||||
Accounts Payable |
(8,670) |
23,806 |
|||||
Accounts Payable — Related Party |
(358) |
(875) |
|||||
Net Cash Provided by Operating Activities |
116,017 |
84,694 |
|||||
Cash Flows from Investing Activities: |
|||||||
Capital Expenditures |
(291,211) |
(269,686) |
|||||
Proceeds on Sale of Equipment |
— |
85 |
|||||
Net Cash Used in Investing Activities |
(291,211) |
(269,601) |
|||||
Cash Flows from Financing Activities: |
|||||||
Investments by Partners and Noncontrolling Interest Holders |
182,053 |
146,626 |
|||||
Proceeds from Issuance of Common Units, Net of Offering Costs |
— |
413,005 |
|||||
Distribution of Proceeds |
— |
(407,971) |
|||||
Distributions to Unitholders |
(52,094) |
— |
|||||
Payment of Revolver Fees |
— |
(777) |
|||||
Proceeds from Revolver |
42,200 |
31,300 |
|||||
Net Cash Provided by Financing Activities |
172,159 |
182,183 |
|||||
Net Decrease in Cash |
(3,035) |
(2,724) |
|||||
Cash at Beginning of Period |
3,252 |
5,976 |
|||||
Cash at End of Period |
$ |
217 |
$ |
3,252 |
CONE MIDSTREAM PARTNERS LP SUPPLEMENTAL STATEMENTS OF CASH FLOWS (in thousands) (unaudited) | |||||||
Three Months Ended | |||||||
2015 |
2014 | ||||||
Cash Flows from Operating Activities: |
|||||||
Net Income |
$ |
35,796 |
$ |
23,027 |
|||
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities: |
|||||||
Depreciation Expense and Amortization of Debt Issuance Costs |
4,664 |
2,225 |
|||||
Gain on Disposition of Equipment |
— |
(85) |
|||||
Unit Based Compensation |
92 |
— |
|||||
Changes in Operating Assets: |
|||||||
Receivables — Related Party |
(2,046) |
(9,344) |
|||||
Prepaid Expenses |
(1,133) |
(798) |
|||||
Non-Current Assets |
— |
168 |
|||||
Changes in Operating Liabilities: |
|||||||
Accounts Payable |
(15,482) |
9,404 |
|||||
Accounts Payable — Related Party |
(5,142) |
(2,266) |
|||||
Net Cash Provided by Operating Activities |
16,749 |
22,331 |
|||||
Cash Flows from Investing Activities: |
|||||||
Capital Expenditures |
(58,261) |
(83,985) |
|||||
Proceeds on Sale of Equipment |
— |
85 |
|||||
Net Cash Used in Investing Activities |
(58,261) |
(83,900) |
|||||
Cash Flows from Financing Activities: |
|||||||
Investments by Partners and Noncontrolling Interest Holders |
37,093 |
26,000 |
|||||
Proceeds from Issuance of Common Units, Net of Offering Costs |
— |
264 |
|||||
Distribution to Unitholders |
(13,569) |
— |
|||||
Payment of Revolver Fees |
— |
(91) |
|||||
Proceeds from Revolver |
17,000 |
31,300 |
|||||
Net Cash Provided by Financing Activities |
40,524 |
57,473 |
|||||
Net Decrease in Cash |
(988) |
(4,096) |
|||||
Cash at Beginning of Period |
1,205 |
7,348 |
|||||
Cash at End of Period |
$ |
217 |
$ |
3,252 |
Development Companies Jointly Owned by CONE Gathering LLC and CONE Midstream Partners LP Operating Income Summary, Selected Operating Statistics and Capital Investment (in thousands) (unaudited) | |||||||||||||||
Three Months Ended December 31, 2015 | |||||||||||||||
Development Company | |||||||||||||||
Anchor |
Growth |
Additional |
TOTAL | ||||||||||||
Income Summary |
|||||||||||||||
Revenue |
$ |
46,063 |
$ |
3,080 |
$ |
9,642 |
$ |
58,785 |
|||||||
Expenses |
16,525 |
1,546 |
4,918 |
22,989 |
|||||||||||
Net Income |
29,538 |
1,534 |
4,724 |
35,796 |
|||||||||||
Less: Net Income Attributable to Noncontrolling Interest |
7,385 |
1,457 |
4,488 |
13,330 |
|||||||||||
Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
22,153 |
$ |
77 |
$ |
236 |
$ |
22,466 |
|||||||
Operating Statistics - Gathered Volumes |
|||||||||||||||
Dry Gas (BBtu/d) |
614 |
73 |
11 |
698 |
|||||||||||
Wet Gas (BBtu/d) |
372 |
8 |
196 |
576 |
|||||||||||
Condensate (Bcfe/d) |
7 |
— |
10 |
17 |
|||||||||||
Total Gathered Volumes |
993 |
81 |
217 |
1,291 |
|||||||||||
Total Volumes Net to CONE Midstream Partners LP |
745 |
4 |
11 |
760 |
|||||||||||
Capital Investment |
|||||||||||||||
Maintenance Capital |
$ |
3,333 |
$ |
352 |
$ |
725 |
$ |
4,410 |
|||||||
Expansion Capital |
29,034 |
188 |
24,629 |
53,851 |
|||||||||||
Total Capital Investment |
$ |
32,367 |
$ |
540 |
$ |
25,354 |
$ |
58,261 |
|||||||
Capital Investment Net to CNNX |
|||||||||||||||
Maintenance Capital |
$ |
2,500 |
$ |
18 |
$ |
36 |
$ |
2,554 |
|||||||
Expansion Capital |
21,776 |
9 |
1,231 |
23,016 |
|||||||||||
Total Capital Investment Net to CNNX |
$ |
24,276 |
$ |
27 |
$ |
1,267 |
$ |
25,570 |
Development Companies Jointly Owned by CONE Gathering LLC and CONE Midstream Partners LP Operating Income Summary, Selected Operating Statistics and Capital Investment (in thousands) (unaudited) | |||||||||||||||
Three Months Ended December 31, 2014 | |||||||||||||||
Development Company | |||||||||||||||
Anchor |
Growth |
Additional |
TOTAL | ||||||||||||
Income Summary |
|||||||||||||||
Revenue |
$ |
35,166 |
$ |
2,464 |
$ |
4,855 |
$ |
42,485 |
|||||||
Expenses |
15,025 |
1,847 |
2,586 |
19,458 |
|||||||||||
Net Income |
20,141 |
617 |
2,269 |
23,027 |
|||||||||||
Less: Net Income Attributable to Noncontrolling Interest |
5,035 |
586 |
2,155 |
7,776 |
|||||||||||
Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP |
$ |
15,106 |
$ |
31 |
$ |
114 |
$ |
15,251 |
|||||||
Operating Statistics - Gathered Volumes |
|||||||||||||||
Dry Gas (BBtu/d) |
389 |
71 |
17 |
477 |
|||||||||||
Wet Gas (BBtu/d) |
313 |
— |
81 |
394 |
|||||||||||
Condensate (Bcfe/d) |
12 |
— |
— |
12 |
|||||||||||
Total Gathered Volumes |
714 |
71 |
98 |
883 |
|||||||||||
Total Volumes Net to CONE Midstream Partners LP |
536 |
4 |
5 |
545 |
|||||||||||
Capital Investment |
|||||||||||||||
Maintenance Capital |
$ |
2,372 |
$ |
230 |
$ |
157 |
$ |
2,759 |
|||||||
Expansion Capital |
18,465 |
22,296 |
40,465 |
81,226 |
|||||||||||
Total Capital Investment |
$ |
20,837 |
$ |
22,526 |
$ |
40,622 |
$ |
83,985 |
|||||||
Capital Investment Net to CNNX |
|||||||||||||||
Maintenance Capital |
$ |
1,779 |
$ |
12 |
$ |
8 |
$ |
1,799 |
|||||||
Expansion Capital |
13,849 |
1,114 |
2,023 |
16,986 |
|||||||||||
Total Capital Investment Net to CNNX |
$ |
15,628 |
$ |
1,126 |
$ |
2,031 |
$ |
18,785 |
SOURCE CONE Midstream Partners LP
PITTSBURGH, Feb. 8, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) announced today the nomination of Bernard Lanigan, Jr., Joseph P. Platt and Edwin S. Roberson to its Board of Directors for election at its annual meeting of shareholders scheduled for May 11, 2016. The other nominees include eight current members of the Board.
The company also announced today the election of William N. Thorndike, Jr. as Chairman of the Board effective immediately upon the conclusion of the annual meeting. J. Brett Harvey, current Chairman of the Board, has elected to retire and not stand for re-election at the annual meeting. The Board has appointed Mr. Harvey as Chairman Emeritus, in recognition of his many years of service to the company, as both Chairman and Chief Executive Officer. Philip W. Baxter and David C. Hardesty, Jr. have also elected to retire and not stand for re-election at the annual meeting.
"We are excited to announce the nomination of Bernie Lanigan, Joe Platt and Ed Roberson to our Board," said Nicholas J. DeIuliis, Chief Executive Officer. "We reached out to our largest shareholders and asked them for names of qualified candidates for director and these gentlemen rose to the top of the list. We want to thank Brett, Phil and David for their many contributions to the company over the years, but with their retirements, we think we have found three candidates who will prove to be worthy successors. Bernie, Joe and Ed will bring considerable financial, strategic and public company board experience to join an already highly accomplished and experienced board."
Bernard Lanigan, Jr.
Mr. Lanigan founded and has served as Chairman and Chief Executive Officer of Southeast Asset Advisors, Inc., a registered investment advisor and wealth management company, since 1991. He also founded and has served as Chairman of Lanigan & Associates, P.C., a certified public accounting and consulting firm, since 1974. Mr. Lanigan currently serves on the boards of directors of Ruby Tuesday, Inc. and Rayonier Inc., as well as various private companies and foundations. Mr. Lanigan previously served on the board of directors of Texas Industries, Inc. Mr. Lanigan is a graduate of Furman University and is a certified public accountant.
Mr. Lanigan has leadership experience with large, complex and diverse organizations, a strong background in financial, valuation, accounting and tax matters, as well as significant experience in strategic planning and risk assessment.
Joseph P. Platt
Mr. Platt is the general partner at Thorn Partners, LP, a family limited partnership, since 1997. Mr. Platt's career at Johnson and Higgins, or J&H, a global insurance broker and employee benefits consultant, spanned 27 years, until 1997, when J&H was sold to Marsh & McLennan Companies.
At the time of the sale of J&H, Mr. Platt was an owner, director and executive vice president. Mr. Platt is on the board of directors of Greenlight Capital Re, Ltd., which provides a variety of custom tailored reinsurance solutions to the insurance, risk retention group, captive and financial marketplaces. He also serves as an independent director of BlackRock's Open End & Liquidity Funds. Mr. Platt is active in the community, serving on the boards of a number of nonprofit organizations. He received his Bachelor of Arts degree from Manhattan College in 1968 and his Juris Doctor degree from Fordham University Law School in 1971. He also attended Harvard Business School's Advanced Management Program in 1983. Mr. Platt is a member of the New York State Bar Association.
Mr. Platt brings to the Board significant financial, compensation and risk management expertise.
Edwin S. Roberson
Mr. Roberson currently serves as Chief Executive Officer of Christ Community Health Services, a health system providing high quality healthcare to the underserved in the Memphis community. Prior to that, Mr. Roberson served for several years as Chief Executive Officer of Novostem Therapeutics, Inc., a cancer research biotech firm, and Beacon Consulting LLC, a business consulting firm. From 1991 to 2006, he worked at Conwood LLC, the nation's second-largest manufacturer of smokeless tobacco products and a major seller and distributor of tobacco products manufactured by third parties. There, he served in several roles, including Chief Financial Officer and, ultimately, President. After serving in the Army from 1969 to 1971, where he was awarded two Bronze Stars in Vietnam, Mr. Roberson began his professional career at KPMG, an international accounting and consulting firm, where he was a tax partner for many years until 1991. Mr. Roberson serves on the board of directors of several private corporations. He is also serving or has served as a board member for a number of educational, religious, civic and charitable organizations, including Duke University Divinity School and the Boy Scouts of America. He received a Master of Business Administration degree from the University of Georgia in 1972 and a Bachelor of Science degree in Business Administration from the University of North Carolina at Chapel Hill in 1968. Mr. Roberson is a certified public accountant.
Mr. Roberson brings to the Board significant leadership skills and financial and strategy expertise.
CONSOL Energy's Annual Meeting of Shareholders
CONSOL Energy's 2016 annual meeting of shareholders is scheduled for 10:00 a.m. (Eastern Time) on Wednesday, May 11, 2016 at the Hyatt Regency Pittsburgh International Airport, 1111 Airport Boulevard, Pittsburgh, Pennsylvania 15231.
The other candidates for election to the Board of Directors at the meeting are: Nicholas J. DeIuliis, Alvin R. Carpenter, William E. Davis, Maureen E. Lally-Green, Gregory A. Lanham, John T. Mills, William P. Powell and William N. Thorndike, Jr.
This press release is not a proxy statement or a solicitation of proxies from the holders of common stock of CONSOL Energy. A solicitation of proxies in connection with the annual meeting will be made only by CONSOL Energy's definitive proxy statement that will be mailed to all shareholders of record on the record date. CONSOL Energy will be filing a definitive proxy statement for the annual meeting with the Securities and Exchange Commission (SEC). Shareholders are urged to read the proxy statement and any other relevant documents filed or that will be filed with the SEC when they become available because they will contain important information. Shareholders will be able to receive the proxy statement and other relevant documents free of charge at the SEC's website at http://www.sec.gov or from CONSOL Energy Investor Relations at 1000 CONSOL Energy Drive, Canonsburg, PA 15317.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based producer of natural gas and coal. The company is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CONSOL Energy deploys an organic growth strategy focused on rapidly developing its resource base. As of December 31, 2015, CONSOL Energy had 5.6 trillion cubic feet equivalent of proved natural gas reserves.
The company's premium coals are sold to electricity generators and steel makers, both domestically and internationally. CONSOL Energy is a member of the Standard & Poor's 500 Equity Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, Feb. 5, 2016 /PRNewswire/ -- CNX Coal Resources LP (NYSE: CNXC), today announced the filing of its Annual Report on Form 10-K for the fiscal year ending December 31, 2015 with the Securities and Exchange Commission (SEC).
A copy of the Annual Report on Form 10-K, which contains the Partnership's audited financial statements, is available for download at www.cnxlp.com in the Investors section under SEC Filings and on the SEC website at www.sec.gov.
Unitholders can also request a printed copy of the Partnership's complete audited financial statements, free of charge, by contacting the Investor Relations department of CNX Coal Resources.
About CNX Coal Resources LP
CNX Coal Resources is a growth-oriented master limited partnership recently formed by CONSOL Energy Inc. (NYSE: CNX) to manage and further develop all of CONSOL's active thermal coal operations in Pennsylvania. Its initial assets include a 20% undivided interest in, and operational control over, CONSOL's Pennsylvania mining complex, which consists of three underground mines and related infrastructure. More information is available on our website www.cnxlp.com.
Contacts: |
|
Investor: |
Mitesh Thakkar, (724) 485-3133 |
Media: |
Brian Aiello, (724) 485-3078 |
SOURCE CNX Coal Resources LP
PITTSBURGH, Feb. 5, 2016 /PRNewswire/ -- During 2015, CONSOL Energy Inc. (NYSE: CNX) added 934 Bcfe (net to CONSOL) of proved reserves through extensions and discoveries. As of December 31, 2015, total proved reserves were 5.6 Tcfe, which included 583 Bcfe, or 10.3%, of oil, condensate, and liquids. Marcellus Shale reserves account for 369 Bcfe, or 14.4%, of these heavier hydrocarbons.
CONSOL Energy replaced 284% of its 2015 production, when considering increases from extensions and discoveries of 934 Bcfe. Production in 2015 was 329 Bcfe (net to CONSOL).
During 2015, drilling and completion costs incurred directly attributable to extensions and discoveries were $618.3 million. When divided by the extensions and discoveries of 934 Bcfe, this yields a drill bit finding and development cost of $0.66 per Mcfe, compared to $0.76 per Mcfe at year-end 2014.
Future development costs for PUD reserves are estimated to be approximately $943 million, or $0.48 per Mcfe.
The following table shows the summary of changes in reserves:
Summary of Changes in Proved Reserves (Bcfe) | |
Balance at December 31, 2014 |
6,828 |
Price revisions(1) (2) |
(3,159) |
Plan and other revisions(2) |
1,369 |
Extensions and discoveries |
934 |
Production |
(329) |
Balance at December 31, 2015 |
5,643 |
Note: The proved reserve estimate for 2015 was prepared by CONSOL Energy and audited by Netherland, Sewell & Associates, Inc. | |
(1) Amount of reserves that would not be included in the December 31, 2014 proved reserve balance due to the decrease in natural gas, | |
(2) Approximately 2,200 Bcfe within the "Price revisions" and "Plan and other revisions" categories has been removed due to changes to the |
Total net revisions are 1,790 Bcfe, which include negative price revisions of 3,159 Bcfe and net positive plan and other revisions of 1,369 Bcfe. The positive plan and other revisions are primarily driven by performance revisions resulting from CONSOL's success in reducing costs, continued improvements in type curves and EURs in the Marcellus, and focusing on developing higher internal rate of return projects across the company. Approximately 2,200 Bcfe of negative revisions included in price revisions and plan and other revisions have been removed from CONSOL's 5-year development plan.
Proved developed reserves of 3,697 Bcfe in 2015 were 16% higher than 2014 and comprised 66% of total proved reserves, compared to 47% in 2014. Proved undeveloped reserves (PUDs) were 1,946 Bcfe at December 31, 2015, or 34% of total proved reserves, compared to 53% at year-end 2014. This reflects consistent booking of proved undeveloped reserves in 2015, as a result of the company's continued success in the Marcellus Shale and increased activity in the dry Utica. PUDs at year-end 2015 represent 78% of the total wells the company expects to drill over the next five years.
In the Marcellus Shale CONSOL Energy and its joint venture (JV) partner turned in line 81 gross wells with an average completed lateral length of approximately 7,600 feet and expected ultimate recoveries (EUR) averaging approximately 2 Bcfe per thousand feet of completed lateral. Max 24-hour production rates were as high as 19 MMcf per day, with 31 wells peaking at rates greater than 10 MMcf per day and 12 wells peaking at rates greater than 15 MMcf per day. As of December 31, 2015, the Marcellus Shale proved reserves were 2,573 Bcfe, which included 1,689 Bcfe of proved developed reserves.
In the Utica Shale, during 2015 CONSOL Energy and its JV partner turned in line 32 gross wells with an average completed lateral length of approximately 7,600 feet and EURs ranging up to 3 Bcfe per thousand feet of completed lateral. In the Dry Utica Shale, four 100% CONSOL-owned wells peaked at over 20 MMcf per day with the Westmoreland County, PA Gaut 4I testing at a 24-hour flow rate of 61 MMcf per day and the Monroe County, Ohio Switz 6D testing at a 24-hour flow rate in excess of 44 MMcf per day. In 2015, CONSOL booked 876 Bcfe of Utica PUDs, which is an increase of 262% from the 334 Bcfe booked during 2014 and includes 523 Bcfe of offset Dry Utica PUDs in Monroe County, Ohio, due to successful drilling results and cost reductions.
As of December 31, 2015, CONSOL Energy has total proved, probable, and possible reserves (also known as "3P reserves") of 38.3 Tcfe, which is an increase of 1.7 Tcfe, or 5%, in 3P reserves from the 36.6 Tcfe reported at year-end 2014. The increase in 3P reserves is primarily attributed to more certainty in the success of the Ohio Utica Shale, as well as continued success and optimization in the Marcellus Shale. The company has had strong initial success in the Pennsylvania dry Utica Shale, but it is still early in the play and reserve bookings are currently limited to one PDP well in the 2015 reserve report. The company continues testing Upper Devonian and dry Utica potential in Pennsylvania, Ohio, and West Virginia and believes that these areas will provide additional opportunities for CONSOL's proved reserves over time. The company's 3P reserves have been determined in accordance with the guidelines of the Society of Petroleum Engineers Petroleum Resources Management System.
The following table shows the breakdown of reserves, in Bcfe, from the company's current development and exploration plays:
Breakdown of Reserves (Bcfe) |
|||||||||||
Proved |
Proved Developed Non-Producing |
Proved |
Total |
|
|
Total 3P | |||||
Marcellus |
1,689 |
170 |
714 |
2,573 |
14,576 |
6,551 |
23,700 | ||||
Coalbed |
952 |
12 |
335 |
1,299 |
589 |
593 |
2,481 | ||||
Utica |
369 |
54 |
876 |
1,299 |
2,526 |
1,198 |
5,023 | ||||
Other (1) |
446 |
6 |
21 |
472 |
3,351 |
3,295 |
7,116 | ||||
Total |
3,455 |
242 |
1,946 |
5,643 |
21,042 |
11,637 |
38,321 | ||||
Definition: Total 3P is a summation of total proved, probable, and possible reserves. The estimates of reserves and future revenue were prepared in accordance with the definitions and guidelines of the SEC (1) Includes Upper Devonian proved reserves of 55.7 Bcfe and 750 Bcfe of 3P reserves. |
The Securities and Exchange Commission ("SEC") rules require that the proved reserve calculations be based on the first day of the month average prices over the preceding twelve months. For the year-end 2015 reserve evaluation, the benchmark prices were $2.59 per MMBtu for natural gas, $15.59 per barrel for natural gas liquids, $26.65 per barrel for condensate and $50.28 per barrel for crude oil (Cushing), representing the simple average of the prices for the first day for each month of 2015. Comparative prices for year-end 2014 were $4.35 per MMBtu for natural gas, $46.54 per barrel for natural gas liquids, $75.99 per barrel for condensate and $94.99 per barrel for crude oil (Cushing).
Based on these prices adjusted for energy content, quality, hedges, transportation costs, and basis differentials ($2.02 per Mcf, $15.59 per barrel of natural gas liquids, $24.00 per barrel of condensate and $45.28 per barrel of crude oil, respectively), the pre-tax discounted (10%) present value ("PV-10") of the company's proved reserves was $1.66 billion for 2015, compared to $4.88 billion at year-end 2014.
The company's reserve based lending credit facility, which as of December 31, 2015 had a $2 billion borrowing base, is redetermined semiannually in the spring and fall based off the present value of the company's oil and gas reserves at a forward looking price deck. At future strip pricing for natural gas and liquids as of December 31, 2015 adjusted for energy content, quality, hedges, transportation costs, and basis differentials, the pre-tax discounted (10%) PV-10 of the company's proved reserves would be $3.4 billion for 2015.
Standardized Measure of Discounted Future Net Cash Flows
The following information was prepared in accordance with the provisions of the Financial Accounting Standards Board's Accounting Standards Update No. 2010-03, "Extractive Activities-Oil and Gas (Topic 932)." This topic requires the standardized measure of discounted future net cash flows to be based on the average, first-day-of-the-month price for the year ended December 31, 2015. Because prices used in the calculation are average prices for that year, the standardized measure could vary significantly from year to year based on the market conditions that occurred.
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 a 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.
Reconciliation of PV-10 to Standardized Measure |
||||||
December 31, | ||||||
(Dollars in millions) |
2015 |
2014 |
2013 | |||
Future cash inflows |
$ 11,838 |
$ 28,503 |
$ 21,603 | |||
Future production costs |
(6,585) |
(10,101) |
(7,106) | |||
Future development costs (including abandonments) |
(1,220) |
(3,369) |
(3,903) | |||
Future net cash flows (pre-tax) |
4,033 |
15,033 |
10,594 | |||
10% discount factor |
(2,374) |
(10,149) |
(7,814) | |||
PV-10 (Non-GAAP measure) (1) |
1,659 |
4,884 |
2,780 | |||
Undiscounted income taxes |
(1,532) |
(5,712) |
(4,026) | |||
10% discount factor |
892 |
3,812 |
2,927 | |||
Discounted income taxes |
(640) |
(1,900) |
(1,099) | |||
Standardized GAAP measure |
$ 1,019 |
$ 2,984 |
$ 1,681 | |||
(1) We calculate our present value at 10% (PV-10) in accordance with the following table. Management believes that the presentation of the non-Generally Accepted Accounting Principle (GAAP) financial measure of PV-10 provides useful information to investors because it is widely used by professional analysts and sophisticated investors in evaluating oil and gas companies. Because many factors that are unique to each individual company impact the amount of future income taxes estimated to be paid, the use of a pre-tax measure is valuable when comparing companies based on reserves. PV-10 is not a measure of the financial or operating performance under GAAP. PV-10 should not be considered as an alternative to the standardized measure as defined under GAAP. We have included a reconciliation of the most directly comparable GAAP measure-after-tax discounted future net cash flows. |
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas and other liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels. An extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan exceeding total service and interest cost in a plan year; divestitures we anticipate may not occur or produce anticipated benefits; the terms of our existing joint ventures restrict our flexibility, actions taken by the other party in our gas joint ventures may impact our financial position and various circumstances could cause us not to realize the benefits we anticipate receiving from these joint ventures; risks associated with our debt; replacing our gas and oil reserves, which if not replaced, will cause our gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; other factors discussed in the 2014 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible oil and gas reserves that a company anticipates as of a given date to be economically and legally producible and deliverable by application of development projects to known accumulations. We may use certain terms in this press release, such as EUR (estimated ultimate recovery), unproved reserves and total resource potential, that the SEC's rules strictly prohibit us from including in filings with the SEC. These measures are by their nature more speculative than estimates of reserves prepared in accordance with SEC definitions and guidelines and accordingly are less certain. We also note that the SEC strictly prohibits us from aggregating proved, probable and possible reserves in filings with the SEC due to the different levels of certainty associated with each reserve category.
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SOURCE CONSOL Energy Inc.
HOUSTON, Feb. 2, 2016 /PRNewswire/ -- CARBO Ceramics Inc. (NYSE: CRR) announced the successful use of KRYPTOSPHERE® LD, its ultra-conductive, low-density ceramic proppant technology, in the Utica for CONSOL Energy, a leading Appalachian basin producer. This is the first well to utilize KRYPTOSPHERE LD and joins KRYPTOSPHERE HD as another product in the KRYPTOSPHERE ultra-conductive proppant technology platform to maximize hydrocarbon flow for the life of the well.
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In its first application, KRYPTOSPHERE LD was used at a depth of approximately 13,500 feet. Under these stress conditions, this technology was selected for its better economics, strength, improved proppant transport and increased propped fracture volume. KRYPTOSPHERE LD eliminated the need for gel and cross-linked fluids, leading to a reduction in overall completion cost. Initial production from the first well using KRYPTOSPHERE LD was prolific, flowing more than 61.9 MMcfd of natural gas in a 24 hour period and making it one of the highest producing wells in the Utica to date.
KRYPTOSPHERE LD is engineered to have the same characteristics as KRYPTOSPHERE HD – mono-sized with exceptional strength, durability and smoothness – providing high conductivity across the entire range of low to high stress well conditions. It significantly exceeds the conductivity of existing low-density proppant and reduces costly wear-and-tear on pressure pumping equipment, ultimately providing higher production and estimated ultimate recovery (EUR). In addition, the KRYPTOSPHERE LD technology provides higher conductivity, improved proppant transport and increased propped fracture volume compared to intermediate-density and bauxite ceramics.
"Integrating KRYPTOSPHERE LD technology into our completion design is an example of how CONSOL Energy has achieved the completion efficiency that has allowed us to showcase three of the top ten dry Utica well results to-date across the industry," remarked Kirby Walker, Director of Regional Operations, CONSOL Energy.
"Commercializing innovations like KRYPTOSPHERE LD that lower the operator's cost to produce oil and gas is a necessity in today's challenging environment," added Don Conkle, Vice President of Sales and Marketing, CARBO. "Working with leading operators such as CONSOL Energy who make it possible to introduce such technologies affirms the investment CARBO is making in technologies that improve reservoir recovery and F&D costs."
About CARBO
CARBO focuses on integrating technologies to produce engineered solutions in its Design, Build, and Optimize the Frac® technology businesses, delivering important value to E&P operators by increasing well production and EUR.
For more information, please visit www.carboceramics.com.
Investor Contact:
Mark Thomas, Director, Investor Relations
(281) 921-6400
Media Contact:
Jamie Efurd, Marketing Communications Manager
(281) 921-6400
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based producer of natural gas and coal. The company is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CONSOL Energy deploys an organic growth strategy focused on rapidly developing its resource base. As of December 31, 2014, CONSOL Energy had 6.8 trillion cubic feet equivalent of proved natural gas reserves. The company's premium coals are sold to electricity generators and steel makers, both domestically and internationally. CONSOL Energy is a member of the Standard & Poor's 500 Equity Index. Additional information can be found at www.consolenergy.com.
SOURCE CARBO Ceramics Inc.
PITTSBURGH, Feb. 1, 2016 /PRNewswire/ -- CONSOL Energy Inc.'s (NYSE: CNX) Board of Directors declared a regular quarterly dividend of $0.01 per share, payable on March 3, 2016, to shareholders of record on February 16, 2016.
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based producer of natural gas and coal. The company is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CONSOL Energy deploys an organic growth strategy focused on rapidly developing its resource base. As of December 31, 2014, CONSOL Energy had 6.8 trillion cubic feet of proved natural gas reserves. The company's premium coal assets are sold to electricity generators and steelmakers, both domestically and internationally. CONSOL Energy is a member of the Standard & Poor's 500 Equity Index. Additional information may be found at www.consolenergy.com.
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SOURCE CONSOL Energy Inc.
PITTSBURGH, Jan. 29, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) reported net income attributable to CONSOL Energy shareholders of $30 million for the quarter, or $0.13 per diluted share. This is compared to net income attributable to CONSOL Energy shareholders of $74 million, or $0.32 per diluted share from the year-earlier quarter. Earnings before deducting net interest expense (interest expense less interest income), income taxes and depreciation, depletion and amortization (EBITDA), attributable to CONSOL Energy shareholders was $363 million for the 2015 fourth quarter, compared to $299 million in the year-earlier quarter.
After adjusting for certain unusual items, which are listed in the EBITDA reconciliation table, the company had an adjusted net loss1 in the 2015 fourth quarter of $26 million, or ($0.11) per share. Adjusted EBITDA1 attributable to CONSOL Energy shareholders was $206 million for the 2015 fourth quarter, compared to $273 million in the year-earlier quarter. Cash flow from operations in the just-ended quarter was $102 million, compared to $87 million in the year-earlier quarter.
The fourth quarter earnings results included the following pre-tax items related to recent transactions:
"CONSOL continues to control the controllables in a commodity price and energy environment that is unprecedented," commented Nicholas J. DeIuliis, president and CEO. "Specifically, CONSOL continues to adapt to the challenging commodity environment by further driving down costs, illustrated by the E&P Division reducing total unit cash costs by over 25% year-over-year. For the Coal Division, Pennsylvania Operations (PA) set new levels of cost performance, and the Buchanan Mine, again, posted impressive total unit costs. In addition to the substantial cost performance, recently, we announced that we are exerting production discipline on both the E&P and Coal sides of our business. For E&P, specifically, we reduced our 2016 capital budget by an additional $185 million, while scaling back production growth to approximately 15%, over 2015 volumes. For the Coal Division, we have also optimized production schedules to better align with customers' delivery schedules to help manage high inventory levels, due to the lack of demand from a mild start to the winter. The company also continues to position itself to capitalize on what we believe to be an industry leading dry Utica acreage position and initial well results, as demonstrated by showcasing three of the top ten dry Utica wells across the industry, to-date."
1 The terms "adjusted net loss" and "adjusted EBITDA" are non-GAAP financial measures, which are defined and reconciled to GAAP net income below, under the caption "Non-GAAP Financial Measures."
During the fourth quarter of 2015, CONSOL's E&P Division achieved record production of 95.5 Bcfe, or an increase of 35% from the 70.5 Bcfe produced in the year-earlier quarter. As a result, during the quarter, average daily production eclipsed 1 Bcfe per day. The E&P Division's total unit cash costs declined during the quarter to $1.40 per Mcfe, compared to $1.91 per Mcfe during the year-earlier quarter. CONSOL's total 2015 production was 328.7 Bcfe, which is in-line with previously stated production guidance of 325-330 Bcfe. For 2016, CONSOL recently lowered its production growth guidance from 20% down to approximately 15%, compared to 2015 production volumes.
Marcellus Shale production volumes in the 2015 fourth quarter were 48.5 Bcfe, or 33% higher than the 36.5 Bcfe produced in the 2014 fourth quarter. Marcellus Shale total unit cash costs were $1.54 per Mcfe in the just-ended quarter, which is a $0.17 per Mcfe improvement from the fourth quarter of 2014 costs of $1.71 per Mcfe.
CONSOL Energy's Utica Shale production volumes in the 2015 fourth quarter were 20.7 Bcfe, up substantially from 7.1 Bcfe in the year-earlier quarter. Utica Shale total unit cash costs were $0.85 per Mcfe in the just-ended quarter, which is a $0.41 per Mcfe improvement from the fourth quarter of 2014 total unit cash costs of $1.26 per Mcfe. The significant cost improvements across the Utica Shale were primarily driven by reductions to lease operating expenses.
In January 2016, CONSOL Energy completed its second successful test of the dry Utica/Point Pleasant formation on the company's acreage located in Greene County, Pennsylvania. CONSOL's GH 9 well had an initial 24-hour flow test of 61.9 MMcf per day at an average flowing casing pressure of 8,312 psi. CONSOL has a 100% working interest and 96% net revenue interest (NRI) in the well, which was completed with a 6,141 foot lateral and 30 frac stages.
For 2016, CONSOL Energy recently revised its E&P Division capital budget to approximately $205-$325 million, which is $185 million lower than the previous guidance of $400-$500 million, based on the midpoints. The lower end of the capital budget range supports CONSOL Energy's base-case development plan, which excludes any drilling activity in 2016, but instead focuses on completing approximately 31 wells that are already drilled, plus turning in line an additional 36 wells. As a result, CONSOL expects to turn-in-line (TIL) approximately 67 wells in 2016. These 67 new well additions, along with midstream debottlenecking initiatives, will drive the E&P Division's 2016 production guidance of approximately 15%, compared to 2015 production volumes.
CONSOL's Coal Division sold 6.6 million tons in the 2015 fourth quarter, compared to 8.1 million tons during the year-earlier quarter. Northern Appalachian thermal, as well as metallurgical coal, prices continued to decline throughout the quarter. The Pennsylvania Operations average sales price per ton decreased during the quarter to $52.57 per ton, compared to $60.10 per ton from the year-earlier quarter. Northern Appalachian thermal coal prices saw continued declines due to consistently low regional natural gas prices and higher-than-normal coal inventory levels. In the Virginia Operations, the company's Buchanan Mine also continued to see further declines of metallurgical coal prices. The Virginia Operations average sales price decreased during the quarter to $48.41 per ton, compared to $68.58 per ton from the year-earlier quarter. CONSOL has partially offset the continued degradation to commodity pricing through lower unit costs.
As a result of rising interest rates and plan changes throughout 2015, CONSOL Energy reduced balance sheet legacy liabilities by approximately $152 million at December 31, 2015, compared to year-end 2014.
The benefit related to changes in CONSOL Energy's retiree medical (OPEB) plan resulted from recent plan amendments. Due to CONSOL actively managing the OPEB liability, these amendments resulted in lower operating and other coal costs in the third and fourth quarters of 2015. Beyond year-end 2015, CONSOL will benefit, indefinitely, through lower cash payments related to these liabilities by $15-$20 million per year.
The unrealized gain on commodity derivative instruments represents changes in fair value of all existing gas commodity hedges on a mark-to-market basis.
The pension settlement expense occurs when the lump sum distributions made for a given plan year exceed the total of the service and interest costs for that same plan year. The pension settlement of $15.9 million is at the lower end of the previously stated guidance range of $15-$20 million, which the company expected in the fourth quarter of 2015.
The expense associated with the settlement of working capital adjustments and other matters relates to the prior sale of CONSOL's industrial supply subsidiary, which closed during the fourth quarter of 2014.
The company recorded a gain on the sale of non-core assets during the quarter, related to the previously announced sale of lignite reserves in South Texas to a private entity.
E&P Division:
E&P Division Fourth Quarter Summary:
Production increased by over 35% in the just-ended quarter, when compared to the year-earlier quarter. Despite increased production, total quarterly outside sales revenue decreased by $10.1 million for the same period due to depressed commodity prices. Despite a reduction in sales revenue, the E&P Division realized net income of $57.1 million in the fourth quarter of 2015, compared to $36.5 million in the year-earlier quarter.
During the fourth quarter of 2015, the E&P Division's total unit costs, including depreciation, depletion, and amortization (DD&A), declined to $2.45 per Mcfe, compared to $3.19 per Mcfe during the year-earlier quarter. Full year 2015 E&P Division total unit costs were $2.73 per Mcfe, including DD&A, or an improvement of $0.58 per Mcfe, compared to $3.31 per Mcfe in the prior year. For the E&P Division, full year 2015 total unit costs were slightly below the low-end of the previously stated guidance range of $2.74-$2.84 per Mcfe.
As expected, E&P Division capital declined significantly in the fourth quarter to $83.4 million due to the company laying down all operated rigs late in the third quarter of 2015.
Dry Utica Shale Wells Update:
GH 9 (Greene County, Pennsylvania):
CONSOL Energy completed its second successful test of the dry Utica/Point Pleasant formation on the company's acreage in Pennsylvania. CONSOL's GH 9 well located in Greene County, Pennsylvania, had an initial 24-hour flow test of 61.9 MMcf per day at an average flowing casing pressure of 8,312 psi. CONSOL has a 100% working interest and 96% NRI in the well, which was completed with a 6,141 foot lateral and 30 frac stages.
Gaut 4I (Westmoreland County, Pennsylvania):
In the third quarter of 2015, CONSOL Energy announced its first dry Utica test well, the Gaut 4I, in Westmoreland County, Pennsylvania, which had an initial 24-hour flow test to sales of 61.4 MMcf per day at an average flowing casing pressure of 7,968 psi. CONSOL has a 100% working interest and 87.5% NRI in the well, which was completed with a 5,800 foot lateral and 30 frac stages. The company subsequently conducted flow tests to ascertain the deliverability of the reservoir and well drainage, which have provided critical information on pressure draw-down management and inter-lateral spacing for future Utica Shale development. Following the flow tests, the Gaut 4I well produced for approximately one month at an average rate of approximately 19 MMcf per day, with limited pressure draw-down of 20-25 psi per day. To-date the well has produced 1.26 Bcf in 60 days of operations, while average flowing casing pressure is approximately 8,100 psi. CONSOL Energy expects to manage casing pressure draw-down over time, until reaching line pressure of approximately 800-1,000 psi. During this extended draw-down phase, CONSOL expects production volumes to be relatively flat for 9-12 months after which it will enter its hyperbolic decline phase.
Switz 6 (Monroe County, Ohio):
CONSOL Energy brought online the Switz 6D well in October 2015 on its 4-well dry Utica pad, located in Monroe County, Ohio, at an initial production rate of 44.7 MMcf per day with average flowing casing pressure of 6,835 psi. To-date, the Switz 6D well has been online for 30 days and has cumulatively produced approximately 488 MMcf. As of January 18, 2016, the Switz 6D well was producing at 19.6 MMcf per day with average flowing casing pressure of 7,150 psi.
Also during the fourth quarter, CONSOL completed and turned-in-line the three remaining dry Utica wells on the Switz 6 pad: the Switz 6F, 6H, and 6B wells. The Switz 6F and 6H wells had initial production rates of 23.7 MMcf per day and 25.2 MMcf per day with average casing pressure of 6,752 psi and 6,480 psi, respectively. These two wells were drilled and completed in the Utica formation with lateral lengths of 10,127 feet and 9,035 feet, respectively. As of January 18, 2016, the Switz 6F was producing at approximately 20.0 MMcf per day with flowing casing pressure of 7,113 psi, and the Switz 6H was producing at approximately 18.2 MMcf per day with flowing casing pressure of 6,900 psi. Both the Switz 6F and 6H are on a managed production plan. The Switz 6B well had an average initial production rate of 15.2 MMcf per day at an average flowing casing pressure of 5,532 psi. The Switz 6B was drilled and completed with a 6,145 foot lateral.
The Switz pad wells were completed with varying stimulation techniques and materials such as sand, ceramic, resin, and resin tailed-in proppant. The estimated cost savings of utilizing 100% sand proppant versus 100% ceramic proppant in the stimulation process is approximately $2.5 million per well. The company will evaluate the data collected to-date, as well as future production results, to determine the optimal completion methodology in the Ohio Dry Utica, while weighing initial production versus completion costs.
"The company continues to rapidly implement lessons learned from drilling and completing dry Utica Shale wells, as illustrated by reducing drilling costs per foot by nearly 50% from the first to the last well drilled in Monroe County, Ohio," commented Timothy C. Dugan, COO-E&P Division. "Based on initial data from the first set of operated and non-operated wells, CONSOL believes it can further reduce drilling and completion costs at or below the $10 million targeted goal, assuming a 7,000 foot lateral. For the Switz 6 pad, CONSOL has a 100% working interest and an average NRI of 80%."
MND 6H -Non-operated (Marshall County, West Virginia):
In the fourth quarter of 2015, the MND 6H dry Utica Shale well was brought on-line and production reached 60 MMcf per day during flowback operations. This well was drilled on a joint venture Marcellus pad. The MND 6H well, located in the Moundsville area, is part of the prior sale of approximately 3,000 acres to Noble Energy, which CONSOL executed in 2014. CONSOL believes that the 9,345 foot lateral is the longest Utica lateral drilled in West Virginia to-date. CONSOL has a 50% working interest in the well with a 49% NRI. Currently, the well is producing 20 MMcf per day with managed pressure draw-down of approximately 15-20 psi per day. CONSOL believes production from this well will remain flat for an extended period.
E&P DIVISION RESULTS -- Quarter-to-Quarter Comparison | ||||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
December 31, 2015 |
December 31, 2014 |
September | ||||||||||
Sales - Gas |
$ |
152.9 |
$ |
204.9 |
$ |
137.7 |
||||||
Gain on Commodity Derivative Instruments - Cash Settlement |
79.5 |
24.2 |
44.5 |
|||||||||
Sales - Oil |
0.6 |
2.3 |
1.7 |
|||||||||
Sales - NGLs |
23.2 |
30.0 |
7.6 |
|||||||||
Sales - Condensate |
8.9 |
13.8 |
10.8 |
|||||||||
Total Sales Revenue ($ MM) |
$ |
265.1 |
$ |
275.2 |
$ |
202.3 |
||||||
Net Income Attributable to CONSOL Energy Shareholders |
$ |
57.1 |
$ |
36.5 |
$ |
30.3 |
||||||
Net Cash Provided by Operating Activities ($ MM) |
$ |
95.2 |
$ |
55.7 |
$ |
54.0 |
||||||
Total Period Production (Bcfe) |
95.5 |
70.5 |
86.1 |
|||||||||
Average Daily Production (MMcfe) |
1,037.8 |
766.6 |
935.6 |
|||||||||
Capital Expenditures ($ MM) |
$ |
83.4 |
$ |
251.6 |
$ |
209.6 |
CONSOL's E&P division production in the quarter came from the following categories:
Quarter |
Quarter |
Quarter |
|||||||||||||
Ended |
Ended |
Ended |
|||||||||||||
December 31, 2015 |
December 31, 2014 |
% Increase/ |
September 30, 2015 |
% Increase/ | |||||||||||
GAS |
|||||||||||||||
Marcellus Sales Volumes (Bcf) |
42.5 |
31.1 |
36.7 |
% |
38.1 |
11.5 |
% | ||||||||
Utica Sales Volumes (Bcf) |
14.8 |
4.1 |
261.0 |
% |
10.2 |
45.1 |
% | ||||||||
CBM Sales Volumes (Bcf) |
18.7 |
20.0 |
(6.5) |
% |
18.5 |
1.1 |
% | ||||||||
Other Sales Volumes (Bcf)1 |
7.5 |
6.8 |
10.3 |
% |
7.2 |
4.2 |
% | ||||||||
LIQUIDS2 |
|||||||||||||||
NGLs Sales Volumes (Bcfe) |
9.8 |
6.7 |
46.3 |
% |
9.6 |
2.1 |
% | ||||||||
Oil Sales Volumes (Bcfe) |
0.1 |
0.2 |
(50.0) |
% |
0.2 |
(50.0) |
% | ||||||||
Condensate Sales Volumes (Bcfe) |
2.1 |
1.6 |
31.3 |
% |
2.3 |
(8.7) |
% | ||||||||
TOTAL |
95.5 |
70.5 |
35.5 |
% |
86.1 |
10.9 |
% |
Note: The increase in Marcellus sales volumes represents only the gas portion of production. When including liquids, the increase in Marcellus volumes was 33% compared to the year-earlier quarter. Production results are net of royalties.
1. Other Sales Volumes: primarily related to shallow oil and gas production, as well as Upper Devonian Shale in Pennsylvania and West Virginia.
2. Liquids: NGLs, Oil, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas.
Liquids production of 12.0 Bcfe, as a percentage of the total of 95.5 Bcfe, was approximately 13% in the just-ended quarter. As a result of continuing to high-grade production away from wet areas and shift more towards dry gas areas, liquids production decreased by 0.1 Bcfe, or approximately 1% during the quarter, compared to the third quarter of 2015.
E&P PRICE AND COST DATA PER MCFE -- Quarter-to-Quarter Comparison: | ||||||||||||
Quarter |
Quarter |
Quarter | ||||||||||
Ended |
Ended |
Ended | ||||||||||
(Per Mcfe) |
December 31, 2015 |
December 31, 2014 |
September 30, 2015 | |||||||||
Average Sales Price - Gas |
$ |
1.83 |
$ |
3.31 |
$ |
1.86 |
||||||
Average Gain on Commodity Derivative Instruments - Cash Settlement- Gas |
$ |
0.95 |
$ |
0.39 |
$ |
0.60 |
||||||
Average Sales Price - Oil* |
$ |
6.51 |
$ |
13.47 |
$ |
9.03 |
||||||
Average Sales Price - NGLs* |
$ |
2.36 |
$ |
4.50 |
$ |
0.80 |
||||||
Average Sales Price - Condensate* |
$ |
4.23 |
$ |
8.08 |
$ |
4.64 |
||||||
Average Sales Price - Total Company |
$ |
2.78 |
$ |
3.90 |
$ |
2.35 |
||||||
Costs - Production |
||||||||||||
Lifting |
$ |
0.24 |
$ |
0.43 |
$ |
0.28 |
||||||
Ad Valorem, Severance and Other Taxes |
0.06 |
0.15 |
0.10 |
|||||||||
DD&A |
0.97 |
1.16 |
0.96 |
|||||||||
Total Production Costs |
$ |
1.27 |
$ |
1.74 |
$ |
1.34 |
||||||
Costs - Gathering |
||||||||||||
Transportation |
$ |
0.77 |
$ |
0.70 |
$ |
0.79 |
||||||
Operating Costs |
0.25 |
0.41 |
0.29 |
|||||||||
DD&A |
0.08 |
0.12 |
0.09 |
|||||||||
Total Gathering Costs |
$ |
1.10 |
$ |
1.23 |
$ |
1.17 |
||||||
Gas Direct Administrative Selling & Other |
$ |
0.08 |
$ |
0.22 |
$ |
0.12 |
||||||
Total Costs |
$ |
2.45 |
$ |
3.19 |
$ |
2.63 |
||||||
Margin |
$ |
0.33 |
$ |
0.71 |
$ |
(0.28) |
*Oil, NGLs, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.
Note: Costs-the line item "Gas Direct Administrative, Selling, & Other" excludes general administration, incentive compensation, and other corporate expenses.
The average sales price per Mcfe within the E&P Division was impaired in the just-ended quarter, when compared to the year-earlier quarter due in part to the depressed commodity prices.
The average sales price of $2.78 per Mcfe, when combined with unit costs of $2.45 per Mcfe, resulted in a margin of $0.33 per Mcfe. This was a decrease when compared to the year-earlier quarter even though the improvements in unit costs partially offset the decline in price realizations.
Total E&P Division unit costs continued to improve in the just-ended quarter, as fixed costs, such as direct administration, were spread over higher production volumes. Unit costs were also improved, as low-cost Marcellus and Utica Shale production represented a much higher proportion of total production. In addition, the company has generated significant cost improvements across its coal-bed methane (CBM) field through continued optimization, despite volumes declining year-over-year.
The Utica Shale segment's continued efficiency improvements, along with higher production volumes, helped drive down lease operating expenses and direct administration costs, specifically, which were partially offset by slight increases to gathering and transportation costs during the quarter.
The Marcellus Shale segment's all-in unit costs were improved in part by volumes increasing 33%, when compared to the year-earlier quarter. Partially offsetting Marcellus unit cost improvements were slight increases in gathering and transportation costs associated with fees related to liquids gas processing.
The coal-bed methane (CBM) segment's all-in unit costs were $2.79 per Mcf in the just-ended quarter, or a decrease of $0.48 per Mcf from $3.27 per Mcf in the year-earlier quarter. Despite volumes declining in the quarter by approximately 7%, compared to the year-earlier quarter, the company continued to drive down costs through optimizing areas related to lease operating expenses such as contractual and well services, salt water disposal, and maintenance schedules.
E&P Marketing, Transportation, and Processing Update:
For the fourth quarter of 2015, CONSOL's average sales price for natural gas, natural gas liquids (NGL), oil, and condensate was $2.78 per Mcfe. CONSOL's average price for natural gas was $1.83 per Mcf for the quarter and, including hedging, was $2.78 per Mcf. During the fourth quarter, CONSOL produced NGL, oil, and condensate volumes of 12.0 Bcfe, or 13% of the company's total gas equivalent volumes. These liquids volumes were 41% greater than those of the year-earlier quarter, which then comprised 12% of the company's total gas equivalent volumes. The average realized price for all liquids for the fourth quarter of 2015 was $16.34 per barrel.
The company currently has a total of 1.2 Bcf per day of available firm transportation capacity. This is composed of 0.9 Bcf per day of firm capacity on existing pipelines and an additional 0.3 Bcf per day of long-term firm sales with major customers having their own firm capacity. Additionally, CONSOL has contracted volumes of approximately 0.5 Bcf per day on several pipeline projects that will be completed over the next several years. Even with the future expiration of certain transportation contracts, the company's effective firm transportation capacity will increase to approximately 1.6 Bcf per day. The average demand cost for the existing firm capacity is approximately $0.26 per MMBtu. The average demand cost for the existing and committed firm capacity is approximately $0.34 per MMBtu.
In addition to firm transportation capacity, CONSOL has developed a processing portfolio to support the projected volumes from its wet production areas. The company has agreements in place to support the processing of approximately 0.4 Bcf per day of gross natural gas volumes.
Coal Division Results:
Coal Division Fourth Quarter Summary:
During the fourth quarter of 2015, CONSOL Energy's Coal Division saw safety and compliance exceptions reduced by approximately 60%, compared to the year-earlier quarter. In the Pennsylvania Operations, the company's Bailey Mine was awarded the 2015 Keystone Mine Safety Award for the second consecutive year in the longwall mine category during the fourth quarter. The Miller Creek Complex was awarded the Mountaineer Guardian Safety Award of West Virginia. These significant accomplishments continue to illustrate CONSOL's unwavering commitment to the company's top two core values of safety and compliance.
During the fourth quarter of 2015, the Coal Division's total unit costs were $41.97 per ton, or an improvement of $3.02 per ton, compared to $44.99 per ton in the year-earlier quarter. Full year 2015 Coal Division total unit costs were $43.64 per ton, or an improvement of $3.27 per ton, compared to $46.91 per ton in the prior year. Full year 2015 Coal Division total unit costs were within the previously stated cost guidance of $41.61-$45.36 per ton.
The Pennsylvania Operations total unit costs were $39.84 per ton, compared to $42.61 per ton in the year-earlier quarter, despite production declining by approximately 28% over the same period. The improved cost performance during the quarter was primarily driven by reduced expenses related to Pennsylvania streams subsidence. Also, the Pennsylvania Operations continues to optimize the operational schedule at the mines to offset potential unit cost increases related to expected lower production volumes.
CONSOL Energy previously announced a reduction to Pennsylvania Operations 2016 sales guidance to 22-26 million tons due to shipment schedules and high-levels of customer inventories. As a result CONSOL has temporarily idled the Harvey Mine, one of the five longwalls in the Pennsylvania Operations. This action will not affect the previously stated guidance, but it will optimize the operating schedule to offset any cost increases associated with the delay in shipments. CONSOL expects that its decision to idle a longwall is short-term since the Pennsylvania Operations has a strong sold position of approximately 100%, based on the midpoint of the 22-26 million tons sales guidance. The Pennsylvania Operations was built to provide optionality and flexibility as to which longwalls are run, which could change in the future, based on coal quality, mining conditions and timing.
The Virginia Operations continues to optimize its cost structure, as reflected in the much lower all-in unit costs during the fourth quarter 2015 of $44.08 per ton, compared to $53.96 per ton in the year-earlier quarter. Better utilization from previously completed efficiency projects, and reduced travel time to the face of the longwall continued to benefit cost performance.
During the quarter, CONSOL's active coal operations generated $121 million of cash before capital expenditures.
COAL DIVISION RESULTS BY PRODUCT CATEGORY - Quarter-To-Quarter Comparison | ||||||||||||||||||||||||
PA Ops |
PA Ops |
VA Ops |
VA Ops |
Other |
Other | |||||||||||||||||||
Quarter |
Quarter |
Quarter |
Quarter |
Quarter |
Quarter | |||||||||||||||||||
Ended |
Ended |
Ended |
Ended |
Ended |
Ended | |||||||||||||||||||
December 31, |
December 31, |
December 31, |
December 31, |
December 31, |
December 31, | |||||||||||||||||||
2015 |
2014 |
2015 |
2014 |
2015 |
2014 | |||||||||||||||||||
Beginning Inventory (millions of tons) |
0.5 |
0.3 |
0.1 |
0.1 |
0.2 |
0.1 |
||||||||||||||||||
Coal Production (millions of tons) |
4.6 |
6.4 |
1.1 |
1.0 |
0.5 |
0.6 |
||||||||||||||||||
Ending Inventory (millions of tons) |
0.1 |
0.2 |
0.1 |
0.1 |
0.2 |
0.1 |
||||||||||||||||||
Sales - Company Produced (millions of tons) |
5.0 |
6.5 |
1.1 |
1.1 |
0.5 |
0.5 |
||||||||||||||||||
Sales Per Ton |
$ |
52.57 |
$ |
60.10 |
$ |
48.41 |
$ |
68.58 |
$ |
60.65 |
$ |
59.38 |
||||||||||||
Total Production Costs Per Ton |
$ |
39.84 |
$ |
42.61 |
$ |
44.08 |
$ |
53.96 |
$ |
61.26 |
$ |
56.10 |
||||||||||||
Average Margin Per Ton Sold |
$ |
12.73 |
$ |
17.49 |
$ |
4.33 |
$ |
14.62 |
$ |
(0.61) |
$ |
3.28 |
||||||||||||
Addback: DD&A Per Ton |
$ |
8.26 |
$ |
6.85 |
$ |
8.83 |
$ |
10.00 |
$ |
3.82 |
$ |
3.63 |
||||||||||||
Average Margin Per Ton, before DD&A |
$ |
20.99 |
$ |
24.34 |
$ |
13.16 |
$ |
24.62 |
$ |
3.21 |
$ |
6.91 |
||||||||||||
Cash Flow before Cap. Ex ($ MM) |
$ |
105 |
$ |
158 |
$ |
14 |
$ |
27 |
$ |
2 |
$ |
3 |
The Pennsylvania Operations include Bailey, Enlow Fork, and Harvey mines. The Virginia Operations include the Buchanan Mine. Other includes the Miller Creek Complex. Total Production Costs per Ton include: operating costs, direct administration and selling costs, royalty and production taxes and depreciation, depletion and amortization. Sales tons times Average Margin Per Ton, before DD&A is meant to approximate the amount of cash generated for the Pennsylvanian Operations, Virginia Operations, and Other coal categories. This cash generation will be offset by maintenance of production (MOP) capital expenditures. Table may not sum due to rounding.
Coal Marketing Update:
In the fourth quarter of 2015, CONSOL Energy's Coal Division sold 6.6 million tons, compared to 8.1 million during the year-earlier quarter. For full year 2015, CONSOL sold 29.2 million tons, which was in-line with 2015 total Coal Division guidance of 28.9-29.9 million tons. The timing of receipts of contracted tons, netback contracts, and spot business, both domestic and export, are affecting coal price realizations.
Pennsylvania Operations:
During the fourth quarter of 2015, the Pennsylvania Operations sold 5.0 million tons to 40 different end users through term contracts varying in length. Despite the currently depressed coal and gas markets, CONSOL has been able to gain market share in both traditional and non-traditional markets, which has resulted in a strong 2016 sold position of 24.1 million tons, or 100% of total estimated sales tons based on the midpoint of the recently reduced guidance range for Pennsylvania Operations of 22-26 million tons. However, unprecedented warm December weather has contributed more volatility to an already volatile market. This volatility could result in shipping delays, which may affect average realizations based upon changes in the customer mix and timing of coal shipments. Despite some shipping delays, CONSOL expects to ultimately ship these tons, but in the interim, the company continues to seek additional incremental sales to help offset delays. In addition to a strong 2016 sold position, CONSOL also has sold positions for 2017 and 2018 of approximately 61% and 49%, respectively. CONSOL Energy's contracting strategy remains the same: to continue to build a portfolio that targets the power plants that will endure in future energy markets with the potential to grow their consumption of coal.
Virginia Operations:
In the fourth quarter of 2015, the Virginia Operations sold 1.1 million tons of coal to domestic and international customers. The continued cost performance of the Virginia Operation's Buchanan Mine allowed the segment to remain competitive and profitable, while attracting new sales opportunities domestically and in Europe. During the quarter, CONSOL executed upon its strategy to increase domestic sales, which are now expected to represent approximately 35%-40% of 2016 sales. In the fourth quarter, CONSOL contracted 0.7 million tons of the Buchanan Mine's low-vol metallurgical coal into the domestic market for 2016. As additional supply cuts are announced and the metallurgical coal market recovers, the Virginia Operations will continue to prosper. CONSOL Energy continues to expect steady demand for its low-vol coal in the first quarter of 2016 and subsequent quarters.
Other:
In the fourth quarter of 2015, the Miller Creek Complex sold 0.5 million tons, which is flat with the year-earlier quarter. Also in the fourth quarter, CONSOL contracted a term deal consisting of an additional 2.0 million tons with a Southeastern utility customer, resulting in a sold position of 1.8 and 1.0 million tons for 2016 and 2017, respectively. In order to balance inventory with coal shipments, CONSOL temporarily idled the Miller Creek Complex. The company anticipates restarting operations once inventory levels normalize.
E&P Division Guidance:
CONSOL Energy expects annual 2016 E&P Division production to be approximately 15% growth compared to 2015 total production volumes.
Total hedged natural gas production in the 2016 first quarter is 58.9 Bcf. The annual gas hedge position is shown in the table below:
E&P DIVISION GUIDANCE | ||||||
2016 |
2017 | |||||
Total Yearly Production (Bcfe) / % growth |
~15% |
TBD* | ||||
Volumes Hedged (Bcf), as of 1/15/16 |
223.7 |
156.6 | ||||
* Yearly 2017 production will be a function of the second half 2016 capital program, continued debottlenecking initiatives, and the company's drilled but uncompleted (DUC) well inventory.
CONSOL Energy's hedged gas volumes include a combination of NYMEX financial hedges and index financial hedges (NYMEX plus basis). In addition, to protect the NYMEX hedge volumes from basis exposure, CONSOL enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. CONSOL Energy's gas hedge position is shown in the table below:
GAS HEDGES | ||||||||||||
Q1 2016 |
2016 |
2017 | ||||||||||
Total NYMEX + Basis* (Bcf) |
55.6 |
223.3 |
67.6 | |||||||||
Average Hedge Price ($/Mcf) |
$ |
3.55 |
$ |
3.28 |
$ |
3.07 | ||||||
NYMEX Only Hedges Exposed to Basis (Bcf) |
- |
0.4 |
89.0 | |||||||||
Average Hedge Price ($/Mcf) |
- |
$ |
3.58 |
$ |
3.08 | |||||||
Physical Sales With Fixed Basis Exposed to NYMEX (Bcf) |
3.3 |
- |
- | |||||||||
Average Hedge Basis Value ($/Mcf) |
$ |
0.31 |
- |
- |
* Includes physical sales with fixed basis in Q1 2016, 2016, and 2017 of 18.8 Bcf, 57.5 Bcf, and 21.3 Bcf, respectively.
During the fourth quarter of 2015, CONSOL Energy added an additional 96 Bcf of NYMEX hedges for 2017. In addition, to help mitigate basis exposure on NYMEX hedges, in the fourth quarter, CONSOL added 50.5 Bcf and 21.1 Bcf of basis hedges for 2016 and 2017, respectively.
CONSOL's 2016 NYMEX plus basis hedge position increased during the quarter to 223.3 Bcf at an average hedge price of $3.28 per Mcf. NYMEX plus basis hedge volumes are not exposed to basis differentials but instead have protected revenue. As a result, in 2016, NYMEX plus basis gas hedges lock in revenue of approximately $732 million.
Coal Division Guidance:
CONSOL Energy expects annual 2016 Coal Division sales to be approximately 27-32 million tons, which includes 2016 estimated sales for Pennsylvania Operations of 22-26 millions tons.
COAL DIVISION GUIDANCE | ||||||
2016 |
2017 | |||||
Est. Total Coal Sales |
27.0 - 32.0 |
30.5 - 33.4 | ||||
Committed |
27.8 |
12.7 | ||||
Estimated Price Per Ton (committed tons) |
$50-$55 |
$50-$55 | ||||
Est. PA Operations Sales |
22.0 - 26.0 |
25.0 - 27.0 | ||||
Committed |
24.1 |
11.1 | ||||
Est. VA Operations Sales |
3.5 - 4.2 |
3.7 - 4.2 | ||||
Committed |
1.9 |
1.6 | ||||
Est. Other Sales |
1.5 - 1.8 |
1.8 - 2.2 | ||||
Committed |
1.8 |
— |
Refer to note at the end of the press release for additional disclosures.
Liquidity:
As of December 31, 2015, CONSOL Energy had $855.9 million in total liquidity, which is comprised of $66.1 million of cash, excluding the CNX Coal Resources LP ("CNXC") cash balance, and $789.8 million available to be borrowed under its $2.0 billion bank facility. During the quarter, the company's lending group reaffirmed the bank facility's $2.0 billion borrowing base. In addition, CONSOL holds 12.7 million CNXC limited partnership units with a current market value of approximately $86 million and 19.1 million CONE Midstream Partners LP ("CNNX") limited partnership units with a current market value of approximately $190 million, as of January 22, 2016.
As of December 31, 2015, CONSOL Energy's leverage ratio decreased to 3.6x, compared to the previous quarter's leverage of 3.8x.
About CONSOL
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based producer of natural gas and coal. The company is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CONSOL Energy deploys an organic growth strategy focused on rapidly developing its resource base. As of December 31, 2014, CONSOL Energy reported 6.8 trillion cubic feet equivalent of proved natural gas reserves. The company's premium coals are sold to electricity generators and steel makers, both domestically and internationally. CONSOL Energy is a member of the Standard & Poor's 500 Equity Index. Additional information can be found at www.consolenergy.com.
Non-GAAP Financial Measures
Definition: 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. Adjusted EBITDA is defined as EBITDA after adjusting for the discrete items listed below. Although EBIT, EBITDA, and Adjusted 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 to evaluate a company's operating performance. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDA, or Adjusted EBITDA identically, the presentation here may not be comparable to similarly titled measures of other companies.
Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial net income attributable to CONSOL Energy Shareholders is as follows (dollars in 000):
Three Months Ended | ||||||||
December 31, | ||||||||
2015 |
2014 | |||||||
Net Income |
$ |
34,325 |
$ |
73,666 | ||||
Add: Interest Expense |
49,082 |
53,025 | ||||||
Less: Interest Income |
(431) |
(476) | ||||||
Add: Tax Valuation Allowance |
65,395 |
— | ||||||
Add: Income Taxes |
59,569 |
6,032 | ||||||
Earnings Before Interest & Taxes (EBIT) |
207,940 |
132,247 | ||||||
Add: Depreciation, Depletion & Amortization |
159,170 |
166,841 | ||||||
Earnings Before Interest, Taxes and DD&A (EBITDA) |
367,110 |
299,088 | ||||||
Adjustments: |
||||||||
OPEB Plan Changes |
(109,879) |
— | ||||||
Unrealized Gain on Commodity Derivative Instruments |
(62,388) |
— | ||||||
Pension Settlement |
15,921 |
3,603 | ||||||
Industrial Supplies Working Capital Settlement |
6,258 |
— | ||||||
Gain on Sale of Non-Core Assets |
(7,551) |
(19,830) | ||||||
Blacksville Fire Settlement |
— |
(9,750) | ||||||
Total Pre-tax Adjustments |
(157,639) |
(25,977) | ||||||
Adjusted EBITDA |
$ |
209,471 |
$ |
273,111 | ||||
Less: Noncontrolling Interest |
(3,920) |
— | ||||||
Adjusted EBITDA Attributable to CONSOL Energy Shareholders |
$ |
205,551 |
$ |
273,111 |
Note: Income tax effect of Total Pre-tax Adjustments was $36,257 and $9,871 for the three months ended December 31, 2015 and December 31, 2014, respectively. Adjusted net income attributable to CONSOL Energy shareholders for the three months ended December 31, 2015 is calculated as GAAP net income of $30,405 less total pre-tax adjustments of $157,639, plus the tax effect of $36,257, plus the tax valuation allowance of $65,395 equals the adjusted net loss attributable to CONSOL Energy shareholders of $25,582. EBITDA attributable to CONSOL Energy shareholders of $363,190 equals EBITDA of $367,110 less Noncontrolling interest of $3,920.
Coal Division Guidance
Note: Committed tons are tons that are both committed to be purchased and priced. Committed tons exclude collared tons and tons that are sold but not yet priced. There are no collared tons in 2015 or 2016. Collared tons in 2017 are 4.9 million tons, with a ceiling of $50.98 per ton and a floor of $43.77 per ton. Contracts with certain customers permit the customer to carry a portion of their contracted tons into the following year and/or to take gas instead of coal. For purposes of this table, the estimated price of each committed contract includes the base price stated in the contract and an estimate of the future adjustments to the contracted base price as set forth in such contract. The adjustment mechanisms reflect (i) variances in the quality characteristics of coal delivered to the customer beyond threshold quality characteristics specified in the applicable sales contract, (ii) the actual calorific value of coal delivered to the customer, and/or (iii) changes in electric power prices in the markets in which our customers operate, as adjusted for any factors set forth in the applicable contract. Each customer contract is different and not all contracts contain adjustments described in the preceding sentence. The estimated prices set forth in the table above were based in part on certain assumptions made by management. With respect to clause (i) quality characteristics, we based our assumption on our average monthly estimated quality numbers generated with our production forecast, created using pre-mining geology and analytical work, to determine the likely penalties and premiums associated with each contract using the average mine quality for tons estimated to be shipped during the time period. With respect to clause (ii) actual calorific value, we based our assumption on our average monthly estimated quality numbers generated with our production forecast, created using premining geology and analytical work, to determine the likely penalties and premiums associated with each contract using the average mine quality for tons estimated to be shipped during the time period. With respect to clause (iii), the electric power price-related adjustments, if any, result only in positive monthly adjustments to the contracted base price that we receive for our coal. These adjustments to contracted base prices were estimated using publicly available regional power generation information applicable to the markets in which our customers operate and other internally estimated information regarding contract specific factors that impact pricing. The key assumptions used for the estimated electric power price-related adjustments were derived using PJM Western Hub Day-Ahead Calendar Month (Peak and Off-Peak) prices adjusted using management's judgment and historical results. These derived assumptions were held constant in 2016 and 2017. While management considers the expectations and assumptions regarding estimated prices, including with respect to estimated electric power price-related adjustments, to be reasonable, they are inherently subject to business, economic, competitive, regulatory, and other risks and uncertainties, most of which are beyond our control.
Cautionary Statements
Various statements in this release, including those that express a belief, expectation or intention, may be considered forward-looking statements under federal securities laws including Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. 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," "estimate," "plan," "predict," "project," "will," 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 press release, if any, speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: deterioration in economic conditions in any of the industries in which our customers operate may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas, natural gas and other liquids and coal are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels. An extended decline in the prices we receive for our natural gas, natural gas liquids and coal affecting our operating results and cash flows; foreign currency fluctuations could adversely affect the competitiveness of our coal abroad; our customers extending existing contracts or entering into new long-term contracts for coal on favorable terms; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of rail, barge, gathering, processing and transportation facilities and other systems that deliver our natural gas, natural gas liquids and coal to market; a loss of our competitive position because of the competitive nature of the natural gas and coal industries, or a loss of our competitive position because of overcapacity in these industries impairing our profitability; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion emissions; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and coal and for our securities; the risks inherent in natural gas and coal operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions which could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our mining and transportation operations; obtaining and renewing governmental permits and approvals for our natural gas and coal operations; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas and coal operations; our ability to find adequate water sources for our use in gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current gas and coal operations; the effects of mine closing, reclamation, gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable gas, oil and coal reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, which are more fully described in our reports filed under the Securities Exchange Act of 1934; exposure to employee-related long-term liabilities; lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan exceeding total service and interest cost in a plan year; divestitures we anticipate may not occur or produce anticipated benefits; the terms of our existing joint ventures restrict our flexibility, actions taken by the other party in our gas joint ventures may impact our financial position and various circumstances could cause us not to realize the benefits we anticipate receiving from these joint ventures; risks associated with our debt; replacing our gas and oil reserves, which if not replaced, will cause our gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by Murray Energy to satisfy liabilities it acquired from us, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; certain provisions in our multi-year sales contracts may provide limited protection during adverse economic conditions, and may result in economic penalties or permit the customer to terminate the contract; our common units in CNX Coal Resources LP and CONE Midstream Partners LP are subordinated, and we may not receive distributions from CNX Coal Resources LP or CONE Midstream Partners LP; other factors discussed in the 2014 Form 10-K under "Risk Factors," as updated by any subsequent Form 10-Qs, which are on file at the Securities and Exchange Commission.
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
Three Months Ended |
Year Ended | ||||||||||||||
(Dollars in thousands, except per share data) |
December 31, |
December 31, | |||||||||||||
(Unaudited) |
2015 |
2014 |
2015 |
2014 | |||||||||||
Revenues and Other Income: |
|||||||||||||||
Natural Gas, NGLs and Oil Sales |
$ |
185,291 |
$ |
250,484 |
$ |
726,921 |
$ |
1,004,924 |
|||||||
Gain on Commodity Derivative Instruments |
141,868 |
24,234 |
392,942 |
23,193 |
|||||||||||
Coal Sales |
343,117 |
497,227 |
1,657,865 |
2,052,166 |
|||||||||||
Other Outside Sales |
6,371 |
63,195 |
30,967 |
276,242 |
|||||||||||
Production Royalty Interests and Purchased Gas Sales |
20,208 |
22,654 |
59,631 |
91,427 |
|||||||||||
Freight-Outside Coal |
11,602 |
5,597 |
25,597 |
28,148 |
|||||||||||
Miscellaneous Other Income |
33,568 |
41,288 |
145,968 |
207,103 |
|||||||||||
Gain on Sale of Assets |
19,906 |
30,986 |
74,510 |
43,601 |
|||||||||||
Total Revenue and Other Income |
761,931 |
935,665 |
3,114,401 |
3,726,804 |
|||||||||||
Costs and Expenses: |
|||||||||||||||
Exploration and Production Costs |
|||||||||||||||
Lease Operating Expense |
22,632 |
30,429 |
98,997 |
109,172 |
|||||||||||
Transportation, Gathering and Compression |
97,594 |
78,298 |
355,923 |
258,110 |
|||||||||||
Production, Ad Valorem, and Other Fees |
5,833 |
10,601 |
30,438 |
39,418 |
|||||||||||
Direct Administrative and Selling |
7,639 |
15,788 |
46,192 |
55,004 |
|||||||||||
Depreciation, Depletion and Amortization |
100,997 |
90,955 |
370,374 |
323,600 |
|||||||||||
Exploration and Production Related Other Costs |
2,423 |
7,590 |
10,119 |
23,355 |
|||||||||||
Production Royalty Interests and Purchased Gas Costs |
15,793 |
18,666 |
46,544 |
77,185 |
|||||||||||
Other Corporate Expenses |
23,875 |
25,712 |
90,583 |
86,588 |
|||||||||||
Impairment of Exploration and Production Properties |
— |
— |
828,905 |
— |
|||||||||||
General and Administrative |
12,158 |
16,292 |
54,244 |
64,047 |
|||||||||||
Total Exploration and Production Costs |
288,944 |
294,331 |
1,932,319 |
1,036,479 |
|||||||||||
Coal Costs |
|||||||||||||||
Operating and Other Costs |
132,485 |
305,903 |
863,199 |
1,322,737 |
|||||||||||
Royalties and Production Taxes |
15,370 |
23,493 |
78,844 |
100,890 |
|||||||||||
Direct Administrative and Selling |
7,284 |
9,753 |
33,476 |
44,106 |
|||||||||||
Depreciation, Depletion and Amortization |
58,172 |
75,490 |
279,209 |
280,150 |
|||||||||||
Freight Expense |
11,602 |
5,597 |
25,597 |
28,148 |
|||||||||||
General and Administrative Costs |
8,050 |
11,155 |
29,836 |
45,160 |
|||||||||||
Other Corporate Expenses |
6,824 |
13,877 |
39,687 |
55,321 |
|||||||||||
Total Coal Costs |
239,787 |
445,268 |
1,349,848 |
1,876,512 |
|||||||||||
Other Costs |
|||||||||||||||
Miscellaneous Operating Expense |
24,828 |
62,810 |
64,096 |
309,174 |
|||||||||||
General and Administrative Costs |
— |
137 |
— |
788 |
|||||||||||
Depreciation, Depletion and Amortization |
1 |
396 |
18 |
1,896 |
|||||||||||
Loss on Debt Extinguishment |
— |
— |
67,751 |
95,267 |
|||||||||||
Interest Expense |
49,082 |
53,025 |
199,269 |
223,564 |
|||||||||||
Total Other Costs |
73,911 |
116,368 |
331,134 |
630,689 |
|||||||||||
Total Costs And Expenses |
602,642 |
855,967 |
3,613,301 |
3,543,680 |
|||||||||||
Earnings (Loss) Before Income Tax |
159,289 |
79,698 |
(498,900) |
183,124 |
|||||||||||
Income Tax Expense (Benefit) |
124,964 |
6,032 |
(134,425) |
14,347 |
|||||||||||
Income (Loss) From Continuing Operations |
34,325 |
73,666 |
(364,475) |
168,777 |
|||||||||||
Loss From Discontinued Operations, net |
— |
— |
— |
(5,687) |
|||||||||||
Net Income (Loss) |
34,325 |
73,666 |
(364,475) |
163,090 |
|||||||||||
Less: Net Income Attributable to Noncontrolling Interests |
3,920 |
— |
10,410 |
— |
|||||||||||
Net Income (Loss) Attributable to CONSOL Energy Shareholders |
$ |
30,405 |
$ |
73,666 |
$ |
(374,885) |
$ |
163,090 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(CONTINUED) | |||||||||||||||
Three Months Ended |
For the Year Ended | ||||||||||||||
(Dollars in thousands, except per share data) |
December 31, |
December 31, | |||||||||||||
(Unaudited) |
2015 |
2014 |
2015 |
2014 | |||||||||||
Earnings (Loss) Per Share |
|||||||||||||||
Basic |
|||||||||||||||
Income (Loss) from Continuing Operations |
$ |
0.13 |
$ |
0.32 |
$ |
(1.64) |
$ |
0.73 |
|||||||
Income (Loss) from Discontinued Operations |
— |
— |
— |
(0.02) |
|||||||||||
Total Basic Earnings (Loss) Per Share |
$ |
0.13 |
$ |
0.32 |
$ |
(1.64) |
$ |
0.71 |
|||||||
Dilutive |
|||||||||||||||
Income (Loss) from Continuing Operations |
$ |
0.13 |
$ |
0.32 |
$ |
(1.64) |
$ |
0.73 |
|||||||
Loss from Discontinued Operations |
— |
— |
— |
(0.03) |
|||||||||||
Total Dilutive Earnings (Loss) Per Share |
$ |
0.13 |
$ |
0.32 |
$ |
(1.64) |
$ |
0.70 |
|||||||
Dividends Paid Per Share |
$ |
0.01 |
$ |
0.0625 |
$ |
0.145 |
$ |
0.25 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
Three Months Ended |
For the Year Ended | ||||||||||||||
(Dollars in thousands) |
December 31, |
December 31, | |||||||||||||
(Unaudited) |
2015 |
2014 |
2015 |
2014 | |||||||||||
Net Income (Loss) |
$ |
34,325 |
$ |
73,666 |
$ |
(364,475) |
$ |
163,090 |
|||||||
Other Comprehensive (Loss) Income: |
|||||||||||||||
Actuarially Determined Long-Term Liability Adjustments (Net of tax: $28,435, $51,850, $53,487, ($56,304)) |
(46,410) |
(90,486) |
(86,447) |
94,989 |
|||||||||||
Net Increase in the Value of Cash Flow Hedge (Net of tax: $-, ($68,928), $-, ($55,767)) |
— |
117,348 |
— |
97,316 |
|||||||||||
Reclassification of Cash Flow Hedges from Other Comprehensive Income to Earnings (Net of tax: $9,931, $15,974, $45,054, $10,465 |
(17,331) |
(22,042) |
(78,051) |
(18,288) |
|||||||||||
Other Comprehensive (Loss) Income |
(63,741) |
4,820 |
(164,498) |
174,017 |
|||||||||||
Comprehensive (Loss) Income |
(29,416) |
78,486 |
(528,973) |
337,107 |
|||||||||||
Less: Net Income Attributable to Noncontrolling Interests |
3,920 |
— |
10,410 |
— |
|||||||||||
Comprehensive (Loss) Income Attributable to CONSOL Energy Inc. Shareholders |
$ |
(33,336) |
$ |
78,486 |
$ |
(539,383) |
$ |
337,107 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands) |
December 31, |
December 31, | |||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash and Cash Equivalents |
$ |
72,578 |
$ |
176,989 |
|||
Accounts and Notes Receivable: |
|||||||
Trade |
200,508 |
260,943 |
|||||
Other Receivables |
122,095 |
346,020 |
|||||
Inventories |
97,438 |
101,873 |
|||||
Recoverable Income Taxes |
13,887 |
20,401 |
|||||
Prepaid Expenses |
298,257 |
187,742 |
|||||
Total Current Assets |
804,763 |
1,093,968 |
|||||
Property, Plant and Equipment: |
|||||||
Property, Plant and Equipment |
15,574,946 |
14,674,777 |
|||||
Less—Accumulated Depreciation, Depletion and Amortization |
5,905,569 |
4,512,305 |
|||||
Total Property, Plant and Equipment—Net |
9,669,377 |
10,162,472 |
|||||
Other Assets: |
|||||||
Investment in Affiliates |
237,330 |
152,958 |
|||||
Other |
218,432 |
245,248 |
|||||
Total Other Assets |
455,762 |
398,206 |
|||||
TOTAL ASSETS |
$ |
10,929,902 |
$ |
11,654,646 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited) |
|||||||
(Dollars in thousands, except per share data) |
December 31, |
December 31, | |||||
LIABILITIES AND EQUITY |
|||||||
Current Liabilities: |
|||||||
Accounts Payable |
$ |
271,394 |
$ |
531,973 |
|||
Short-Term Notes Payable |
952,000 |
— |
|||||
Current Portion of Long-Term Debt |
6,650 |
7,202 |
|||||
Other Accrued Liabilities |
450,893 |
602,972 |
|||||
Total Current Liabilities |
1,680,937 |
1,142,147 |
|||||
Long-Term Debt: |
|||||||
Long-Term Debt |
2,712,911 |
3,203,920 |
|||||
Capital Lease Obligations |
35,294 |
39,456 |
|||||
Total Long-Term Debt |
2,748,205 |
3,243,376 |
|||||
Deferred Credits and Other Liabilities: |
|||||||
Deferred Income Taxes |
74,629 |
259,024 |
|||||
Postretirement Benefits Other Than Pensions |
630,892 |
703,680 |
|||||
Pneumoconiosis Benefits |
113,032 |
116,941 |
|||||
Mine Closing |
299,280 |
306,789 |
|||||
Gas Well Closing |
164,634 |
175,369 |
|||||
Workers' Compensation |
69,812 |
75,947 |
|||||
Salary Retirement |
91,596 |
109,956 |
|||||
Reclamation |
34,150 |
33,788 |
|||||
Other |
166,959 |
158,171 |
|||||
Total Deferred Credits and Other Liabilities |
1,644,984 |
1,939,665 |
|||||
TOTAL LIABILITIES |
6,074,126 |
6,325,188 |
|||||
Stockholders' Equity: |
|||||||
Common Stock, $0.01 Par Value; 500,000,000 Shares Authorized, 229,054,236 Issued and Outstanding at December 31, 2015; 230,265,463 Issued and Outstanding at December 31, 2014 |
2,294 |
2,306 |
|||||
Capital in Excess of Par Value |
2,435,497 |
2,424,102 |
|||||
Preferred Stock, 15,000,000 Shares Authorized, None Issued and Outstanding |
— |
— |
|||||
Retained Earnings |
2,579,834 |
3,054,150 |
|||||
Accumulated Other Comprehensive Loss |
(315,598) |
(151,100) |
|||||
Common Stock in Treasury, at Cost—No Shares at December 31, 2015 and 2014 |
— |
— |
|||||
Total CONSOL Energy Inc. Stockholders' Equity |
4,702,027 |
5,329,458 |
|||||
Noncontrolling Interest |
153,749 |
— |
|||||
TOTAL EQUITY |
4,855,776 |
5,329,458 |
|||||
TOTAL LIABILITIES AND EQUITY |
$ |
10,929,902 |
$ |
11,654,646 |
CONSOL ENERGY INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) |
Common Stock |
Capital in Excess of Par Value |
Retained Earnings (Deficit) |
Accumulated Other Comprehensive (Loss) |
Common Stock in Treasury |
Total CONSOL Energy Inc. Stockholders' Equity |
Non- Controlling Interest |
Total Equity | |||||||||||||||||||||||
December 31, 2014 |
$ |
2,306 |
$ |
2,424,102 |
$ |
3,054,150 |
$ |
(151,100) |
$ |
— |
$ |
5,329,458 |
$ |
— |
$ |
5,329,458 |
|||||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||||||
Net (Loss) Income |
— |
— |
(374,885) |
— |
— |
(374,885) |
10,410 |
(364,475) |
|||||||||||||||||||||||
Gas Cash Flow Hedge (Net of $45,054 Tax) |
— |
— |
— |
(78,051) |
— |
(78,051) |
— |
(78,051) |
|||||||||||||||||||||||
Actuarially Determined Long-Term Liability Adjustments (Net of $53,487 Tax) |
— |
— |
— |
(86,447) |
— |
(86,447) |
— |
(86,447) |
|||||||||||||||||||||||
Comprehensive (Loss) Income |
— |
— |
(374,885) |
(164,498) |
— |
(539,383) |
10,410 |
(528,973) |
|||||||||||||||||||||||
Treasury Stock Activity |
— |
— |
(12,181) |
— |
— |
(12,181) |
— |
(12,181) |
|||||||||||||||||||||||
Issuance of Common Stock |
10 |
8,278 |
— |
— |
— |
8,288 |
— |
8,288 |
|||||||||||||||||||||||
Retirement of Common Stock (2,213,100 shares) |
(22) |
(17,683) |
(53,969) |
— |
— |
(71,674) |
— |
(71,674) |
|||||||||||||||||||||||
Tax Cost from Stock-Based Compensation |
— |
(3,706) |
— |
— |
— |
(3,706) |
— |
(3,706) |
|||||||||||||||||||||||
Amortization of Stock-Based Compensation Awards |
— |
24,506 |
— |
— |
— |
24,506 |
— |
24,506 |
|||||||||||||||||||||||
Distributions to Noncontrolling Interest |
— |
— |
— |
— |
— |
— |
(5,060) |
(5,060) |
|||||||||||||||||||||||
Proceeds from Sale of MLP Interest |
— |
— |
— |
— |
— |
— |
148,399 |
148,399 |
|||||||||||||||||||||||
Dividends ($0.145 per share) |
— |
— |
(33,281) |
— |
— |
(33,281) |
— |
(33,281) |
|||||||||||||||||||||||
December 31, 2015 |
$ |
2,294 |
$ |
2,435,497 |
$ |
2,579,834 |
$ |
(315,598) |
$ |
— |
$ |
4,702,027 |
$ |
153,749 |
$ |
4,855,776 |
CONSOL ENERGY INC. AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
(Dollars in Thousands) |
Three Months Ended |
Year Ended | ||||||||||||||
December 31, |
December 31, | |||||||||||||||
2015 |
2014 |
2015 |
2014 | |||||||||||||
Operating Activities: |
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) | ||||||||||||
Net Income |
$ |
34,325 |
$ |
73,666 |
$ |
(364,475) |
$ |
163,090 |
||||||||
Adjustments to Reconcile Net Income to Net Cash Provided By Continuing Operating Activities: |
||||||||||||||||
Net Loss from Discontinued Operations |
— |
— |
— |
5,687 |
||||||||||||
Depreciation, Depletion and Amortization |
159,170 |
166,841 |
649,601 |
605,646 |
||||||||||||
Impairment of Exploration and Production Properties |
— |
— |
828,905 |
— |
||||||||||||
Non-Cash Other Post-Employment Benefits |
(109,879) |
(45,751) |
(261,750) |
(45,749) |
||||||||||||
Stock-Based Compensation |
4,667 |
9,358 |
24,506 |
41,877 |
||||||||||||
Gain on Sale of Assets |
(19,906) |
(30,986) |
(74,510) |
(43,601) |
||||||||||||
Loss on Debt Extinguishment |
— |
— |
67,751 |
95,267 |
||||||||||||
Gain on Commodity Derivative Instruments |
(141,868) |
(24,234) |
(392,942) |
(23,193) |
||||||||||||
Net Cash Received in Settlement of Commodity Derivative Instruments |
79,480 |
24,234 |
196,348 |
19,025 |
||||||||||||
Deferred Income Taxes |
59,376 |
(6,823) |
(152,051) |
(10,430) |
||||||||||||
Return on Equity Investment |
4,355 |
54,750 |
35,466 |
102,174 |
||||||||||||
Equity in Earnings of Affiliates |
(16,059) |
(11,314) |
(54,897) |
(49,791) |
||||||||||||
Changes in Operating Assets: |
||||||||||||||||
Accounts and Notes Receivable |
40,933 |
(33,007) |
118,205 |
(97,248) |
||||||||||||
Inventories |
15,512 |
7,391 |
4,435 |
19,933 |
||||||||||||
Prepaid Expenses |
24,596 |
(4,267) |
127,687 |
4,536 |
||||||||||||
Changes in Other Assets |
(19,121) |
14,977 |
3,792 |
(20,767) |
||||||||||||
Changes in Operating Liabilities: |
||||||||||||||||
Accounts Payable |
(25,204) |
(124,364) |
(148,580) |
27,465 |
||||||||||||
Accrued Interest |
(37,230) |
(42,566) |
26,649 |
(9,868) |
||||||||||||
Other Operating Liabilities |
(8,495) |
68,810 |
(152,288) |
195,431 |
||||||||||||
Changes in Other Liabilities |
33,619 |
(6,208) |
(8,677) |
(54,274) |
||||||||||||
Other |
23,295 |
9,094 |
32,674 |
45,496 |
||||||||||||
Net Cash Provided by Continuing Operations |
101,566 |
99,601 |
505,849 |
970,706 |
||||||||||||
Net Cash Used In Discontinued Operating Activities |
— |
(12,992) |
— |
(33,926) |
||||||||||||
Net Cash Provided by Operating Activities |
101,566 |
86,609 |
505,849 |
936,780 |
||||||||||||
Cash Flows from Investing Activities: |
||||||||||||||||
Capital Expenditures |
(127,411) |
(318,818) |
(1,022,567) |
(1,493,425) |
||||||||||||
Proceeds from Sales of Assets |
27,527 |
215,700 |
110,571 |
356,836 |
||||||||||||
Net Investment in Equity Affiliates |
(13,997) |
(13,325) |
(84,221) |
95,207 |
||||||||||||
Net Cash Used in Investing Activities |
(113,881) |
(116,443) |
(996,217) |
(1,041,382) |
||||||||||||
Cash Flows from Financing Activities: |
||||||||||||||||
Proceeds from (Payments on) Short-Term Borrowings |
7,000 |
— |
952,000 |
(11,736) |
||||||||||||
Payments on Miscellaneous Borrowings |
(2,776) |
(6,117) |
(4,338) |
(10,286) |
||||||||||||
Payments on Long-Term Notes, including Redemption Premium |
— |
(11,736) |
(1,263,719) |
(1,819,005) |
||||||||||||
Proceeds from Issuance of Long-Term Notes |
— |
11,736 |
492,760 |
1,859,920 |
||||||||||||
Net Proceeds from Revolver - MLP |
5,000 |
— |
185,000 |
— |
||||||||||||
Distributions to Noncontrolling Interest |
(5,060) |
— |
(5,060) |
— |
||||||||||||
Proceeds from Sale of MLP Interests |
— |
— |
148,359 |
— |
||||||||||||
Tax Benefit from Stock-Based Compensation |
— |
151 |
208 |
2,629 |
||||||||||||
Dividends Paid |
(2,290) |
(14,387) |
(33,281) |
(57,506) |
||||||||||||
Proceeds from Issuance of Common Stock |
— |
1,613 |
8,288 |
15,016 |
||||||||||||
Purchases of Treasury Stock |
— |
— |
(71,674) |
— |
||||||||||||
Debt Issuance and Financing Fees |
— |
— |
(22,586) |
(24,861) |
||||||||||||
Net Cash Provided By (Used in) Financing Activities |
1,874 |
(18,740) |
385,957 |
(45,829) |
||||||||||||
Net Decrease in Cash and Cash Equivalents |
(10,441) |
(48,574) |
(104,411) |
(150,431) |
||||||||||||
Cash and Cash Equivalents at Beginning of Period |
83,019 |
225,563 |
176,989 |
327,420 |
||||||||||||
Cash and Cash Equivalents at End of Period |
$ |
72,578 |
$ |
176,989 |
$ |
72,578 |
$ |
176,989 |
Logo - http://photos.prnewswire.com/prnh/20120416/NE87957LOGO
SOURCE CONSOL Energy Inc.
CANONSBURG, Pa., Jan. 25, 2016 /PRNewswire/ -- The Board of Directors of CONE Midstream GP LLC, the general partner of CONE Midstream Partners LP (NYSE: CNNX), today announced the declaration of a cash distribution of $0.2362 per unit with respect to the fourth quarter of 2015. The distribution will be made on February 12, 2016 to unitholders of record as of the close of business on February 4, 2016. The distribution, which equates to an annual rate of $0.9448 per unit, represents an increase of 3.6% over the prior quarter, and an increase of 11.2% over the Minimum Quarterly Distribution as defined in CNNX's partnership agreement.
CONE Midstream Partners is a growth-oriented master limited partnership formed by CONSOL Energy Inc.(NYSE:CNX) and Noble Energy, Inc. (NYSE:NBL), whom we refer to as our Sponsors, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service our Sponsors' production in the Marcellus Shale in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available at our website www.conemidstream.com.
This press release is intended to be a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of CONE Midstream's distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business. Accordingly, CONE Midstream's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not CONE Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.
Contact: |
Stephen R. Milbourne |
CONE Midstream Partners Investor Relations | |
Phone: 724-485-4408 | |
Email: smilbourne@conemidstream.com |
SOURCE CONE Midstream Partners LP
PITTSBURGH, Jan. 4, 2016 /PRNewswire/ -- CONSOL Energy Inc. (NYSE: CNX) announced today that it will participate in the Goldman Sachs Global Energy Conference 2016 in Miami, Florida on Wednesday and Thursday, January 6-7, 2016.
CONSOL Energy's President and Chief Executive Officer, Nicholas J. DeIuliis, and Chief Operating Officer of the E&P Division, Timothy C. Dugan, will meet with investors at the conference. Also, on Thursday, January 7, 2016 at 11:00am ET, Mr. DeIuliis will participate in the Appalachian E&P Panel: Will productivity gains offset midstream de-bottlenecking?
The company will use presentation materials for the investors meetings, which will be available on the investor relations portion of the company's website at 6:45 a.m. ET on Wednesday, January 6, 2016. The panel discussion will not be webcast.
About CONSOL Energy
CONSOL Energy Inc. (NYSE: CNX) is a Pittsburgh-based producer of natural gas and coal. The company is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CONSOL Energy deploys an organic growth strategy focused on rapidly developing its resource base. As of December 31, 2014, CONSOL Energy had 6.8 trillion cubic feet equivalent of proved natural gas reserves. The company's premium coals are sold to electricity generators and steel makers, both domestically and internationally. CONSOL Energy is a member of the Standard & Poor's 500 Equity Index. Additional information can be found at www.consolenergy.com.
Logo - http://photos.prnewswire.com/prnh/20120416/NE87957LOGO
SOURCE CONSOL Energy Inc.
Buckland Compressor Station (subscriber access)
Status: (subscriber access)
Parent Entities:
CNX Midstream Partners LP
Cardinal States Gathering (CSG) System (subscriber access)
Status: (subscriber access)
Parent Entities:
CNX Resources Corporation
Morris Station Upgrade (subscriber access)
Status: (subscriber access)
Parent Entities:
CNX Midstream Partners LP
Ohio River Waterline (subscriber access)
Status: (subscriber access)
Parent Entities:
CNX Midstream Partners LP
CNX Resources Corporation
Richhill Area Infrastructure Pipelines (subscriber access)
Status: (subscriber access)
Parent Entities:
CNX Midstream Partners LP
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