Slide 1: Company Presentation Q4 2014
Company Presentation Q4 2014
Slide 2: Cautionary Language
Cautionary Language This presentation contains statements, estimates and projections which are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended). Statements that are not historical, are forward-looking, and include our operational and strategic
Slide 3: Summary of Updates Since Q3 2014 Earnings Call
Summary of Updates Since Q3 2014 Earnings Call Company Overview Gas Marketing - Slides 7 and 9-15: Updated for Q4 2014 earnings results - Slide 98: Updated NYMEX hedge percentage and basin exports - Slide 99: Update to graph to reflect current FT position; bar chart E&P Division updated to ref
Slide 4: Agenda
Agenda Company Overview E&P Division ─ Marcellus Shale ─ Utica Shale ─ Upper Devonian ─ Stacked Pay Potential ─ Other Gas Reserves and Resources ─ Gas Marketing Coal Division Monetization of Non-Core Assets Financial Overview Appendix 4
Slide 5: Transformative Journey
Company Overview Transformative Journey Ten years ago – traditional coal producer, the largest underground producer in the world Eight years ago – created CNX Gas Four years ago – acquired Dominion Resources’ Appalachian E&P business and became a coal company with a growing natural gas busines
Slide 6: CONSOL Energy Core Values
Company Overview CONSOL Energy Core Values Unwavering focus on Core Values of safety, compliance, and continuous improvement 6
Slide 7: Strategic Evolution
Company Overview Strategic Evolution CONSOL’s E&P Division represents the greatest portion of EBITDA Natural gas is the de facto choice for new MWh demand as well as for backfilling market share ceded by nuclear and coal, which is a bullish indicator for natural gas Capitalized, low cost coal
Slide 8: Oil and Gas Acreage Ownership
Company Overview Oil and Gas Acreage Ownership CONSOL % of Legacy Ownership by State and Horizon State Marcellus Utica Burkett Rhinestreet PA 50% 100% 50% 100% WV 50% 100% 50% 100% OH 100% 50% 100% 100% Note: CONSOL’s percentage of ownership is per the original 2011 JV agreements. Noble and Hess wil
Slide 9: Summary
Company Overview Summary We have tier-one assets across our entire Appalachian-centric portfolio, in both E&P and Coal: - Sweet spots in both the wet and dry portions of the Marcellus and Utica shales - Multiple stacked pay opportunities - In thermal coal, one of the highest Btu coals in the U.S.
Slide 10: Fourth Quarter 2014 Results
Company Overview Fourth Quarter 2014 Results Net income for the fourth quarter was $74 million - Includes the following after-tax items related to recent transactions completed by the company: $12.3 million in net income related to the sales of certain non-core assets as a part of its ongoing no
Slide 11: E&P Division: Summary
Company Overview E&P Division: Summary Q-to-Q Q-to-Q E&P Division 4Q2014 4Q2013 Change 4Q2014 3Q2014 Change Average Sales Price ($ / Mcfe) $3.90 $4.26 ($0.36) $3.90 $3.97 ($0.07) Average Costs ($ / Mcfe) $3.19 $3.55 ($0.36) $3.19 $3.12 $0.07 Sales Volumes (Bcfe) 70.5 48.5 22.0 70.5 64.9 5.6 Sales Vo
Slide 12: Coal Division: Summary
Company Overview Coal Division: Summary Q-to-Q Q-to-Q Coal Division 4Q2014 4Q2013 Change 4Q2014 3Q2014 Change Average Sales Price ($ / ton) $61.19 $66.85 ($5.66) $61.19 $62.32 ($1.13) Average Costs ($ / ton) $45.00 $50.05 ($5.05) $45.00 $49.93 ($4.93) Coal Production (millions of tons) 8.0 7.1 0.9 8
Slide 13: Strong Liquidity Position of $2.0 Billion
Company Overview Strong Liquidity Position of $2.0 Billion Cash on hand of $177 million Accounts receivable securitization and revolving credit facility of $1.8 billion Amount/ Amount Letters Amount December 31, 2014 ($ in million) Capacity Drawn of Credit Available Cash and Cash Equivalents $17
Slide 14: Net (Decrease)/Increase in Cash
Company Overview CONSOL Energy: Net (Decrease)/Increase in Cash Goal is to maintain our strong liquidity position Cash Flow Summary Q-to-Q Q-to-Q ($ in millions) 4Q2014 4Q2013 Change 4Q2014 3Q2014 Change Net Cash Provided by Operations $87 $70 $17 $87 $293 ($206) Capital Expenditures ($319) ($483)
Slide 15: Marketing 1Q15 and 2015 Forecasts
Company Overview Marketing 1Q15 and 2015 Forecasts 2015 Coal Sales Facts and Goals Sales Tons by Product Year 2015 Contracted tons for 2015: 78% - Priced: 76% 7% 12% Approximately 89% of the PA Ops tons are expected to be sold domestically Approximately 100% of the Other tons are expected to b
Slide 16: E&P Division
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Slide 17: Q4 2014 Operations Summary
E&P Division Q4 2014 Operations Summary Marcellus Shale Quarterly Summary Utica Shale Quarterly Summary Avg. TIL Avg. TIL Turned Turned Sub- Horizontal Lateral Sub- Horizontal Lateral Drilled Completed In Line Counties Drilled Completed In Line Counties Regions Rigs Length Regions Rigs Length (TIL)
Slide 18: Continuous Improvement in the Marcellus Shale
E&P Division Continuous Improvement in the Marcellus Shale Average Completed Lateral Length Average Max IP and Average 30-Day Rate 9,000 14,000 7,807 8,000 11,555 12,000 7,000 10,000 9,297 6,000 5,483 8,298 5,137 8,000 7,394 Mcf/d 5,000 Feet 4,000 3,366 6,000 5,033 5,227 4,593 3,000 3,780 3,499 2,04
Slide 19: CONSOL Energy is a Low Cost Leader
E&P Division CONSOL Energy is a Low Cost Leader 2011-2013 All Sources Reserve Replacement: 3-Year Average vs. E&P Peers 2,000% 1,500% Average: 316% 1,000% 515% 500% 0% CONSOL Energy 2011-2013 All Sources F&D Cost: 3-Year Average vs. E&P Peers $10 $8 $6 Average: $3.85 $/Mcfe $4 $2 $0.88 $0 CONSOL Ene
Slide 20: Large and Growing E&P Reserves
E&P Division Large and Growing E&P Reserves YE 2013 Proved Reserves Proved Reserves Growth 6,000 172 105 (172) 1,633 5,731 6,000 5,731 5,000 5,000 3,993 4,000 3,993 4,000 3,732 3,480 3,000 44% increase in proved Bcfe Bcfe reserves 3,000 87% increase in Marcellus Shale proved reserves 2,000 1,911
Slide 21: Resource and Opportunity Rich Portfolio
E&P Division Resource and Opportunity Rich Portfolio Proved Estimated Potential Locations (Gross) Tcfe Proved(2) Unproven Total Marcellus Shale 3.4 1,414 8,024 9,438 Utica Shale(1) 0.1 45 3,030 3,075 Upper Devonian 0.0 5 2,884 2,889 CBM 1.5 3,806 5,603 9,409 Conventional 0.6 9,997 71,871 81,868 Tota
Slide 22: E&P Division Summary
E&P Division Summary Marcellus Shale Utica Shale Future Development Growth engine over next 3-5 Growing portion of Stacked pay production years of development production mix over next 3 ─ 3 stacked play pads in years ─ Over 60% CAGR expected production with Marcellus – through 2016 ─ ~280% CAG
Slide 23: 2014 Activity Overview
E&P Division 2014 Activity Overview Marcellus Shale Utica Shale Upper Devonian PA/W North South Ohio Ohio SWPA CPA WV Ohio(1) Total V Total SWPA WV Total Wet Wet Wet Dry(1) Dry Drilled 44 10 23 1 67 24 169 38 1 -- 39 9 2 11 Completed 43(2) 14 18 -- 64 24 163 35 -- -- 35 4 -- 4 TIL 29(3) 14 16 -- 52
Slide 24: Gas Division Production Growth
E&P Division Gas Division Production Growth Gas Production 450 400 +30% 350 300-310 300 250 235.7 Bcfe 200 172.4 153.5 156.3 150 127.9 94.4 100 76.6 56.1 58.2 44.5 48.6 48.4 50 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E Marcellus CBM Utica Other Total 2014 Marcellus Sh
Slide 25: Marcellus Shale
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Slide 26: Marcellus Shale Overview
Marcellus Shale Overview ~436,000 CONSOL net acres ─ ~88% NRI ─ ~87% HBP 21.9 Tcfe 3P Over 8,900 gross potential wells(1) 2014 drilled wells: 169(2) ~93% Marcellus production growth in 2014 compared to 2013 Liquids growth from 2% in 2013 to 8% of total production in 2014 8 horizontal r
Slide 27: Growth Runway and Depth of Inventory
Marcellus Shale Growth Runway and Depth of Inventory Marcellus Shale Upside Potential Total Prospective Marcellus Acreage ~790,000 - Acres within JV ~690,000 - Acres outside JV – 100% CONSOL ~100,000 Acreage per well (assumed 750 ft spacing) ~86 Producing wells (YE2013) 259 PDNP and PUD loca
Slide 28: Actual Well Costs vs. Lateral Length
Marcellus Shale Actual Well Costs vs. Lateral Length 2012 and 2013 Combined Well Costs RCS/SSL Well Costs $12,000,000 $12,000,000 Actual RCS/SSL well costs $10,000,000 $10,000,000 $8,000,000 $8,000,000 $6,000,000 $6,000,000 $4,000,000 Targeted well costs $4,000,000 $2,000,000 $2,000,000 $0 $0 0 2,00
Slide 29: Increasing Economics By Drilling Longer Laterals
Marcellus Shale Increasing Economics By Drilling Longer Laterals IRR w/Carry IRR w/Eff IRR Hist. CONSOL consistently 160% 154% drills industry leading 145% long laterals 136% ─ 2011: 3,853 ft 126% 115% ─ 2012: 5,514 ft 120% 111% 105% 104% ─ 2013: 7,970 ft 98% 91% ─ 2014: 7,810 ft ATAX IRR 83% 83%
Slide 30: Marcellus Shale: Drilling
Marcellus Shale: Drilling 30
Slide 31: CONSOL-Operated Drilling Summary
Marcellus Shale: Drilling CONSOL-Operated Summary Drilling Summary 2011 2012 2013 2014 Wells TD’d 78 64 46 89 Lateral ft 300,466 328,428 366,615 663,718 Total MD ft 92,264 794,098 730,316 1,360,752 Average Lateral ft 3,853 5,514 7,970 7,458 Average TMD ft 11,824 13,280 15,876 15,289 Average Drill Co
Slide 32: Drilling Cost Efficiencies and Improvements
Marcellus Shale: Drilling Cost Efficiencies and Improvements Air Directional: Expect a two-day reduction in horizontal cycle times Technological Advances: One-run RSS tools; drilling optimization, and evaluating 7-7/8” production hole Rig Move Improvements: Expect 20% reduction in rig move tim
Slide 33: Marcellus Shale: Completions
Marcellus Shale: Completions 33
Slide 34: CONSOL-Operated Completions Summary
Marcellus Shale: Completions CONSOL-Operated Summary Completions Summary 2011 2012 2013 2014 Wells Completed 57 51 59 73(1) Lateral Completed ft 188,800 270,256 333,895 569,919 Total Stages 684 940 1,527 3,374 Average Stage/Well 12 18 26 46 Average Stage Cost $205k $184k $193k $128k(2) Evolving Stim
Slide 35: Completions Cost Efficiencies and Improvements
Marcellus Shale: Completions Cost Efficiencies and Improvements Completions Pricing Reduction: Service cost reductions expected in 2015. Efficiency Increases: Increases the number of stages per day: Have achieved 11 RCS/SSL stages in 24 hrs Stimulation Design Optimization: Pump rates, sand sch
Slide 36: Capital Savings per Well
Marcellus Shale: Completions Cost Efficiencies and Improvements Entire pad average stages per day Increasing from 4 to 8 stages per day equates to capital savings of $430,000 and reduces cycle time by ~7 days Capital Savings vs. Stages per Day $116,000 $600,000 Capital Savings per well $114,000
Slide 37: Marcellus Shale: Sub-Regions
Marcellus Shale: Sub-Regions 37
Slide 38: Marcellus Sub-Regions Summary
Marcellus Shale: Sub-Regions Summary Marcellus Shale North South SWPA CPA WV Ohio(1) Total Wet Wet Net Acres ~45,000 ~110,000 ~105,000 ~11,000 ~60,000 ~105,000 ~436,000 Approximate Gross 700 2,000 2,300 100 1,600 2,200 ~8,900 Locations(2) Avg EURs/1,000 ft 2.1 1.6 1.8 1.3 1.7 1.4 -- (Bcfe) Avg Drill
Slide 39: Southwest PA Overview
Marcellus Shale: Southwest PA Southwest PA Overview ~45,000 CONSOL net acres NV56 Pad Over 700 gross locations(1) 6 Wells 8,753’ Avg Lateral Length per well 9,230 Mcfe Avg 30-day IP per well ─ 155 wells online, as NV36 Pad NV57 Pad of 12/31/2014 8 Wells 7 Wells 8,914’ Avg Lateral Length per well
Slide 40: Southwest PA 5,000 ft Type Curve and Economics
Marcellus Shale: Southwest PA Southwest PA 5,000 ft Type Curve and Economics 1,000 100 MMcfe/Mo 10 1 0 50 100 150 200 Months IRR w/Carry IRR w/Eff IRR Hist. 160% 159% Southwest PA 131% Assumptions Type Curve 2014 (2) Lateral Length (ft) 5,000 7,655 120% 105% 115% EUR (Bcfe) 10.5 16.1 ATAX IRR(1) 95%
Slide 41: Southwest PA Production vs. 5,000 ft Type Curve
Marcellus Shale: Southwest PA Southwest PA Production vs. 5,000 ft Type Curve 8.5 Bcfe Type Curve 7.2 Bcfe Type Curve Projecting 18% improvement in EURs utilizing RCS/SSL 41
Slide 42: Southwest PA Production vs. 5,000 ft Type Curve
Marcellus Shale: Southwest PA Southwest PA Production vs. 5,000 ft Type Curve 11.6 Bcfe Type Curve 9.6 Bcfe Type Curve In our core Southwest PA area of Green Hill, Morris, and Nineveh, we drilled 53 laterals in 2014 and expect to add another 30 lateral TDs in both 2015 and 2016 42
Slide 43: Northern WV Overview
Marcellus Shale: Northern WV Dry Northern WV Overview ~105,000 CONSOL net acres Over 2,300 gross ANDERSON (PDC Mountaineer) 3 Wells PHL10 Pad locations(1) 4,859’ Avg Lateral Length per well 6 Wells 595 MMcf/well – 1st 6-Month Cum 4,636’ Avg Lateral Length per well ─ 34 wells online, as of 3,148
Slide 44: Northern WV 5,000 ft Type Curve and Economics
Marcellus Shale: Northern WV Dry Northern WV 5,000 ft Type Curve and Economics 1,000 100 MMcfe/Mo 10 1 0 50 100 150 200 Months IRR w/Carry IRR w/Eff IRR Hist. 100% Northern WV Dry Assumptions Type Curve 2014 85% Lateral Length (ft) 5,000 7,074(2) 80% 69% EUR (Bcfe) 8.8 12.4 62% ATAX IRR(1) 60% 54% E
Slide 45: Northern WV Production vs. 5,000 ft Type Curve
Marcellus Shale: Northern WV Dry Northern WV Production vs. 5,000 ft Type Curve 7.9 Bcfe Type Curve 6.6 Bcfe Type Curve Faulting has hampered early pads in this area but new 3D seismic will allow better targeted drilling and engineered completions designs 45
Slide 46: Northern WV - Dominion Transmission Storage Field
Marcellus Shale: Northern WV Dry Northern WV - Dominion Transmission Storage Field Antero Activity(1) Within 2 miles of DTI northern border AUD7 Pad Average EURs: 1.7 Bcfe/1,000’ lateral 1 Well Delineation utilizing RCS/SSL 8,904’Avg Lateral Length per well 7,120 Mcfe Avg 30-day IP per well AUD3 Pad
Slide 47: Central PA Overview
Marcellus Shale: Central PA Central PA Overview ~110,000 CONSOL net acres CRAWFORD 5 Pad Over 2,000 gross 2 Wells 7,305’ Avg Lateral Length per well NARDELL Pad Currently drilling 2 Marcellus wells locations(1) 13,586 Mcfe Avg 24-hr IP per well 624 Mmcfe/well – 60 day Cum ─ 56 wells online, as o
Slide 48: Central PA 5,000 ft Type Curve and Economics
Marcellus Shale: Central PA Central PA 5,000 ft Type Curve and Economics 1,000 100 MMcfe/Mo 10 1 0 50 100 150 200 Months IRR w/Carry IRR w/Eff IRR Hist. 80% Central PA 78% Assumptions Type Curve 2014 63% Lateral Length (ft) 5,000 7,189(2) 60% 57% EUR (Bcfe) 8.0 11.5 50% ATAX IRR(1) 46% EUR/1000 ft (
Slide 49: Central PA Production vs. 5,000 ft Type Curve
Marcellus Shale: Central PA Central PA Production vs. 5,000 ft Type Curve 7.2 Bcfe Type Curve 6.0 Bcfe Type Curve Eleven RCS/SSL wells are included 49
Slide 50: New Project Areas – Pittsburgh Airport
Marcellus Shale: North Wet Gas New Project Areas – Pittsburgh Airport 45 planned Marcellus laterals 45 potential Upper Devonian laterals 15 planned 30 potential 45 potential Utica Shale laterals ~9,000 contiguous acres have resource potential in excess of 1.6 Tcfe; currently running 1 horizontal rig
Slide 51: North Wet Gas Overview
Marcellus Shale: North Wet Gas North Wet Gas Overview ~60,000 CONSOL net acres Over 1,600 gross locations(1) ─ 110 wells online as of 12/31/2014 IMPERIAL LAND (Range ─ 52 wells brought Resources) online in 2014 4 Wells BARE WARREN (Range 3,182’ Avg Lateral Length per well Resources) 373 MMcf/wel
Slide 52: Moundsville Field: Combined Utica Development
Marcellus Shale: North Wet Gas Moundsville Field: Combined Utica Development During Q4 - CONSOL and Noble closed on ~3,400 Utica acres in Moundsville Field AMI only covers Moundsville Development and combines 1,000+ acres already jointly held Will utilize mix of Marcellus pads and new pads to
Slide 53: North Wet Gas 5,000 ft Type Curve and Economics
Marcellus Shale: North Wet Gas North Wet Gas 5,000 ft Type Curve and Economics 1,000 5 Wellhead Sold Gas 4 100 Condensate MMcf/Mo MBbl/Mo NGL 3 2 10 1 1 0 0 50 100 150 200 Months IRR w/Carry IRR w/Eff IRR Hist. 100% North Wet Gas 91% Assumptions Type Curve 2014 (2) 80% 74% Lateral Length (ft) 5,000
Slide 54: North Wet Gas Production vs. 5,000 ft Type Curve
Marcellus Shale: North Wet Gas North Wet Gas Production vs. 5,000 ft Type Curve Increasing productivity Limited use of RCS/SSL First 12 wells of 2014 ─ 2014 IP rates significantly above 2012 and 2013 levels with increased use of RCS/SSL 15-20% upside potential for EURs as RCS/SSL 8.5 Bcfe Type
Slide 55: South Wet Gas Overview
Marcellus Shale: South Wet Gas South Wet Gas Overview SHR1 Pad ~105,000 CONSOL net 6 Wells ~8,741’ Avg Lateral Length per well WEESE (Triad Hunter) 3 Wells acres PENS1 Pad 10,143 Mcfe Avg 30-day IP per well 9 Wells 3,711’ Avg Lateral Length per well Over 2,200 gross ~6,824’ Avg Lateral Length pe
Slide 56: South Wet Gas 5,000 ft Type Curve and Economics
Marcellus Shale: South Wet Gas South Wet Gas 5,000 ft Type Curve and Economics 1,000 5 Wellhead Sold Gas 4 100 Condensate MMcf/Mo MBbl/Mo NGL 3 2 10 1 1 0 0 50 100 150 200 Months IRR w/Carry IRR w/Eff IRR Hist. South Wet Gas 60% Assumptions Type Curve 2014 (2) 51% Lateral Length (ft) 5,000 8,539 41%
Slide 57: South Wet Gas Production vs. 5,000 ft Type Curve
Marcellus Shale: South Wet Gas South Wet Gas Production vs. 5,000 ft Type Curve Condensate yield: 5 Bbls/MMcf NGLs yield: 33 Bbls/MMcf 7.0 Bcfe Type Curve 5.0 Bcfe Type Curve 57
Slide 58: Utica Shale
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Slide 59: A Leading Position in the Utica Shale
Utica Shale Overview: A Leading Position in the Utica Shale ~581,000 CONSOL net acres(1) Over 3,000 gross locations ─ 48 wells online, as of 12/31/2014 ─ 41 wells brought online in 2014 ─ 7,510 ft average laterals in 2014 ─ 4-5 wells per pad on average in 2014 ─ 120-acre spacing (assuming 7,000
Slide 60: Utica Growth Runway and Depth of Inventory
Utica Shale Growth Runway and Depth of Inventory Utica Shale Upside Potential Total Prospective Utica Acreage ~650,000 - Acres within JV ~137,000 - Acres outside JV – 100% CONSOL ~513,000 Acreage per well (assumed 750 ft spacing) ~86 Producing wells (YE2013) 9 PDNP and PUD locations (YE2013)
Slide 61: Utica Production Growth
Utica Shale Utica Production Growth Production 50 45.0 40.0 40 30 Bcfe 20 16.7 10 0.7 0 2013 2014 2015E 2016E Utica Net Production Utica Shale 2014 production exceeded original guidance; Utica expected to continue to become even greater part of mix moving forward 61
Slide 62: Utica Shale: Drilling
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Slide 63: CONSOL-Operated Drilling Summary
Utica Shale: Drilling CONSOL-Operated Summary Drilling Summary 2013 2014 Wells TD’d 9 14 Lateral ft 63,167 79,079 Total MD ft 137,769 195,793 Average Lateral ft 7,019 5,649 Average TMD ft 15,308 13,985 Average Drill Cost/ft $366 $350 Average Lateral Cost/ft $798 $867 39 gross Utica Shale wells drill
Slide 64: Drilling Cost Efficiencies and Improvements
Utica Shale: Drilling Cost Efficiencies and Improvements Shortened Intermediate Casing: Potential to reduce cycle times by 8 days with revised casing program; could result in reduction in cost of $900k per well Technological Advances: One-run RSS tools, drilling optimization, and evaluating 7-7/
Slide 65: Utica Shale: Completions
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Slide 66: CONSOL-Operated Completions Summary
Utica Shale: Completions CONSOL-Operated Summary Completions Summary 2012 2013 2014 Wells Completed 4 10 16 Lateral Completed ft 18,160 50,916 95,808 Total Stages 63 200 610 Average Stg/Well 16 20 38 Average Stage Cost $310k $224k $168k(1) Evolving Stimulation Design 2012 2013 2014 Stage Length ft 3
Slide 67: Completions Cost Efficiencies and Improvements
Utica Shale: Completions Cost Efficiencies and Improvements Completions Pricing Reduction: Service cost reductions are expected in 2015. Efficiency Increases: Increases the number of stages per day Stimulation Design Optimization: Pump rates, sand schedules, additives, etc. $180,000 $155,000 (
Slide 68: Utica Shale: Sub-Regions
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Slide 69: 2014 Activity Overview
Utica Shale: Sub-Regions 2014 Activity Overview Utica Shale Ohio Wet Ohio Dry PA/WV Dry Total Net Acres ~84,000 ~25,000 ~472,000 ~581,000 Approximate Gross 500 300 2,200 3,000 Locations(1) Avg Drilled Lateral 7,535 6,559 -- -- Length ft Avg EURs/well 14.3 15.7 -- -- (Bcfe) Avg EURs/1,000 ft 1.9 2.4
Slide 70: The Utica Sweet Spot Evolves
Utica Shale: Ohio Wet Gas The Utica Sweet Spot Evolves HES – Cadiz A HES – Cadiz B IP GAS: 8,006 Mcf/d IP GAS: 10,254 Mcf/d CHK - Buell 8H IP OIL: 399 Bbl/d IP OIL: 191 Bbl/d IP GAS: 9,500 Mcf/d IP OIL: 1,425 Bbl/d HES – Athens A GPOR - Boy Scout 33H IP GAS: 7,745 Mcf/d ~36,000 net core wet acres IP
Slide 71: CONSOL's Historic Core
Utica Shale: Ohio Wet Gas CONSOL’s Historic Core: Noble, Harrison, Belmont, Guernsey, and Jefferson Counties ~84,000 CONSOL net acres ~36,000 CONSOL net acres in core Type curve reflects core area Over 500 gross core area locations(1) ─ 53 wells online, as of 12/31/2014 ─ 41 wells online in
Slide 72: Recent IP Rates In-and-Around Monroe County, OH
Utica Shale: Ohio Dry Gas Recent IP Rates In-and-Around Monroe County, OH CVX Conner well (Utica): 25.0 MMcf/d – Avg 24-hr rate GPOR Irons 1-4H (Utica): ECR Shroyer 2-well pad (Utica): 30.3 MMcf/d – Avg 24-hr rate 7,819 – Avg later length 42.5 MMcf/d – Combined Rate GST Simms: 4447' Lateral 1st 48 H
Slide 73: Ohio Dry Gas Area Production vs. Type Curve
Utica Shale: Ohio Dry Gas Ohio Dry Gas Area Production vs. 5,000 ft Type Curve ~25,000 CONSOL net acres ─ ~11,000 net acres in Monroe County, OH ─ ~14,000 net acres in eastern portion of Jefferson, Belmont and Harrison counties Over 300 gross locations(1) ─ First pad (SWITZ 6: 4 Utica and 1 Marc
Slide 74: Utica PA/WV Dry Gas Area Overview
Utica Shale: PA/WV Dry Gas Utica PA/WV Dry Gas Area Overview REXX – Cheeseman 1 RRC– Zahn #1 IP Gas: 9,200 Mcf/d IP Gas: ~4,500 Mcf/d IP Oil: 0 Bbl/d IP Oil: 0 Bbl/d CHK – Thompson 3H CHK– Hubbard 3H IP Gas: 6,400 Mcf/d IP Gas: 11,00 Mcf/d IP Oil: 0 Bbl/d IP Oil: 0 Bbl/d CHK – Brown 10H CNX – Gaut 4
Slide 75: Utica PA/WV Dry Gas Production vs. Type Curve
Utica Shale: PA/WV Dry Gas Utica PA/WV Dry Gas Production vs. 5,000 ft Type Curve ~472,000 CONSOL net acres ─ ~300,000 prospective net acres in PA (~80,000 net acres located within Greene and Washington counties) ─ ~172,000 prospective net acres in WV Well count Over 2,200 gross locations(1) 1
Slide 76: Upper Devonian
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Slide 77: Burkett Shale Sweet Spot
Upper Devonian Burkett Shale Sweet Spot CONSOL is well situated in the best part of the Burkett fairway, with an estimated 345,000 net acres of potential across the entire Upper Devonian 77
Slide 78: NV39F Upper Devonian Exploration Well
Upper Devonian NV39F Upper Devonian Exploration Well Drilled in Southwest PA 5 underlying Marcellus wells on pad Washington County, PA ─ Drilled lateral length of 4,889 ft ─ Frac’d 17 stages in Burkett Shale ─ Tested 3.0 MMcf/d, TIL 6/21/13 ─ Currently producing 2.4 MMcf/d ─ Produced 1.0 Bcf in
Slide 79: Upper Devonian Production vs. 5,000 ft Type Curve
Upper Devonian Upper Devonian Production vs. 5,000 ft Type Curve First Upper Devonian well demonstrating very shallow decline compared to type curve Currently producing above type curve: Forecasted EUR 9 Bcfe Drilled 9 Burkett Shale and 2 Rhinestreet Shale wells in 2014 Within the Marcellus
Slide 80: Stacked Pay Potential
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Slide 81: Appalachian Shale Acreage
Stacked Pay Potential Appalachian Shale Acreage P a y Formation Name Wet Dry Total Net Acres Net Acres Net Acres Rhinestreet Shale Upper Cashaqua Shale Devonian 190,000 155,000 345,000 Middlesex Shale West River Shale Burkett Shale Tully Limestone Hamilton Shale Marcellus Marcellus 175,000 261,000 4
Slide 82: CONSOL's Shale Fairway
Stacked Pay Potential CONSOL’s Shale Fairway PIT Airport Rhinestreet = 5,340’ Burkett = 5,460’ Marcellus = 5,690’ Utica = 10,760’ Monroe County/Moundsville Rhinestreet = 5,930’ Burkett = 6,110’ Southwest PA Marcellus = 6,190’ Rhinestreet = 6,730’ Utica = 10,680 Burkett = 7,000’ Marcellus = 7,270’ Ut
Slide 83: Gas Factory Development
Stacked Pay Potential Gas Factory Development Stacked laterals provide economies of scale to access up to 4 pays from 1 pad 83
Slide 84: Southwest PA Stack Pay Potential
Stacked Pay Potential Southwest PA Stack Pay Potential: ~9.0 Tcfe Resource Potential Potential Lateral Spacing Well CapEx EUR Liquids Resource Pay Wells Length (ft) (acre) ($MM) (Bcfe) (%) (Bcfe) Burkett 235 ~6,400 110 7.6 9.5 - 2,226 Rhinestreet 165 ~6,100 105 7.4 4.5 - 745 Marcellus 249 ~6,400 110
Slide 85: Pittsburgh Airport Stack Pay Potential
Stacked Pay Potential Pittsburgh Airport Stack Pay Potential: ~1.6 Tcfe Resource Potential Potential Lateral Spacing Well CapEx EUR Liquids Resource Pay Wells Length (ft) (acre) ($MM) (Bcfe) (%) (Bcfe) Upper Devonian (Burkett) 45 ~8,000 138 8.8 9.3 16% 418 Marcellus 45 ~8,000 138 8.8 13.3 16% 598 Ut
Slide 86: Stacked Pay Model in Southwest PA
Stacked Pay Potential Stacked Pay Model CONSOL is executing in Southwest PA NV-20 Marcellus Wells NV-48 Burkett Wells NV-48 Rhinestreet Well NV-48 Burkett Wells Existing Marcellus Wells on NV-20 Pad Existing Marcellus Wells on NV-20 Pad CNX has executed on stacked pay potential on several pads; incl
Slide 87: Other Gas Reserves and Resources
Other Gas Reserves and Resources 87
Slide 88: Virginia Coalbed Methane (CBM)
Other Gas Reserves and Resources Virginia Coalbed Methane (CBM) 350,000 net acres(1) Origin of CNX Gas Associated with mining at Buchanan mine Advantageous gas marketing location for basis Over 2,700 gross locations ─ ~3,000 wells online, as of 12/31/2014 ─ 60 wells online in 2014E 0.5 B
Slide 89: Conventional Wells
Other Gas Reserves and Resources Conventional Wells 2,294,000 net acres(1) HBP position creates substantial flexibility to explore and develop other pays Mostly acquired with Dominion E&P acquisition in 2010 ~70,000 gross locations ─ ~10,000 wells online, as of 12/31/2014 0.250 Bcfe/well
Slide 90: Chattanooga Shale, Monteagle SOG, and Conasauga Shale
Other Gas Reserves and Resources Chattanooga Shale, Monteagle SOG, and Conasauga Shale 243,000 CONSOL net acres 2,170 gross locations ─ 93 wells online as of 12/31/2014 ─ 8 wells online in 2014 Chattanooga: $1.5 million/Hz well 1.0 Bcfe/well (4,200 ft) Currently producing 7.6 MMcf/d Annu
Slide 91: Illinois Basin
Other Gas Reserves and Resources Illinois Basin 277,000 net acres(1) ~1,400 gross locations Stacked pay potential ─ Mississippian and Devonian sandstones and carbonate ─ New Albany shale ─ Maquoketa shale Currently producing: ~0.2 MMcf/d Annual decline rate of ~12% Producing Wells (1) Incl
Slide 92: E&P Division Summary
E&P Division Summary 30% gas production growth Implemented asset teams Driving costs down with efficiencies and lean manufacturing Stacked pay potential Solid production with conventional assets Joint ventures with established partners CONSOL has the team and the assets to drive value 92
Slide 93: Gas Marketing
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Slide 94: Appalachia Energy Basin - Stacked Reserves
Gas Marketing Appalachia Energy Basin - Stacked Reserves Upper Devonian Utica Shale Marcellus Shale Pittsburgh 8 Coalbed Methane Conventional SOG Reserves Pocahontas Coalbed Methane CONSOL Energy is located in the middle of a world-class natural gas and coal reserve area that has decades of growth p
Slide 95: CONSOL Energy Stacked Assets
Gas Marketing CONSOL Energy Stacked Assets CNX Assets Marcellus Shale Utica Shale Upper Devonian Conventional SOG Upper Coalbed Methane Devonian Utica Coal Reserves Shale Marcellus Shale Bailey Complex Conventional SOG CNX Reserves • ~5.7 Tcfe of proved gas reserves Coalbed Methane • ~436,000 Marcel
Slide 96: Market Opportunities - Stacked Customers
Gas Marketing Market Opportunities - “Stacked Customers” Power Plants Natural Gas Plants Coal Plants Our ability to produce both natural gas and coal allows us the flexibility to provide an energy solution to utilities that burn either fuel Source: SNL Financial. 96
Slide 97: Shared Value Opportunities
Gas Marketing Shared Value Opportunities Land Thermal Coal Gathering NGL Sales Processing Export Ethane Met Coal Pipelines Domestic Ethane Power Purchases Export Coal Dry Gas Sales Export LNG Actively pursuing opportunities with customers for gas sales, coal sales, pipeline project development, land
Slide 98: Gas Marketing Summary
Gas Marketing Summary Natural Gas Sales - Current NYMEX hedges cover 45% of total estimated volumes for 2015 - Sales portfolio of 80 customers in five index markets (32% basin exports currently) Firm Transportation - FT capacity supports the majority of plan production through 2016 - Near-term r
Slide 99: Firm Transportation
Gas Marketing Firm Transportation CNX's Firm Transportation and Sales* 1,600,000 Total company FT capacity supports the majority of plan 1,400,000 NEXUS production through 2016 1,200,000 ANR 1,000,000 Columbia (TCO) MMBtu/day Targeting pipeline projects 800,000 Dominion (DTI) that access favorab
Slide 100: Firm Transportation - Current Portfolio
Gas Marketing Firm Transportation - Current Portfolio ANR Pipeline Dominion (DTI) Columbia (TCO) East Tennessee Pipeline (MMcf/d) YE 2014 YE 2017 Dominion (DTI) 255 354 East Tennessee 282 282 Texas Eastern (TETCO) Columbia (TCO) 234 202 TETCO (Firm Sales) 285 225 TETCO (Firm Capacity) 30 127 Other 0
Slide 101: Firm Transportation - Recent Projects
Gas Marketing Firm Transportation - Recent Projects ANR Capacity Nexus Capacity Volume: 47,000 Mcf/d Volume: 150,000 Mcf/d Start Date: November 2015 Start Date: November 2017 Market: MichCon/Chicago Market: MichCon MichCon TETCO - Gas City Project Volume: 47,000 Mcf/d Start Date: November 2015 Marke
Slide 102: Natural Gas Sales
Gas Marketing Natural Gas Sales Gas Sales 2014 2016* Midwest In-Basin 68% 50% TETCO M3 Exports 32% 50% Dominion South 100% 100% * CY2016 Targets TCO Pool TETCO M2 East Tennessee Gas Sales CY 2015 Est. TETCO (M3) 29% Columbia (TCO) 22% TETCO (M2) 19% Dominion (DTI) 14% East Tennessee 11% TETCO ELA TE
Slide 103: Natural Gas Sales - Basis Risk
Gas Marketing Natural Gas Sales - Basis Risk Chicago MichCon CY 2015: $0.02 CY 2015: $0.05 CY 2016: - $0.12 CY 2016: -$0.08 TETCO M3 Dominion South CY 2015: - $0.44 CY 2015: - $1.18 CY 2016: - $0.46 CY 2016: - $1.24 TCO Pool Basis TETCO M2 CY 2015: - $0.23 CY 2015: - $1.10 CY 2016: - $0.38 CY 2016:
Slide 104: Natural Gas Sales - Volatile Prices
Gas Marketing Natural Gas Sales - Volatile Prices Natural gas prices and basis values are expected to remain volatile over time Manage price risk by adding program, supplemental, and basis hedges Manage basis risk by developing a diversified portfolio of sales locations Target additional fir
Slide 105: Natural Gas Sales – Transportation Projects
Gas Marketing Natural Gas Sales – Transportation Projects MichCon CY 2015: $0.05 CY 2016: -$0.08 Dominion South CY 2015: - $1.18 NEXUS Project CY 2016: - $1.24 TETCO M2 CY 2015: - $1.10 CY 2016: - $1.19 Southeast Pipeline Projects TCO Pool Basis CY 2015: - $0.23 CY 2016: - $0.38 Transco Zone 5 CY 20
Slide 106: Natural Gas Processing
Gas Marketing Natural Gas Processing Contracted capacity meets current requirements CNX’s Contracted Processing Capacity – Gross Inlet Gas Volumes 450,000 Options for additional volumes under our existing 400,000 contracts 350,000 300,000 Maximize realizations by taking advantage of the liquid
Slide 107: Natural Gas Liquids Plant Outlet Sales
Gas Marketing Natural Gas Liquids Plant Outlet Sales (C2+) CNX NGL Barrels Per Day by Product (C2+Sales) 16,000 14,000 12,000 C5+ Normal Butane 10,000 Iso-Butane BPD 8,000 Propane 6,000 4,000 2,000 Ethane 0 Ethane Propane Iso-Butane Normal Butane C5+ Fourth quarter volumes reflect a temporary declin
Slide 108: Ethane Sales - Market Options
Gas Marketing Ethane Sales - Market Options Shell Cracker MW Majorsville CNX McQuay Braskem Cracker INEOS Exports ATEX to Mont Belvieu Northeast ethane production has a number of sales alternatives including exports to Europe, two major cracker projects, and the ATEX pipeline to the Gulf markets Sou
Slide 109: Plan Forward
Gas Marketing Plan Forward Diversified Transportation - Selectively target pipeline projects that serve our production areas - Add new sales with matching firm transportation - Pursue third-party released capacity opportunities Diversified NGL Processing - Sell through midstream partners with th
Slide 110: Coal Division
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Slide 111: Best in Class Operations
Coal Division Best in Class Operations Industry Average Safety CONSOL Energy Environmental CONSOL Energy 112 2011 2012 Industry Average CONSOL Energy 5.13 79 3.21 42 2.06 36 1.46 Incident Rate S&S Industry Rate CNX Coal NOV Number of Recordable Injuries * 200,000 hours National Industry Rate for Sig
Slide 112: Mining Complex Locations
Coal Division Mining Complex Locations PA Operations VA Operations Other Southern West Virginia / Location Southwestern Pennsylvania Southwestern Virginia Mingo County 5 Longwalls and 1 Longwall System and Stripping Shovels and Method Continuous Mining Machines Continuous Mining Machines Front-end L
Slide 113: PA Operations Complex
Coal Division PA Operations Complex Location: West Finley, PA Mine life: 25+ years Reserves: 800 million tons Thermal & high-vol met coal Production units: - 5 longwalls - 17 miner sections Annual production capacity: 28 million tons Union free operations Upgrades: - 5 new coal silos
Slide 114: Enlow Fork Mine Area
Coal Division Islandof Island ofManhattan Manhattan==33.8 33.8sq. sq.mi. mi. Enlow Fork Total Mine Area = 46.9 sq. mi. Total Sealed Area as of 12/31/14 = 38.6 sq. mi. 114
Slide 115: Bailey Distribution
Coal Division Bailey Distribution Around-the-clock reliability Strong relationships and service with both railroads Ability to load up to 10 trains per day Delivered over 26MMTons 1 new side track built (total of 3 at the complex) CSX and NS investing significant CAPEX to increase rail tak
Slide 116: Buchanan
Coal Division Buchanan Location: Buchanan County, VA Mine life: 20+ years Reserves: 98 million tons Low-vol met coal Production units: - 1 longwall - 5 miner sections - 2 mains - 3 longwall developments - Super-sections Annual production capacity: 5.2 million tons Lower cost than most
Slide 117: Miller Creek Complex – Surface & Underground
Coal Division Miller Creek Complex – Surface & Underground Location: Mingo County, WV Mine life: 9 Years on current permit - 15+ additional years on western expansion area High-Quality Reserves - 13 million tons current permit - 20+ million tons additional on western expansion area - Owned in
Slide 118: Appalachia Powerhouse
Coal Division Appalachia Powerhouse Coal fleet generates strong cash flow - We divested our low-margin, high-maintenance operations - Remaining mines have been recapitalized and are brand new and running well - It’s not a matter of if we make money, but how much money we make. Bailey’s future is
Slide 119: Best-in-Class Assets: Historic Sales Price per Ton
Coal Division Best-in-Class Assets Historic Sales Price per Ton Weighted average sales price per ton from 2009 – 2014 $200.00 $150.00 $127 $100.00 $69 $64 $50.00 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 $- PA Operations Complex Buchanan Miller Creek C
Slide 120: Best-in-Class Operations: Cash Cost & Cash Margin
Coal Division Best-in-Class Operations Cash Cost & Cash Margin Cash margin per ton 2014 Cash Cost per Ton Cash cost per ton $200 $200 $150 $150 $127 5-yr Avg Price $100 $100 $64 5-yr Avg Price $69 5-yr Avg Price $21-141 Incr Mgn $5-19 Incr Mgn $50 $22.61 $50 $23-31 Incr Mgn 2014 Cash Cost 2014 Cash
Slide 121: Strong Cash Margins
Coal Division Strong Cash Margins 1,800 1,600 1,400 1,200 Total $ in millions 1,000 Miller Creek Complex 800 PA Operations Complex 600 400 Buchanan 200 Thermal Met Total Total annual potential cash margin range $0.6-$1.7 billion (20+ years of reserves) Note: Low Range = Internal estimate production
Slide 122: Distribution and Logistics Extend Our Market Reach
Coal Division Distribution and Logistics Extend Our Market Reach Europe Asia South America CNX Marine Terminal • 16 million TPY throughput capacity • Ships to 22 countries • Flexibility to sell into thermal and met markets CNX Mines CNX Marine Terminal NS Railroad System CSX Railroad System Transpor
Slide 123: Diversified Sales Portfolio
Coal Division Diversified Sales Portfolio Our core customers have: Large plants Low heat rates Environmental controls to exist post-MATS Mid-Atlantic MM Tons Logistically-favorable plants Total Tons Burned 39 Quality requirements conducive to our coal 22 CNX Customer Plants 21 CNX 2014E Sa
Slide 124: Protecting Our Turf and Expanding Our Markets
Coal Division Protecting Our Turf and Expanding Our Markets CNX Mines CNX Marine Terminal $11-13 NAPP vs IB Mid- Atlantic Transportation $/Ton Advantage $13-15 NAPP vs IB Europe Transportation $/Ton Advantage $6-8 NAPP vs IB Southeast Transportation $/Ton Advantage Transportation and distribution ab
Slide 125: Minor MATS Impact
s Coal Division Minor MATS Impact: Tonnage Reduction Due to MATS 2014-2019 10 GW 2 GW 1.5 MMT 46 GW 3.5 MMT 13 MMT 2014 CNX shipments – 100 MMT Total burn Mid Atlantic & Southeast Mid-Atlantic Total U.S. Impact CNX Customers – Mid & Southeast Atlantic & Southeast Gas captures much of the retiring 46
Slide 126: Buchanan – A Sleeping Giant
Coal Division Buchanan – A Sleeping Giant Low-cost, high-quality low-vol met product Customers in U.S., Europe, Brazil, Korea, India, and China CNX financial strength permits disciplined pricing Huge free option as cash generating machine Well-capitalized and developed coal mine prepared for
Slide 127: Monetization of Non-Core Assets
Monetization of Non-Core Assets 127
Slide 128: Completed Divestitures and JVs Since 2012
Monetization of Non-Core Assets Completed Divestitures and JVs Since 2012 $450 $1,000 $400 $900 $800 $350 Cumulative Transaction Value ($MM) $700 $300 Transaction Value ($MM) $600 $250 $500 $200 $400 $150 $300 $100 170 $200 $50 103 $100 3 13 25 26 7 25 $0 15 $0 Routt County Burning Star Crows Nest E
Slide 129: Sale of West Virginia Mines to Murray Energy
Monetization of Non-Core Assets Sale of West Virginia Mines to Murray Energy Divested 5 West Virginia thermal longwall coal mines, select reserves, and river division - Total coal reserves of 1.1 billion tons, and production of approximately 30 million tons CONSOL received $3.5 billion in value
Slide 130: Future Asset Divestiture Opportunities
Monetization of Non-Core Assets Future Asset Divestiture Opportunities (1) Key Future Asset Divestiture Opportunities Asset Type Potential Illinois Basin reserves/resources Thermal 1,082 MM tons Fola/Birch/Canfield coal mines/reserves Met/Thermal 230 MM tons Itmann coal mines/reserves Metallurgical
Slide 131: Illinois Basin Divestiture
Monetization of Non-Core Assets Illinois Basin Divestiture 8 coal blocks consisting of 1,082 MM tons of reserves and resources Note: Reserves and resource tons of Illinois basin divestiture opportunities are estimated as of June 2014. 131
Slide 132: Cardinal States Gathering
Monetization of Non-Core Assets Cardinal States Gathering CSG is a premier gathering system located in Virginia, Kentucky and West Virginia Consists of four interconnected pipelines, a treating/compressor station (Grant Station) and a downstream pipeline connected to a Columbia Pipeline and East
Slide 133: CNX Baltimore Terminal
Monetization of Non-Core Assets CNX Baltimore Terminal Located on 200 acres in the Port of Baltimore Only east coast terminal served by two rail lines (NS & CSX) Operational 24/7, 363 days a year Exported 35.8 million tons to 21 countries in the past three years 10.2 million tons exported
Slide 134: WV JV Development/Land Sales
Monetization of Non-Core Assets WV JV Development/Land Sales Mon-View project expected to generate >$30 million for CONSOL 134
Slide 135: Financial Overview
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Slide 136: Driving Down Our Cost of Capital
Financial Overview Driving Down Our Cost of Capital Sound investment philosophy: - Within our geographic footprint - Focus on strengthening our asset base for the long term - Improve efficiencies, lower capital intensity, and raise project rates of returns Managing our growth profile and risks a
Slide 137: Disciplined Investment Approach
Financial Overview Disciplined Investment Approach Coal: Shifted into maintenance mode after strong historical investment Invested $2.1 billion over 8 years; maintenance capital declining to $4-5/ton from $5-$6 per ton - Organic coal capacity vs. acquisitions (BMX, Amonate, WAE) - Efficiency proje
Slide 138: Positive Capital Efficiency Trends
Financial Overview Positive Capital Efficiency Trends Improving Recycle Ratios Recycle Ratio 4.00 Investment cycle shifting to cash generation Liquids uplift 2.77 Improving economics through 2.40 RCS/SSL and declining capital costs 2.00 Carry impacts 1.42 CONE Midstream IPO bears capital -
Slide 139: Ample Funding Tools
Financial Overview Ample Funding Tools Coal production stream: fully-capitalized and 25-year life Two JV-carried interests: Marcellus = $1.63B and Utica = $0.1B Thermal Coal MLP and Met Coal Subsidiary transactions Non-core asset sales: estimated between $0.1-$0.3B/Year Infrastructure asse
Slide 140: CONE Midstream Partners LP Asset Overview
Financial Overview CONE Midstream Partners LP Asset Overview CONE Midstream Partners LP (NYSE: CNNX) IPO on 9/24/2014 - IPO proceeds of $204MM, net to CONSOL Value to CNX shareholders - LP ownership of 33%, valued at $2.02/share - Additional value through GP units Pure-play gathering & process
Slide 141: Joint Ventures
Financial Overview Joint Ventures Summary of JV Carry Eligible Capital Description Marcellus / Noble Energy Inc. Utica / Hess Corporation Ownership 50/50 50/50 (1) (2) Acreage 345,151 68,488 Zones PA and WV Marcellus, Burkett to Onondaga OH Utica Noble to pay 1/3 of CNX 50% share of eligible charges
Slide 142: Financial Overview: Cost of Equity
Financial Overview: Cost of Equity 142
Slide 143: Beta Declining While Stock Recovering
Financial Overview: Cost of Equity Beta Declining While Stock Recovering 1 Yr Beta (Daily Returns) Index Stock Price Index Indexed to Oct 28 2009-Oct 27 2010 Time Period Indexed to Oct 28 2009-Oct 27 2010 Time Period CNX Coal Peer Avg Gas Peer Avg CNX Coal Peer Avg Gas Peer Avg 1.4 2.0 1.2 1.5 1.0 I
Slide 144: Meeting or Exceeding Guidance
Financial Overview: Cost of Equity Meeting or Exceeding Guidance Gas Guidance and Production With the sale of the 5 mines, CONSOL increased Guidance Range Actual Production 80 its focus on growing our E&P production 75 70 Our lean manufacturing concept will improve our 65 cycle times and provide
Slide 145: Declining E&P Unit Costs
Financial Overview: Cost of Equity Declining E&P Unit Costs Driving Down Weighted Average Cost: Consolidated Cost per Mcfe Property & Other Taxes Direct Admin, Selling & Other Total operating cost per Mcfe expected to decline LOE Gathering and Transportation 10% to 15% over the next three years DD
Slide 146: Ability to Maintain Low Unit Costs
Financial Overview: Cost of Equity Ability to Maintain Low Unit Costs Reducing Bailey Complex Average Cost: Bailey Complex Production Cost Ranges per Ton Cash Cost Range Total Cost Range Fully loaded and cash costs per ton $50 in 2014 improved to $43.75 and $37.62, respectively $45 YTD fully loa
Slide 147: Commodity Risks and Market Analysis
Financial Overview: Cost of Equity Commodity Risks and Market Analysis Market Definition Market Drivers Scope: The natural gas, thermal and metallurgical coal markets Supply: Domestic production are analyzed in the context of general economic drivers as well as and net imports those specific to thei
Slide 148: Commodity Interrelationships
Financial Overview: Cost of Equity Commodity Interrelationships Residential Domestic and Domestic and Global Commercial Global Power Steel Markets Industrial Markets Natural Gas Thermal Coal Metallurgical Coal CNX EBITDA Shifting Fast Towards E&P 2013 2014 2016E E&P 32% Coal Coal 37% 47% E&P 53% E&P
Slide 149: U.S. Electric Generation Mix
Financial Overview: Cost of Equity U.S. Electric Generation Mix Net Generation Mix United States Coal Natural Gas Nuclear Other 50% 40% 30% 20% 10% - 2010 2011 2016 2017 2018 2012 2013 2014 2015 2019 2020 Natural Gas Demand By Category Residential & Commerical Electric Generation Industrial Other (I
Slide 150: Managing Commodity Price Risk
Financial Overview: Cost of Equity Managing Commodity Price Risk Revenue and Cash Flow Risks: Value at Risk (VaR): CONSOL’s revenues and cash flows are derived from • Statistical risk management tool that calculates: three main products with price volatility 1. An asset’s greatest expected price l
Slide 151: VaR, Company Portfolio
Financial Overview: Cost of Equity VaR, Company Portfolio One month Value at Risk, 95% Confidence Interval Natural Gas Thermal Coal Metallurgical Coal Nat Gas VaR Thermal VaR Met Coal VaR CNX Unhedged Portfolio VaR CNX Hedged Portfolio VaR Oil & Condensate NGLs CNX Hedged Portfolio Oil & Condensate
Slide 152: Hedge and Coal Contract Program
Financial Overview: Cost of Equity Hedge and Coal Contract Program Hedge Program: Program Hedge: Program and actively monitored hedges Protect margins on 90% of our Proved Developed Production Reducing the total portfolio VaR including coal Use a program approach to layering on - Protect cas
Slide 153: Hedge Program
Financial Overview: Cost of Equity Hedge Program Actively Monitored Hedge: 2015 Competitor and CNX Hedge Positions (As Percent of Total E&P Volume) Swaps Collars Priced Coal 100% 90% Actively monitor the market to add hedges that meet margin goals 80% 66% Use swaps and collars 58% 60% 51% Add
Slide 154: Financial Overview: Cost of Debt
Financial Overview: Cost of Debt 154
Slide 155: Legacy Liability Outlook
Financial Overview: Cost of Debt Legacy Liability Outlook Converted open OPEB and Pension to a fixed payout and 401K in 3Q14, results in a meaningful reduction in OPEB liabilities - Strengthens CNX’s balance sheet by exiting from retirement programs that generate long-term liabilities Total redu
Slide 156: Debt Profile
Financial Overview: Cost of Debt Debt Profile Debt Vintages Consolidated Revolver Recent Activity: $2.0 $1.9B Lowered average coupon rate of $1.8 long-term debt by over 120bps to $1.6 $1.5B 6.67% from 7.89% $1.4 Lowered coupon cost of debt capital $0.3B on ~55% of total long-term debt by $1.2 Re
Slide 157: Debt Capacity and Philosophy
Financial Overview: Cost of Debt Debt Capacity and Philosophy CNX Forecasted Debt/EBITDA Debt/EBITDA Consolidated 6x CNX Debt/EBITDA High & Low Range Moody's Ratio From the Moody’s report dated February 14, 2014: 4x “The negative outlook reflects our expectation that the company's leverage will re
Slide 158: Finance Summary
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Slide 159: Reducing the Total Cost of Capital
Financial Summary Reducing the Total Cost of Capital 2013 Cost of Capital Reduction CNX Consolidated WACC US Treasury 10Yr 18% Sale of Northern WV Thermal Mines Released $2.05B employee benefit/pension obligation Received $850MM net cash proceeds 2014 Cost of Capital Reduction 16% Increased we
Slide 160: Reducing Risk and Increasing Valuation
Financial Summary Reducing Risk and Increasing Valuation We have a strong asset base and powerful planning and investing processes to manage our growth, reduce risk, and ultimately drive improving value for both our debt and equity stakeholders We are prepared to drive margin expansion and profi
Slide 161: Appendix
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Slide 162: Non-GAAP Reconciliation
Appendix Non-GAAP Reconciliation Three Months Ended December 31 ($ in thousands) 2014 2013 Net Income Attributable to CONSOL Energy Inc. Shareholders $73,666 $738,183 Less: Net (Income) Attributable to Discontinued Operations, net of tax -- (591,144) Add: Interest Expense 53,025 55,004 Less: Interes
Slide 163: Non-GAAP Reconciliation
Appendix Non-GAAP Reconciliation CONSOL Energy Continuing Ops ($ in millions) 2011 2012 2013 2013 2014 Net Income Attributable to CONSOL Energy Inc. Shareholders $632 $388 $660 $81 $169 Add: Interest Expense $248 $220 $219 $219 $223 Less: Interest Income (9) (29) (16) (16) (2) Add: Income Taxes 155
Slide 164: Standardized Measure of Discounted Future Net Cash Flows
Appendix Standardized Measure of Discounted Future Net Cash Flows: CONSOL Energy December 31, December 31, ($ in thousands) (1) 2013 2012 2011 2013 Future cash inflows $24,169,530 $21,602,594 $11,777,550 $14,804,398 Future production costs (7,275,402) (7,105,962) (4,823,670) (5,262,635) Future devel