Slide 1: Earnings Results Fourth Quarter 2018
Earnings Results Fourth Quarter 2018 January 31, 2019
Slide 2: Cautionary Language
Cautionary Language Risk Factors. This presentation, including the oral statements made in connection herewith, contains forward-looking statements, estimates and projections within the meaning of the federal securities laws. Statements that are not historical are forward-looking and may include our
Slide 3: Executive Summary
Executive Summary Q4 2018 EXPECTATION STRATEGIC INITIATIVE 2018 Production & ▪ Q4 2018 Consolidated Adjusted EBITDAX Per Share(2) ▪ Adjusted EBITDAX per share growth remains an output of EBITDAX per Share Growth(1) increased 90% year-over-year prudent capital allocation ▪ Leverage will continue to b
Slide 4: Steadfast in Philosophy
Steadfast in Philosophy PHILOSOPHY Maximize RETURNS the Risk-adjusted returns set basis for all capital allocation decisions long-term per share value FLEXIBILITY of the firm Flexibility in development plans and capital deployment drive optionality through prudent capital HEDGING allocation Hedging
Slide 5: Confident in Strategy
Confident in Strategy This process, which grew PLAN RISK EBITDAX and Strategy designed to MITIGATION reduced work NAV/SHARE GROWTH shares through HIGH RATES OF through the RETURN 2018, is cycle and SHARE COUNT REDUCTION primed to be does so at STRONG deployed in strip pricing MARGINS 2019 and in all
Slide 6: The Strategy Drives Significant EBITDAX per Share Growth
The Strategy Drives Significant EBTIDAX per Share Growth Per Share Adjusted EBITDAX Attributable to CNX Resources Shareholders Q1 2017 – Q4 2018 $1.60 $1.41 $1.40 $1.20 $1.08 $1.03 $1.00 $0.96 $0.83 $0.80 $0.60 $0.54 $0.48 $0.45 $0.40 $0.20 $- Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
Slide 7: Q4 2018 Financial Results Summary
Q4 2018 Financial Results Summary Net Income and Adjusted EBITDAX ▪ Consolidated net income of $129 million in the 2018 fourth quarter; consolidated adjusted net income of $160 million(1); adjusted net income excludes the following pre- Q4 2018 tax items: Consolidated Adjusted EBITDAX - $37 million
Slide 8: E&P Standalone Costs and Margins Drive Rates of Return
E&P Standalone Costs and Margins Drive Rates of Return Production Cash Costs(1) and Margins FY2018 $2.50 Total Production Cash Costs Total Production Cash Margin $2.00 $2.09 $1.50 $1.79 $1.78 $1.88 CNX has the lowest per unit cash $/Mcfe production costs of all southwest $1.00 Marcellus operators dr
Slide 9: Capital Efficiency Driving Down Total Costs Over Time
Capital Efficiency Driving Down Total Costs Over Time ▪ Current DD&A charges ($0.89/Mcfe in Q4 2018) account for legacy operations ▪ Based on up-to-date per well capital expenditures and expected type curves, capital per Mcfe in SWPA Marcellus is currently $0.31 ▪ Over time, DD&A charges per Mcfe ar
Slide 10: Debt Discipline and EBITDAX Growth Drive Available Capacity
Debt Discipline and EBITDAX Growth Drive Available Capacity Net Debt Attributable to CNX Shareholders Shares Repurchased Since Program Announced 250.0 6.4 5.8 $ in millions December 31, 2018 5.3 8.3 6.8 0.5 200.0 E&P Midstream Total Shares (millions) Total Debt (GAAP)(1)(2) $1,921.3 $477.2 $2,398.5
Slide 11: Only E&P of the Peer Group to have Reduced Shares Since 2013
Only E&P of the Peer Group to have Reduced Shares Since 2013 Peer Share Count Percent Change: YE2013-YE2018 140% 120% 103% 100% 80% 69% 60% 64% 53% Peer Avg 50% 40% 38% 20% 21% 4% 0% -14% -20% -40% Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 CNX Peer Avg Expect continued substantial share count
Slide 12: Flexibility in Development Mitigates Risk and Grows NAV/Share
Flexibility in Development Mitigates Risk and Grows NAV/Share Share Repurchases Equity Price Forward Strip Pricing Supply/Demand Indicators M&A Opportunities Multiyear: DISCRETIONARY CAPITAL Utica Data Set Through the Cycle: CNXM Commitments Balance Sheet Capacity Service Contracts INCREMENTAL NAV/S
Slide 13: 2019 Minimum Guidance Update
2019 Minimum Guidance Update 2019E Minimum Capital Expenditures Capital budget represents a minimum set of D&C activity Low High ($ millions) Throughout the year, the company will evaluate a series Drilling & Completions $575 $625 of factors to determine incremental activity and will Non-D&C $175 $1
Slide 14: LP and GP Distributions Help Grow Balance Sheet Capacity
LP and GP Distributions Help Grow Balance Sheet Capacity LP + GP/IDR Distributions FY2017-FY2019E $60 $55 $50 Distributions Received in Each Year ($ millions) LP distributions from CNX Midstream $39 $40 have consistently grown 15% year- over-year $30 $29 As growth continues, LP + GP/IDR distribution
Slide 15: Natural Gas Hedging and Basis Protection
Natural Gas Hedging and Basis Protection 500 450 44.2 Layering in hedges out to 2023 to protect Gas Volumes Hedged (Bcf) 400 margins on proved developed production 6.7 58.8 350 and a portion of PUDs 300 250 59.9 200 424.4 369.3 351.5 De-risked pricing for next three 150 25.0 100 216.7 years and mean
Slide 16: Q4 and FY2018 Activity
Q4 and FY2018 Activity Q4 2018 FY2018 Average HZ Rigs Lateral at Period TD FRAC TIL Length(1) End TD FRAC TIL SWPA Marcellus 19 12 11 8,316 2 61 43 41 Central Utica - - - - 1 - 1 1 WV Marcellus - - - - - 5 5 5 Shirley-Penns Utica - - - - - - - - CPA Utica 1 - 1 6,529 1 4 2 2 OH Dry - 2 4 9,306 - 8 8
Slide 17: Q4 2018 Operational Results Summary
Q4 2018 Operational Results Summary Y/Y Q/Q ▪ Marcellus Shale costs were $1.98 per Mcfe in Q4 2018, a decrease of ($/Mcfe) $0.34 from $2.32 per Mcfe vs. Q4 2017, or a 15% decline 4Q 2018 4Q 2017 Change 4Q 2018 3Q 2018 Change Average Sales Price(1) - Driven by decreases to LOE, transportation, gather
Slide 18: Production Costs by Segment Show Ongoing Improvement
Production Costs by Segment Show Ongoing Improvement Marcellus Utica CBM & Other TOTAL 4Q18 4Q17 Δ 4Q18 4Q17 Δ 4Q18 4Q17 Δ 4Q18 4Q17 Δ Production Volumes (Bcfe) 87.0 64.0 23.0 34.0 33.8 0.2 15.1 21.1 (6.0) 136.1 118.9 17.2 Lease Operating Expense 0.09 0.15 (0.06) 0.12 0.16 (0.04) 0.33 0.46 (0.13) 0.
Slide 19: Dry Gas Marcellus Wells Exceeding Expectations and Peers
Dry Gas Marcellus Wells Exceeding Expectations and Peers SWPA Dry Type Curves vs. Greene & Washington County State Data Actuals: 2017-2018 TILs(1) 10,000,000 9,000,000 Recent CNX dry gas wells 8,000,000 currently outperforming type 7,000,000 curve while peers underperform expectations on similar wel
Slide 20: CPA Deep Utica Bell Point Producing In-Line with Past Successes
CPA Deep Utica Bell Point 6 Producing In-Line with Past Successes Bell Point 6 Performance vs. Existing Mamont Wells Geologic and 5,000,000 Cumulative Mcf Normalized to 7000' fracture 4,500,000 Aikens 5J Aikens 5M CPA Dry Utica Pads To-Date modelling allows 4,000,000 Gaut 4I CPA Dry Utica 3.5 TC for
Slide 21: Ohio River Waterline to Supply Core SWPA Development
Ohio River Waterline to Supply Core SWPA Development Ohio River Water Line: Planned Route Water Infrastructure Benefits ~70% of CNX water is transferred 80% cost savings compared to through pipeline trucking infrastructure Water pipelines constructed in Dual pipeline construction results in tandem w
Slide 22: Appendix
CNX Appendix
Slide 23: Marketing Highlights and Liquids Realizations
Marketing Highlights and Liquids Realizations Marketing Highlights Natural Gas Liquids, Oil and Condensate ▪ Directly-marketed ethane volumes were 251,400 ▪ Q4 2018 liquids sold: 7.5 Bcfe barrels in Q4 and, on an equivalent basis, yielded a ▪ Total weighted average price of all liquids decreased 19%
Slide 24: 2019E Gas Hedging Gain/Loss Projections
2019E Gas Hedging Gain/Loss Projections CY2019 CY2020 Hedged Volumes Hedged Forward Forecasted Gain/(Loss) (1) (000 MMBtu) Price Market ($/MMBtu) ($ in 000's) ($/MMBtu) NYMEX 386,088 $2.83 $3.07 ($0.23) ($90,344) ▪ In addition to NYMEX and basis financial hedges, CNX has physical fixed basis sales a
Slide 25: Q1 2019E Gas Hedging Gain/Loss Projections
Q1 2019E Gas Hedging Gain/Loss Projections Q1 2019 CY2019 Hedged Volumes Hedged Forward Forecasted Gain/(Loss) (1) (000 MMBtu) Price Market ($/MMBtu) ($ in 000's) ($/MMBtu) NYMEX 89,775 $2.86 $3.45 ($0.60) ($53,685) Basis: DOM South (DOM) 10,800 ($0.59) ($0.27) ($0.32) ($3,489) TCO Pool (TCO) 10,800
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended December 31, 2018 2018 2018 2018 2017 E&P (1) Total Total Midstream Unallocated ($ in thousands) Division Company Company Net Income (Loss) $48,250 $39,309 $41,856 $129,415 $276,643 Less: Income from Discontinued Operations - - - - 9,391 Add: Interest Expen
Slide 27: Attributable Share Reconciled to Consolidated Results
“Attributable Share” Reconciled to Consolidated Results Attributable to CNX Shareholders + Noncontrolling Interest = Consolidated Inside the MLP Outside the MLP 63.91% of CNXM E&P Attributable to Total "Attributable to Attributable to Total Q4 2018 Standalone + CNXM LP & GP + Unallocated(1) + CNX Ga
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Three Months Three Months Three Months Twelve Months Ended Ended Ended Ended Ended March 31, June 30, September 30, December 31, December 31, ($ in thousands) 2018 2018 2018 2018 2018 Net Income $545,546 $61,394 $146,756 $129,415 $883,111 Add: Interest Expense 38
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Three Months Three Months Three Months Twelve Months Ended Ended Ended Ended Ended March 31, June 30, September 30, December 31, December 31, ($ in thousands) 2017 2017 2017 2017 2017 Net Income ($38,965) $169,510 ($26,441) $276,643 $380,747 Less: Loss (Income) f
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($/Mcfe) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Average Sales Price - Total Company $ 2.85 $ 2.47 $ 2.50 $ 2.80 $ 3.00 $ 2.87 $ 2.92 $ 3.09 Lease Operating Expense $ 0.23 $ 0.23 $ 0.22 $ 0.21 $ 0.28 $ 0.21 $ 0.14 $ 0.12 Transportation, Gathering and C