Cnx Resources Corporation · NYSE:CNX
Cnx Resources — CONSOL Energy — Q1 2014 Earnings Presentation
27 slides from Cnx Resources's earnings presentation, Apr 29, 2014
Slide 1: First Quarter 2014 Earnings Presentation
First Quarter 2014 Earnings Presentation April 29, 2014 J. Brett Harvey, Chairman and CEO Nicholas J. DeIuliis, President David Khani, CFO James C. Grech, Chief Commercial Officer Tim Dugan, COO – E&P Division
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). Such statements include estimates of reserves and resources, projections and estimates concerning
Slide 3: CONSOL Energy's Business Strategy
CONSOL Energy’s Business Strategy Grow natural gas production ─ 30% projected production increase in 2014 ─ Develop liquids profile within our footprint ─ High-grade acreage position ─ Experienced team is in place Aggressively manage coal margins and maintenance capital with retained mines ─ New
Slide 4: First Quarter 2014 Results
First Quarter 2014 Results Summary Pre-tax income for the first quarter was $130 million - Net income from continuing operations was $122 million resulting from solid E&P and coal production, higher gas prices, and disciplined cost controls - Income from discontinued operations, net of tax, was ($
Slide 5: Q4 2013 to Q1 2014 Net Income Reconciliation
Q4 2013 to Q1 2014 Net Income Reconciliation 1,000 $42 $4 ($6) ($139) 900 $74 $738 ($ in millions) 800 ($597) 700 600 500 400 300 200 $116 100 - Q4 2013 Net E&P Coal Division Interest Other Income Discontinued Q1 2014 Net Income Division Expense Corporate Taxes Ops, net of Income Expenses tax Earnin
Slide 6: Gas Division
Gas Division Summary Q-to-Q Q-to-Q Gas Division 1Q2014 1Q2013 Change 1Q2014 4Q2013 Change Average Sales Price ($ / Mcfe) $5.52 $4.30 $1.22 $5.52 $4.26 $1.26 Average Costs ($ / Mcfe) $3.63 $3.53 $0.10 $3.63 $3.55 $0.08 Sales Volumes (Bcfe) 48.4 39.2 9.2 48.4 48.5 (0.1) Sales Volumes (Bcfe) by Categor
Slide 7: Gas Division Production Results and Forecast
Gas Division Production Results and Forecast Gas and Liquids Production (Bcfe) CONSOL is rapidly growing its natural gas production ─ Total 2013 natural gas production: 172.4 Bcfe ─ Q1 2014 natural gas production: 48.4 Bcfe ─ Total 2014 natural gas production guidance: 215 – 235 Bcfe (30% growth)
Slide 8: Coal Division
Coal Division Summary Q-to-Q Q-to-Q Coal Division 1Q2014 1Q2013 Change 1Q2014 4Q2013 Change Average Sales Price ($ / ton) $66.20 $72.18 ($5.98) $66.20 $66.85 ($0.65) Average Costs ($ / ton) $45.15 $51.14 ($5.99) $45.15 $50.05 ($4.90) Coal Production (millions of tons) 8.1 7.4 0.7 8.1 7.1 1.0 Sales V
Slide 9: Hedge Program and Integrated Infrastructure
Hedge Program and Integrated Infrastructure 2014 Competitor and CNX Hedge Positions Actively Monitored Hedge Program: Swaps Collars Priced Coal 100% 86% - For 2014: 25.7 Bcf added in the first quarter at 87% approximately $5.32 per Mcf 80% 83% 75% 74% - Basis hedges represent 34% of 2014 total 7%
Slide 10: CONSOL Cost Metrics
CONSOL Cost Metrics Gas: Operating Costs per Mcfe $6 $5 $ / Mcfe $4 $3 $2 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 CBM Marcellus Shallow Oil & Gas Coal: Cost per Ton Sold $86 $76 $ / Ton $66 $56 $46 $36 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 Thermal High
Slide 11: Gas Operations: Capital Expenditure
Gas Operations: Capital Expenditure $1,200 $1,110 $1,000 $953 $800 $ in millions $600 $528 $400 $200 $0 2012 2013 2014E Land Capex Other Gas Capex 2014E Total Gas Capex Estimate Natural Gas Operations: ($ in millions) 2014E Capex CONSOL Gas Capex: Coring up land Land and Permitting 70 positions Li
Slide 12: Strong Liquidity Position of $2.1 Billion
Strong Liquidity Position of $2.1 Billion Cash on hand of $314 million Accounts receivable securitization and revolving credit facilities of $1.8 billion Amount/ Amount Letters Amount March 31, 2014 ($ in million) Capacity Drawn of Credit Available Cash and Cash Equivalents $314 $0 $0 $314 Accou
Slide 13: Cash Flow Summary
CONSOL Energy Overview Net (Decrease) / Increase in Cash - $ in millions Goal is to maintain our strong liquidity position Cash Flow Summary Q-to-Q Q-to-Q ($ in millions) 1Q2014 1Q2013 Change 1Q2014 4Q2013 Change Net Cash Provided by Operations(1) $336 $268 $68 $336 $70 $266 Capital Expenditures (
Slide 14: Murray Energy Transaction Impact: Credit Metrics
Murray Energy Transaction Impact: Credit Metrics CONSOL Energy ($ in millions) 2011 2012 2013 Cash and Cash Equivalents $376 $22 $327 Available Liquidity $2,733 $2,351 $2,081 Total Debt $3,198 $3,251 $3,175 (1) Net Debt $2,822 $3,229 $2,848 Legacy Liabilities OPEB $3,242 $3,018 $1,022 LTD 36 39 20 W
Slide 15: Recent Notes Offering Summary
Recent Notes Offering Summary Senior Unsecured Notes Issuer CONSOL Energy Inc. Notes offered $1,600 million aggregate principal amount of 5.875% senior notes due 2022 Maturity date April 15, 2022 Interest rate 5.875% per year (calculated using a 360-day year) Optional redemption Non-callable for 3 y
Slide 16: Drilling Results and Forecast
Drilling Results and Forecast Formation Region 2012 2013 1Q2014 2014E Marcellus Shale: Southwest Pa. (incl NBL) 70 97 26 144 West Virginia 6 10 4 25 Central Pa. 13 10 5 12 Ohio 0 0 0 1(1) Total: 89 117 35 182 Utica Shale (incl Hess): 10 24 7 34(2) Total Shales (Gross): 99 141 42 216 Coalbed Methane:
Slide 17: CONSOL Energy Overview
CONSOL Energy Overview Summary Gas and coal operations are long-lived, low-cost, and provide solid growth Our well-capitalized assets – and highly trained personnel – provide more consistent operational execution Our emphasis on safety and compliance increases reliability Balance sheet remai
Slide 18: Appendix
(= CONSOL ENERGY AMERICA’S ENERGY STARTS HERE. Appendix 18
Slide 19: Marketing 2Q14 and 2014 Forecasts
Appendix Marketing 2Q14 and 2014 Forecasts 2014 Coal Sales Facts and Goals Sales Tons by Product Year 2014 Contracted tons for 2014: more than 92% 6% - Priced: more than 89% 12% Approximately 81% of the Low-Vol & High-Vol met coal tons are forecasted to be shipped overseas Approximately 94% of
Slide 20: Coal Division Guidance
Appendix Coal Division Guidance 2014 firm tonnage: 2015 firm tonnage: - Low-Vol: 59% - Low-Vol: 16% - High-Vol: 50% - High-Vol: 15% - Thermal: 97% - Thermal: 43% - Total Coal Sales: 89% - Total Coal Sales: 37% (Tons in millions) Q2 2014 2014 2015 Est. Total Coal Sales 8.1 - 8.5 31.0 - 33.0 33.6
Slide 21: Coal Capital Expenditure – Year History
Appendix Coal Capital Expenditure – 10 Year History $1,000 $993 25% $900 20% $800 $681 $707 $700 $677 15% $580 $ in millions $600 $489 $500 $446 $459 10% $415 $390 $400 $317 5% $300 $203 $200 0% $100 $0 (5%) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E Coal Capital Expenditure EBIT M
Slide 22: Use of Cash Proceeds
Appendix Use of Cash Proceeds $1,000 $900 $850 $8 ($361 ) $800 $700 $ in millions $600 ($115 ) $500 ($31 ) $400 ($37 ) $327 $300 $200 $100 $13 $0 Beginning Receipt from Tetrick Credit DTI Acres / Fees Other Ending Cash Cash Balance Murray Override Facilities Utica Interest Balance as of as of Paydow
Slide 23: BMX Mine Overview
Appendix BMX Mine Overview BMX Mine: Began operations in mid-March 2014 - Lowest cost CNX mine 23
Slide 24: Our Domestic Coal Market Remains Solid
Appendix Our Domestic Coal Market Remains Solid PJM Coal Inventory Trailing 12 Months 5 Year Average 30 25 20 Tons (MM) 15 10 5 - Feb 13 May 13 Aug 13 Nov 13 Source: EIA, PIRA, and CONSOL analysis. 24
Slide 25: Marcellus Drilling and Completions Summary
Appendix CONSOL-Operated Wells: Marcellus Drilling and Completions Summary Drilling Summary 2011 2012 2013 YTD 2014 Wells TD'd 78 64 46 16 Lateral Ft 300,466' 328,428' 366,615' 124,297' Total MD 92,264' 794,098' 730,316' 251,113' Average Lateral 3,853' 5,514' 7,970' 7,769' Average TMD 11,824' 13,280
Slide 26: Non-GAAP Reconciliation
Appendix Non-GAAP Reconciliation CONSOL Energy ($ in millions) 2011 2012 2013 Net Income Attributable to CONSOL Energy Inc. Shareholders $632 $388 $660 Add: Interest Expense $248 $220 $219 Less: Interest Income (9) (29) (16) Add: Income Taxes 155 109 357 Add: Loss on Debt Extinguishment 16 - Add: Ab
Slide 27: Reconciliation of EBIT, EBITDA and Adjusted EBITDA
Appendix Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial net income Three Months Ended March 31 ($ in thousands) 2014 2013 Net Income Attributable to CONSOL Energy Inc. Shareholders $116,003 ($1,564) Less: Net (Income)/Loss Attributable to Discontinued Operations, net of tax 5,687 (1