Cnx Resources Corporation · NYSE:CNX
Cnx Resources — Scotia Howard Weil 2017 Energy Conference
31 slides from Cnx Resources's conference presentation, Mar 27, 2017
Slide 1: Scotia Howard Weil 2017 Energy Conference
SCOTIA HOWARD WEIL 2017 ENERGY CONFERENCE MARCH 27-28, 2017
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: Who We Are: Differentiating Ourselves Through Three Pillars
Who We Are: Differentiating Ourselves Through Three Pillars Values: • Never compromised regardless of circumstance • Operate daily free of injuries and environmental incidents • Pursuit of perfection driving towards best-in-class performance • Mitigates business risk profile and supports license to
Slide 4: The Path Forward: Realization of Value
The Path Forward: Realization of Value How we plan to close the value gap: Today $15.73 Closing price 3/20/2016 1 GROW EBITDA – PRUDENT GROWTH OF E&P PRODUCTION EFFICIENT CAPITAL ALLOCATION TO HIGH IRR, NAV ACCRETIVE AOIs 2 PAY DOWN DEBT – ORGANIC FREE CASH FLOW AND ASSET MONETIZATIONS DRIVE LEVERAG
Slide 5: Weathered Downturn Without Issuing Equity
Weathered Downturn Without Issuing Equity Since the beginning of 2014, total follow-on Follow-On Equity Issued Across equity issued by Appalachian peers totaled Energy Industry 2015-2016 $10.6 billion: $40,000 • All seven Appalachian peers have issued follow- on equity since the beginning of 2014 $3
Slide 6: Exploration & Production
EXPLORATION & PRODUCTION 6
Slide 7: Continuous Improvement
Continuous Improvement Capital Efficiency 160% 140% 120% NAV growth 100% being driven BTAX IRR (%) 1.24 Mcfe/$ 1.83 Mcfe/$ 2.78 Mcfe/$ by improved 80% capital 60% efficiency 40% 20% 0% 1.43 1.52 0.46 0.60 0.78 0.83 0.97 1.04 1.27 1.64 1.95 2.04 2.20 1.03 1.09 1.24 1.47 1.63 1.85 1.98 1.99 2.03 2.16
Slide 8: Operational Evolution
Operational Evolution Key Performance Metrics(1) 2014 2016E Average EUR (Bcfe/1,000’) 1.4 2.8 Total Marcellus capital ($/ft) 1,345 835 Lease operating expense (LOE) ($/Mcfe) 0.41 0.19 Average drilling days on well 27 18 Average completion days on well 32 15 Completion stage spacing (ft) 300 150-225
Slide 9: Dissolution of the Marcellus Shale Joint Venture
Dissolution of the Marcellus Shale Joint Venture 64% increase in Marcellus core acreage: Post-Exchange Marcellus Acreage Map • Full control of stacked pay opportunity set • Incremental 85 MMcfe/d of production • Further strengthens balance sheet • Higher weighted average EUR, compared to pre-dissolu
Slide 10: New World View: Stacked Pay
New World View: Stacked Pay • 40+ years of stacked pay inventory(1) P Formation • a The JV separation gives CONSOL complete y Name operational control in stacked pay opportunities Rhinestreet • The Upper Devonian provides triple stacked pay potential, on top of Marcellus and Utica Cashaqua • Stacked
Slide 11: Stacked Pay Value for SWPA: Pad Level Example
Stacked Pay Value for SWPA: Pad Level Example Stacked Pay Pad Economics Example(1) $160,000 120% Unstacked NPV Stacked pay development improves IRR $140,000 Stacked NPV Unstacked IRR % 100% by 10-20 percentage points Stacked IRR % $120,000 • Marginal horizons may be pulled into the BTAX NPV ($ in mi
Slide 12: Moving Utica Non-Core to Core
Moving Utica Non-Core to Core Delineating the Utica through operated Delineation Opportunities and non-operated wells, data trades, and data purchases: • Provides geologic and reservoir data to evaluate NAV impact and helps assess development risk • 170,000 dry Utica core acres • Potential to increa
Slide 13: Stacked Pay with the Utica: The Size of the Prize
Stacked Pay with the Utica: The Size of the Prize • 360,000 net acres of double stacked pay opportunity 360,000+ in the core and non-core areas Net Acres • 180,000 core acres with double stacked pay opportunity • Utica stacked pay delineation in the next 2 years drives 20 Tcfe stacked pay developmen
Slide 14: Two-Year Development Plan
Two-Year Development Plan 2017 2018 • Consistently complete DUCs ($ in millions) TD FRAC TIL Capex TD FRAC TIL Capex from December 2016 through Marcellus 12 13 13 $80 54 42 40 $260 2018 SWPA Utica 0 0 0 $0 3 3 3 $40 Upper Devonian - 2 3 $15 - - - - - Total of 33 DUCs to be Marcellus - 20 18 $95 - -
Slide 15: E&P Capital Expenditure Guidance
E&P Capital Expenditure Guidance E&P Capital and Production Plans • Capital expenditure projections based ($ in millions) 2017E 2018E on current market conditions and forecast Drilling and Completion $465 - Flexibility exists to adjust Midstream $40 spending as necessitated by Land, Permitting, and
Slide 16: E&P Marketing: Gas Hedges
E&P Marketing: Gas Hedges 320 Hedge Position 300 NYMEX Only Hedges Exposed to Basis (Outer ring = NYMEX; Inner ring = Basis) 280 (2) NYMEX + Basis (2) 260 Gas Volumes Hedged (Bcf) 240 220 200 180 160 140 120 2017 100 80 60 40 20 0 FY2017 2017 FY2018 2018 FY2019 2019 FY2020 2020 FY2020 2021 Hedged Op
Slide 17: Diversified Business Units
DIVERSIFIED BUSINESS UNITS 17
Slide 18: Business Development: Strategy
Business Development: Strategy CONSOL has a strong track record of successful divestitures: • 20 NAV-enhancing divestitures since 2012 • Over $5 billion of combined value Team is now focused on divesting E&P assets: • Recent Marcellus JV separation provides more control and flexibility with asset ba
Slide 19: Finance: Legacy Liabilities
Finance: Legacy Liabilities Significant legacy liability reductions over Balance Sheet Liability Long-Term Liability Guidance past three years: 12/31/2016 FY 2017E FY 2018E LTD $19 • Miller Creek/Fola transaction drove WC 80 substantial reduction in legacy liabilities CWP 119 OPEB 700 in 2016 Salary
Slide 20: Finance
FINANCE 20
Slide 21: Financial Outlook: NAV/Share Value Drivers Accelerating
Financial Outlook: NAV/Share Value Drivers Accelerating We expect growth while generating free cash flow: • Stringent focus on capital allocation to drive the highest NAV per share decisions • Become a leader in capital allocation, when compared to the best global companies • Invest when rates of re
Slide 22: Conditions Improving for Complete Separation from CNXC
Conditions Improving for Complete Separation from CNXC Path to Completing Separation from CNXC Financial Conditions Growing Improving CNXC revenue and margins Performance Pursuing 3 parallel paths: - Outright sale Reduction in financing costs Capital Market Strength - Spin-off - Additional dropdowns
Slide 23: Finance: Leverage Ratio and Liquidity Projection
Finance: Leverage Ratio and Liquidity Projection Leverage Ratio 2016-2018E(1) • Year-end 2016 leverage ratio below prior forecast; 2017E and 5.0 2018E targets reduced by 0.2x and 0.3x, respectively 4.4 4.0 • Path to reaching and maintaining a sub-2.5x leverage ratio • Liquidity rises by estimated $1
Slide 24: Finance: E&P Guidance
Finance: E&P Guidance E&P Segment Guidance 2017E 2018E Production Volumes: Natural Gas (Bcf) 375 445 NGLs (MBbls) 5,800 5,950 Oil (MBbls) 45 40 Condensate (MBbls) 740 730 Total Production (Bcfe) 415 485 % Liquids 10% 8% Open Natural Gas Basis Differential to NYMEX ($/Mcf) ($0.63) ($0.50) NGL Realize
Slide 25: Finance: PA Mining Operations Guidance
Finance: PA Mining Operations Guidance PA Mining Operations – Consolidated 100% Basis 2017E 2018E Estimated Total Coal Sales Volumes (in millions of tons) 26.0 26.0 Total Committed Volumes (Contracted & Priced) 25.4 % Committed 98% Capital Expenditures ($ in millions): Production $120 Other (Land/Wa
Slide 26: Finance: 2017E EBITDA Guidance
Finance: 2017E EBITDA Guidance EBITDA Guidance by Segment – 2017E Current Prior ($ in millions) E&P(1) Coal Other Total Total (1/31/17) (12/13/16) Earnings Before Interest, Taxes and $705 $390 ($15) $1,080 $840 DD&A (EBITDA) Adjustments: Unrealized Loss/(Gain) on Commodity (200) - - (200) (5) Deriva
Slide 27: CONSOL Energy Represents a Unique Value Story
CONSOL Energy Represents a Unique Value Story Driving NAV/share growth: • Significant increases to estimated ultimate recoveries (EURs) Focus on • Reducing drilling and completion (D&C) costs and capital intensity NAV/Share Growth • Proving up and de-risking reserves • Accelerating activity • Contin
Slide 28: Appendix
APPENDIX 28
Slide 29: Finance: Q4 2016 Review
Finance: Q4 2016 Review Non-GAAP Reconciliation: EBITDA and Adjusted EBITDA Three Months Ended December 31, 2016 2016 2016 2016 2015 PA Mining E&P Division Operations Other(1) Total Company Total Company ($ in thousands) Division Net (Loss) Income ($222,454) $50,121 ($129,301) ($301,634) $34,325 Les
Slide 30: Finance: Q4 2016 Review
Finance: Q4 2016 Review Non-GAAP Reconciliation: Trailing Twelve Months EBIT, EBITDA, and Adjusted EBITDA Three Months Three Months Three Months Three Months Year Ended Ended Ended Ended Ended March 31, June 30, September 30, December 31, December 31, ($ in thousands) 2016 2016 2016 2016 2016 Net In
Slide 31: Finance: Q4 2016 Review
Finance: Q4 2016 Review Free Cash Flow Reconciliation Three Months Ended Year Ended December 31, December 31, ($ in thousands) 2016 2016 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
CNX Resources — Scotia Howard Weil 2017 Energy Conference on 6ix