Cnx Resources Corporation · NYSE:CNX
Cnx Resources — CONSOL Energy — Investor Presentation (November 2009)
29 slides from Cnx Resources's investor presentation, November 2009
Slide 1: November 2009 Investor Presentation
November 2009 Investor Presentation
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). These statements, which are described in detail in our annual report form 10-K filed with the Securities and E
Slide 3: CONSOL Energy: An Energy Juggernaut
CONSOL Energy: An Energy Juggernaut COAL GAS Coalbed Methane Thermal Coal Conventional Gas Metallurgical Coal Marcellus Shale Chattanooga Shale CONSOL Energy has chosen to diversify by producing energy from multiple formations within Appalachia. 3
Slide 4: 2008 Energy Production (Trillion Btus)
2008 Energy Production (Trillion Btus) 2008 Peabody Energy (U.S. only) 1,837.0 CONSOL Energy- Thermal Coal and Met Coal 1,674.0 CONSOL Energy-Gas 76.6 CONSOL Energy -Total 1,750.6 CONOCO-Phillips (U.S. only) 1,696.2 Chesapeake Energy 843.0 Massey Energy 523.1 Range Resources 140.9 EQT (formerly Equi
Slide 5: Met Coal, Thermal Coal, and Gas
Met Coal, Thermal Coal, and Gas 5
Slide 6: Met Coal Overview
Met Coal Overview n Buchanan Mine in southwestern Virginia – A low-cost longwall mine – +100 mm tons of high quality, low-vol reserves n 2009 sales estimated at 2.4 mm tons; prices just under $100 – 1.1 mm tons to be shipped in 4Q n 2010 sales estimated at 5.0 mm tons – 1.4 mm tons priced at $114.47
Slide 7: Thermal Coal Overview
Thermal Coal Overview n CONSOL Energy is the largest producer in America’s premier thermal coal basin: Northern Appalachia n Northern Appalachia has: – The highest Btus per pound of any thermal coal – Location value, straddling eastern markets – Excellent geology, allowing for the use of longwalls –
Slide 8: CNX Gas Overview
CNX Gas Overview n 83.3% owned by CONSOL Energy n Largest Appalachian Basin gas producer in terms of revenue, net income, and return on capital employed n CNX Gas is the highest margin producer in the industry n In 2009: – Production guidance raised to 92 Bcf, or 20% higher than the 76.6 Bcf produce
Slide 9: Financial Review
,_—_« . . . » =m Financial Review
Slide 10: 2009 Third Quarter Results
2009 Third Quarter Results n Net Income of $87 million n GAAP EPS of $0.48 n Net Cash from Operations of $162 million n Coal Production: 0.6 mm met tons, 12.9 mm thermal tons n Margins per ton: $36.82 per met ton, $10.24 per thermal ton CONSOL Energy has out-earned the competition, year-to-date. 10
Slide 11: Short Term Financial Flexibility
Short Term Financial Flexibility (at September 30, 2009) ($MM) Amount / Amount Letters Amount Capacity Drawn of Credit Available Cash and Cash Equivalents - CONSOL 31 - - 31 Cash and Cash Equivalents - CNX Gas 1 - - 1 AR Securitization - CONSOL 165 165 - - Revolving Credit Facility - CONSOL 1,000 33
Slide 12: Long Term Financial Flexibility
Long Term Financial Flexibility (at September 30, 2009) n Manageable Long-Term Debt: – $ 490 million of long-term debt, of which – $ 39 million is due in 2010 CONSOL Energy has been careful to create shareholder value without over-levering its balance sheet. 12
Slide 13: Coal Operations
VU) Cc O = © we oO) Q O rs O O
Slide 14: Met Coal Outlook
Met Coal Outlook n U.S. and international met market is currently strengthening – Blast furnaces have re-started – Steel capacity utilization is increasing • US mills at 60% • Asian mills at 75% Buchanan has the potential to help CONSOL boost profits in the fourth quarter of 2009 and 2010. 14
Slide 15: Thermal Coal Outlook
Thermal Coal Outlook n Utility stockpiles are still high: 60 days in the Northeast and 80-85 days in the Southeast n Return to normal levels unlikely to occur before mid-year 2010 n An additional 50 mm tons of production needs to be withdrawn CONSOL Energy is looking at 2010 as a bridge year, with f
Slide 16: Met and Thermal Coal Commitments for 2009-2011
Met and Thermal Coal Commitments for 2009-2011 (MM Tons) 2009 2010 2011 COAL-COMMITTED TONS W/O PRICING - 7.2 19.5 COAL-TONS WITH FIRM PRICING Tons Committed and Priced (MM tons,10/16/09) 58.2 51.1* 20.8 Avg. Realized Price/Ton Committed & Priced $58.74 $53.51 $51.53 COAL-TONS PRICED WITH COLLARS To
Slide 17: Scrubber Builds Are Being Completed
Scrubber Builds Are Being Completed Since 2006, CONSOL has signed 6 multi-year, multi-million ton agreements with domestic customers that in aggregate ~ 250 million tons of high-Btu coal 10% 28% Percentage of Gigawatts Scrubbed by Year 62% Thru 12/31/08 2009-2010 2011+ 17
Slide 18: Close Proximity to Scrubbed Customers
Close Proximity to Scrubbed Customers By 2012, ~ 142 gigawatts scrubbed east of Mississippi River 60 generating units within 50 miles of CONSOL’s NAPP coal reserves CONSOL’s Assets in Appalachia • Producing Complexes: 16 • Reserves: 3.5 billion tons 18
Slide 19: CNX Gas Corporation
CNX Gas Corporation 19
Slide 20: Leading Appalachian Producer
Leading Appalachian Producer Among Appalachian producers, CNX Gas is: § #1 in Sales Revenue § #1 in Profitability and Returns § #1 in Production Growth § #2 in Production Volume § #2 in Market Capitalization Industry-wide, CNX Gas is: § #1 in Safety § #1 in Unit Margins § #1 in Carbon Credit Generat
Slide 21: 2009 Third Quarter Results
2009 Third Quarter Results § Net Income of $35.5 million § GAAP EPS of $0.23 § Gas Production of 24.8 Bcf § Margin per Mcf: $2.81 § Zero Lost-Time Incidents for Employees Another quarter of record production enabled us to increase 2009 production guidance to 92 Bcf. 21
Slide 22: Asset Overview
Asset Overview Red: CBM acres Blue: O&G/Shale acres Gray: both CBM and O&G/Shale acres 4.3 Million Gross Acres Coalbed Methane and Marcellus Shale Coalbed Methane and New Albany Shale Coalbed Methane and Huron Shale Chattanooga Shale Reserve Base/Resource Potential • 1.4 Tcf of proved reserves, of w
Slide 23: Gas Operations Summary
Gas Operations Summary Coal Bed Methane: § Most experience related to active coal mining § Most CBM horizontal drilling experience Marcellus Shale: § Successfully adopted state-of-the-art exploration techniques § Successfully benefited from the horizontal drilling experience on the CBM side § Many s
Slide 24: Marcellus Shale Results
Marcellus Shale Results Peak Daily Oct. 13 Daily Cumulative Production Production Production (MMcf) Well Name Turn in date Peak date (MMcf) (MMcf) Through Oct. 13 1. CNX#3 10/5/2008 12/16/2008 6.6 1.6 826 2. CNX#2 1/28/2009 2/13/09 2.5 1.0 344 3. CNX#2A 2/13/2009 3/4/2009 2.0 1.0 326 4. GH10CV 4/6/2
Slide 25: Advances in the Marcellus
Advances in the Marcellus Reserves per well increasing: § From 3.0 Bcf in Dec. 2008 to 3.5 Bcf today Costs dropping: § From $5.2 million in Dec. 2008 to less than $3.5 million today Well spacing dropping: § From 160 acres in Dec. 2008 to 40 acres today Acreage footprint increasing: § From 186,000 ac
Slide 26: Hedge Position
Hedge Position CNX Gas has one of the best hedge books in the industry: 2009 2010 2011 2012 Total Yearly Production (Bcf) 92 100 NA NA Volumes Hedged (Bcf) 51.6 45.6 22.6 15.1 Average Hedge Price ($/Mcf) $8.76 $7.94 $6.84 $6.84 CNX Gas has one of the industry’s highest hedge positions in 2010. 26
Slide 27: CONSOL Energy's Value Discount
CONSOL Energy’s Value Discount n CONSOL Energy has out-earned the competition, yet trades at a 35% discount (market cap of $11.6 billion vs. $8.6 billion): – CONSOL had GAAP net income YTD of $397 million – Peabody had GAAP net income YTD of $356 million n On the Met Coal Side, Walter Energy produce
Slide 28: Current EV/2010 EBITDA Comparison
Current EV/2010 EBITDA Comparison Peer Median: 6.6x 5.7 Another way of viewing the CONSOL Energy Discount. 28
Slide 29: November 2009 Investor Presentation
November 2009 Investor Presentation
CONSOL Energy — Investor Presentation (November 2009) on 6ix