Cnx Resources Corporation · NYSE:CNX

Cnx Resources — CONSOL Energy — Scotia Howard Weil 2016 Energy Conference

31 slides from Cnx Resources's conference presentation, Mar 21, 2016

  1. Slide 1: Scotia Howard Weil 2016 Energy Conference

    Scotia Howard Weil 2016 Energy Conference March 21-23, 2016

  2. 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

  3. Slide 3: Company Overview

    Company Overview Transformative Journey  Twelve years ago – traditional coal producer, the largest underground producer in the world  Ten years ago – created CNX Gas  Six years ago – acquired Dominion Resources’ Appalachian E&P business and became a coal company with a growing natural gas busines

  4. Slide 4: Key Takeaways

    Key Takeaways  CONSOL Energy’s E&P Division has demonstrated that it can stand on its own as a premier Appalachian Basin producer:  Gas production has grown significantly  Capital intensity and costs are down dramatically  Dry Utica has opened up a new opportunity set  Our base plan is achievab

  5. Slide 5: Overview: E&P Division (Marcellus Shale)

    Overview: E&P Division Marcellus Shale  ~436,000 CONSOL net acres ─ ~88% NRI ─ ~91% HBP  23.9 Tcfe 3P  Over 8,900 gross potential wells(1)  Marcellus production grew at a 71% CAGR from 2013 to 2015 Producing Pads Note: Townships are shown in yellow and purple (acres owned in fee) where CONSOL ho

  6. Slide 6: Overview: E&P Division (Utica Shale)

    Overview: E&P Division Utica Shale Overview: A Leading Position in the Utica Shale  ~622,000 CONSOL net acres(1)  Over 3,000 gross locations ─ 8,082 ft average TIL laterals in Q4 2015 ─ 4 wells per pad on average ─ 120-acre spacing (assuming 7,000 ft lateral)  EURs: ─ Ohio Wet: 2.3 Bcfe EUR/1,000

  7. Slide 7: Overview: CONE's Growing Cash Contribution

    Overview: CONE’s Growing Cash Contribution  CONSOL owns 32.1% of CONE Midstream Partners LP’s (CNNX:NYSE) LP units and 50% of the General Partner CONE Midstream's and Gathering's Pro Rata Net (“GP”), which has a 2% interest in CNNX (and rights to Income Contribution to CNX IDRs) $60 $56  CNNX owns

  8. Slide 8: E&P Division

    (= CONSOL ENERGY AMERICA’S ENERGY STARTS HERE. E&P Division

  9. Slide 9: E&P Division: Production Growth and Costs

    E&P Division Gas Division Production Growth E&P Production Volumes Indexed Production Growth 450 260 Production by Area 400 ~15% 2015A 2016E 240 350 Marcellus 51% 54% 329 220 CBM 23% 19% 300 Utica (Wet & Dry) 17% 21% 200 250 Other 9% 6% 236 180 Bcfe 200 160 172 154 156 128 150 140 100 120 50 100 201

  10. Slide 10: 2016 Planned E&P Activity Overview

    E&P Division 2016 Planned E&P Activity Overview E&P Activity Summary – 2016 Plan Drilled Drilled Uncompleted Completed 2016 2016 Inventory Inventory Completions TIL Marcellus SW PA Operated 29 23 25 42 SW PA Non-Op 5 10 - 10 WV Operated 7 - - - WV Non-Op 49 - - - Total Marcellus 90 33 25 52 Utica SW

  11. Slide 11: E&P Division: Bridging to Growth

    E&P Division Bridging to Growth 400 71 ~378 350 329 23 5 300 -50 250 Bcfe 200 150 100 50 0 2015 Production 2016 Base decline 2016: Gathering De- 2016: Non-Op (Ex NBL/HES) 2016: Production Adds 2016 Total Production bottlenecking Prod. Adds 2016 production growth primarily driven by wells’ productivi

  12. Slide 12: E&P Division: Capital Expenditures

    E&P Division: Capital Expenditures Efficiencies Driving Reduced E&P Capital Expenditures Without Sacrificing Growth  Deferring activity, increasing capital efficiency 2016 E&P Capital Budget: improvements and identification of additional de- $205-$325 Million bottlenecking activities  Revised 2016

  13. Slide 13: E&P Division: Utica Shale PA/WV Dry Gas

    E&P Division RRC– Zahn #1 Utica Shale: PA/WV Dry Gas IP Gas: ~4,500 Mcf/d REXX – Cheeseman 1 IP Oil: 0 Bbl/d IP Gas: 9,200 Mcf/d CHK– Hubbard 3H IP Oil: 0 Bbl/d IP Gas: 11,00 Mcf/d CHK – Thompson 3H IP Oil: 0 Bbl/d IP Gas: 6,400 Mcf/d CNX – Gaut 4IH IP Oil: 0 Bbl/d 61.4 MMcf/d @ 7,968 psig CHK – Bro

  14. Slide 14: Utica Shale: GH9 Greene County, PA

    Utica Shale: GH 9 Greene County, PA Range Resources - Claysville Sportsman’s Club #1 IP Gas – 59.0 MMcf/d EQT – Pettit Spud in Aug. 2015 13,400 ft. TVD 4,000-4,500 ft. lateral  100% WI and 96% NRI to CONSOL EQT – Scotts Run 24 hr IP – 72.9 MMcf/d.  TVD: 13,400’ 3,221’ Treated interval.  Frac’d in

  15. Slide 15: Utica Shale: Ohio Dry Gas

    Utica Shale: Ohio Dry Gas CNX Activity and Recent IP Rates In-and-Around Monroe County, OH CVX Conner well (Utica): GPOR Irons 1-4H (Utica): 25.0 MMcf/d – Avg 24-hr rate 30.3 MMcf/d – Avg 24-hr rate NBL / CNX MND 6H (Utica): 1 Utica Well 39.1 MMcf/d 24-hr IP @7,126 psi CNX SWITZ 6 Pad (Utica) : 9,34

  16. Slide 16: Utica Shale: Monroe County, OH Cost Improvements

    Utica Shale: Monroe Cty, OH Cost Improvements Days vs. Depth (Well in order of Horizontal TD Date) 0 5,000 Measured Depth (ft.) 10,000 Switz-6B-HSU Switz-6F-HSU 15,000 ~60+% Reduction in Days to Drill Switz-6H-HSU 20,000 Switz-6D-HSU Switz-16J-HSU 25,000 0 20 40 60 80 100 120 Days Switz Drilling Cos

  17. Slide 17: Gas Marketing

    Gas Marketing Firm Transportation 1,600 NEXUS  Targeting pipeline projects that 1,400 access favorable markets at ANR 1,200 favorable rates Columbia 1000s MMBtu/day 1,000 East Tennessee  Will supplement direct FT with 800 firm sales to customers that have matching firm capacity 600 Dominion 400 

  18. Slide 18: Gas Marketing: Hedges

    Gas Marketing: Hedges Gas Hedges 250 E&P Hedge Program: 225 Physical Sales With Fixed Basis Exposed to NYMEX  Program and actively NYMEX Only Hedges Exposed to Basis 200 monitored hedges NYMEX + Basis (1) Gas Volumes Hedged (Bcf) 175 ─ Program Hedge - protect margins on up to 90% of our 150 Proved

  19. Slide 19: Coal Division

    (= CONSOL ENERGY AMERICA’S ENERGY STARTS HERE. Coal Division 19

  20. Slide 20: Coal Division: Marketing Overview

    Coal Division: Marketing Overview Coal Division: FY 2016 and FY 2017 Marketing Forecasts FY 2016E Sales Tons by Segment 2016E Coal Sales Facts and Goals 6%  Contracted tons for 2016: 97% 13% - Priced: 94%  ~96% of the PA Ops tons are expected to be sold domestically 81%  ~60%-65% of the VA Ops to

  21. Slide 21: Coal Division: Not All NAPP Longwalls Are Created Equal

    Coal Division Not All NAPP Longwalls Are Created Equal 25 5.0 2015 Production - CNX/CNXC Assets 2015 Production - Other Longwalls 2015 Sulfur 4.5 20 4.0 Production (million tons) Sulfur (% as received) 3.5 15 3.0 2.5 10 2.0 1.5 Closed 5 in 2015 Closed 1.0 in 2015 0.5 0 0.0 Marion County (1) Emerald

  22. Slide 22: Financial

    (= CONSOL ENERGY AMERICA’S ENERGY STARTS HERE. 22

  23. Slide 23: Financial: Focused on Free Cash Flow

    Financial: Focused on Free Cash Flow  Solid liquidity position  Reduction in legacy liabilities  Guidance: Production, price realizations, operating and capital costs - Growing E&P production volumes - Reductions to operating and overhead costs - Reductions in E&P capital intensity  Service cost

  24. Slide 24: Financial: Liquidity

    Financial: Liquidity Debt and Liquidity Profile CNX CNXC: CNX CNX Unit Market Consolidated 100% Attributable Equity Value of Ownership in Affiliated Public MLPs Onwed LP (5) Price (5) Value Capitalization and Liquidity 12/31/2015 12/31/2015 12/31/2015 Units CNX Coal Resources LP (CNXC:NYSE) 12.7 $6.

  25. Slide 25: Financial: Legacy Liabilities

    Financial: Legacy Liabilities Significant Legacy Liability Reductions Over Past 3 Years $4,500 $375 $370 $4,345 $4,000 $350 $325 Annual Cash Servicing Cost $3,500 Projected $109MM Annual Cash $300 Servicing Cost for FY 2016, a Legacy Liabilities $3,000 $28MM reduction from the year- $275 $2,500 end

  26. Slide 26: Summary

    Summary Plans and Goals Aligned to Drive Increased Valuation  Milestones:  Improving E&P performance from high-grading activities, improving completion techniques, reducing cycle times, and service deflation  Benefits from recent long-term contracting activities and operating cost reductions  CO

  27. Slide 27: Appendix

    (= CONSOL ENERGY AMERICA’S ENERGY STARTS HERE. Appendix 27

  28. Slide 28: Appendix: Financial Guidance Summary (E&P)

    Appendix: Financial Guidance Summary E&P Segment Guidance 2016E Production Volumes: Natural Gas (Bcf) 335 NGLs (MBbls) 6,000 Oil (MBbls) 65 Condensate (MBbls) 1,000 Total Production (Bcfe) ~+15% Natural Gas Basis Differential to NYMEX ($/Mcf) ($0.35) - ($0.45) NGL Realized Price ($/Bbl) $7.00 - $9.0

  29. Slide 29: Appendix: Financial Guidance Summary (Coal)

    Appendix: Financial Guidance Summary Coal Segment 2016E 2017E Total Coal Operations (in millions of tons) Estimated Total Coal Sales Volumes 27.0 - 32.0 30.5 - 33.4 Total Committed Volumes (Contracted & Priced) 27.8 12.7 % Committed (Contracted & Priced) 94% 40% Estimated Total Average Price ($/Ton)

  30. Slide 30: Non-GAAP Reconciliation: Quarter-over-Quarter EBITDA

    Appendix Non-GAAP Reconciliation: Quarter-over-Quarter EBITDA and Adj. EBITDA Three Months Ended December 31 ($ in thousands) 2015 2014 Net Income $34,325 $73,666 Add: Interest Expense 49,082 53,025 Less: Interest Income (431) (476) Add: Tax Valuation Allowance 65,395 - Add: Income Taxes (Benefit) 5

  31. Slide 31: Non-GAAP Reconciliation: Trailing Twelve Months EBITDA

    Appendix Non-GAAP Reconciliation: Trailing Twelve Months EBITDA and Adj. EBITDA Three Months Ended Three Months Ended Three Months Ended Three Months Ended Twelve Months Ended March 31 June 30 September 30 December 31 December 31 ($ in thousands) 2015 2015 2015 2015 2015 Net Income / (Loss) $79,031

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