Slide 1: Earnings Results First Quarter 2020
Earnings Results First Quarter 2020 April 27, 2020
Slide 2: Cautionary Language
Cautionary Language For purposes of this presentation: (i) “CNX”, “CNX Resources”, “Company”, “we” and “our” refer to CNX Resources Corporation (ii) “CNXM” refers to CNXM Midstream Partners LP; and (iii) “CNXM GP” refers to CNX Midstream GP LLC Risk Factors. This presentation, including the oral sta
Slide 3: Executive Summary
CNX Executive Summary |
Slide 4: The CNX Philosophy and Approach to Making Decisions
The CNX Philosophy and Approach to Making Decisions Our Approach: 1. We optimize long term net asset value (NAV) per share above all else 2. The best metric for optimizing NAV per share is consolidated free cash flow (FCF); maximizing consolidated free cash flow strengthens the balance sheet, allows
Slide 5: CNX's Approach in Action
CNX’s Approach in Action Philosophy continues to Successful execution in CNX near-term maturities drive tactics in Q2 2020 CNX poised 2019 positioned company were reduced by over and beyond to navigate for 2020 and beyond $300MM in Q1 2020 downturn to deliver substantial 2019 Q1 2020 Q2 +2020 consol
Slide 6: Q1 2020 Highlights
CNX Q1 2020 Highlights
Slide 7: Significant Free Cash Flow Generation in Q1 2020
Significant Free Cash Flow (FCF) Generation in Q1 2020 $129MM Consolidated FCF (1) in Q1 2020 $129MM in Consolidated FCF(1) $267 ▪ During Q1 2020, we restructured a ($152) portion of our 2022 through 2024 hedges $ in millions for $55 million ▪ This restructuring reestablished a new $14 $129 hedge pr
Slide 8: Cardinal States Gathering (CSG) Financing Overview
Cardinal States Gathering (CSG) Financing Overview ◼ $175 million loan: $125 million tranche and $50 million tranche Deal Terms ◼ Blended average loan tenor is ~7.8 years ◼ Blended average loan interest rate is ~6.5% ◼ Debt in an Unrestricted Subsidiary (like the CNXM Credit Facility or CNXM 2026 Bo
Slide 9: Repurchased ~$79 Million of 2022 Notes at Significant Discount
Repurchased ~$79 Million of 2022 Notes at Significant Discount ($ in millions) Average Bonds Current Percent Repurchase Savings to Balance @ YE2019 Repurchased Balance Reduction Price Cash Outlay Par $894 $79(1) $815 8.7% 84.7 $67 ($12) 2022 Notes outstanding have been reduced via open market repurc
Slide 10: 2020 Plan Update
CNX £ © oS oF =) - & O. © N ° N
Slide 11: Spring 2020 Borrowing Base Redetermination Completed
Spring 2020 Borrowing Base Redetermination Completed ▪ Borrowing Base and Revolving Credit Commitments redetermined at $1.9 billion ($ in billions) CSG + Hedges ▪ Two significant transactions reduced the engineered value of the company’s borrowing base: - CSG project financing of $175 million - Hedg
Slide 12: 2020 Super Contango Gas Markets
2020 “Super Contango” Gas Markets NYMEX Henry Hub Forward Strip ▪ CNX has the flexibility to modify its production profile allowing $3.10 company to save some production to sell during significantly higher prices this winter and next year ▪ CNX restructured its hedge book to take advantage of this o
Slide 13: Production Profile and Hedge Management
Production Profile and Hedge Management Expected Daily Production 2020(1) Low end of 2020 production range 1.7 assumes production weighted towards $2.90/MMBtu 1.6 winter and into 2021, while high end of production guidance assumes 1.5 Stronger production is moved forward into 1.4 Winter and summer 2
Slide 14: 2020 Wet Gas Markets: Minimal Impact
2020 Wet Gas Markets: Minimal Impact Q2 2020 Q3 2020 Q4 2020 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 (Forecast) (Forecast) (Forecast) Guidance assumes conservative NGLs ($/Bbl) $26.76 $18.36 $13.68 $19.20 $14.04 $4.59 $6.35 $8.54 prices for NGLs and condensate NGL Revenue ($MM) $29.8 $24.0 $18.3 $32
Slide 15: 2020 AMT Credit and Additional Refunds
2020 AMT Credit and Additional Refunds ▪ AMT credit refund expected in 2020 of approximately $102 million due Refund Reconciliation ($ in millions): to accelerating the receipt of the AMT refund previously expected in AMT Credit $102 2021, as a result of the passage of the CARES Act of 2020 Other Pr
Slide 16: Updated 2020 Guidance
Updated 2020 Guidance Previous UPDATED 2020E 2020E Capital Expenditures Low High Low High ($ millions) Drilling & Completions $360 $410 $330 $380 Non-D&C $90 $100 $75 $85 Total consolidated capital expenditures down ~10% Total E&P Capital $450 $510 $405 $465 CNX Midstream LP Capital $80 $100 $65 $85
Slide 17: CNXM Ownership: Valuable Midstream Company
CNXM Ownership: Valuable Midstream Company Business Update ▪ Significant SWPA gas infrastructure build for core Marcellus and Utica is in close-out phase in 2020 ▪ Positive operating leverage from the build out results in lower go-forward capital intensity and stable free cash flow generation from f
Slide 18: 2022 Bond Retirement Addressed
2022 Bond Retirement Addressed
Slide 19: CNX Reduces Near-Term Debt by Over $500 Million in 2020
CNX Reduces Near-Term Debt by Over $500 Million in 2020 Over $500MM in ~ $200MM Remaining CNX debt reduced $25 $160 $200 Reduced $300MM+ debt in Q1 ($ in millions) Project Financing $175 $12MM Bond Buy Back $300 Savings to Date E&P Stand- $140 Alone FCF(1) Q1 2020 CNX Debt Reduced Remaining 2020 CNX
Slide 20: CNX Net Debt Significantly Reduced & 2022s Addressed
CNX Net Debt Significantly Reduced & 2022s Addressed E&P Net Debt at CNX(1) 2022s RBL 2027s CNX will have $1.6B of liquidity $2,033 with no debt maturities until 2027 ~$1,630 $895 ~$1,550 $634M CNXM LP ($ in millions) $350 Unit Value(2) Remaining 2022 Bonds $661 $700 Paid off with FCF from $995M the
Slide 21: Balance Sheet is Getting Stronger
Balance Sheet is Getting Stronger $ in millions March 31, 2020 Stand-Alone E&P Net Debt Stand-Alone LP-Adjusted(3) and Leverage(1) Total Long-Term Debt (GAAP)(2) $1,757.2 $1,757.2 Less: Cash and Cash Equivalents $31.7 $31.7 Less: Forecasted Remaining 2020 Total FCF(1) $160.0 $160.0 Less: Additional
Slide 22: The HY Credit Market Reflects CNX's Strength
The HY Credit Market Reflects CNX’s Strength 5,000 High-Yield E&P Maturities 4,746 4,500 4,000 CNX 5.875s of ’22: $97.50 3,589 CNX has outperformed on 3,500 a relative value basis 2,505 2,977 3,000 2,387 $ in millions 2,500 2,000 1,882 1,706 1,500 1,246 1,221 800 1,000 845 891 694 760 500 350 300 25
Slide 23: 7-Year Free Cash Flow Plan
CNX 14.000 6000 — TUBE AM coNEcTION 4009 2000 7-Year Free Cash Flow Plan
Slide 24: 7-Year Plan Overview
7-Year Plan Overview 2020-2021: 2-Year Bond Paydown Plan 2022-2026: 5-Year FCF Plan ▪ 2020 and 2021 plans developed to maximize FCF and to ensure ▪ Major infrastructure and land cost spend behind us for our MOP CNX paydown of the 2022 notes prior to maturity development plan areas ▪ Cash flows are p
Slide 25: 2021 is Positioned for Optionality
2021 is Positioned for Optionality ▪ FCF plan produces over $400 million in consolidated FCF(1) in If Commodity Prices 2021 at the current strip Remain Depressed - Sets 2022 to easily grow ~5% if natural gas prices and capital markets warrant ▪ Reduces debt and leverage ▪ CNX can grow significantly
Slide 26: Free Cash Flow Plan Provides Opportunity
Free Cash Flow Plan Provides Opportunity Methodically Develop ◼ Drill ~25 wells per year Assets at High Internal ◼ Average 7-year annual production of approximately 540 Bcfe Rates of Return at Current Strip Pricing ◼ Operational flexibility to quickly re-position from maintenance mode to growth mode
Slide 27: FCF Plan Assumptions
FCF Plan Assumptions Capital plan Estimated 2022E – 2024E cash costs ($ / Mcfe) 2022E - 2026E (annual avg.) TIL Count ~25 $2.50 $2.44 $2.43 Net production (Bcfe) ~560 Capital Expenditures ($ in millions) Drilling & Completion ~$230 Other ~$40 $1.03 $1.04 $1.03 Total (Standalone CNX) ~$270 CNX Midstr
Slide 28: 7-Year Plan Generates Substantial Free Cash Flow
7-Year Plan Generates Substantial Free Cash Flow Annual 2022E-2026E Consolidated FCF(1) at Current Strip Pricing Aggregate consolidated FCF of ~$700 $700 $3.00 million for 2020 and 2021 protected by Annual consolidated FCF for 2022E- 2026E averages $500 million hedge book $600 $2.50 $2.47 $2.44 $2.4
Slide 29: CNX is Uniquely Differentiated
CNX is Uniquely Differentiated
Slide 30: Differentiating Highlights
Differentiating Highlights Strong Hedge Position Protects Future Cash Flows and Ensures Capital Returns Low Operating Cash Costs Matter Even More in a Low Price Environment Substantial Free Cash Flow Each Year Across 7-Year Plan at Current Strip Pricing Strong Balance Sheet and Minimal Firm Transpor
Slide 31: Best Downside Protection in the E&P Space
Best Downside Protection in the E&P Space 2020E(1) Hedged Gas Production 2021E(1) Hedged Gas Production 100% $3.00 100 % $ 3.00 $ 2.95 97% 94% $2.90 ~60% of 2022(1) production $ 2.87 89% $ 2.88 $ 2.90 95% $2.90 hedged under maintenance $2.79 89% $ 2.80 scenario at $2.83 NYMEX $2.80 80 % 80% 77% $ 2.
Slide 32: E&P Leading Consolidated Cash Costs
E&P Leading Consolidated Cash Costs $2.25 $2.15 TTM Q1 2020/Q4 2019 Production Cash Costs per Mcfe(1) $1.65 CNX’s top-tier production cash $1.50 $1.26 $1.30 costs, substantial $1.10 $1.13 hedge book, and midstream control $0.77 $0.75 $0.70 create a significant advantage in a weak natural gas pricing
Slide 33: Highly Resilient Balance Sheet
Highly Resilient Balance Sheet Net Debt + Off-Balance Sheet Obligations / 2021E EBITDA(1) ▪ Under current strip, CNX expects to generate FCF and reduce Net Debt 22.8 x leverage Off-Balance Sheet Obligations 17.4 x 17.5 x 15.0 x 14.2 x ▪ Flexibility through low total liability positioning in Appalach
Slide 34: CNX Screens Well on All-In Debt Metrics vs. Appalachian Peers
CNX Screens Well on All-In Debt Metrics vs. Appalachian Peers Total Debt(1) as % of EV FT Commitments as % of EV Total Debt(1) + FT Commitments as a % of EV 88% 86% 71% 395% 61% 57% 309% 301% 281% 272% 240% 244% 39% 215% 211% 157% 13% 85% 46% 29% 16% Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 CNX Peer 6 Pee
Slide 35: CNX Acreage Position Remains Top-Tier in Appalachia
CNX Acreage Position Remains Top-Tier in Appalachia CNX SWPA Central Marcellus Locations(1) Assuming a run rate of 25 Appalachian Peer Group Net Acres SWPA Central Marcellus TILs 1,200,000 per year: SWPA Marcellus inventory to stay at MOP production for 15 1,000,000 years CNX maintains ~12 years of
Slide 36: CPA Dry Utica Results Remain Consistent and Strong
CPA Dry Utica Results Remain Consistent and Strong 50 CPA Dry Utica Cumulative Production CPA Dry Utica Results Normalized to 7000’ 45 Daily Production Normalized to 7000’ 16,000 40 14,000 BP6 Cumulative Production (MMcf) 35 12,000 outperforming Daily Production (mmcf) 30 type curve 10,000 25 8,000
Slide 37: CNX is a Compelling Investment Opportunity
CNX is a Compelling Investment Opportunity with Best in Class FCF Generation, In-line Leverage, and a Discounted Valuation 2021E Free Cash Flow Yield(1) CNX Appalachia peers Other E&P Mid-caps Appalachia peers median: (5%) 18% 14% 10% 7% 6% 6% 5% Other E&P Mid-caps median: 6% (1%) (4%) (5%) (13%) (4
Slide 38: We are Well Positioned for Substantial FCF Generation
We are Well Positioned for Substantial FCF Generation Strong Balance Sheet More than Adequate Liquidity ✓ Easily manageable debt and leverage ✓ Current E&P liquidity of ~$1.3 billion and metrics relative to Appalachian peers consolidated liquidity over $1.5 billion ✓ Unique hedging position ($370 mi
Slide 39: Appendix
Appendix
Slide 40: Operational Highlights
Operational Highlights CNX Drilling Operations Drilling ▪ Improved efficiencies in lateral feet per day leading to capital expenditure reductions in West Virginia Marcellus and Ohio Utica of $50 per foot and $150 per foot, respectively Completions ▪ Capital expenditure reductions due to supply chain
Slide 41: COVID-19 Response Plan
COVID-19 Response Plan ▪ Mandatory Work From Home for all office-based employees and contractors, except for Gas Control Personnel - Gas Control Personnel have been separated to different floors and locations - Multiple back up locations established for gas control ▪ Suspension of all business trave
Slide 42: Natural Gas Hedging and Basis Protection
Natural Gas Hedging and Basis Protection 500 450 Gas Volumes Hedged (Bcf) 400 Despite cashing in 350 $55M of value and 300 250 resetting 2022-2024 451.1 433.5 200 hedges, still 150 279.8 100 162.9 maintain strong 149.7 50 average hedge 0 2020 2021 2022 (2) 2023 2024 prices NYMEX + Basis (2) Hedge Vo
Slide 43: Financial Guidance
Financial Guidance PREVIOUS (1/30/2020) UPDATE (4/27/2020) 2020E 2020E Revenue and Other Operating Income E&P Consolidated E&P Consolidated Production Volumes: Natural Gas (Bcf) 495-525 465-500 NGLs (MBbls) 4,535-4,760 3,485-4,400 Condensate (MBbls) 245-265 110-170 Total Production (Bcfe) 525-555 49
Slide 44: Realignment Driving Expected Best-In-Class SG&A
Realignment Driving Expected Best-In-Class SG&A $350 TTM Q1 2020/Q4 2019 SG&A(1) $0.25 Expect ~$30 million in total expected consolidated cash SG&A savings $300 since 2018 $253 $0.20 ▪ Combined upstream and midstream teams Total SG&A Absolute Dollars ($M) $250 ▪ Streamlined to one monitoring Total S
Slide 45: Q1 2020 Financial Results Summary
Q1 2020 Financial Results Summary Quarter Quarter Quarter Quarter Ended Ended Ended Ended March 31, March 31, March 31, March 31, 2020 2019 2020 2019 % Increase/ % Increase/ ($ in millions, except per share data) Stand-alone Consolidated (Decrease) (Decrease) Adjusted Net Income $193 $28 589.3% $113
Slide 46: Q1 2020 Operational Results Summary
Q1 2020 Operational Results Summary Y/Y Q/Q ▪ Marcellus Shale cash production costs were $1.27 per Mcfe in Q1 ($/Mcfe) 1Q 2020 1Q 2019 Change 1Q 2020 4Q 2019 Change 2020, down $0.06 from $1.33 per Mcfe in Q1 2019, or a 5% decrease (1) Average Sales Price $2.59 $2.97 ($0.38) $2.59 $2.54 $0.05 ▪ Utica
Slide 47: Q1 2020 Activity Summary
Q1 2020 Activity Summary Q1 2020 Average Rigs at Lateral Period ($ in millions) TD FRAC TIL Length (1) End SWPA Marcellus - 10 10 13,730 1 Central Utica 1 3 4 9,050 1 WV Marcellus 7 - - - - Shirley-Penns Utica - - - - - CPA South Utica - - - - - OH Dry Utica 2 - - - - Total 10 13 14 2 Expect to run
Slide 48: Natural Gas and Liquids Realizations
Natural Gas and Liquids Realizations Natural Gas Price Reconciliation Natural Gas Liquids, Oil and Condensate 2020 2019 ▪ Q1 2020 liquids sold: 8.7 Bcfe Q1 Q1 ▪ Total weighted average price of all liquids decreased 45% to $15.14 NYMEX Natural Gas ($/MMBtu) $1.95 $3.15 per Bbl in Q1 2020 from $27.41
Slide 49: Financial Guidance: 2020E Natural Gas Marketing Mix and Basis
Financial Guidance: 2020E Natural Gas Marketing Mix and Basis 2020E CY 2020 Northeast Pipeline Projects Market Michcon Gas Sold (%) Basis 2020E Gas: 11% DOM South 7% ($0.47) CY20 Basis: ($0.18) ETNG Mainline 5% $0.13 DOM South TETCO M3 TCO Pool 17% ($0.34) 2020E Gas: 10% Dawn Pipeline Projects 2020E
Slide 50: Q2 2020 and 2020 Gas Hedging Gain/Loss Projections
Q2 2020 and 2020 Gas Hedging Gain/Loss Projections Q2 2020 CY2020 Wtd. Avg. Avg. Forecasted Wtd. Avg. Avg. Forecasted Hedged Volumes Hedged Forward Gain/(Loss)(2) Hedged Volumes Hedged Forward Gain/(Loss)(2) (1) (1) (000 MMBtu) Price Market ($ in 000s) (000 MMBtu) Price Market ($ in 000s) ($/MMBtu)
Slide 51: YE2019 Type Curve Area and Acreage Update
YE2019 Type Curve Area and Acreage Update Note: As of year-end 2019 as identified in 2019 10-K filed February 10, 2020. 51
Slide 52: YE2019 Acreage and Undeveloped Location Update
YE2019 Acreage and Undeveloped Location Update MARCELLUS UTICA TYPE CURVE AREAS TYPE CURVE AREAS SWPA Central Greater TOTAL SWPA SWPA Central Greater TOTAL SWPA Total Net Acres 88,300 30,600 118,900 Total Net Acres 114,800 57,100 171,900 Net Developed Acres 34,600 2,400 37,000 Net Developed Acres 3,
Slide 53: Non-GAAP Definition
Non-GAAP Definition Non-GAAP Financial Measures Definitions: EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) and income taxes. EBITDAX is defined as earnings before deducting net interest expense (interest expense less interest income), incom
Slide 54: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended March 31, 2020 2019 2020 2019 (1) (1) Stand-alone Stand-alone Total Company Total Company ($ in thousands) Net Income (Loss) from EBITDAX Reconciliation $124,322 ($97,235) ($305,222) ($64,651) Adjustments Total Pre-tax Adjustments from EBITDAX Reconciliatio
Slide 55: Non-GAAP Reconciliation
Non-GAAP Reconciliation Cash from Operations and Capital Expenditures by Segment ($ in millions) E&P CNX Total Gathering(1) = (1) Q1 2020 Standalone + CNX + MLP = Consolidated Cash from Operations $227.3 $1.4 $228.7 $38.7 $267.4 Capital Expenditures $119.3 $1.3 $120.6 $31.4 $152.0 Proceeds from Asse
Slide 56: Non-GAAP Reconciliation
Non-GAAP Reconciliation Organic Free Cash Flow Three Months Ended Three Months Ended March 31, March 31, ($ in thousands) 2020 2019 Net Cash provided by Operating Activities $267,387 $308,652 Capital Expenditures (152,049) (299,138) Organic Free Cash Flow $115,338 $9,514 Free Cash Flow Net Cash Prov
Slide 57: Non-GAAP Reconciliation
Non-GAAP Reconciliation Price and Cost Data per Mcfe ($/Mcfe) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Average Sales Price - Total Company $ 2.97 $ 2.63 $ 2.51 $ 2.54 $ 2.59 Lease Operating Expense $ 0.14 $ 0.15 $ 0.11 $ 0.09 $ 0.07 Transportation, Gathering and Compression $ 0.92 $ 0.98 $ 0.97 $ 0.9
Slide 58: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended March 31, 2020 2020 2020 (1) Stand-alone Midstream Total Company ($ in thousands) Net Income (Loss) $124,322 ($429,544) ($305,222) Interest Expense 40,186 8,809 48,995 Interest Income (92) - (92) Income Tax Benefit (152,582) - (152,582) Earnings Before Inte
Slide 59: Non-GAAP Reconciliation
Non-GAAP Reconciliation Twelve Months Ended March 31, 2020 2020 2020 Stand-alone(1) Midstream Total Company ($ in thousands) Net Income (Loss) $86,852 ($295,475) ($208,623) Interest Expense 132,808 31,795 164,603 Interest Income (1,307) (12) (1,319) Income Tax Benefit (113,287) - (113,287) Earnings
Slide 60: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended March 31, 2019 2019 2019 (1) Stand-alone Midstream Total Company ($ in thousands) Net (Loss) Income ($97,235) $32,584 ($64,651) Interest Expense 28,432 7,339 35,771 Interest Income (722) - (722) Income Tax Benefit (11,559) - (11,559) Earnings Before Interes
Slide 61: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Three Months Three Months Three Months Twelve Months Ended Ended Ended Ended Ended June 30, September 30, December 31, March 31, March 31, ($ in thousands) 2019 2019 2019 2020 2020 Net Income (Loss) $192,694 $143,960 ($240,055) ($305,222) ($208,623) Interest Expe