Cnx Resources Corporation · NYSE:CNX
Cnx Resources — CONSOL Energy — Q3 2016 Earnings Presentation
38 slides from Cnx Resources's earnings presentation, 2016
Slide 1: Company Presentation Q3 2016
Company Presentation Q3 2016
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: CONSOL Energy: Company Overview
CONSOL Energy: Company Overview Journey Towards Becoming a Top Tier Appalachian E&P Company Complete December 5, 2013 – Transaction with Murray Energy Corp. in which we sold half of coal assets and related assets April 19, 2014 – CONSOL Energy 150th Anniversary September 25, 2014 – IPO of CONE
Slide 4: Marcellus Joint Venture (JV) Exchange Agreement
Marcellus Joint Venture (JV) Exchange Agreement 1. Exchange agreement of jointly owned Oil & Gas properties, Post-Exchange Acreage Map consisting of: Developed properties with associated current production of 1,070 MMcfe/d, net to the JV. CNX and NBL to receive net production of ~620 and ~450 MMcf
Slide 5: Post-Exchange Agreement: Pro Forma Analysis
Post-Exchange Agreement: Pro Forma Analysis Impact on Marcellus Shale Operations Before After CONSOL Energy JV Exchange Agreement JV Exchange Agreement 2016E Production(1) (Bcfe) 380-385 390-395 2016E Average per Unit Operating Expenses ($/Mcfe) $2.27 - $2.49 $2.27 - $2.49 Net Marcellus DUC Inventor
Slide 6: Strategic Overview
Strategic Overview Agreement to Separate Marcellus Shale Joint Venture Full autonomy to develop, operate, or divest assets - Flexibility to operate these assets as we choose - Facilitates stacked pay development opportunities - Unlocks development of assets - Increases ability to execute asset sal
Slide 7: Key Takeaways of the Exchange Agreement
Key Takeaways of the Exchange Agreement Joint Venture Separation Drives Long-Term Value Growth The exchange agreement provides CONSOL Energy the ability to drive NAV per share higher through: Greater flexibility in our capital allocation strategy and long-term development plan - Optimize the devel
Slide 8: E&P Operations
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Slide 9: Marcellus Shale Footprint
Marcellus Shale Footprint Before and After the Joint Venture Exchange Agreement with Noble Energy Marcellus Shale Marcellus Shale Before Exchange Agreement After Exchange Agreement WI (%) 50 WI (%) 100 Net Net Undeveloped 335,000 Undeveloped 306,000 Acres Acres Net Future Net Future Locations(1) 2,7
Slide 10: E&P Division: Q3 2016 Operations Summary
E&P Operations E&P Division: Q3 2016 Operations Summary Marcellus Shale Quarterly Summary Utica Shale Quarterly Summary Avg. TIL Turned Turned Avg. TIL Sub- Horizontal Lateral Sub- Horizontal Drilled Completed In Line Counties Drilled Completed In Line Lateral Counties Regions Rigs Length Regions Ri
Slide 11: E&P Operations: Pro Forma DUC Inventory
E&P Operations: Pro Forma DUC Inventory 2016 Activity Overview and 2017 Drilled and Uncompleted Opportunity Set E&P Activity Summary – 2016 Plan Expected New Drilled Drilled Implied 2016 Wells Drilled in Uncompleted Completed 2016 TIL's 2017 Completions H2 2016 Inventory Inventory Remaining Inventor
Slide 12: E&P Operations: Capital Expenditures
E&P Operations: 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 $190-$205 Million de-bottlenecking activities Other 2016
Slide 13: E&P Operations: Benchmarking vs Peers
E&P Operations: Benchmarking vs Peers Full-cycle Breakeven Operating Metrics Declined from $3.51 to $1.92 per Mcfe, a 45% Projected Decline $4.00 $3.51 $3.50 $3.27 $3.00 $1.17 $1.11 $2.56 $2.50 $0.82 $1.92 $2.00 Cash OpEx $0.84 $0.59 (plus SG&A) of $0.48 $1.28/Mcfe, $1.50 $0.17 $0.37 plus PUD-to- $0
Slide 14: E&P Operations: Drilling Improvements
E&P Operations: Drilling Improvements Days vs. Utica Shale: Depth Days vs. Depth (Wells (Wells in orderof in order of Horizontal Horizontal TD Date) TD Date) 0.0 SWITZ6B SWITZ6D 5,000.0 SWITZ6F SWITZ6H Expect Additional 10,000.0 Realized ~60+% Reduction in Days to Drill Depth (ft.) ~16% Reduction SW
Slide 15: Utica Shale: Drilling Cost Improvements
Utica Shale: Drilling Cost Improvements Switz Drilling Cost ($/lateral ft) (Wells in order of Tophole TD) $2,000 Drilling Cost ($/lateral ft) $1,800 $1,810 $1,740 $1,600 $1,400 $1,380 $1,340 $1,200 $1,150 $1,060 $1,040 $1,040 $1,000 $950 $800 Switz 6B Switz 6D Switz 6H Switz 6F Switz 16J Switz 16D Q
Slide 16: Gas Marketing
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Slide 17: Q3 2016 Gas Realization and Marketing Highlights
Gas Marketing Q3 2016 Gas Realization and Marketing Highlights CONSOL basin exports are projected to increase approximately 73,000 Dth/day for FY 2016 over FY 2015 as TETCO’s U2GC Q3 2016 Natural Gas Price Reconciliation and TEAM OPEN projects were put into service in late 2015, increasing expecte
Slide 18: Gas Marketing: Firm Transportation
Gas Marketing Firm Transportation Expected Firm Capacity by Pipeline After FT Reallocation In addition to the upstream 1,800 deal, CNX and NBL have 1,600 agreed to work with the NEXUS 1,400 pipelines to reallocate firm 1000s MMBtu/day transportation to better 1,200 ANR align with the upstream 1,00
Slide 19: Natural Gas Sales: Expected Market Mix
Gas Marketing Natural Gas Sales: Expected Market Mix MIDWEST TETCO M3 DOMINION SOUTH TCO POOL TETCO M2 EAST TENNESEE Gas Sales 2016E 2017E Columbia (TCO) 17% 17% TETCO (M2) 29% 28% TETCO (M3) 16% 15% Dominion (DTI) 15% 15% TETCO ELA East Tennessee 10% 10% TETCO WLA TETCO ELA & WLA 8% 8% Midwest (Chi
Slide 20: Natural Gas Processing and NGLs
Gas Marketing Natural Gas Processing and NGLs 600 CNX Expected Contracted Processing Capacity CNX and NBL have also agreed to work with processing 500 counterparties to realign processing capacity with the upstream assets 400 MMcf/day After the swap of capacity, CNX’s volume of firm processing c
Slide 21: Gas Marketing: Liquids Realizations
Gas Marketing: Liquids Realizations Natural Gas Liquids, Oil, and Condensate Q3 2016 Avg. “NGL Barrel” Composition Q3 2016 liquids sold: 13.6 Bcfe, up 29% from Q2 2016 3Q16 Est NGL Sales Comp Total weighted average price of all liquids decreased Natural 1.6% to $15.48 per Bbl in Q3 2016 from $15
Slide 22: Gas Hedges
Gas Marketing Gas Hedges CNX Gas Volumes Hedged 2016-2020 E&P Hedge Program: 300 Program and actively Physical Sales With Fixed Basis Exposed to NYMEX Gas Volumes Hedged (Bcf) monitored hedges 250 NYMEX Only Hedges Exposed to Basis ─ Program Hedge - protect NYMEX + Basis¹ 200 margins on up to 90%
Slide 23: Financial
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Slide 24: Financial: Q3 2016 Review
Financial: Q3 2016 Review Third Quarter 2016 Results Net earnings attributable to continuing operations(1) in the 2016 third quarter of $62.6 million, or $0.26 per diluted share Adjusted net loss attributable to continuing operations(1) in the 2016 third quarter of $35.5 million, or ($0.15) per
Slide 25: Financial: Q3 2016 Review (Cont'd)
Financial: Q3 2016 Review (Cont’d) Net (Decrease)/Increase in Cash Generated positive free cash flow - Organic free cash flow from continuing operations in Q3 2016 of $103 million; first nine months 2016 total organic FCF of $188 million - Total free cash flow in Q3 2016 of $92 million; first nine
Slide 26: E&P Division: Results Summary
Financial: Q3 2016 Review (Cont’d) E&P Division: Results Summary Y/Y Q-to-Q Seq. Q-to-Q E&P Division 3Q2016 3Q2015 Change 3Q2016 2Q2016 Change (1) Average Sales Price ($ / Mcfe) $2.54 $2.35 $0.19 $2.54 $2.50 $0.04 (2) Average Costs ($ / Mcfe) $2.36 $2.54 ($0.18) $2.36 $2.27 $0.09 Sales Volumes (Bcfe
Slide 27: Financial: Liquidity
Financial: Liquidity Strong Liquidity Position of ~$1.4 Billion Amount/ Amount Letters Amount September 30, 2016 ($ in million) Capacity Drawn of Credit Available Cash and Cash Equivalents(1) $74 - - $74 (2) Revolving Credit Facility $2,000 $354 $324 $1,322 Total $2,074 $354 $324 $1,396 (1) Cash and
Slide 28: Financial: Liquidity (Cont'd)
Financial: Liquidity (Cont’d) Debt and Liquidity Profile CNX CNXC: CNX CNX Consolidated 100% Attributable Equity Value of Ownership in Unit Market Owned LP (5) Capitalization and Liquidity 9/30/2016 9/30/2016 9/30/2016 Affiliated Public MLPs (5) Price Value Units Capitalization CNX Coal Resources LP
Slide 29: Financial: Legacy Liabilities
Financial: Legacy Liabilities Significant Legacy Liability Reductions Over Past 3 Years $4,500 $4,345 $400 Annual Cash Servicing Costs ($ in Millions) $4,000 $350 $370 Legacy Liabilities ($ in millions) $3,500 Projected $100MM Annual Cash $300 Servicing Cost for FY 2016, a $3,000 $37MM reduction fro
Slide 30: Financial: CNX Coal Resources LP (CNXC:NYSE)
Financial: CNX Coal Resources LP (CNXC:NYSE) Organizational Structure and CNX Ownership CONSOL Energy Inc. CNXC owns a 25% undivided interest(1) in, and ("CONSOL Energy") operational control over, CONSOL Energy’s Pennsylvania NYSE: CNX mining complex (Bailey, Enlow Fork and Harvey mines) 100% owners
Slide 31: Financial: CONE's Growing Cash Contribution
Financial: CONE’s Growing Cash Contribution CNNX: CNX Ownership and Cash Contribution CONSOL owns 32.1% of CONE Midstream Partners LP’s CONE Midstream's and Gathering's Pro Rata Net Income Contribution to CNX (NYSE: CNNX) LP units and 50% of the General Partner ($ in millions) (“GP”), which has a
Slide 32: Guidance
Guidance E&P Segment Guidance 2016E Production Volumes: Natural Gas (Bcf) 346 - 349 NGLs (MBbls) 6,500 - 6,750 Oil (MBbls) 62 - 68 Condensate (MBbls) 800 - 850 Total Production (Bcfe) 390 - 395 Natural Gas Basis Differential to NYMEX ($Mcf) ($0.65) - ($0.75) NGL Realized Prices ($Bbl) $13.00 - $15.0
Slide 33: Guidance
Guidance Coal Segment Guidance 2016E Estimated Total PA Mining Operations Sales Volumes (in millions of tons) 23.6 - 24.4 Sales Volumes Attributed to Discontinued Operations (in millions of tons) 2.1 % PA Mining Operations Tonnage Sold 100% Total Consolidated Coal Segment Capital Expenditures ($ in
Slide 34: Key Takeaways
Key Takeaways 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 cost deflation Adding two rigs while maintaining discipline on capital expenditures Benefi
Slide 35: Appendix
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Slide 36: Non-GAAP Reconciliation: EBITDA and Adj. EBITDA
Appendix Non-GAAP Reconciliation: EBITDA and Adj. EBITDA Three Months Ended September 30, 2016 2016 2016 2016 2015 PA Mining E&P Total Total ($ in thousands) Division Operations Other1 Company Company Division Net Income/(Loss) $161,075 $34,741 ($168,223) $27,593 $125,470 Less: Loss from Discontinue
Slide 37: Non-GAAP Reconciliation: Trailing Twelve Months EBITDA
Appendix Non-GAAP Reconciliation: Trailing Twelve Months EBITDA and Adj. EBITDA Three Months Three Months Three Months Three Months Twelve Months Ended Ended Ended Ended Ended December 31, March 31, June 30, September 30, September 30, ($ in thousands) 2015 2016 2016 2016 2016 Net Income / (Loss) $3
Slide 38: Free Cash Flow Reconciliation
Appendix Free Cash Flow Reconciliation Three Months Ended Nine Months Ended September 30, September 30, ($ in thousands) 2016 2016 Net Cash provided by Continuing Operations $ 166,064 $ 372,211 Capital Expenditures (64,132) (179,389) Net Investment in Equity Affiliates 1,023 (4,555) Organic Free Cas