Slide 1: Earnings Results Second Quarter 2020
Earnings Results Second Quarter 2020 July 30, 2020
Slide 2: Cautionary Language
Cautionary Language Various statements in this presentation, including those that express a belief, expectation or intention, may be considered forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act) that involv
Slide 3: The CNX Philosophy and Approach to Making Decisions
The CNX Philosophy and Approach to Making Decisions Our Approach: 1. We optimize long term intrinsic value per share above all else 2. The best metric for optimizing intrinsic value per share is free cash flow (FCF); maximizing free cash flow strengthens the balance sheet, allows for opportunistic c
Slide 4: 6 Reasons Why CNX is a Non-Replicable Best-In-Class E&P
6 Reasons Why CNX is a Non-Replicable Best-In-Class E&P ▪ Production cash costs lowest in basin and declining over time The Lowest Cost E&P 1 ▪ Fully burdened cash costs expected to drop significantly over time Company ▪ Cost position drives basin leading cash margins ▪ Current F&D costs half of his
Slide 5: Track Record of Success
Track Record of Success ▪ Constructed critical ▪ Implemented water infrastructure CNX has been a first Programmatic Hedging Program projects to drive water mover in basin and efficiencies for years ▪ No meaningful to come gone against contracts on new ▪ Bought back 19% of industry norms, e.g. expens
Slide 6: Drilling and Completion Improvements Driving Capital Efficiencies
Drilling and Completion Improvements Driving Capital Efficiencies SWPA Marcellus Drilling Efficiencies SWPA Marcellus Completions Efficiencies Most Recent 2 Well Results: 1.1 SWPA Marcellus: $720/ft Drilling Days/1,0000 ft Frac Days/1,0000 ft SWPA Utica: 0.9 $1,375/ft SHR/PEN Marcellus: 0.7 $680/ft
Slide 7: Most Recent CPA Dry Utica Well Producing Above Type Curve
Most Recent CPA Dry Utica Well Producing Above Type Curve CPA Dry Utica Results 50 45 Increased EUR for Bell Point 6 40 Utica well to range of 4.5–5.0 Bcfe 35 per 1,000’, Daily Production (MMcf) Most productive Utica well to date 30 25 20 15 10 5 0 0 100 200 300 400 500 600 700 Days ▪ ~20 years of U
Slide 8: Current F&D At Much Higher Capital Efficiency Than Historical D&C DD&A
Current F&D At Much Higher Capital Efficiency Than Historical D&C DD&A $1.20 Marcellus Well Cost $ per Mcfe DD&A ($ / Mcfe) 2019 $1.00 Land $0.10 Gathering/Water Infrastructure $0.07 $0.80 Well (D&C, Water, Pad/Facilities) $0.68 Well Closing Liability $0.02 $0.60 Total DD&A Rate $0.87 $0.40 Signific
Slide 9: Best-In-Class Production Cash Costs
Best-In-Class Production Cash Costs TTM Production Cash Costs per Mcfe(1) $2.25 $2.12 The CNXM $1.61 transaction $1.50 $1.36 lowered $1.14 $1.26 CNX’s production $0.75 $0.73 $0.77 cash costs by ~$0.40 per Mcfe $- CNX Peer 6 Peer 5 Peer 2 Peer 3 Peer 4 Peer 1 Lease Operating Expense ($/Mcfe) Producti
Slide 10: Fully Burdened Cash Costs Under $0.90 Per Mcfe
Fully Burdened Cash Costs Under $0.90 Per Mcfe 2020E-2026E Average Prices 2020E-2026E Fully Burdened Costs $/MMBtu $1.40 NYMEX $2.40 $1.22 In Basin Price $1.95 $1.20 CNX Realized Price ($/Mcfe) $2.38 $0.34 $1.01 $1.00 $0.93 BTU Conversion (MMBtu/Mcf) 1.079 $0.20 $0.87 $0.86 $0.86 $0.85 $0.16 $0.01 $
Slide 11: Best Downside Protection in the E&P Space
Best Downside Protection in the E&P Space 2021E(1) Hedged Gas Production 2022E(1) Hedged Gas Production $ 3.00 $ 3.00 104% $2.94 ~38% of 2023(1) production 63% 100 % $ 2.90 $ 2.90 hedged under maintenance $2.85 60 % scenario at $2.81 NYMEX $2.80 87% $ 2.80 $ 2.80 vs. 80 % $ 2.70 $ 2.70 ~1% for peers
Slide 12: Flexibility to Modify Production Profile to Capture Higher Prices
Flexibility to Modify Production Profile to Capture Higher Prices Expected Daily Production 1,800 Flowing Now December 2020 CNX shut in certain wells in May 2020 1,600 due to pricing contango 1,400 1,200 CNX has the flexibility to modify its production profile allowing company MMcf / d 1,000 800 to
Slide 13: Q2 2020 Activity Summary
Q2 2020 Activity Summary Q2 2020 Average Rigs at Lateral Period ($ in millions) TD FRAC TIL Length (1) End SWPA Marcellus 7 8 6 8,560 1 Central Utica 1 - - - - WV Marcellus - - - - - Shirley-Penns Utica - - - - - CPA South Utica - - - - - OH Dry Utica - 3 - - - Total 8 11 6 1 Expect to run 1 rig and
Slide 14: A Balance Sheet Strengthening Convertible Notes Offering
A Balance Sheet Strengthening Convertible Notes Offering Senior Unsecured / Non-callable for 3.5 years ▪ Opportunistically issued convertible notes on April 28, 2020 Total Issuance $345MM ▪ Continued to de-risk balance sheet by further eliminating refinancing risk Net Proceeds $299.0MM(2) associated
Slide 15: Updated 2020 Guidance
Updated 2020 Guidance Previous UPDATED Started deferring volumes on May 1, 2020 2020E 2020E Capital Expenditures Plan to turn wells back online November 1, driving Low High Low High ($ millions) production volumes towards low end of guidance range Drilling & Completions $330 $380 $330 $380 Non-D&C $
Slide 16: Substantial Cumulative Free Cash Flow and Yield
Substantial Cumulative Free Cash Flow and Yield >$3 billion of cumulative FCF over 7-year plan Cumulative Free Cash Flow (1) 2020E-2026E Cumulative Free Cash Flow (1) FCF Yield at Current Share Price(2) $3,500 30% $3,000 CNX Pro Forma Debt 25% $2,500 Free Cash Flow Yield 20% CNX Pro Forma Market Cap
Slide 17: Why Invest in the "New" CNX?
Why Invest in the “New” CNX? Lowest cost Appalachian E&P Average annual go forward FCF of ~$500 million assuming current $2.40 NYMEX Safety in paying down debt to increase equity value Immense upside in normal or high gas price environment Non-replicable business model: Midstream, NRIs, water assets
Slide 18: Appendix
Appendix
Slide 19: CNX Overview
CNX Overview Total Net Shale Acres >1.1 million Total Marcellus Net Acres 519,300 Net Undeveloped Marcellus Locations in SWPA 328 Total Utica Net Acres 608,300 Net Undeveloped Utica Locations in CPA 439 2020E Total Production 490-530 Bcfe Q2 2020 Liquidity >$1.4 billion NYSE Ticker CNX Corporate Off
Slide 20: Relative Free Cash Flow Yield
Relative Free Cash Flow Yield 2021E Free Cash Flow Yield(1) CNX Appalachia Peers Top 10 XOP S&P 500 Sectors CNX 2021E-2026E Average Expected FCF Yield: 26% Implied CNX share price of ~$35 assuming a 6.5% yield Source: Public filings, FactSet as of 7/17/2020. Note: Market data as of 7/17/2020. Free C
Slide 21: Q2 2020 Financial Results Summary
Q2 2020 Financial Results Summary Quarter Quarter Quarter Quarter Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 % Increase/ % Increase/ ($ in millions, except per share data) Stand-alone Consolidated (Decrease) (Decrease) Adjusted Net (Loss) Income ($7) $12 -158.3%
Slide 22: Financial Guidance
Financial Guidance PREVIOUS UPDATED (4/27/2020) (7/30/2020) Revenue and Other Operating Income 2020E 2020E Production Volumes: Natural Gas (Bcf) 465-500 465-500 NGLs (MBbls) 3,485-4,400 3,485-4,400 Condensate (MBbls) 110-170 110-170 Total Production (Bcfe) 490-530 490-530 % Liquids ~5%-6% ~5%-6% Nat
Slide 23: Low Base Decline Rate Drives Low Capital Intensity
Low Base Decline Rate Drives Low Capital Intensity Capital plan 2022E - 2026E (annual avg.) As PDPs build over time, base decline shallows to TIL Count ~25 average ~20% in 2022E-2026E Net production (Bcfe) ~560 Capital Expenditures ($ in millions) Fewer TILs required to keep production flat Y-o-Y Dr
Slide 24: Natural Gas Hedging and Basis Protection
Natural Gas Hedging and Basis Protection 500 450 Despite cashing in Gas Volumes Hedged (Bcf) 400 350 $84MM of value YTD 300 and resetting 2022- 250 200 459.7 435.9 2024 hedges, still 150 285.9 maintain strong 100 50 170.3 156.4 average hedge 0 2020 2021 2022 2023 2024 prices and cash flow NYMEX + Ba
Slide 25: Natural Gas Hedging and Basis Protection (Cont'd)
Natural Gas Hedging and Basis Protection (Cont’d) For financial hedging, CNX utilizes over-the-counter swaps to manage its exposure to natural gas price fluctuations. Typically, CNX “sells” swaps under which it receives a fixed price from counterparties and pays a floating market price. In order to
Slide 26: Natural Gas and Liquids Realizations
Natural Gas and Liquids Realizations Natural Gas Price Reconciliation Natural Gas Liquids, Oil and Condensate 2020 2019 ▪ Q2 2020 liquids sold: 5.0 Bcfe Q2 Q2 ▪ Total weighted average price of all liquids decreased 54% to $8.73 per NYMEX Natural Gas ($/MMBtu) $1.72 $2.64 Bbl in Q2 2020 from $19.14 p
Slide 27: 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 8% ($0.42) CY20 Basis: ($0.13) ETNG Mainline 4% $0.13 DOM South TETCO M3 TCO Pool 16% ($0.30) 2020E Gas: 11% Dawn Pipeline Projects 2020E
Slide 28: Q3 2020, 2020, and 2021 Gas Hedging Gain/Loss Projections
Q3 2020, 2020, and 2021 Gas Hedging Gain/Loss Projections Q3 2020 CY2020 CY2021 Wtd. Avg. Avg. Forecasted Wtd. Avg. Avg. Forecasted Wtd. Avg. Avg. Forecasted (1) (3) (1) (3) Hedged Volumes Hedged Forward Gain/(Loss) Hedged Volumes Hedged Forward Gain/(Loss) Hedged Volumes Hedged Forward Gain/(Loss)(
Slide 29: YE2019 Type Curve Area and Acreage Update
YE2019 Type Curve Area and Acreage Update Note: As of year-end 2019 as identified in 2019 10-K filed February 10, 2020. 29
Slide 30: YE2019 Acreage and Undeveloped Location Update
YE2019 Acreage and Undeveloped Location Update MARCELLUS UTICA TYPE CURVE AREAS TYPE CURVE AREAS SWPA Central Greater TOTAL SWPA SWPA Central Greater TOTAL SWPA Total Net Acres 88,300 30,600 118,900 Total Net Acres 114,800 57,100 171,900 Net Developed Acres 34,600 2,400 37,000 Net Developed Acres 3,
Slide 31: Non-GAAP Definition
Non-GAAP Definition Non-GAAP Financial Measures Definitions: EBIT is defined as earnings before deducting net interest expense (interest expense less interest income) and income taxes. EBITDAX is defined as earnings before deducting net interest expense (interest expense less interest income), incom
Slide 32: Non-GAAP Reconciliation
Non-GAAP Reconciliation Price and Cost Data per Mcfe ($/Mcfe) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Average Sales Price - Total Company $ 2.97 $ 2.63 $ 2.51 $ 2.54 $ 2.59 $ 2.52 Lease Operating Expense $ 0.14 $ 0.15 $ 0.11 $ 0.09 $ 0.07 $ 0.09 Transportation, Gathering and Compression $ 0.
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation Source: Company filings. 33
Slide 34: Non-GAAP Reconciliation
Non-GAAP Reconciliation Source: Company filings. 34
Slide 35: Non-GAAP Reconciliation
Non-GAAP Reconciliation Source: Company filings. 35