Production Volumes and Activity Summary........................................................................................................................
2
Hedge Volumes and Pricing…...........................................................................................................................................
3
Gas Hedging Gain/Loss Projections…..............................................................................................................................
4
Consolidated Statements of Income..................................................................................................................................
Consolidated Statements of Cash Flows….......................................................................................................................
7
Market Mix and Natural Gas Price Reconciliation…..........................................................................................................
8
Price and Cost Data (Per Mcfe).......................................................................................................................................
Net Debt and Adjusted EBITDAX TTM..............................................................................................................................
NOTE: Please note that CNX is unable to provide a reconciliation of projected financial results contained in this presentation, including the measures referenced above, to their respective comparable financial measure calculated in accordance with GAAP. This is due to our inability to calculate the comparable GAAP projected metrics, including operating income, net cash provided by operating activities and total production costs, given the unknown effect, timing, and potential significance of certain income statement items.
PRODUCTION VOLUMES
GAS
Q3-2020
Q2-2020
Q1-2020
Q4-2019
Q3-2019
Shale Sales Volumes (Bcf)
95.2
96.5
112.4
119.1
106.0
CBM Sales Volumes (Bcf)
13.0
13.1
13.2
13.7
14.1
Other Sales Volumes (Bcf)
-
-
0.1
0.1
0.1
LIQUIDS*
NGLs Sales Volumes (Bcfe)
6.9
4.7
8.3
10.0
8.0
Oil and Condensate Sales Volumes (Bcfe)
0.6
0.2
0.4
0.5
0.1
TOTAL (Bcfe)
115.7
114.5
134.4
143.4
128.3
Average Daily Production (MMcfe)
1,257.6
1,258.3
1,476.5
1,558.5
1,394.6
* NGLs, Oil and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.
Q3 2020 ACTIVITY SUMMARY
TD
Frac
TIL
Average Lateral Length(1)
Rigs at Period End
SWPA Central
Marcellus
7
4
12
12,245
1
Utica
-
-
-
-
-
WV Shirley-Pennsboro
Marcellus
-
-
-
-
-
Utica
-
-
-
-
-
CPA South
Utica
-
1
1
4,840
-
Ohio Dry
Utica
-
2
5
8,992
-
Total
7
7
18
-
1
(1) Measured in lateral feet from perforation to perforation.
2
HEDGE VOLUMES AND PRICING
NYMEX Hedges
Q4 2020
2020
2021
2022
2023
2024
Volumes (Bcf)
123.6
457.1
436.8
290.7
160.5
165.2
Average Prices ($/Mcf)
$2.95
$2.93
$2.94
$2.85
$2.80
$2.88
Physical Fixed Price Sales and Index Hedges
Volumes (Bcf)
3.8
12.4
22.3
20.9
34.3
17.7
Average Prices ($/Mcf)
$2.48
$2.44
$2.51
$2.49
$2.16
$2.22
Total Volumes Hedged (Bcf)(1)
127.4
469.5
459.1
311.6
194.8
182.9
NYMEX + Basis (fully-covered volumes)(2)
Volumes (Bcf)
127.4
469.5
453.5
311.6
194.8
182.9
Average Prices ($/Mcf)
$2.50
$2.52
$2.47
$2.32
$2.24
$2.30
NYMEX Hedges Exposed to Basis
Volumes (Bcf)
-
-
5.6
-
-
-
Average Prices ($/Mcf)
-
-
$2.94
-
-
-
Total Volumes Hedged (Bcf)(1)
127.4
469.5
459.1
311.6
194.8
182.9
(1) Hedge positions as of 10/8/2020. Excludes basis hedges in excess of NYMEX hedges of 2.9 Bcf, 10.1
Bcf, 78.4 Bcf, 77.8 Bcf, and 66.5 Bcf for Q4 2020, 2020, 2022, 2023, and 2024, respectively. Q4 2020
and 2020 exclude purchased swaps. See below table.
(2) Includes the impact of NYMEX and basis-only hedges as well as physical sales agreements.
PURCHASED SWAPS
NYMEX Only Hedges
Q4 2020
2020
Volumes (Bcf)
3.3
21.5
Average Fixed Prices ($/Mcf)
$2.35
$2.18
Index Hedges
Volumes (Bcf)
2.4
10.3
Average Fixed Prices ($/Mcf)
$1.54
$1.52
Basis Hedges
Volumes (Bcf)
3.8
20.7
Average Fixed Prices ($/Mcf)
($0.47)
($0.38)
For financial hedging, CNX utilizes over-the-counter swaps to manage its exposure to natural gas price
fluctuations. Typically, CNX “sells” swaps under which it receives a fixed price from counterparties and
pays a floating market price. In order to help gain additional flexibility to move production to higher price
periods, during the second quarter of 2020, CNX purchased, rather than sold, financial swaps for the
period May through November of 2020 under which CNX will pay a fixed price to and receive a floating
price from its hedge counterparties. Swaps purchased have the effect of reducing total hedged volumes
for the period of the swap.
3
HEDGING GAIN/LOSS PROJECTIONS
Q4 2020
CY2020
CY2021
Wtd. Avg.
Avg.
Forecasted
Wtd. Avg.
Avg.
Forecasted
Wtd. Avg.
Avg.
Forecasted
Hedged Volumes(1)
Hedged
Forward
Gain/(Loss)(3)
Hedged Volumes(1)
Hedged
Forward
Gain/(Loss)(3)
Hedged Volumes
Hedged
Forward
Gain/(Loss)(3)
($/MMBtu)
(000 MMBtu)
Price
Market(2)
($ in 000s)
(000 MMBtu)
Price
Market(2)
($ in 000s)
(000 MMBtu)
Price
Market
($ in 000s)
NYMEX
130,975
$2.72
$2.63
$12,394
469,785
$2.76
$2.07
$313,783
475,623
$2.70
$2.96
($122,437)
Index
(1,550)
$1.48
$1.72
$372
(10,025)
$1.75
$1.41
($4,596)
900
$2.40
$2.42
($18)
Basis:
DOM South (DOM)
15,915
($0.56)
($0.76)
$2,191
53,280
($0.59)
($0.59)
($1,085)
88,545
($0.61)
($0.54)
($6,218)
TCO Pool (TCO)
13,340
($0.40)
($0.54)
$1,527
53,940
($0.40)
($0.39)
($979)
58,400
($0.49)
($0.39)
($6,365)
Michcon (NMC)
8,208
($0.17)
($0.24)
$589
34,013
($0.17)
($0.17)
($99)
46,230
($0.17)
($0.19)
$983
TETCO ELA (TEB)
1,220
($0.09)
($0.12)
($28)
4,260
($0.09)
($0.10)
($169)
7,300
($0.09)
($0.11)
$176
TETCO WLA (TWB)
2,750
($0.10)
($0.09)
($49)
10,050
($0.11)
($0.07)
($375)
7,300
($0.08)
($0.05)
($194)
TETCO M3 (TMT)
4,905
$0.47
($0.26)
$3,448
19,060
$0.31
($0.18)
$8,958
6,868
$0.96
$0.14
($335)
TETCO M2 (BM2)
52,440
($0.55)
($0.91)
$17,831
195,150
($0.54)
($0.66)
$20,133
170,575
($0.60)
($0.53)
($12,782)
Transco Zone 5 South (DKR)
3,380
$0.63
$0.11
$1,812
12,530
$0.16
$0.16
$1,773
6,825
$0.55
$0.34
$312
Total Financial Basis Hedges
102,158
$27,321
382,283
$28,157
392,043
($24,423)
Total Projected Realized Gain (Loss)
$40,087
$337,344
($146,878)
Note: Forward market prices, hedged volumes, and hedge prices are as of 10/8/2020. Anticipated hedging activity is not included in projections.
(1) Net of purchased swaps.
(2) January through October prices are settled.
(3) Forecasted Gain/(Loss) amounts are based on sum of current monthly hedge positions vs. strip. CY 2020 excludes $84 million of hedge monetization gains.
4
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Dollars in thousands, except per share data
Revenue and Other Operating Income:
Q3-2020
Q2-2020
Q1-2020
Q4-2019
Q3-2019
Natural Gas, NGL and Oil Revenue
$182,213
$175,776
$251,494
$320,463
$265,051
(Loss) Gain on Commodity Derivative Instruments
(168,834)
(63,303)
115,142
135,987
213,913
Purchased Gas Revenue
31,541
20,424
26,359
29,846
29,192
Other Revenue and Operating Income
21,155
15,944
23,364
22,693
21,841
Total Revenue and Other Operating Income
66,075
148,841
416,359
508,989
529,997
Costs and Expenses:
Operating Expense
Lease Operating Expense
10,377
10,244
10,033
12,738
14,202
Transportation, Gathering and Compression
68,810
60,025
83,242
86,323
80,193
Production, Ad Valorem, and Other Fees
5,994
5,384
6,162
7,358
6,127
Depreciation, Depletion and Amortization
114,464
113,545
129,164
133,844
120,459
Exploration and Production Related Other Costs
2,141
3,310
3,888
29,480
6,075
Purchased Gas Costs
31,721
19,989
24,998
28,077
27,490
Impairment of Exploration and Production Properties
-
-
61,849
327,400
-
Impairment of Unproved Properties and Expirations
-
-
-
119,429
-
Impairment of Goodwill
-
-
473,045
-
-
Selling, General, and Administrative Costs
22,714
23,399
30,238
34,535
24,307
Other Operating Expense
23,284
26,596
20,681
18,059
19,746
Total Operating Expense
279,505
262,492
843,300
797,243
298,599
Other Expense
Other Expense
2,180
4,819
5,186
101
3,439
Gain on Assets Sales and Abandonments, net
(3,567)
(5,938)
(12,055)
(34,953)
(3,308)
Loss (Gain) on Debt Extinguishment
108
344
(11,263)
-
-
Interest Expense
37,921
46,256
48,995
37,051
38,405
Total Other Expense
36,642
45,481
30,863
2,199
38,536
Total Costs and Expenses
316,147
307,973
874,163
799,442
337,135
(Loss) Earnings Before Income Tax
(250,072)
(159,132)
(457,804)
(290,453)
192,862
Income Tax (Benefit) Expense
(61,279)
(28,646)
(152,582)
(50,398)
48,902
Net (Loss) Income
(188,793)
(130,486)
(305,222)
(240,055)
143,960
Less: Net Income Attributable to Noncontrolling Interest
15,905
15,263
23,864
31,353
28,422
Net (Loss) Income Attributable to CNX Resources Shareholders
($204,698)
($145,749)
($329,086)
($271,408)
$115,538
(Loss) Earnings per Share
Basic
($1.03)
($0.78)
($1.76)
($1.45)
$0.62
Diluted
($1.03)
($0.78)
($1.76)
($1.45)
$0.61
5
CONSOLIDATED BALANCE SHEETS
(Unaudited)
Dollars in thousands
30-Sep-20
30-Jun-20
31-Mar-20
31-Dec-19
30-Sep-19
ASSETS
Current Assets:
Cash and Cash Equivalents
$150,132
$19,607
$31,833
$16,283
$5,484
Restricted Cash
733
738
853
-
-
Accounts and Notes Receivable
Trade, net
75,929
69,174
91,477
133,480
96,997
Other Receivables, net
4,653
7,669
10,839
13,679
11,462
Supplies Inventories
10,090
10,317
10,266
6,984
7,527
Recoverable Income Taxes
644
114,440
115,261
62,425
11,184
Derivative Instruments
77,608
197,804
312,749
247,794
198,272
Prepaid Expenses
12,450
10,973
12,775
17,456
14,800
Total Current Assets
332,239
430,722
586,053
498,101
345,726
Property, Plant and Equipment:
Property, Plant and Equipment:
10,904,837
10,814,035
10,691,516
10,572,006
10,512,298
Less-Accumulated Depreciation, Depletion and Amortization
3,841,699
3,730,232
3,622,413
3,435,431
2,981,723
Total Property, Plant and Equipment—Net
7,063,138
7,083,803
7,069,103
7,136,575
7,530,575
Other Non-Current Assets:
Operating Lease Right-of-Use Assets
124,329
141,198
159,521
187,097
205,647
Investment in Affiliates
15,685
15,159
16,549
16,710
17,110
Derivative Instruments
160,098
212,657
258,111
314,096
275,892
Goodwill
323,314
323,314
323,314
796,359
796,359
Other Intangible Assets
91,733
93,371
95,009
96,647
98,285
Restricted Cash
5,456
5,576
5,340
-
-
Other Non-Current Assets
13,182
13,884
15,950
15,221
16,664
Total Other Non-Current Assets
733,797
805,159
873,794
1,426,130
1,409,957
TOTAL ASSETS
8,129,174
8,319,684
8,528,950
9,060,806
9,286,258
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable
117,004
148,345
171,890
202,553
308,003
Derivative Instruments
144,545
83,527
49,058
41,466
45,476
Current Portion of Finance Lease Obligations
7,419
7,295
20,451
7,164
7,203
Current Portion of Long-Term Debt
22,488
22,430
7,200
-
-
Current Portion of Operating Lease Obligations
52,032
52,110
54,622
61,670
65,061
Other Accrued Liabilities
164,473
162,817
197,130
216,086
195,881
Total Current Liabilities
507,961
476,524
500,351
528,939
621,624
Non-Current Liabilities:
Long-Term Debt
2,577,974
2,540,768
2,640,148
2,754,443
2,640,234
Finance Lease Obligations
2,322
4,225
6,095
7,706
9,400
Operating Lease Obligations
66,180
79,701
92,463
110,466
122,514
Derivative Instruments
203,709
178,187
163,898
115,862
117,217
Deferred Income Taxes
398,878
370,412
376,401
476,108
476,968
Asset Retirement Obligations
61,761
62,543
64,387
63,377
33,123
Other Non-Current Liabilities
40,213
40,370
40,497
41,596
43,360
Total Non-Current Liabilities
3,351,037
3,276,206
3,383,889
3,569,558
3,442,816
TOTAL LIABILITIES
3,858,998
3,752,730
3,884,240
4,098,497
4,064,440
Stockholders' Equity
Common Stock
2,249
1,878
1,874
1,870
1,870
Capital in Excess of Par Value
2,989,699
2,261,729
2,205,941
2,199,605
2,197,783
Preferred Stock
-
-
-
-
-
Retained Earnings
1,290,498
1,495,197
1,641,009
1,971,676
2,243,104
Accumulated Other Comprehensive Loss
(12,270)
(12,382)
(12,493)
(12,605)
(7,778)
Total CNX Resources Stockholders' Equity
4,270,176
3,746,422
3,836,331
4,160,546
4,434,979
Noncontrolling Interest
-
820,532
808,379
801,763
786,839
TOTAL STOCKHOLDERS' EQUITY
4,270,176
4,566,954
4,644,710
4,962,309
5,221,818
TOTAL LIABILITIES AND EQUITY
$8,129,174
$8,319,684
$8,528,950
$9,060,806
$9,286,258
6
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Dollars in thousands
Cash Flows from Operating Activities:
Q3-2020
Q2-2020
Q1-2020
Q4-2019
Q3-2019
Net (Loss) Income
($188,793)
($130,486)
($305,222)
($240,055)
$143,960
Depreciation, Depletion and Amortization
114,464
113,545
129,164
133,844
120,459
Amortization of Deferred Financing Costs
5,807
6,348
2,447
1,690
1,649
Impairment of Exploration and Production Properties
-
-
61,849
327,400
-
Impairment of Unproved Properties and Expirations
-
-
-
119,429
-
Impairment of Goodwill
-
-
473,045
-
-
Stock-Based Compensation
2,503
2,566
6,840
1,869
1,781
Gain on Asset Sales and Abandonments
(3,567)
(5,938)
(12,055)
(34,953)
(3,308)
Loss (Gain) on Debt Extinguishment
108
344
(11,263)
-
-
Loss (Gain) on Commodity Derivative Instruments
168,834
63,303
(115,142)
(135,987)
(213,913)
Loss on Other Derivative Instruments
152
3,598
10,639
-
-
Net Cash Received in Settlement of Commodity Derivative Instruments
90,310
142,256
151,161
43,449
57,041
Deferred Income Taxes
(61,278)
(25,683)
(99,746)
959
48,902
Equity in (Earnings) Loss of Affiliates
(396)
1,260
161
(400)
(673)
Return on Equity Investment
(131)
131
-
800
1,200
Changes in Operating Assets
Accounts and Notes Receivable
(3,427)
24,631
43,639
(36,093)
28,724
Recoverable Income Taxes
113,796
821
(52,836)
(51,356)
102,518
Supplies Inventories
227
(51)
(3,282)
543
3,715
Prepaid Expenses
(1,842)
1,832
4,710
(2,610)
1,438
Changes in Other Assets
(129)
(296)
692
989
114
Changes in Operating Liabilities
Accounts Payable
(14,153)
(17,810)
2,322
(61,685)
25,934
Accrued Interest
(8,409)
(495)
(5,063)
2,170
(2,691)
Other Operating Liabilities
9,141
(35,994)
(13,626)
44,931
4,703
Changes in Other Liabilities
(55)
(84)
(1,047)
(466)
(16,134)
Net Cash Provided by Operating Activities
223,162
143,798
267,387
114,468
305,419
Cash Flows from Investing Activities:
Capital Expenditures
(108,335)
(134,852)
(152,049)
(228,097)
(336,137)
Proceeds from Asset Sales
5,855
12,151
13,975
29,884
8,189
Net Cash Used in Investing Activities
(102,480)
(122,701)
(138,074)
(198,213)
(327,948)
Cash Flows from Financing Activities:
Payments on Miscellaneous Borrowings
(1,779)
(1,777)
(1,792)
(1,827)
(1,807)
Payments on Long-Term Notes
(50,000)
(408,985)
(59,880)
-
-
Net Proceeds from (Payments on) CNXM Revolving Credit Facility
24,000
(28,000)
35,250
65,750
38,000
Net (Payments on) Proceeds from CNX Revolving Credit Facility
(140,000)
113,000
(224,000)
47,800
(16,800)
Proceeds from Issuance of CNX Senior Notes
207,000
-
-
-
-
Net (Payments on) Proceeds from CSG Non-Revolving Credit Facilities
(5,202)
(3,667)
173,250
-
-
Proceeds from Issuance of Convertible Senior Notes
-
334,650
-
-
-
Purchase of Capped Call Related to Convertible Senior Notes
-
(35,673)
-
-
-
Distributions to CNXM Noncontrolling Interest Holders
(21,055)
(3,489)
(17,443)
(16,822)
(16,250)
Proceeds from Issuance of Common Stock
151
1,650
4
355
49
Shares Withheld for Taxes
(1)
(63)
(1,890)
(27)
(62)
Purchases of Common Stock
-
-
-
-
(7,697)
Debt Issuance and Financing Fees
(3,396)
(848)
(11,069)
(685)
(31)
Net Cash Provided by (Used in) Financing Activities
9,718
(33,202)
(107,570)
94,544
(4,598)
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash
130,400
(12,105)
21,743
10,799
(27,127)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period
25,921
38,026
16,283
5,484
32,611
Cash, Cash Equivalents, and Restricted Cash at End of Period
$156,321
$25,921
$38,026
$16,283
$5,484
7
MARKET MIX AND NATURAL GAS PRICE RECONCILIATION
2020E
2021E
Gas Sold (%)
Basis
Gas Sold (%)
Basis
DOM South
6%
($0.59)
4%
($0.54)
ETNG Mainline
4%
$0.09
4%
$0.26
TCO Pool
15%
($0.39)
23%
($0.39)
TETCO ELA & WLA
3%
($0.08)
5%
($0.08)
TETCO M3
6%
($0.18)
6%
$0.14
TETCO M2
34%
($0.66)
30%
($0.53)
Michcon
10%
($0.17)
9%
($0.19)
Physical basis sales
22%
($0.28)
19%
($0.33)
Weighted Average Basis
100%
($0.40)
100%
($0.33)
NYMEX
$2.07
$2.96
Weighted Average Basis (Not considering hedging)
($0.40)
($0.33)
Realized Price (per MMBtu)
$1.67
$2.63
Conversion Factor (MMBtu/Mcf)
1.08
1.09
Realized Price Before Financial Hedging (per Mcf)
$1.80
$2.87
8
PRICE AND COST DATA (PER MCFE)
Q3-2020
Q2-2020
Q1-2020
Q4-2019
Q3-2019
Average Sales Price - Gas
$1.51
$1.54
$1.83
$2.14
$2.04
Average Gain on Commodity Derivative Instruments - Cash Settlement- Gas(1)
$0.83
$1.03
$0.77
$0.33
$0.47
Average Sales Price - Oil and Condensate*
$6.58
$4.40
$6.59
$7.47
$12.19
Average Sales Price - NGLs*
$2.19
$1.31
$2.34
$3.20
$2.28
Average Sales Price - E&P
$2.36
$2.52
$2.59
$2.54
$2.51
Lease Operating Expense (LOE)
$0.09
$0.09
$0.07
$0.09
$0.11
Production, Ad Valorem, and Other Fees
$0.05
$0.05
$0.05
$0.05
$0.05
Transportation, Gathering and Compression
$0.59
$0.52
$0.62
$0.60
$0.63
Depreciation, Depletion and Amortization (DD&A)
$0.98
$0.97
$0.94
$0.92
$0.93
Total Production Costs
$1.71
$1.63
$1.68
$1.66
$1.72
Total Production Cash Costs, before DD&A
$0.73
$0.66
$0.74
$0.74
$0.79
Cash Margin, before DD&A
$1.63
$1.86
$1.85
$1.80
$1.72
Fully Burdened Cash Costs, before DD&A(2)
$1.17
$1.29
$1.20
$1.19
$1.26
Fully Burdened Cash Margin, before DD&A
$1.19
$1.23
$1.39
$1.35
$1.25
Note: "Total Production Costs" excludes Selling, General, and Administration and Other Operating Expenses
*NGLs, Oil, and Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGLs, condensate, and natural gas prices.
(1) Excludes hedge monetizations.
(2) Fully burdened cash costs include production cash costs, selling, general and administrative (SG&A) cash costs, other operating cash expense, other cash (income) expense, other revenue and operating income, and cash interest expense. Q3 2020, Q2 2020, Q1 2020, Q4 2019 and Q3 2019 total fully burdened cash costs exclude a gain on asset sales of $0.03 per Mcfe, $0.24 per Mcfe, $0.09 per Mcfe, $0.05 per Mcfe and $0.03 per Mcfe, respectively. Q3 2020, Q2 2020, Q1 2020, Q4 2019 and Q3 2019 also exclude unrealized losses on interest rate swaps and noncash amortization of $0.05 per Mcfe, $0.08 per Mcfe, $0.11 per Mcfe, $0.01 per Mcfe and $0.02 per Mcfe respectively.
Natural Gas Price Reconciliation
Q3-2020
Q2-2020
Q1-2020
Q4-2019
Q3-2019
NYMEX Natural Gas ($/MMBtu)
$1.98
$1.72
$1.95
$2.50
$2.23
Average Differential
(0.57)
(0.29)
(0.26)
(0.51)
(0.33)
BTU Conversion (MMBtu/Mcf)*
0.10
0.11
0.14
0.15
0.14
Gain on Commodity Derivative Instruments-Cash Settlement(1)
0.83
1.03
0.77
0.33
0.47
Realized Gas Price per Mcf
$2.34
$2.57
$2.60
$2.47
$2.51
*Conversion factor
1.07
1.08
1.08
1.08
1.08
(1) Excludes hedge monetizations.
9
GUIDANCE
Previous
Updated
Previous
Updated
($ in millions)
2020E
2020E
2021E
2021E
Capital Expenditures
Low
High
Low
High
Drilling & Completions (D&C)
$330
-
$380
$365
-
$375
-
-
Non-D&C
$140
-
$170
$130
-
$140
-
-
Total Capital
$470
-
$550
$495
-
$515
~$440
~$440
Production Volumes (Bcfe)
490
-
530
500
-
510
~550
~550
% of Natural Gas Hedged
94%
89%
Prices on Open Volumes(1)
Natural Gas NYMEX ($/MMBtu)
$1.94
$2.07
-
-
Natural Gas Basis Differential ($/MMBtu)
($0.20)
-
($0.30)
($0.35)
-
($0.45)
-
-
NGL Realized Price ($/Bbl)
$12.50
-
$14.50
$12.50
-
$14.50
-
-
($ in millions)
Adjusted EBITDAX(2)
$830
-
$900
~$900
~$920
~$960
($ in millions)
Free Cash Flow (FCF)(2)
~$350
~$350
~$425
~$425
(1) Forward market prices are as of 10/8/2020.
(2) Non-GAAP measures. See “Non-GAAP Financial Measures” for definitions.
10
Non-GAAP Measures (Definitions, Purpose, and Reconciliations)
CNX's management uses certain non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful for investors in analyzing the company. Although these are not measures of performance calculated in accordance with generally accepted accounting principles (GAAP), management believes that these financial measures are useful to an investor in evaluating CNX because (i) analysts utilize these metrics when evaluating company performance and have requested this information as of a recent practicable date, (ii) these metrics are widely used to evaluate a company’s operating performance, and (iii) we want to provide updated information to investors. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with GAAP. In addition, because all companies do not calculate these measures identically, these measures may not be comparable to similarly titled measures of other companies.
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), income taxes, depreciation, depletion and amortization, and exploration. Adjusted EBITDAX is defined as EBITDAX after adjusting for the discrete items listed below. Although EBIT, EBITDAX, and adjusted EBITDAX are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating CNX Resources because they are widely used to evaluate a company's operating performance. We exclude stock-based compensation from adjusted EBITDAX because we do not believe it accurately reflects the actual operating expense incurred during the relevant period and may vary widely from period to period irrespective of operating results. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with generally accepted accounting principles. In addition, because all companies do not calculate EBIT, EBITDAX or adjusted EBITDAX identically, the presentation here may not be comparable to similarly titled measures of other companies.
Reconciliations of EBIT, EBITDAX, adjusted EBITDAX, adjusted net income, operating margins, cash operating margins, net debt, TTM EBITDAX, free cash flow and organic free cash flow to the most directly comparable GAAP financial measures are as follows:
11
Non-GAAP Measures
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), income taxes, depreciation, depletion and amortization, and exploration. Adjusted EBITDAX is defined as EBITDAX after adjusting for the discrete items listed below.
(Dollars in millions)
Q3-2020
Q2-2020
Q1-2020
Q4-2019
Q3-2019
Net (Loss) Income
($189)
($130)
($305)
($240)
$144
Interest Expense
38
46
49
37
38
Interest Income
(2)
-
-
-
(1)
Income Tax (Benefit) Expense
(61)
(29)
(153)
(50)
49
(Loss) Earnings Before Interest & Taxes (EBIT)
(214)
(113)
(409)
(253)
230
Depreciation, Depletion & Amortization
115
114
129
134
121
Exploration Expense
2
3
4
29
6
(Loss) Earnings Before Interest, Taxes, DD&A and Exploration (EBITDAX)
($97)
$4
($276)
($90)
$357
Adjustments:
Unrealized Loss (Gain) on Commodity Derivative Instruments
259
206
36
(93)
(157)
Merger Related Costs
5
-
-
-
-
Stock-Based Compensation
3
2
7
2
2
Impairment of Exploration and Production Properties
-
-
62
327
-
Impairment of Unproved Properties and Expirations
-
-
-
119
-
Impairment of Goodwill
-
-
473
-
-
Gain on Debt Extinguishment
-
-
(11)
-
Severance
-
-
-
2
Shaw Insurance Recovery
-
-
-
(2)
-
Total Pre-tax Adjustments
267
208
567
353
(153)
Adjusted EBITDAX
$ 170
$ 212
$ 291
$ 263
$ 204
Adjusted Net Income is defined as net income after adjusting for the discrete items listed below as well as the tax effectiveness.
(Dollars in millions)
Q3-2020
Q2-2020
Q1-2020
Q4-2019
Q3-2019
Net (Loss) Income from EBITDAX Reconciliation
($189)
($130)
($305)
($240)
$144
Adjustments:
Total Pre-tax Adjustments from EBITDAX Reconciliation
267
208
567
353
(153)
Tax Effect of Adjustments
(70)
(54)
(148)
(92)
40
Adjusted Net Income
$8
$24
$114
$21
$31
12
Non-GAAP Measures
Operating Margin: Adjusted EBIT divided by Total Revenue after adjusting for unrealized loss on commodity derivative instruments.
(Dollars in millions)
Q3-2020
Q2-2020
Q1-2020
Q4-2019
Q3-2019
Total Revenue
$66
$148
$416
$509
$530
Net (Loss) Income
($189)
($130)
($305)
($240)
$144
Interest Expense
38
46
49
37
38
Interest Income
(2)
-
-
-
(1)
Income Tax (Benefit) Expense
(61)
(29)
(153)
(50)
49
(Loss) Earnings Before Interest & Taxes (EBIT)
(214)
(113)
(409)
(253)
230
Depreciation, Depletion & Amortization
115
114
129
134
121
(Loss) Earnings Before Interest, Taxes, DD&A (EBITDA)
($99)
$1
($280)
($119)
$351
Adjustments:
Unrealized Loss (Gain) on Commodity Derivative Instruments
$259
$206
$36
($93)
($157)
Merger Related Costs
5
-
-
-
-
Impairment of Exploration and Production Properties
-
-
62
327
-
Impairment of Unproved Properties and Expirations
-
-
-
119
-
Impairment of Goodwill
-
-
473
-
-
Total Adjustments
$264
$206
$571
$353
($157)
Total Revenue Minus Unrealized Loss (Gain) on Commodity Derivative Instruments
$325
$354
$452
$416
$373
Adjusted EBIT
$50
$93
$162
$100
$73
Operating Margin
15%
26%
36%
24%
20%
13
Non-GAAP Measures
Cash Operating Margin: Adjusted EBITDA divided by Total Revenue after adjusting for unrealized loss on commodity derivative instruments.
(Dollars in millions)
Q3-2020
Q2-2020
Q1-2020
Q4-2019
Q3-2019
Total Revenue
$66
$148
$416
$509
$530
Net (Loss) Income
($189)
($130)
($305)
($240)
$144
Interest Expense
38
46
49
37
38
Interest Income
(2)
-
-
-
(1)
Income Tax (Benefit) Expense
(61)
(29)
(153)
(50)
49
(Loss) Earnings Before Interest & Taxes (EBIT)
(214)
(113)
(409)
(253)
230
Depreciation, Depletion & Amortization
115
114
129
134
121
(Loss) Earnings Before Interest, Taxes, DD&A (EBITDA)
($99)
$1
($280)
($119)
$351
Adjustments:
Unrealized Loss (Gain) on Commodity Derivative Instruments
$259
$206
$36
($93)
($157)
Stock-Based Compensation
3
2
7
2
2
Merger Related Costs
5
-
-
-
-
Impairment of Exploration and Production Properties
-
-
62
327
-
Impairment of Unproved Properties and Expirations
-
-
-
119
-
Gain on Debt Extinguishment
-
-
(11)
-
Impairment of Goodwill
-
-
473
-
-
Total Adjustments
$267
$208
$567
$355
($155)
Total Revenue Minus Unrealized Loss (Gain) on Commodity Derivative Instruments
$325
$354
$452
$416
$373
Adjusted EBITDA
$168
$209
$287
$236
$196
Cash Operating Margin
52%
59%
64%
57%
53%
14
Non-GAAP Measures
Net Debt: Management uses net debt to determine the company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. Management believes that using net debt attributable to CNX Resources shareholders is useful to investors in determining the company's leverage ratio since the company could choose to use its cash and cash equivalents to retire debt.
(Dollars in millions)
Net Debt
30-Sep-20
Total Long-Term Debt (GAAP)(1)
$2,600
Less: Cash and Cash Equivalents
150
Net Debt
$2,450
(1) Includes current portion
Three Months Ended
Twelve Months Ended
(Dollars in millions)
31-Dec-19
31-Mar-20
30-Jun-20
30-Sep-20
30-Sep-20
Net (Loss) Income
$
(240)
$
(305)
$
(130)
$
(189)
$
(864)
Interest Expense
37
49
46
38
170
Interest Income
-
-
-
(2)
(2)
Income Tax (Benefit) Expense
(50)
(153)
(29)
(61)
(293)
(Loss) Earnings Before Interest & Taxes (EBIT)
(253)
(409)
(113)
(214)
(989)
Depreciation, Depletion & Amortization
134
129
114
115
492
Exploration Expense
29
4
3
2
38
(Loss) Earnings Before Interest, Taxes, DD&A, and Exploration (EBITDAX)
(90)
(276)
4
(97)
(459)
Adjustments:
Unrealized (Gain) Loss on Commodity Derivative Instruments
(93)
36
206
259
408
Merger Related Costs
-
-
-
5
5
Impairment of Exploration and Production Properties
327
62
-
-
389
Impairment of Unproved Properties and Expirations
119
-
-
-
119
Impairment of Goodwill
-
473
-
-
473
Stock Based Compensation
2
7
2
3
14
Gain on Debt Extinguishment
-
(11)
-
-
(11)
Shaw Insurance Recovery
(2)
-
-
-
(2)
Total Pre-tax Adjustments
353
567
208
267
1,395
Adjusted EBITDAX TTM
$
263
$
291
$
212
$
170
$
936
15
Non-GAAP Measures
The Company's management believes that the following measures provide useful information to external users of the Company's consolidated financial statements, such as industry analysts, lenders and ratings agencies. Free cash flow and organic free cash flow should not be considered as alternatives to net cash provided by operating activities or any other measure of liquidity presented in accordance with GAAP.
Free Cash Flow (FCF): Operating cash flow minus capex plus proceeds from asset sales.
FCF Yield: Free cash flow per share divided by current market value.
Free Cash Flow
(Dollars in millions)
Q3-2020
Q2-2020
Q1-2020
Q4-2019
Q3-2019
Net Cash Provided by Operating Activities
$223
$144
$267
$114
$305
Capital Expenditures
(108)
(135)
(152)
(228)
(336)
Proceeds from Asset Sales
6
12
14
30
8
Free Cash Flow
$121
$21
$129
($84)
($23)
Organic Free Cash Flow
(Dollars in millions)
Q3-2020
Q2-2020
Q1-2020
Q4-2019
Q3-2019
Net Cash Provided by Operating Activities
$223
$144
$267
$114
$305
Capital Expenditures
(108)
(135)
(152)
(228)
(336)
Organic Free Cash Flow
$115
$9
$115
($114)
($31)
Risk Factors
This presentation, including the oral statements made in connection herewith, contains forward-looking statements estimates and projections within the meaning of the federal securities laws. Statements that are not historical are forward-looking and may include our operational and strategic plans; estimates of gas reserves and resources; projected timing and rates of return of future investments; and projections and estimates of future production revenues, income and capital spending. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those statements estimates and projections. Investors should not place undue reliance on forward-looking statements as a prediction of future actual results. The forward-looking statements in this presentation speak only as of the date of this presentation; we disclaim any obligation to update the statements, and we caution you not to rely on them unduly.
Specific factors that could cause future actual results to differ materially from the forward-looking statements are described in detail under the captions "Forward- Looking Statements" and "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission (SEC), as supplemented by our quarterly reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, and any subsequent reports filed with the SEC. Those risk factors discuss, among other matters, pricing volatility or pricing decline for natural gas and NGLs; the failure to realize the anticipated costs savings, synergies and other benefits of CNX’s purchase of the outstanding interests in CNXM not already owned by CNX; local, regional and national economic conditions and the impact they may have on our customers; the impact of outbreaks of communicable diseases such as COVID-19 on business activity, our operations and national and global economic conditions, generally; conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for oil or natural gas or a sustained decrease in the price of oil or natural gas; the financial condition of our customers; any non-performance by customers of their contractual obligations; changes in customer, employee or supplier relationships resulting from the proposed transaction; and changes in safety, health, environmental and other regulations.
