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Advances EP Growth Strategy – Consol Energy Inc.

Consol Energy Inc. · Oct 28, 2013 · 30 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Advances EP Growth Strategy – Consol Energy Inc. – slide 1
    CONSOL Energy Advances E&P Growth Strategy October 28, 2013
  2. Advances EP Growth Strategy – Consol Energy Inc. – slide 2
    Strategy: Evolution Continues 3
  3. Advances EP Growth Strategy – Consol Energy Inc. – slide 3
    CONSOL Energys Evolution The Past 15 Years CONSOL Energy Equity CNX Gas (Adjusted Closing Price - NYSE) listed on 3.5B 4.0B 120 NYSE CONSOL Energy January 2006 Acquisition of Marcellus & IPO Dominion Utica acreage April 1999…
  4. Advances EP Growth Strategy – Consol Energy Inc. – slide 4
    Strategy: Evolution Continues Grow natural gas production 30% annual production increase through 2016 Develop our liquids profile within our footprint High-grade our acreage position Aggressively manage coal margins and maintenance…
  5. Advances EP Growth Strategy – Consol Energy Inc. – slide 5
    Transaction Overview 6
  6. Advances EP Growth Strategy – Consol Energy Inc. – slide 6
    Transaction Summary Divesting: 5 West Virginia longwall thermal coal mines, select reserves, and river division Total coal reserves of 1.1 billion tons, and production of approximately 30 million tons Mines have multi-year contracts,…
  7. Advances EP Growth Strategy – Consol Energy Inc. – slide 7
    CONSOLs Follow-Up Actions CONSOL Will Reduce the Impact To Our Cash Outflows Several Ways: In a separate action following the sale, CONSOL will be reducing its administrative expenses by approximately 65 million per year Composition…
  8. Advances EP Growth Strategy – Consol Energy Inc. – slide 8
    The Process: Started Early This Year CONSOL conducted a robust process Using Stifel (lead banker) and BofA Merrill Lynch, we contacted 28 potential bidders Legal representation included Greenberg Traurig LLP, Wachtell, Lipton, Rosen…
  9. Advances EP Growth Strategy – Consol Energy Inc. – slide 9
    Retained Assets Oil and Gas operations intact Total coal reserves of 3.1 billion tons Our lower sulfur and lower cost assets Infrastructure Assets: Baltimore Terminal, midstream, and prep plants 12/31/2012 Approximate Reserves…
  10. Advances EP Growth Strategy – Consol Energy Inc. – slide 10
    Valuation 11
  11. Advances EP Growth Strategy – Consol Energy Inc. – slide 11
    Value Proposition Sale of Five West Virginia Mines Estimated Coal Ops EBITDA 300 250 200 in millions 150 100 50 - Mine 1 Mine 2 Mine 3 Mine 4 Other Mines Mine 1 Mine 2 Mine 3 Mine 4 Mine 5 Retained Mines Divested…
  12. Advances EP Growth Strategy – Consol Energy Inc. – slide 12
    Value Proposition Sale of Five West Virginia Mines Selected Public Companies Analysis ( in millions, except per share data) Equity (EV + LL)/ Price as of Market Enterprise Legacy (EBITDA + Servicing Cost) Company (Ticker) 10/22/2013…
  13. Advances EP Growth Strategy – Consol Energy Inc. – slide 13
    Value Proposition Sale of Five West Virginia Mines Capitalized Method Capitalized Method Transaction Valuation Summary ( in millions ) (excl. 1974 Pension Plan) (incl. 1974 Pension Plan) Cash 850 850 Future Payments: Retention of a…
  14. Advances EP Growth Strategy – Consol Energy Inc. – slide 14
    Strategy Going Forward 15
  15. Advances EP Growth Strategy – Consol Energy Inc. – slide 15
    Financial Focus to Fund Gas Production Growth Transaction generates 850 million in cash Cash is expected to fund natural gas production growth Expected to generate a cash tax benefit Transaction reduces coal MOP capex to 100 - 110…
  16. Advances EP Growth Strategy – Consol Energy Inc. – slide 16
    Gas Division Production Results and Forecast Gas and Liquids Production (Bcfe) CONSOL is rapidly growing its natural gas production Total 2013 natural gas production guidance: 170 172 Bcfe Total 2014 natural gas production guidance:…
  17. Advances EP Growth Strategy – Consol Energy Inc. – slide 17
    2013 Marcellus Shale Drilling Program: 123 wells Large Acreage Position within Marcellus Fairway PA OH 87% of Acreage HBP Allowing for Development Flexibility NBL Operated 50% of approximately 600,000 gross acres 170,000 Gross…
  18. Advances EP Growth Strategy – Consol Energy Inc. – slide 18
    Marcellus Shale Acreage Tract: Pittsburgh Airport Approximately 8,700 contiguous acres: 6 pads with up to 49 Marcellus and a potentially similar number of Upper Devonian Wells to be drilled. Expect first well spud before February…
  19. Advances EP Growth Strategy – Consol Energy Inc. – slide 19
    Upper Devonian Exploration Well NV39F 5 Underlying Marcellus Wells on Pad OH PA CONSOL MD WV Area Nineveh Core VA Wet Gas Dry Gas Washington County, PA Drilled lateral length of 4,889 Fracd 17 stages in Burkett Shale…
  20. Advances EP Growth Strategy – Consol Energy Inc. – slide 20
    Utica Shale Acreage Hess operates in a four county area of Jefferson, Harrison, Belmont, and Guernsey CONSOL operates in surrounding areas 30,000 Core Acres, net to CONSOL 21
  21. Advances EP Growth Strategy – Consol Energy Inc. – slide 21
    Participating in the Growth of World Coal Markets Retained Mines Sell Coal to 19 Countries 22
  22. Advances EP Growth Strategy – Consol Energy Inc. – slide 22
    Participating in the Growth of World Coal Markets Low-cost mines Dual-rail service from Pittsburgh 8 seam mines to Baltimore 100%-owned Baltimore terminal, with capacity of 16 million tons Boots-on-the-ground globally, through…
  23. Advances EP Growth Strategy – Consol Energy Inc. – slide 23
    Also Retaining 100%-owned Baltimore Terminal Capacity of 16 Million Tons 24
  24. Advances EP Growth Strategy – Consol Energy Inc. – slide 24
    Implementing Strategic Vision Towards Growth CONSOL is participating in the growth of world 25 million tons of production capacity of High- thermal coal markets Btu thermal/high-vol coal Retaining Pennsylvania Operations(1), which…
  25. Advances EP Growth Strategy – Consol Energy Inc. – slide 25
    Implementing Strategic Vision Towards Growth CONSOL is participating in the growth of world met markets Retaining premium low-vol Buchanan Mine: 5 million tons of production capacity Investing to Reduce Costs Retaining Western…
  26. Advances EP Growth Strategy – Consol Energy Inc. – slide 26
    Post-Transaction and Next Steps 27
  27. Advances EP Growth Strategy – Consol Energy Inc. – slide 27
    Post-Transaction: Capitalization Table Capitalization ( in millions) Pre-Transaction Pro Forma Difference Long-Term Debt 8.00% senior notes due 2017 1,500 1,500 - 8.25% senior notes due 2020 1,250 1,250 - 6.375% senior notes due…
  28. Advances EP Growth Strategy – Consol Energy Inc. – slide 28
    Post-Transaction: Dividend Policy Reducing dividend by 50% for an annual rate of 0.25 / share High IRR in organic investment prospects Consistent with growth strategy Closer alignment with E&P peers CNX Dividend Yield Peer…
  29. Advances EP Growth Strategy – Consol Energy Inc. – slide 29
    Whats Next Continued non-core asset sales Continue to evaluate monetizing some remaining infrastructure assets Announce 2014 capital budget in early 2014 Year-end gas reserve report in early 2014 Continued shale investment to…
  30. Advances EP Growth Strategy – Consol Energy Inc. – slide 30
    Implementing Our Strategic Vision Transaction in line with our strategic goals to close the value gap Committed to multi-year production growth Marcellus Shale Utica Shale Retained coal assets generate high margins and can be sold…

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