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Q1 2015 EARNINGS CALL – Consol Energy Inc.

Consol Energy Inc. · Apr 30, 2015 · 47 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. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 1
    Company Presentation Q1 2015
  2. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 2
    Company Overview First Quarter 2015 Results Net income for the first quarter was 79 million - Includes the following pre-tax items: 67.7 million loss on debt extinguishment 60.0 million unrealized gain on commodity derivative…
  3. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 3
    Company Overview E&P Division: Summary Q-to-Q Q-to-Q E&P Division 1Q2015 1Q2014 Change 1Q2015 4Q2014 Change Average Sales Price ( / Mcfe) 3.56 5.52 (1.96) 3.56 3.90 (0.34) Average Costs ( / Mcfe) 3.05 3.63 (0.58) 3.05 3.19 (0.14)…
  4. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 4
    Company Overview Coal Division: Summary Q-to-Q Q-to-Q Coal Division 1Q2015 1Q2014 Change 1Q2015 4Q2014 Change Average Sales Price ( / ton) 60.23 66.20 (5.97) 60.23 61.19 (0.96) Average Costs ( / ton) 43.34 45.14 (1.80) 43.34 45.00…
  5. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 5
    Company Overview Strong Liquidity Position of 1.6 Billion Amount/ Amount Letters Amount March 31, 2015 ( in million) Capacity Drawn of Credit Available Cash and Cash Equivalents 5 0 0 5 Accounts Receivable Securitization 78 33 49…
  6. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 6
    Company Overview CONSOL Energy: Net (Decrease)/Increase in Cash Goal is to maintain our strong liquidity position Cash Flow Summary Q-to-Q Q-to-Q ( in millions) 1Q2015 1Q2014 Change 1Q2015 4Q2014 Change Net Cash Provided by…
  7. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 7
    Company Overview Marketing 2Q15 and 2015 Forecasts 2015 Coal Sales Facts and Goals Sales Tons by Product Year 2015 Contracted tons for 2015: 83% - Priced: 82% 7% 12% Approximately 84% of the PA Ops tons are expected to be sold…
  8. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 8
    E&P Division Q1 2015 Operations Summary Marcellus Shale Quarterly Summary Utica Shale Quarterly Summary Avg. TIL Avg. TIL Turned Turned Sub- Horizontal Lateral Sub- Horizontal Lateral Drilled Completed In Line Counties Drilled…
  9. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 9
    E&P Division Large and Growing E&P Reserves YE 2014 Proved Reserves Proved Reserves Growth 8,000 8,000 218 16 6,828 1,098 (236) 7,000 6,828 7,000 6,000 5,731 6,000 5,731 5,000 5,000 4,000 19% increase in proved…
  10. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 10
    E&P Division Resource and Opportunity Rich Portfolio Proved Estimated Potential Locations (Gross) Tcfe Proved(2) Unproven Total Marcellus Shale 4.2 1,633 8,000 9,633 Utica Shale(1) 0.5 171 3,000 3,171 Upper Devonian 0.02 11…
  11. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 11
    E&P Division Gas Division Production Growth Gas Production 450 400 +20% 350 300-310 300 250 235.7 Bcfe 200 172.4 153.5 156.3 150 127.9 94.4 100 76.6 56.1 58.2 44.5 48.6 48.4 50 0 2003 2004 2005 2006 2007…
  12. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 12
    Marcellus Shale Overview 441,000 CONSOL net acres 88% NRI 91% HBP 85,000 net fee acres 23.9 Tcfe 3P Over 8,900 gross potential wells(1) 2015 YTD drilled wells: 25(2) 93% Marcellus production growth in 2014 compared to…
  13. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 13
    Marcellus Shale Growth Runway and Depth of Inventory Marcellus Shale Upside Potential Total Prospective Marcellus Acreage 790,000 - Acres within JV 701,000 - Acres outside JV 100% CONSOL 89,000 Acreage per well (assumed 750 ft…
  14. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 14
    Marcellus Shale: Sub-Regions Summary Marcellus Shale North South SWPA CPA WV Ohio(1) Total Wet Wet Net Acres 45,000 110,000 117,000 13,000 54,000 102,000 441,000 Approximate Gross 800 2,000 2,400 100 1,400 2,200 8,900…
  15. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 15
    Marcellus Shale: Southwest PA Southwest PA Overview 45,000 CONSOL net acres NV56 Pad Over 800 gross locations(1) 6 Wells 8,753 Avg Lateral Length per well 9,230 Mcfe Avg 30-day IP per well 175 wells online, as NV36 Pad NV57 Pad…
  16. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 16
    Marcellus Shale: Northern WV Dry Northern WV Overview 117,000 CONSOL net acres Over 2,400 gross ANDERSON (PDC Mountaineer) 3 Wells PHL10 Pad locations(1) 4,859 Avg Lateral Length per well 6 Wells 595 MMcf/well 1st 6-Month Cum 4,636…
  17. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 17
    Marcellus Shale: Central PA Central PA Overview 110,000 CONSOL net acres CRAWFORD 5 Pad Over 2,000 gross 2 Wells 7,305 Avg Lateral Length per well NARDELL Pad Currently Flowing Back 2 locations(1) 13,586 Mcfe Avg 24-hr IP per well…
  18. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 18
    Marcellus Shale: North Wet Gas North Wet Gas Overview 54,000 CONSOL net acres Over 1,400 gross locations(1) 111 wells online as of 3/31/2015 1 well brought online in Q1 2015 9,050 ft average laterals in Q1 2015 6 wells per pad…
  19. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 19
    Marcellus Shale: South Wet Gas South Wet Gas Overview SHR1 Pad 102,000 CONSOL net 6 Wells 8,741 Avg Lateral Length per well WEESE (Triad Hunter) 3 Wells acres PENS1 Pad 10,143 Mcfe Avg 30-day IP per well 9 Wells 3,711 Avg Lateral…
  20. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 20
    Utica Shale Overview: A Leading Position in the Utica Shale 614,000 CONSOL net acres(1) Includes 70,000 net fee acres in Ohio Utica Over 3,000 gross locations 53 wells online, as of 3/31/2015 5 wells brought online in Q1 2015…
  21. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 21
    Utica Shale Growth Runway and Depth of Inventory Utica Shale Upside Potential Total Prospective Utica Acreage 690,000 - Acres within JV 153,000 - Acres outside JV 100% CONSOL 537,000 Acreage per well (assumed 750 ft spacing) 86…
  22. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 22
    Utica Shale: Sub-Regions 2014 Activity Overview Utica Shale Ohio Wet Ohio Dry PA/WV Dry Total Net Acres 88,000 30,000 496,000 614,000 Approximate Gross 500 300 2,200 3,000 Locations(1) Avg Drilled Lateral 7,224 10,683 7,185…
  23. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 23
    Utica Shale: Ohio Dry Gas CNX Activity and Recent IP Rates In-and-Around Monroe County, OH CNX Gaut 4I (Utica) : Currently Drilling GPOR Irons 1-4H (Utica): 30.3 MMcf/d Avg 24-hr rate NBL MND 6H (Utica): 1 Utica Well Finished…
  24. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 24
    Utica Shale: PA/WV Dry Gas Utica PA/WV Dry Gas Area Overview REXX Cheeseman 1 RRC Zahn 1 IP Gas: 9,200 Mcf/d IP Gas: 4,500 Mcf/d IP Oil: 0 Bbl/d IP Oil: 0 Bbl/d CHK Thompson 3H CHK Hubbard 3H IP Gas: 6,400 Mcf/d IP Gas: 11,00 Mcf/d…
  25. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 25
    Stacked Pay Potential Appalachian Shale Acreage P a y Formation Name Wet Dry Total Net Acres Net Acres Net Acres Rhinestreet Shale Upper Cashaqua Shale Devonian 190,000 155,000 345,000 Middlesex Shale West River…
  26. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 26
    E&P Division Summary 30% gas production growth in 2015 and 20% production growth in 2016 Implemented asset teams Driving costs down with efficiencies and lean manufacturing Stacked pay potential Q1 2015 Record drilling…
  27. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 27
    Gas Marketing First Quarter Highlights Exceeded previous quarters basis guidance Average gas price for the first quarter of 2015, including hedging, exceeded NYMEX by 0.49 per MMBtu (3.47 vs. 2.98); excluding hedging, gas price…
  28. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 28
    Gas Marketing Firm Transportation CNX's Firm Transportation and Sales* 1,600,000 Total company FT capacity supports the majority of 1,400,000 NEXUS forecasted production through 1,200,000 ANR 2018 1,000,000 Columbia (TCO)…
  29. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 29
    Gas Marketing Natural Gas Sales Gas Sales 2015 2016* Midwest In-Basin 64% 50% TETCO M3 Exports 36% 50% Dominion South 100% 100% * CY2016 Targets TCO Pool TETCO M2 East Tennessee Gas Sales CY 2015 Est. Columbia (TCO) 23%…
  30. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 30
    Gas Marketing Natural Gas Processing Contracted capacity meets current requirements CNXs Contracted Processing Capacity Gross Inlet Gas Volumes 500,000 Options for additional volumes under our existing 450,000 contracts 400,000…
  31. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 31
    Coal Division High Quality, Low Cost Assets with Long Mine Life Pennsylvania (PA) Operations Virginia (VA) Operations Other Type of Coal Primarily Thermal Primarily Met Primarily Thermal 5 Longwalls and 1 Longwall System and…
  32. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 32
    Coal Division Minor MATS Impact Limited Sales Loss, Potential Remaining Customer Gain MATS compliance deadlines Surviving 2014 CNX Customers 20,000 (after 2015-2019 retirements) 18,000 2014 coal burn 16,000 Actual and Demonstrated…
  33. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 33
    Financial Overview 34
  34. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 34
    Financial Overview Summary: Driving EBITDA Improvement Through Cost Reduction Operating Cash Flow Improvements: including one-time items, expected administrative cost and operating cost improvements of over 200 million E&P Operating…
  35. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 35
    Financial Overview: Cost Reductions Declining E&P Operating Unit Costs Driving Down Weighted Average Cost: Consolidated Cost per Mcfe Property & Other Taxes Direct Admin, Selling & Other Total operating cost per Mcfe expected to decline…
  36. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 36
    Financial Overview: Cost Reductions Reducing Overhead & Administrative Costs CONSOL Energy Incom e Statem ent 2014 Target Target Revenues and Other Incom e: in M M 2013 2014 2015E 2016E Drivers Natural Gas, NGLs and Oil Sales 1,028,117…
  37. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 37
    Financial Overview: Service Cost Deflation Realizing well cost reductions by partnering with vendors to optimize the supply chain - expected savings of 85 million versus 2014 with improving benefits in 2Q Implementing…
  38. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 38
    Financial Overview: E&P Capital Expenditures High-grading E&P capital spending for 2015 results in a 30% reduction versus 2014 levels - Increasing Utica capital by 113% YoY (Monroe County and dry Utica) - Marcellus spending directed…
  39. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 39
    Financial Overview Hedge and Coal Contract Program E&P Hedge Program: Program and actively monitored hedges Reducing the total portfolio VaR including coal - Program - protect margins on 90% of our Proved - Protect cash flows…
  40. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 40
    Financial Overview: Joint Ventures Summary of JV Carry Eligible Capital Description Marcellus / Noble Energy Inc. Utica / Hess Corporation Ownership 50/50 50/50 Acreage 345,151(1) 68,488 (2) Zones PA and WV Marcellus, Burkett to…
  41. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 41
    Financial Overview: Cost of Debt Recent Capital Structure Activity Summary Recent transactions reduced annual interest expense by over 15% and extended maturity by three years - Issued 500 million of 8% senior unsecured notes due…
  42. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 42
    Financial Overview: Cost of Debt Debt and Liquidity Profile Sources of Funds (MM) Pro Forma Pre- Transactions Recent Actual 8.0% Senior Notes due 2023 500 3/31/2015 Transactions 3/31/2015 2023 Senior Notes Discount (7) Cash and Cash…
  43. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 43
    Financial Overview: Cost of Debt Legacy Liability Outlook Converted open OPEB and Pension to a fixed payout and 401K in 3Q14, results in a meaningful reduction in OPEB liabilities - Strengthens CNXs balance sheet by exiting from…
  44. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 44
    Financial Summary Reducing Risk and Increasing Valuation Catalysts to drive stock performance: Improving E&P performance from high-grading activities, improving completion techniques, reducing cycle times, and service deflation…
  45. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 45
    Appendix 46
  46. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 46
    Appendix Non-GAAP Reconciliation Three Months Ended March 31 ( in thousands) 2015 2014 Net Income 79,030 116,003 Less: Net Loss Attributable to Discontinued Operations, net of tax -- 5,687 Add: Interest Expense 55,122 50,931…
  47. Q1 2015 EARNINGS CALL – Consol Energy Inc. – slide 47
    Appendix Non-GAAP Reconciliation Twelve Months Ended March 31 ( in thousands) 2015 Net Income 126,116 Less: Net (Income) Attributable to Discontinued Operations, net of tax -- Add: Interest Expense 227,755 Less: Interest Income…

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