Bank of America Merrill Lynch Global Industries Conference December 2009
CONSOL Energy: An Energy Juggernaut COAL GAS Coalbed Methane Thermal Coal Conventional Gas Metallurgical Coal Marcellus Shale Chattanooga Shale CONSOL Energy has chosen to diversify by producing energy from multiple…
2008 Energy Production (Trillion Btus) 2008 Peabody Energy (U.S. only) 1,837.0 CONSOL Energy- Thermal Coal and Met Coal 1,674.0 CONSOL Energy-Gas 76.6 CONSOL Energy -Total 1,750.6 CONOCO-Phillips (U.S. only) 1,696.2 Chesapeake…
100%-Owned Baltimore Terminal 5
Baltimore Terminal n Capacity is 12 million tons per year n Shipments in 2009 will exceed 6 million tons n Looking ahead, our capacity in the short term is sold out, due to our just-announced Asian Marketing Initiative 6
Asian Marketing Initiative n Xcoal will market CONSOL Energy met and thermal coal destined for Asia, through offices in: Beijing Tokyo Seoul Singapore This partnership establishes a meaningful presence for CONSOL Energy in the…
Asian Marketing Initiative Buchanan Mines low-vol met coal is some of the finest met coal in the country. 8
Met Coal, Thermal Coal, and Gas 9
Met Coal Overview n Buchanan Mine in southwestern Virginia A low-cost longwall mine +100 mm tons of high quality, low-vol reserves n 2009 sales estimated at 2.4 mm tons; prices just under 100 1.1 mm tons to be shipped in 4Q n 2010…
Thermal Coal Overview n CONSOL Energy is the largest producer in Americas premier thermal coal basin: Northern Appalachia n Northern Appalachia has: The highest Btus per pound of any thermal coal Location value, straddling eastern…
CNX Gas Overview n 83.3% owned by CONSOL Energy n Largest Appalachian Basin gas producer in terms of revenue, net income, and return on capital employed n CNX Gas is the highest margin producer in the industry n In 2009:…
Financial Review 13
2009 Third Quarter Results n Net Income of 87 million n GAAP EPS of 0.48 n Net Cash from Operations of 162 million n Coal Production: 0.6 mm met tons, 12.9 mm thermal tons n Margins per ton: 36.82 per met ton, 10.24 per thermal ton…
Short Term Financial Flexibility (at September 30, 2009) (MM) Amount / Amount Letters Amount Capacity Drawn of Credit Available Cash and Cash Equivalents - CONSOL 31 - - 31 Cash and Cash Equivalents - CNX Gas 1 - - 1 AR…
Long Term Financial Flexibility (at September 30, 2009) n Manageable Long-Term Debt: 490 million of long-term debt, of which 39 million is due in 2010 CONSOL Energy has been careful to create shareholder value without…
Coal Operations 17
Met Coal Outlook n U.S. and international met market is currently strengthening Blast furnaces have re-started Steel capacity utilization is increasing US mills at 63-65% Asian mills at +80% Buchanan has the potential to help…
Thermal Coal Outlook n Utility stockpiles are still high: 75 days in the Northeast and 100 days in the Southeast n Return to normal levels unlikely to occur before Q3 2010 n An additional 50 mm tons of production needs to be…
Met and Thermal Coal Commitments for 2009-2011 (MM Tons) 2009 2010 2011 COAL-COMMITTED TONS W/O PRICING - 7.2 19.5 COAL-TONS WITH FIRM PRICING Tons Committed and Priced (MM tons,10/16/09) 58.2 51.1* 20.8 Avg. Realized Price/Ton…
Scrubber Builds Are Being Completed Since 2006, CONSOL has signed 6 multi-year, multi-million ton agreements with domestic customers that in aggregate 250 million tons of high-Btu coal 10% 28% Percentage of Gigawatts Scrubbed by…
Close Proximity to Scrubbed Customers By 2012, 142 gigawatts scrubbed east of Mississippi River 60 generating units within 50 miles of CONSOLs NAPP coal reserves CONSOLs Assets in Appalachia Producing Complexes: 16 Reserves:…
CNX Gas Corporation 23
Leading Appalachian Producer Among Appalachian producers, CNX Gas is: 1 in Sales Revenue 1 in Profitability and Returns 1 in Production Growth 2 in Production Volume 2 in Market Capitalization Industry-wide, CNX Gas is: 1 in…
2009 Third Quarter Results Net Income of 35.5 million GAAP EPS of 0.23 Gas Production of 24.8 Bcf Margin per Mcf: 2.81 Zero Lost-Time Incidents for Employees Another quarter of record production enabled us to increase 2009…
Asset Overview Red: CBM acres Blue: O&G/Shale acres Gray: both CBM and O&G/Shale acres 4.3 Million Gross Acres Coalbed Methane and Marcellus Shale Coalbed Methane and New Albany Shale Coalbed Methane and Huron Shale Chattanooga…
Gas Operations Summary Coal Bed Methane: Most experience related to active coal mining Most CBM horizontal drilling experience Marcellus Shale: Successfully adopted state-of-the-art exploration techniques Successfully benefited…
Marcellus Shale Results Peak Daily Oct. 13 Daily Cumulative Production Production Production (MMcf) Well Name Turn in date Peak date (MMcf) (MMcf) Through Oct. 13 1. CNX3 10/5/2008 12/16/2008 6.6 1.6 826 2. CNX2 1/28/2009 2/13/09…
Advances in the Marcellus Reserves per well increasing: From 3.0 Bcf in Dec. 2008 to 3.5 Bcf today Costs dropping: From 5.2 million in Dec. 2008 to less than 3.5 million today Well spacing dropping: From 160 acres in Dec.…
Hedge Position CNX Gas has one of the best hedge books in the industry: 2009 2010 2011 2012 Total Yearly Production (Bcf) 92 100 NA NA Volumes Hedged (Bcf) 51.6 45.6 22.6 15.1 Average Hedge Price (/Mcf) 8.76 7.94 6.84 6.84 CNX…
CONSOL Energys Value Discount n CONSOL Energy has out-earned the competition, yet trades at a 36% discount (market cap of 11.5 billion vs. 7.9 billion): CONSOL had GAAP net income YTD of 397 million Peabody had GAAP net income YTD…
Current EV/2010 EBITDA Comparison Peer Median: 6.4x 6.0 As of 12/1/09 Another way of viewing the CONSOL Energy Discount, assuming CNX Gas is fairly priced in the market. 32
Bank of America Merrill Lynch Global Industries Conference December 2009
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