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Q2 2015 EARNINGS CALL – Consol Energy Inc.

Consol Energy Inc. · Jul 28, 2015 · 56 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. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 1
    Company Presentation Q2 2015
  2. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 2
    Q2 2015 Overview CONSOL Energy: Second Quarter 2015 Results Net loss for the second quarter was (603.3) million - Includes the following pre-tax items: 828.9 million impairment of certain E&P properties, primarily shallow oil and gas…
  3. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 3
    Q2 2015 Overview CONSOL Energy: Net (Decrease)/Increase in Cash Expect free cash flow generation over the next 18 months, starting in 2H15 through 2016 Roadmap: - E&P production guidance reaffirmed: 2015 production projected to be…
  4. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 4
    Q2 2015 Overview Strong Liquidity Position of 1 Billion June 30, 2015, pro forma CNXC IPO Amount/ Amount Letters Amount ( in millions) Capacity Drawn of Credit Available Cash and Cash Equivalents 10 0 0 10 Accounts Receivable…
  5. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 5
    Q2 2015 Overview Coal Division: Q2 2015 Results Summary Y/Y Q-to-Q Seq. Q-to-Q Coal Division 2Q2015 2Q2014 Change 2Q2015 1Q2015 Change Average Sales Price ( / ton) 56.78 62.43 (5.65) 56.78 60.23 (3.45) Average Costs ( / ton) 45.69…
  6. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 6
    Q2 2015 Overview Coal Division: Q3 and FY 2015 and 2016 Marketing Update and Forecasts 2015 Coal Sales Facts and Goals 2015 Sales Tons by Segment Contracted tons for 2015: 96% - Priced: 94% 7% 14% Approximately 82% of the PA Ops tons…
  7. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 7
    Q2 2015 Overview E&P Division: Q2 2015 Results Summary Y/Y Q-to-Q Seq. Q-to-Q E&P Division 2Q2015 2Q2014 Change 2Q2015 1Q2015 Change (1) Average Sales Price ( / Mcfe) 2.68 4.44 (1.76) 2.68 3.56 (0.88) (2) Average Costs ( / Mcfe)…
  8. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 8
    Q2 2015 Overview E&P Division: Q2 2015 Operations Summary Marcellus Shale Quarterly Summary Utica Shale Quarterly Summary Avg. TIL Turned Turned Avg. TIL Sub- Horizontal Lateral Sub- Horizontal Drilled Completed In Line Counties…
  9. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 9
    E&P Division Gas Division Production Growth E&P Production Volumes 450 Production by Area 400 2015E 2016E +20% Marcellus 51% 52% 350 Utica 18% 24% CBM 23% 18% 300-310 300 Other 8% 6% 250 235.7 Bcfe 200 172.4 153.5…
  10. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 10
    E&P Division F&D/Mcfe: Continued Operational Efficiency Improvements 2012-2014 Drill-bit F&D Cost: 5-Year Average vs. E&P Peers 3.50 3.00 Average 2.06 2.50 2.00 /Mcfe 1.50 1.00 0.50 0.00 CNX 2012-2014 Drill-bit F&D…
  11. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 11
    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 184 wells online, as of NV36 Pad NV57…
  12. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 12
    Marcellus Shale: North Wet Gas North Wet Gas Overview 54,000 CONSOL net acres Over 1,400 gross locations(1) 123 wells online as of 6/30/2015 12 wells TIL in Q2 2015 6,983 ft average laterals in Q2 2015 6 wells per pad on…
  13. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 13
    Marcellus Shale: South Wet Gas South Wet Gas Overview 102,000 CONSOL net SHR1 Pad 6 Wells acres 8,741 Avg Lateral Length per well WEESE (Triad Hunter) 3 Wells PENS1 Pad 10,143 Mcfe Avg 30-day IP per well Over 2,200 gross 9 Wells…
  14. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 14
    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 66 wells online, as of 6/30/2015 9 wells TIL in Q2 2015 6,983 ft…
  15. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 15
    Utica Shale: Ohio Wet Gas CONSOL Acreage Position in the Core Wet Gas Utica Window HES Cadiz A HES Cadiz B CHK - Buell 8H IP GAS: 8,006 Mcf/d IP GAS: 10,254 Mcf/d 88,000 CONSOL net acres GPOR - Boy Scout 33H IP GAS: 9,500 Mcf/d IP…
  16. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 16
    Utica Shale: PA/WV Dry Gas Utica PA/WV Dry Gas Area Overview RRC Zahn 1 REXX Cheeseman 1 IP Gas: 4,500 Mcf/d IP Gas: 9,200 Mcf/d IP Oil: 0 Bbl/d IP Oil: 0 Bbl/d CHK Hubbard 3H CHK Thompson 3H IP Gas: 11,00 Mcf/d IP Gas: 6,400 Mcf/d…
  17. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 17
    Utica Shale: GH 9 Greene County, PA Range Resources - Claysville Sportsmans Club 1 IP Gas 59.0 MMcf/d EQT - Hopkins No Completion Data 100% WI to CONSOL EQT Scotts Run 24 hr IP 72.9 Expected TVD: 13,500 MMcf/d Currently…
  18. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 18
    Utica Shale: Gaut 4I Westmoreland County, PA CONSOL GAUT4IH Flowback underway 5,800 single lateral; 100% WI to CONSOL 30 stage completion, currently in flowback 200 stages with 500k proppant : 160k 100 mesh + 200k 40/80…
  19. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 19
    Utica Shale: Ohio Dry Gas CNX Activity and Recent IP Rates In-and-Around Monroe County, OH CVX Conner well (Utica): GPOR Irons 1-4H (Utica): 25.0 MMcf/d Avg 24-hr rate 30.3 MMcf/d Avg 24-hr rate NBL / CNX MND 6H (Utica): 1…
  20. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 20
    Gas Marketing Second Quarter Highlights Average gas price for the second quarter of 2015, including hedging, was (0.06) per MMBtu below NYMEX (2.58 vs. 2.64); excluding hedging, gas price was (0.68) per MMBtu below NYMEX (1.96 vs.…
  21. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 21
    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 2020 ANR Columbia (TCO) 1,000,000…
  22. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 22
    Gas Marketing Natural Gas Sales Midwest TETCO M3 Dominion South TCO Pool TETCO M2 East Tennessee Gas Sales CY 2015 Est. CY 2016 Est. Columbia (TCO) 24% 19% TETCO (M2) 19% 25% TETCO (M3) 20% 15% Dominion (DTI) 19% 18%…
  23. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 23
    Gas Marketing Natural Gas Processing Contracted capacity meets current requirements CNXs Contracted Processing Capacity Gross Inlet Gas Volumes Options for additional 500,000 volumes under our existing contracts 450,000 400,000…
  24. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 24
    Gas Marketing Natural Gas Liquids, Oil, and Condensate Q2 2015 Avg. NGL Barrel Composition Q2 liquids revenue composed 4% of total 2Q15 Actual Company revenue and 12% of E&P sales revenue Natural (100% gasoline Ethane Ethane 15% 0%…
  25. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 25
    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…
  26. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 26
    Coal Division Pennsylvania Mining Complex Pennsylvania mining complex consists of three like-new underground mines and related infrastructure with high-Btu bituminous coal (785.6 million tons proven and probable(1)) - PA mining…
  27. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 27
    Coal Division Not All NAPP Longwalls Are Created Equal 30 5.0 2014 Production - CNXC Assets 2014 Production - Other Longwalls 2014 Sulfur 4.5 25 4.0 Production (million tons) Sulfur (% as received) 3.5 20 3.0 15 2.5…
  28. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 28
    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…
  29. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 29
    Financial: Focused on Free Cash Flow CNXC IPO Growing revenue and income - E&P production volume growth - Steady coal production with lower cost base - Commodity price risk management that leaves upside potential (netback pricing,…
  30. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 30
    Financial: CNX Coal Resources LP (CNXC) IPO CNXC: Organizational Structure CONSOL Energy Inc. CNXC: 20% Undivided interest in Pennsylvania mining (CONSOL Energy) complex (Bailey, Enlow Fork and Harvey mines) NYSE: CNX Sold 10.6…
  31. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 31
    Financial: Liquidity Debt and Liquidity Profile, Pro Forma CNXC Offering PF CNXC Sources of Funds (MM) Actual CNXC IPO CNXC Initial Public Offering 150 6/30/2015 IPO 6/30/2015 CNXC Revolver Borrowing 200 Cash and Cash Equivalents…
  32. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 32
    Financial: Commodity Price Risk Management Hedge and Coal Contract Program E&P Hedge Program: Program and actively monitored hedges Reducing the total portfolio VaR including coal - Protect cash flows - Program - protect margins on…
  33. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 33
    Financial: CONE Midstream & Gathering Growing CONSOL owns 32.1% of CONE Midstream Partners (CNNX) LP units and 50% of the General Partner (GP), which has a CONSOL Energy's Ownership Interest in 2% interest in CNNX (and rights to IDRs)…
  34. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 34
    Financial: Operating Cost Reductions Declining E&P Operating Unit Costs Consolidated Cost per Mcfe Driving Down Weighted Average Cost: Property & Other Taxes Direct Admin, Selling & Other LOE Gathering and Transportation Already met…
  35. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 35
    Financial: Overhead Cost Reductions Reducing Overhead & Administrative Costs Target Target CONSOL Energy Incom e Statem ent 2014 in M M 2013(4) 2014 2015E 2016E Drivers Revenues and Other Incom e: Natural Gas, NGLs and Oil Sales…
  36. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 36
    Financial: E&P Capital Expenditures Efficiencies Driving Reduced E&P Capital Expenditures Without Sacrificing Growth High-grading locations, capital efficiency improvements and cost reductions driving further E&P capital spending…
  37. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 37
    Financial: Legacy Liabilities Significant Legacy Liability Reductions Over Past 3 Years 4,500 375 370 4,345 4,000 Projected: 350 50MM Reduction in Legacy Liabilities 325 Annual Cash Servicing Cost 3,500 and 31MM Reduction in…
  38. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 38
    Financial: Summary Plans and Goals Aligned to Drive Increased Valuation Catalysts to drive stock performance: Coal MLP executed Improving E&P performance from high-grading activities, improving completion techniques, reducing cycle…
  39. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 39
    Appendix Non-GAAP Reconciliation: Quarter-over-Quarter EBITDA and Adj. EBITDA Three Months Ended June 30 ( in thousands) 2015 2014 Net Income / (Loss) (603,301) (24,935) Add: Interest Expense 46,507 64,211 Less: Interest Income…
  40. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 40
    Appendix Non-GAAP Reconciliation: Trailing Twelve Months EBITDA and Adj. EBITDA Twelve Months Ended June 30 ( in thousands) 2015 Net Income / (Loss) (452,250) Add: Interest Expense 210,051 Less: Interest Income (2,510) Add: Income…
  41. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 41
    Appendix Non-GAAP Reconciliation: Adjusted Net Cash Provided by Continuing Operations Three Months Ended June 30 ( in thousands) 2015 Net Cash Provided by Continuing Operations 61,742 Addback: Revolver Amendment (2,302) Addback:…
  42. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 42
    Appendix Joint Ventures Summary of JV Carry Eligible Capital Description Marcellus / Noble Energy Inc. Utica / Hess Corporation Ownership 50/50 50/50 (1) Acreage 345,151 68,488 (2) Zones PA and WV Marcellus, Burkett to Onondaga OH…
  43. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 43
    Appendix 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: 60 93% Marcellus production growth in 2014 compared…
  44. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 44
    Appendix Marcellus Shale: Growth Runway and Depth of Inventory Marcellus Shale Upside Potential Total Gross Prospective Marcellus Acreage 790,000 - Gross Acres within JV 701,000 - Acres outside JV 100% CONSOL 89,000 Acreage per…
  45. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 45
    Appendix 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…
  46. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 46
    Appendix Marcellus Shale: Northern WV Dry 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…
  47. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 47
    Appendix Marcellus Shale: 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…
  48. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 48
    Appendix Utica Shale: Growth Runway and Depth of Inventory Utica Shale Upside Potential Total Gross Prospective Utica Acreage 690,000 - Gross Acres within JV 153,000 - Acres outside JV 100% CONSOL 537,000 Acreage spacing per well…
  49. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 49
    Appendix Utica Shale: Sub-Regions Summary 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 EURs/1,000 ft 2.1 2.4 -- -- (Bcfe) Hz…
  50. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 50
    Appendix Utica Shale: PA/ WV/ OH Dry Gas Overview 526,000 CONSOL net acres 302,000 net acres in PA 194,000 net acres in WV 30,000 net acres in OH 13,000 net acres in Monroe County, OH 4 Utica and 1 Marcellus 100% WI underway…
  51. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 51
    Appendix Stacked Pay Potential: CONSOLs Shale Fairway PIT Airport Rhinestreet = 5,340 Burkett = 5,460 Marcellus = 5,690 Utica = 10,760 Monroe County/Moundsville Rhinestreet = 5,930 Burkett = 6,110 Southwest PA Marcellus =…
  52. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 52
    Appendix 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…
  53. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 53
    Appendix 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…
  54. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 54
    Appendix Coal Division: Low-cost, Highly Productive Longwall Mining Operations During 2014, the PA mining complex generated the h i g h e s t c a s h m a r g i n o f a n y o f o u r c o a l p e e r s (1)(2) The design of the…
  55. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 55
    Appendix Coal Division: Coal Continues to be the Low-Cost Choice for Electricity Generation U.S. power generation will remain highly dependent on thermal coal for the foreseeable future Coal generation maintains a market share of 37-39%…
  56. Q2 2015 EARNINGS CALL – Consol Energy Inc. – slide 56
    Appendix Coal Division: Bullish Gas = Bullish Coal Natural gas prices are more volatile than coal prices, and coal compares favorably on a Btu-equivalent basis: Natural Gas Price (/mmBtu) 1.50 2.00 2.50 3.00 3.50 4.00 4.50 Equivalent…

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