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Q3 2015 Earnings Update – Consol Energy Inc.

Consol Energy Inc. · Oct 27, 2015 · 69 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. Q3 2015 Earnings Update – Consol Energy Inc. – slide 1
    Company Presentation Q3 2015
  2. Q3 2015 Earnings Update – Consol Energy Inc. – slide 2
    Key Takeaways CONSOL Energys E&P Division has demonstrated that it can stand on its own as a premier Appalachian Basin producer: Gas production has grown significantly Capital intensity and costs are down dramatically Dry Utica has…
  3. Q3 2015 Earnings Update – Consol Energy Inc. – slide 3
    Q3 2015 Overview CONSOL Energy: Third Quarter 2015 Results Net income Attributable to CONSOL Energy Shareholders for the third quarter was 119.0 million - Includes the following pre-tax items: 100.9 million benefit related to changes…
  4. Q3 2015 Earnings Update – Consol Energy Inc. – slide 4
    Q3 2015 Overview CONSOL Energy: Net (Decrease)/Increase in Cash E&P Division: - 2015 production projected to be between 325- 330 Bcfe, up from 320-330 Bcfe - Production volumes expected to grow approximately 20% in 2016 over 2015 -…
  5. Q3 2015 Earnings Update – Consol Energy Inc. – slide 5
    Q3 2015 Overview Strong Liquidity Position of 1 Billion Amount/ Amount Letters Amount September 30, 2015 ( in million) Capacity Drawn of Credit Available Cash and Cash Equivalents(1) 80 - - 80 Revolving Credit Facility(2) 2,000 945 281…
  6. Q3 2015 Earnings Update – Consol Energy Inc. – slide 6
    Q3 2015 Overview Coal Division: Q3 2015 Results Summary Y/Y Q-to-Q Seq. Q-to-Q Coal Division 3Q2015 3Q2014 Change 3Q2015 2Q2015 Change Average Sales Price ( / ton) 56.34 62.32 (5.98) 56.34 56.78 (0.44) Average Costs ( / ton) 43.39…
  7. Q3 2015 Earnings Update – Consol Energy Inc. – slide 7
    Q3 2015 Overview Coal Division: Q4, FY 2015 and 2016 Marketing Update and Forecasts 2015 Coal Sales Facts and Goals Contracted tons for 2015: 98% FY 2015 Sales Tons by Segment - Priced: 97% 77% of the PA Ops tons are expected to be…
  8. Q3 2015 Earnings Update – Consol Energy Inc. – slide 8
    Q3 2015 Overview E&P Division: Q3 2015 Results Summary Y/Y Q-to-Q Seq. Q-to-Q E&P Division 3Q2015 3Q2014 Change 3Q2015 2Q2015 Change (1) Average Sales Price ( / Mcfe) 2.35 3.97 (1.62) 2.35 2.68 (0.33) (2) Average Costs ( / Mcfe)…
  9. Q3 2015 Earnings Update – Consol Energy Inc. – slide 9
    Q3 2015 Overview E&P Division: Q3 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…
  10. Q3 2015 Earnings Update – Consol Energy Inc. – slide 10
    E&P Division Gas Division Production Growth E&P Production Volumes 450 450 Production by Area 400 20% 400 2015E 2016E 350 Marcellus 51% 50% 325-330 350 CBM 23% 18% 300 300 Utica (Wet & Dry) 19% 26% 250 Other 7% 6% 236 250…
  11. Q3 2015 Earnings Update – Consol Energy Inc. – slide 11
    E&P Division Bridging to Growth 450 390 83 400 328 350 104 15 300 14 Bcfe 236 -50 250 15 8 200 -38 150 100 50 0 2014 Total 2015 Base 2015: Gathering 2015: Non-Op 2015: Production 2015 Total 2016 Base…
  12. Q3 2015 Earnings Update – Consol Energy Inc. – slide 12
    E&P Division F&D/Mcfe: Continued Operational Efficiency Improvements 2010-2014 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…
  13. Q3 2015 Earnings Update – Consol Energy Inc. – slide 13
    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…
  14. Q3 2015 Earnings Update – Consol Energy Inc. – slide 14
    E&P Division 16
  15. Q3 2015 Earnings Update – Consol Energy Inc. – slide 15
    Utica Shale Utica Shale Overview: A Leading Position in the Utica Shale 614,000 CONSOL net acres(1) Over 3,000 gross locations 77 wells online, as of 9/30/2015 11 wells TIL in Q3 2015 7,525 ft average TIL laterals in Q3 2015 4…
  16. Q3 2015 Earnings Update – Consol Energy Inc. – slide 16
    E&P Division RRC Zahn 1 Utica Shale: PA/WV Dry Gas IP Gas: 4,500 Mcf/d REXX Cheeseman 1 IP Oil: 0 Bbl/d IP Gas: 9,200 Mcf/d CHK Hubbard 3H IP Oil: 0 Bbl/d IP Gas: 11,00 Mcf/d CHK Thompson 3H IP Oil: 0 Bbl/d IP Gas: 6,400 Mcf/d CNX…
  17. Q3 2015 Earnings Update – Consol Energy Inc. – slide 17
    Utica Shale: Gaut 4IH Westmoreland County, PA CONSOL GAUT4IH 61.4 MMcf/d 24-hr test rate 5,800 single lateral; 100% WI to CONSOL 30 stage completion 200 stages with 500k proppant : 160k 100 mesh + 200k 40/80 ceramic + 140k…
  18. Q3 2015 Earnings Update – Consol Energy Inc. – slide 18
    Utica Shale: Gaut 4IH Westmoreland County, PA Flow Rate MCf/Day Casing Pressure PSIG 30,000 10000.00 25,000 9000.00 20,000 8000.00 Flowing Casing Pressure (psig) Conducting a Modified Gas Rate (Mscf/d) Isochronal…
  19. Q3 2015 Earnings Update – Consol Energy Inc. – slide 19
    Utica Shale: GH 9 Greene County, PA Range Resources - Claysville Sportsmans Club 1 IP Gas 59.0 MMcf/d EQT Pettit 593066 Spud in Aug. 2015 13,400 ft. TVD 4,000-4,500 ft. lateral 100% WI to CONSOL EQT Scotts Run 24 hr IP…
  20. Q3 2015 Earnings Update – Consol Energy Inc. – slide 20
    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…
  21. Q3 2015 Earnings Update – Consol Energy Inc. – slide 21
    Utica Shale: Switz 6 Monroe County, OH CONSOL SWITZ 6 Pad (Utica): 4 Utica wells & 1 Marcellus well CNX Switz 6D: 24-hr test rate 44.7 MMcf/d 6,835 psig Remaining wells flowing back 4 Utica Wells and 1 Marcellus Well Avg.…
  22. Q3 2015 Earnings Update – Consol Energy Inc. – slide 22
    Utica Shale: Switz 6D Monroe County, OH Gas Rate Casing Pressure 50,000 10000 The limited decline in flowing casing pressure bodes well for a strong stabilized production 40,000 rate going forward 8000 Flowing Casing Pressure…
  23. Q3 2015 Earnings Update – Consol Energy Inc. – slide 23
    Dry Utica: Monroe County Cost Improvements Days vs. Depth (Well in order of Horizontal TD Date) 0 5,000 Measured Depth (ft.) 10,000 Switz-6B-HSU Switz-6F-HSU 15,000 60+% Reduction in Days to Drill Switz-6H-HSU 20,000…
  24. Q3 2015 Earnings Update – Consol Energy Inc. – slide 24
    PA Utica: Drilling & Completion Cost Reductions Waterfall Diagram - PA Dry Utica Drilling and Completion Costs Per Well Assume 7000' lateral on a development 4-well pad ( in millions) 30.0 26.2 (8.2) 25.0 (2.2) 20.0 (0.4) (0.8) (1.2)…
  25. Q3 2015 Earnings Update – Consol Energy Inc. – slide 25
    Gas Marketing 27
  26. Q3 2015 Earnings Update – Consol Energy Inc. – slide 26
    Gas Marketing E&P Marketing Highlights Average gas price for the third quarter of 2015, including hedging, was a (0.43) per MMBtu differential to NYMEX (2.34 vs. 2.77); excluding hedging, gas price was (1.00) per MMBtu below NYMEX…
  27. Q3 2015 Earnings Update – Consol Energy Inc. – slide 27
    Gas Marketing Firm Transportation 1,600 NEXUS Targeting pipeline projects that 1,400 access favorable markets at ANR 1,200 favorable rates Columbia 1000s MMBtu/day 1,000 East Tennessee Will supplement direct FT with firm…
  28. Q3 2015 Earnings Update – Consol Energy Inc. – slide 28
    Gas Marketing Natural Gas Sales Midwest TETCO M3 Dominion South TCO Pool Updated estimated natural TETCO M2 gas sales mix for FY 2016 reflects an improved expected East Tennessee realization position, including a greater…
  29. Q3 2015 Earnings Update – Consol Energy Inc. – slide 29
    Gas Marketing Natural Gas Processing Contracted capacity meets Contracted Capacity at Processing Plants current requirements 500 450 Inlet wet gas volumes to processing plants were 145 400 MMcf/d above CONSOLs 350 minimum…
  30. Q3 2015 Earnings Update – Consol Energy Inc. – slide 30
    Gas Marketing: Firm TransportAsset or Liability Total Off Balance Sheet Firm Transportation, Gathering and Processing Commitments 20.0 160% 147% 18.0 140% 16.0 17.5 16.0 120% 118% FT Commitments as % of EV 14.0 100%…
  31. Q3 2015 Earnings Update – Consol Energy Inc. – slide 31
    Gas Marketing: Hedges Gas Hedges 250 E&P Hedge Program: NYMEX + Basis (1) Program and actively 225 NYMEX Only Hedges Exposed to Basis monitored hedges 200 Program Hedge - protect Gas Volumes Hedged (Bcf) 175 margins on up…
  32. Q3 2015 Earnings Update – Consol Energy Inc. – slide 32
    Gas Marketing Natural Gas Liquids, Oil, and Condensate Q3 2015 Avg. NGL Barrel Composition Q3 2015 liquids sold: 12.1 Bcfe 3Q15 Actual Natural (100% Assuming maximum ethane recovery scenario gasoline Ethane Ethane Q3 total production…
  33. Q3 2015 Earnings Update – Consol Energy Inc. – slide 33
    Coal Division 35
  34. Q3 2015 Earnings Update – Consol Energy Inc. – slide 34
    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…
  35. Q3 2015 Earnings Update – Consol Energy Inc. – slide 35
    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…
  36. Q3 2015 Earnings Update – Consol Energy Inc. – slide 36
    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…
  37. Q3 2015 Earnings Update – Consol Energy Inc. – slide 37
    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…
  38. Q3 2015 Earnings Update – Consol Energy Inc. – slide 38
    Financial 40
  39. Q3 2015 Earnings Update – Consol Energy Inc. – slide 39
    Financial: Focused on Free Cash Flow Strong and improving liquidity CNXC and CONE - CONE Midstream cash flows and EBITDA growing Asset monetizations Reduction in legacy liabilities Guidance: Production, price realizations,…
  40. Q3 2015 Earnings Update – Consol Energy Inc. – slide 40
    Financial: Liquidity Debt and Liquidity Profile CNX CNXC: CNX CNX Unit Market Consolidated 100% Attributable Equity Value of Ownership in Affiliated Public MLPs Onwed LP (4) Price (4) Value Capitalization and Liquidity 9/30/2015…
  41. Q3 2015 Earnings Update – Consol Energy Inc. – slide 41
    Financial: Asset Monetizations Assets available for sale Engaged several investment bankers and advisors to assist in the sale process - In early Oct. announced 101 million of divestitures of non-core coal assets with projected 2016…
  42. Q3 2015 Earnings Update – Consol Energy Inc. – slide 42
    Financial: Legacy Liabilities Significant Legacy Liability Reductions Over Past 3 Years 4,500 375 370 4,345 4,000 350 325 Annual Cash Servicing Cost 3,500 Projected 107MM Annual Cash 300 3,000 Legacy Liabilities…
  43. Q3 2015 Earnings Update – Consol Energy Inc. – slide 43
    Financial: CNX Coal Resources LP (CNXC:NYSE) CNXC: Organizational Structure and CNX Ownership CONSOL Energy Inc. CNXC owns a 20% undivided interest(1) in, and (CONSOL Energy) operational control over, CONSOL Energys Pennsylvania NYSE:…
  44. Q3 2015 Earnings Update – Consol Energy Inc. – slide 44
    Financial: CONEs Growing Cash Contribution CONSOL owns 32.1% of CONE Midstream Partners LPs CONE Midstream's and Gathering's Pro Rata Net (CNNX:NYSE) LP units and 50% of the General Partner Income Contribution to CNX (GP), which has a…
  45. Q3 2015 Earnings Update – Consol Energy Inc. – slide 45
    Financial: Guidance Summary E&P Segment Guidance 2015E 2016E Production Volumes:(1) Natural Gas (Bcf) 285 20% NGLs (MBbls) 5,500 - 5,900 6,600 - 7,080 Oil (MBbls) 85 - 95 102 - 114 Condensate (MBbls) 1,150 - 1,450 1,380 - 1,740…
  46. Q3 2015 Earnings Update – Consol Energy Inc. – slide 46
    Financial: Guidance Summary Coal Segment 2015E 2016E Total Coal Operations (in millions of tons) Estimated Total Coal Sales Volumes 28.9 - 29.9 30.6 - 33.4 Total Committed Volumes (Contracted & Priced) 28.6 20.2 % Committed 97% 63%…
  47. Q3 2015 Earnings Update – Consol Energy Inc. – slide 47
    Financial: Summary Plans and Goals Aligned to Drive Increased Valuation Milestones: Improving E&P performance from high-grading activities, improving completion techniques, reducing cycle times, and service deflation Benefits from…
  48. Q3 2015 Earnings Update – Consol Energy Inc. – slide 48
    Appendix 50
  49. Q3 2015 Earnings Update – Consol Energy Inc. – slide 49
    Appendix Non-GAAP Reconciliation: Quarter-over-Quarter EBITDA and Adj. EBITDA Three Months Ended September 30 ( in thousands) 2015 2014 Net Income / (Loss) 125,470 (1,645) Add: Interest Expense 48,558 55,397 Less: Interest Income…
  50. Q3 2015 Earnings Update – Consol Energy Inc. – slide 50
    Appendix Non-GAAP Reconciliation: Trailing Twelve Months EBITDA and Adj. EBITDA Twelve Months Ended September 30 ( in thousands) 2015 Net Income / (Loss) (325,135) Add: Interest Expense 203,212 Less: Interest Income (2,344) Add:…
  51. Q3 2015 Earnings Update – Consol Energy Inc. – slide 51
    Appendix Joint Ventures Summary of JV Carry Eligible Capital Description Marcellus / Noble Energy Inc. Utica / Hess Corporation Ownership 50/50 50/50 (1) Acreage 350,904 76,132 (2) Zones PA and WV Marcellus, Burkett to Onondaga OH…
  52. Q3 2015 Earnings Update – Consol Energy Inc. – slide 52
    Appendix Marcellus Shale: Overview 441,000 CONSOL net acres 88% NRI 91% HBP 23.9 Tcfe 3P Over 8,900 gross potential wells(1) 93% Marcellus production growth in 2014 compared to 2013 Liquids growth from 2% in 2013 to 8% of…
  53. Q3 2015 Earnings Update – Consol Energy Inc. – slide 53
    Appendix Marcellus Shale: Offset Peer Acreage Notes: CNX acreage position as of 12/31/2014. CNX acreage shown in yellow and purple (acres owned in fee) where CONSOL holds 3,000 or more acres. Source: Third party acreage positions…
  54. Q3 2015 Earnings Update – Consol Energy Inc. – slide 54
    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…
  55. Q3 2015 Earnings Update – Consol Energy Inc. – slide 55
    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…
  56. Q3 2015 Earnings Update – Consol Energy Inc. – slide 56
    Appendix Marcellus Shale: 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 190 wells online, as of NV36 Pad NV57 Pad…
  57. Q3 2015 Earnings Update – Consol Energy Inc. – slide 57
    Appendix Marcellus Shale: North Wet Gas Overview 54,000 CONSOL net acres Over 1,400 gross locations(1) 139 wells online as of 9/30/2015 16 wells TIL in Q3 2015 8,038 ft average laterals in Q3 2015 6 wells per pad on average…
  58. Q3 2015 Earnings Update – Consol Energy Inc. – slide 58
    Appendix Marcellus Shale: 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 3,711…
  59. Q3 2015 Earnings Update – Consol Energy Inc. – slide 59
    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…
  60. Q3 2015 Earnings Update – Consol Energy Inc. – slide 60
    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 locations(1) 13,586 Mcfe Avg 24-hr IP per well 624 Mmcfe/well 60 day Cum 58 wells…
  61. Q3 2015 Earnings Update – Consol Energy Inc. – slide 61
    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…
  62. Q3 2015 Earnings Update – Consol Energy Inc. – slide 62
    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 2.4 --…
  63. Q3 2015 Earnings Update – Consol Energy Inc. – slide 63
    Appendix Utica Shale: Offset Peer Acreage 614,000 CONSOL net acres in Utica 302,000 net acres in PA 194,000 net acres in WV 30,000 net acres in OH Dry 13,000 net acres in Monroe County, OH 88,000 net acres in OH Wet…
  64. Q3 2015 Earnings Update – Consol Energy Inc. – slide 64
    Appendix Utica Shale: CNX Acreage Position in the Core OH Wet Gas Utica HES Cadiz B HES Cadiz A IP GAS: 10,254 Mcf/d 88,000 CONSOL net acres GPOR - Boy Scout 33H CHK - Buell 8H IP OIL: 191 Bbl/d IP GAS: 9,500 Mcf/d IP GAS: 8,006…
  65. Q3 2015 Earnings Update – Consol Energy Inc. – slide 65
    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 =…
  66. Q3 2015 Earnings Update – Consol Energy Inc. – slide 66
    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…
  67. Q3 2015 Earnings Update – Consol Energy Inc. – slide 67
    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…
  68. Q3 2015 Earnings Update – Consol Energy Inc. – slide 68
    Appendix CONE Corporate Structure 70 Source: CONE Midstream Partners LP.
  69. Q3 2015 Earnings Update – Consol Energy Inc. – slide 69
    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…

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