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Investor Presentation – Consol Energy Inc.

Consol Energy Inc. · Nov 15, 2018 · 38 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. Investor Presentation – Consol Energy Inc. – slide 1
    CONSOL Energy Inc. CONSOL Coal Resources LP Investor Presentation November 2018
  2. Investor Presentation – Consol Energy Inc. – slide 2
    Introduction
  3. Investor Presentation – Consol Energy Inc. – slide 3
    Investment Thesis Premier U.S. coal mining complex with a proven track record of operational excellence. Highly competitive with natural gas and driven by a superior cost position vs. Appalachian E&P producers. Highly-experienced,…
  4. Investor Presentation – Consol Energy Inc. – slide 4
    CEIX Performance Since November 2017 Spin Performance of Our Securities since the November 2017 Spin Spin Today 13% 100% 105.00 4% 5% 115.00 14% 88% 113 +1 S&P notch 102 50.00 90% 4% 110.00 100.00 98 12% 40.40 80% 4% 105.00 25.00…
  5. Investor Presentation – Consol Energy Inc. – slide 5
    Pure-Play Coal Company with Significant Current and Growing Export Exposure CONSOL Energy Inc. (CEIX) was created through the November 2017 spin-off of CNX Resources Corporations (CNX) coal business Differential Assets: Foundation of…
  6. Investor Presentation – Consol Energy Inc. – slide 6
    3Q18 Performance Executive Summary and 2018 Outlook CEIX posted 3Q18 Earnings per Diluted Share of 0.20 and Adjusted EBITDA(1) of 83MM. CCR announced 3Q18 Net Income per Limited Partner Unit Diluted of 0.31 per unit and Adjusted…
  7. Investor Presentation – Consol Energy Inc. – slide 7
    Third Quarter Results and 2018 Guidance Raise For the Quarter Ended Guidance Earnings Results September September CEIX CCR (4) 30, 2018 30, 2017 Change 2018 2018(4) Pennsylvania Mining Complex Volumes (MM Tons) Production 6.4 6.1…
  8. Investor Presentation – Consol Energy Inc. – slide 8
    Operations
  9. Investor Presentation – Consol Energy Inc. – slide 9
    Pennsylvania Mining Complex Overview Three highly productive, well-capitalized underground coal mines Five longwalls and 15-17 continuous miner sections Largest central preparation plant in the United States PA Mining CONSOL Marine…
  10. Investor Presentation – Consol Energy Inc. – slide 10
    The Premier U.S. Coal Mining Complex Best-in-class Btu content(1) Highly-diversified portfolio with access to free markets (Btu/lb gross as-received) (Btu/lb gross as-received) 2017A Sales 13,000 13,000 PJM 12,000…
  11. Investor Presentation – Consol Energy Inc. – slide 11
    Thermal Coal Peer Benchmarking Analysis Cash Cost Improvement vs. Peer Average(1) YTD 9/30/17 YTD 9/30/18 80.00 70.00 60.00 +15% 50.00 +4% +5% +6% (2%) +0% +0% 40.00 29.57 28.87 28.25 28.29 28.66 29.99 30.00 22.94 23.04 20.00 13.91…
  12. Investor Presentation – Consol Energy Inc. – slide 12
    Excellent Access to Transportation Infrastructure Provides Global Reach Dual-served railroad access PAMC CONSOL Marine Terminal PAMC Eastern U.S. coal regions and points of thermal export(1) 13 - 16/ton Core…
  13. Investor Presentation – Consol Energy Inc. – slide 13
    CONSOL Marine Terminal Provides Strategic Access to Export Market Overview Coal export terminal strategically located in Baltimore, MD 15.0 million tons per year throughput capacity 1.1 million tons coal storage yard capacity…
  14. Investor Presentation – Consol Energy Inc. – slide 14
    Marketing
  15. Investor Presentation – Consol Energy Inc. – slide 15
    Multi-pronged PAMC Marketing Strategy Illustrative portion of annual production 1 Maximize sales to established customer base of rail-served power plants in the Eastern U.S., with a focus on top-performing 60 80%…
  16. Investor Presentation – Consol Energy Inc. – slide 16
    Highly-diversified Portfolio Provides Volume Stability and Multiple Paths to Upside 2017A Export Thermal: 2017A Export Met: Annual coal sales (million tons) 27.2 26.1 26.1 24.6 22.9 Europe Africa India Other Asia South…
  17. Investor Presentation – Consol Energy Inc. – slide 17
    Well-established Diversified Credit-worthy Customer Base Minimizes Market Risk Major select customers(1) Limited volume at risk due to announced power plant retirements 2017 domestic power plant shipments by unit retirement status…
  18. Investor Presentation – Consol Energy Inc. – slide 18
    Significant Opportunities in Improving Export Markets Historic and Forward API 2 Prices Layered multi-year 120 export contracts 100 /tonne cif ARA 80 60 and futures have API 2 has more-than continued to rise, Historic API…
  19. Investor Presentation – Consol Energy Inc. – slide 19
    Arbitrage Opportunity in the Global Value Proposition for Coal Spot / Prompt Prices September 2018 16.00 14.00 12.00 10.00 /mmBtu 8.00 6.00 4.00 2.00 0.00 UK LNG India LNG China LNG NAPP Coal Newcastle…
  20. Investor Presentation – Consol Energy Inc. – slide 20
    Highly Competitive with Natural Gas Today - Shortage of Coal and Natural Gas Inventories Currently Thermal coal price behavior vs. natural gas price Strong export market and 70 4.40 Forward Coal Price (/ton) Prompt Year NAPP…
  21. Investor Presentation – Consol Energy Inc. – slide 21
    Finance
  22. Investor Presentation – Consol Energy Inc. – slide 22
    CEIX - Summary of Financial Policy Primary use of free cash flow(1) will be to de-lever the balance sheet and improve shareholder returns Long-term incentive compensation of executives tied to free cash flow generation and shareholder…
  23. Investor Presentation – Consol Energy Inc. – slide 23
    Leverage and Liquidity Analysis Adjusted Method Bank Method CEIX Financial Metrics (MM except ratios) LTM 9/30/2018 LTM 9/30/2018 Leverage EBITDA(1)(2) 489 390 Consolidated Net Debt(3) 634 634 Net Leverage Ratio 1.3x 1.6x…
  24. Investor Presentation – Consol Energy Inc. – slide 24
    Debt Repayment/Equity Purchase Update and 1Q19 TLB Sweep Debt Repayment CEIX Equity Purchases Net Leverage Ratio CCR Equity Purchases 2.4x 2.0x 26 1.6x 1.6x 23 9 1MM 1 2 8MM 1 4Q17 1Q18 2Q18 3Q18 For the nine…
  25. Investor Presentation – Consol Energy Inc. – slide 25
    Return on Capital Highlights the Need for Rising Commodity Prices The goal is to raise CEIXs Return on Capital over time while lowering its WACC. Focused on margins and corporate returns instead of just growth. Low production decline…
  26. Investor Presentation – Consol Energy Inc. – slide 26
    CEIX - Extensive, High-quality Reserve Base Presents Multiple Value Creation Options 1.6 billion tons of additional greenfield met and thermal reserves in NAPP, CAPP and ILB Greenfield reserves provide attractive monetization…
  27. Investor Presentation – Consol Energy Inc. – slide 27
    CEIX Peer Valuation vs API2 and Coking Coal Price Performance While the coal landscape has evolved over time, there are many similarities to the early 2000s. Peer coal companies balance sheets are much healthier today than they were…
  28. Investor Presentation – Consol Energy Inc. – slide 28
    Appendix
  29. Investor Presentation – Consol Energy Inc. – slide 29
    Organizational Structure Overview CONSOL Energy Inc. NYSE: CEIX 28 million shares outstanding 100% ownership 100% interest ownership interest 60.0% CONSOL Coal Resources GP LLC 1.6 billion tons of limited partner (our…
  30. Investor Presentation – Consol Energy Inc. – slide 30
    CEIX Balance Sheet Legacy Liabilities, Manageable and Declining Significant legacy liability reductions over past three years Balance Sheet Cash Servicing Administrative changes in 2017 reduced our OPEB liability without Legacy…
  31. Investor Presentation – Consol Energy Inc. – slide 31
    Experienced Management Team Focused on Safety, Compliance and Financial Discipline Years of experience Executive role at CEIX CONSOL Industry Key performance results Jimmy Brock Significant expertise owning, developing, and managing…
  32. Investor Presentation – Consol Energy Inc. – slide 32
    CEIX Adjusted EBITDA & Organic Free Cash Flow Net to CEIX Shareholders Reconciliations EBITDA Reconciliation 3Q18 3Q17 Net Income 9.1 8.5 Plus: Interest Expense, net 20.9 3.9 Interest Income (0.5) (0.4) Income Tax Expense (0.7)…
  33. Investor Presentation – Consol Energy Inc. – slide 33
    CCR Adjusted EBITDA & Organic Free Cash Flow Reconciliations EBITDA Reconciliation 3Q18 3Q17 Net Income 8.6 3.6 Plus: Interest Expense, net 1.6 2.4 Depreciation, Depletion and Amortization 11.1 10.4 EBITDA 21.3 16.4 Plus:…
  34. Investor Presentation – Consol Energy Inc. – slide 34
    CEIX Net Leverage Ratio Reconciliations CEIX Net Leverage Ratio Reconciliations Adjusted Method Bank Method LTM 9/30/2018 LTM 9/30/2018 Net Income 108 108 Plus: Interest Expense, net 78 78 Interest Income (3) (3) Income Tax…
  35. Investor Presentation – Consol Energy Inc. – slide 35
    CCR Leverage Ratio Reconciliation CCR Net Leverage Ratio Reconciliation LTM 9/30/2018 Net Income 61.3 Plus: Interest Expense 7.3 Depreciation, Depletion and Amortization 44.1 Unit-Based Compensation 3.5 Cash Payments for Legacy…
  36. Investor Presentation – Consol Energy Inc. – slide 36
    CEIX Return on Capital Reconciliation CEIX Return on Capital Reconciliation LTM 9/30/2018 Net Income 108 Plus: Interest Expense, net 78 Interest Income (3) Income Tax Expense 73 EBIT 256 Add Legacy Liability Expense 72 EBIT…
  37. Investor Presentation – Consol Energy Inc. – slide 37
    Average Cash Margin and Average Cash Cost Per Ton Sold Reconciliations (MM except per ton data) 3Q18 3Q17 Total Coal Revenue 295 279 Operating and Other Costs 223 230 Less: Other Costs (Non-Production) (31) (33) Total Cash Cost of…
  38. Investor Presentation – Consol Energy Inc. – slide 38
    PAMC Adjusted EBITDA Reconciliation Years Ended 2014 2015 2016 2017 Earnings before Income Taxes 431 405 131 189 Plus: Interest Expense, net - 3 9 10 Depreciation, Depletion and Amortization 173 177 168 167 PAMC EBITDA 604 585…

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