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February 2019 Investor Presentation – Consol Energy Inc.

Consol Energy Inc. · Feb 26, 2019 · 39 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. February 2019 Investor Presentation – Consol Energy Inc. – slide 1
    CONSOL Energy Inc. CONSOL Coal Resources LP Investor Presentation February 2019
  2. February 2019 Investor Presentation – Consol Energy Inc. – slide 2
    Introduction
  3. February 2019 Investor Presentation – Consol Energy Inc. – slide 3
    Investment Thesis High-margin coal producer with a strong base of long-term domestic customer relationships and exposure to growing export thermal coal markets. PAMC set annual production and sales volume records in 2018. Ability…
  4. February 2019 Investor Presentation – Consol Energy Inc. – slide 4
    CEIX Performance Since November 2017 Spin Performance of Our Securities since the November 2017 Spin Spin Today 60% 3% 12% 40.00 105.00 4% 115.00 112 14% +1 S&P notch 60% 101 35.00 34.24 100.00 98 3% 110.00 12% 50% 25.00 35%…
  5. February 2019 Investor Presentation – Consol Energy Inc. – slide 5
    Pure-Play Coal Company with Significant Current and Growing Export Exposure CEIX was created through the November 2017 spin-off of CNX Resources Corporations (CNX) coal business. Differential Assets: Foundation of CEIX is the premier…
  6. February 2019 Investor Presentation – Consol Energy Inc. – slide 6
    Full Year Results and 2019 Guidance For the Year Ended Guidance Earnings Results December December CEIX CCR 31, 2018 31, 2017 Change 2019(4) 2019(4) Pennsylvania Mining Complex Volumes (MM Tons) Production 27.6 26.1 1.5 Sales 27.7…
  7. February 2019 Investor Presentation – Consol Energy Inc. – slide 7
    Operations
  8. February 2019 Investor Presentation – Consol Energy Inc. – slide 8
    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…
  9. February 2019 Investor Presentation – Consol Energy Inc. – slide 9
    The Premier U.S. Coal Mining Complex Best-in-class Btu content(1) Highly-diversified portfolio (Btu/lb gross as-received) (Btu/lb gross as-received) 2018A Sales 13,000 13,000 PJM 12,000…
  10. February 2019 Investor Presentation – Consol Energy Inc. – slide 10
    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) Core Markets 13 -…
  11. February 2019 Investor Presentation – Consol Energy Inc. – slide 11
    Tier-1 Assets in a Growing Seaborne Thermal Coal Market Tier-1 Cost Position Among Global Thermal Coal Supply(1)(2) Thermal Coal Exports PAMC US Appalachia US Illinois Basin US Powder River US Western Bituminous 2015 2016 2017 120…
  12. February 2019 Investor Presentation – Consol Energy Inc. – slide 12
    Demand for Our Product is Increasing in the Markets We Serve Premium Import Coal as a Percentage of Total(1) Global Coal Supply Quality is Deteriorating Meanwhile, India is Demanding Higher Quality Coals 50% 14% 48% 12% 48% 11%…
  13. February 2019 Investor Presentation – Consol Energy Inc. – slide 13
    Thermal Coal Peer Benchmarking Analysis Cash Cost Remained Relatively Flat vs. Peer Average(1) 2017 2018 80.00 70.00 60.00 +15% 50.00 +3% +4% +4% +1% +0% +0% 40.00 29.02 29.29 28.25 28.29 28.88 29.98 30.00 22.94 23.04 20.00…
  14. February 2019 Investor Presentation – Consol Energy Inc. – slide 14
    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…
  15. February 2019 Investor Presentation – Consol Energy Inc. – slide 15
    Marketing
  16. February 2019 Investor Presentation – Consol Energy Inc. – slide 16
    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 environmentally- 60 80%…
  17. February 2019 Investor Presentation – Consol Energy Inc. – slide 17
    Highly-diversified Portfolio Provides Volume Stability and Multiple Paths to Upside 2018A Export Thermal: 2018A Export Met: Annual coal sales (million tons) 27.7 27.8 26.1 24.6 26.8 22.9 Europe Africa India Canada Other…
  18. February 2019 Investor Presentation – Consol Energy Inc. – slide 18
    Well-established Diversified Credit-worthy Customer Base Minimizes Market Risk Select customers(1) 2018 domestic power plant shipments by unit retirement status Announced Coal Retirement 1.3% Private Market cap: 21.7bn Market…
  19. February 2019 Investor Presentation – Consol Energy Inc. – slide 19
    Capitalizing on a Rising Export Market Historic and Forward API 2 Prices Layered multi-year 120 export contracts 100 /tonne cif ARA 80 and while futures have 60 API 2 more-than declined in the near-term, Historic API 2…
  20. February 2019 Investor Presentation – Consol Energy Inc. – slide 20
    Arbitrage Opportunity in the Global Value Proposition for Coal Spot / Prompt Prices December 2018 14.00 12.00 10.00 /mmBtu 8.00 6.00 4.00 2.00 0.00 NAPP Coal UK LNG Newcastle Coal India LNG China…
  21. February 2019 Investor Presentation – Consol Energy Inc. – slide 21
    Highly Competitive with Natural Gas Today Thermal Coal Price Behavior vs. Natural Gas Price Strong export market and 70 3/mmBtu forward gas supports 4.40 falling inventories lift coal Forward Coal Price (/ton) Prompt Year NAPP…
  22. February 2019 Investor Presentation – Consol Energy Inc. – slide 22
    Finance
  23. February 2019 Investor Presentation – Consol Energy Inc. – slide 23
    CEIX - Summary of Financial Policy Continue to operate assets with disciplined approach to capital expenditures Evaluate other investment opportunities in light of cost of capital, B/S and sector and commodity price outlook…
  24. February 2019 Investor Presentation – Consol Energy Inc. – slide 24
    CEIX Debt Repayment/Equity Purchase Update and 1Q19 TLB Sweep Debt Repayment CEIX Equity Purchases Net Leverage Ratio CCR Equity Purchases 2.4x 2.0x 117 Total 1Q18A- 1.6x 1.6x 1.7x Repurchases 1Q19E Debt 173 CCR Units 3 CEIX…
  25. February 2019 Investor Presentation – Consol Energy Inc. – slide 25
    Leverage and Liquidity Analysis Adjusted Method Bank Method CEIX Financial Metrics (MM except ratios) 2018 2018 Leverage EBITDA(1)(2) 485 386 Consolidated Net Debt(3) 640 640 Net Leverage Ratio(1) 1.3x 1.7x Adjusted EBITDA…
  26. February 2019 Investor Presentation – Consol Energy Inc. – slide 26
    Return on Capital Highlights the Need for Rising Commodity Prices The goal is to raise CEIXs Return on Capital(1) over time while lowering its WACC. Focused on margins and corporate returns instead of just growth. Low production…
  27. February 2019 Investor Presentation – Consol Energy Inc. – slide 27
    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…
  28. February 2019 Investor Presentation – Consol Energy Inc. – slide 28
    CEIX Peer Valuation vs API 2 and Coking Coal Price Performance While the coal landscape has evolved over time, there are many similarities to the early 2000s. We believe peer coal companies balance sheets are much healthier today than…
  29. February 2019 Investor Presentation – Consol Energy Inc. – slide 29
    Appendix 30
  30. February 2019 Investor Presentation – Consol Energy Inc. – slide 30
    Organizational Structure Overview CONSOL Energy Inc. NYSE: CEIX 27 million shares outstanding 100% ownership 100% interest ownership interest 60.0% CONSOL Coal Resources GP LLC 1.6 billion tons of limited partner (our…
  31. February 2019 Investor Presentation – Consol Energy Inc. – slide 31
    CEIX Balance Sheet Legacy Liabilities, Manageable and Declining Significant legacy liability reductions over past three years Balance Sheet Cash Servicing Legacy liabilities Value Cost The impact of administrative changes in 2016 &…
  32. February 2019 Investor Presentation – Consol Energy Inc. – slide 32
    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…
  33. February 2019 Investor Presentation – Consol Energy Inc. – slide 33
    CEIX Adjusted EBITDA & Organic Free Cash Flow Net to CEIX Shareholders Reconciliations EBITDA Reconciliation 2018 2017 Net Income 178.8 82.6 Plus: Interest Expense, net 83.8 26.1 Loss on Debt Extinguishment 3.9 - Interest Income…
  34. February 2019 Investor Presentation – Consol Energy Inc. – slide 34
    CCR Adjusted EBITDA & Organic Free Cash Flow Reconciliations EBITDA Reconciliation 2018 2017 Net Income 66.6 40.5 Plus: Interest Expense, net 6.7 9.3 Loss on Extinguishment of Debt - 2.5 Depreciation, Depletion and Amortization…
  35. February 2019 Investor Presentation – Consol Energy Inc. – slide 35
    CEIX Net Leverage Ratio Reconciliations CEIX Net Leverage Ratio Reconciliations Adjusted Method Bank Method 2018 2018 Net Income 179 179 Plus: Interest Expense, net 84 84 Interest Income (2) (2) Income Tax Expense 9 9 EBIT 269…
  36. February 2019 Investor Presentation – Consol Energy Inc. – slide 36
    CEIX Return on Capital Reconciliation CEIX Return on Capital Reconciliation 2018 Net Income 179 Plus: Interest Expense, net 84 Interest Income (2) Income Tax Expense 9 EBIT 269 Add: Legacy Liability Expense 75 EBIT less Legacy…
  37. February 2019 Investor Presentation – Consol Energy Inc. – slide 37
    CCR Leverage Ratio Reconciliation CCR Net Leverage Ratio Reconciliation 2018 Net Income 66.6 Plus: Interest Expense, net 6.7 Depreciation, Depletion and Amortization 44.7 Unit-Based Compensation 1.8 Cash Payments for Legacy…
  38. February 2019 Investor Presentation – Consol Energy Inc. – slide 38
    Average Cash Margin and Average Cost per Ton Sold Reconciliations (MM except per ton data) 2018 2017 Total Coal Revenue 1,364 1,188 Operating and Other Costs 946 887 Less: Other Costs (Non-Production) (135) (130) Cash Cost of Coal…
  39. February 2019 Investor Presentation – Consol Energy Inc. – slide 39
    PAMC Adjusted EBITDA Reconciliation Years Ended 2014 2015 2016 2017 2018 Earnings before Income Taxes 431 405 131 189 291 Plus: Interest Expense, net - 3 9 10 - Depreciation, Depletion and Amortization 173 177 168 167 179 PAMC…

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