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3Q 2019 Earnings Results – CNX Resources

CNX Resources · Oct 29, 2019 · 46 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. 3Q 2019 Earnings Results – CNX Resources – slide 1
    Earnings Results Third Quarter 2019 October 29, 2019
  2. 3Q 2019 Earnings Results – CNX Resources – slide 2
    Major Highlights Large, High Quality Inventory in the Core Marcellus and Utica Low Cash Costs Matters Even More in a Low Price Environment Strong Hedge Position Protects Future Cash Flows and Ensures Capital Returns On Track to…
  3. 3Q 2019 Earnings Results – CNX Resources – slide 3
    CNX Acreage Position Remains Top-Tier in Appalachia Appalachian Peer Group Net Acres CNX SWPA Central Marcellus Locations(1) Assuming a run rate of 36 1,400,000 SWPA Central Marcellus TILs per year: 1,200,000 CNX maintains 12 years…
  4. 3Q 2019 Earnings Results – CNX Resources – slide 4
    Low Production Cash Costs Create Competitive Advantage 2.25 2.15 TTM Q2/Q3 2019 Production Cash Costs per Mcfe(1) 1.70 CNXs top-tier production cash 1.50 1.25 1.31 costs and 1.11 1.15 substantial hedge book create a 0.78…
  5. 3Q 2019 Earnings Results – CNX Resources – slide 5
    Workflow Integration Driving Significant SG&A Savings Consolidated PREVIOUS FY2018 Consolidated UPDATED Actual FY2019E Consolidated PREVIOUS 113M(1) Guidance FY2019E Consolidated UPDATED 110M(1) Guidance FY2020E Consolidated 100M(1)…
  6. 3Q 2019 Earnings Results – CNX Resources – slide 6
    Substantial Hedges in 2020 and 2021 with Strongest Hedge Price 2020E(1) Hedged Gas Production 2021E(1) Hedged Gas Production 100 % 2.97 3.00 100 % 3.00 91 % 2.93 94 % 2.87 2.88 2.90 2021E % of production 2.90 hedged increases to…
  7. 3Q 2019 Earnings Results – CNX Resources – slide 7
    Despite Weaker Gas Prices, Preserved FCF and Bolstered 2021 Inventory OLD 2020 FCF Guidance Q2 135M Free Cash Flow Outside Changes NYMEX Declined in 2020 (2.55 to 2.40 per MMBtu) & 2019 Management Changes Volumes Capital Costs…
  8. 3Q 2019 Earnings Results – CNX Resources – slide 8
    Competitive Advantages and Philosophy Drive Investment Thesis ADVANTAGES CONSISTENT Marketing Cost Asset PHILOSOPHY Strategy Structure Portfolio Hedge book Strong cash Large stacked- Investments in high rate of return opportunities…
  9. 3Q 2019 Earnings Results – CNX Resources – slide 9
    Operations Update
  10. 3Q 2019 Earnings Results – CNX Resources – slide 10
    Q3 2019 Operational Results Summary Y/Y Q/Q Marcellus Shale cash production costs were 1.33 per Mcfe in Q3 (/Mcfe) 3Q 2019 3Q 2018 Change 3Q 2019 2Q 2019 Change 2019, up 0.08 from 1.25 per Mcfe in Q3 2018, or a 6% increase (1) Average…
  11. 3Q 2019 Earnings Results – CNX Resources – slide 11
    SWPA Blending Strategy in Full Swing Damp Marcellus to Dry Outlets Maximize NAV by drilling high ROR Marcellus pads with enough Utica to blend into dry outlet Two SWPA dry Utica pads TIL'd in Q3 2019 - MAJ 6 (4 wells) - MOR 10 (3…
  12. 3Q 2019 Earnings Results – CNX Resources – slide 12
    Operational Highlights Drilling Highlights Evolution Frac Crew RHL 8 6 Well Marcellus Pad High Operational Performance - Drilling days average of 13 days per well - Drilling footage in lateral of an average of 5,891 per day Most…
  13. 3Q 2019 Earnings Results – CNX Resources – slide 13
    Financial Results & Guidance Update
  14. 3Q 2019 Earnings Results – CNX Resources – slide 14
    Q3 2019 Financial Results Summary Quarter Quarter Quarter Quarter Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2019 2018 2019 2018 % Increase/ % Increase/ ( in millions, except per share data)…
  15. 3Q 2019 Earnings Results – CNX Resources – slide 15
    An Emphasis on Flexibility in Planning and Strategic Decisions CNX has taken a deliberate approach, focusing on flexibility to appropriately manage through the commodity cycle In the event of a sustained downturn in gas prices, CNX…
  16. 3Q 2019 Earnings Results – CNX Resources – slide 16
    Updated 2019 and 2020 Guidance Previous UPDATED Previous UPDATED 2019E D&C capital based on midpoint expected to decrease by 17.5M from 2019E 2019E 2020E 2020E previous update, while production expected Capital Expenditures to increase…
  17. 3Q 2019 Earnings Results – CNX Resources – slide 17
    Updated 2019 and 2020 Guidance 2019E 2020E Revenue and Other Operating Income E&P Consolidated E&P Consolidated Workforce Production Volumes: integration driving Natural Gas (Bcf) 500-508 505-535 NGLs (MBbls) 5,125-5,315 4,490-4,715…
  18. 3Q 2019 Earnings Results – CNX Resources – slide 18
    Realignment Driving Expected Best-In-Class SG&A 300 TTM Q2/Q3 2019 SG&A(1) 0.20 Already realized 25 million in total 278 expected consolidated cash SG&A 0.18 savings out of the original 30 million 250 0.16 target for 2020 Combined…
  19. 3Q 2019 Earnings Results – CNX Resources – slide 19
    Production Cadence and Hedge Advantage 2019-2020 1.8 Expected Daily Production 2019-2020(1) 1.6 Five-year average all-in maintenance capital (D&C + 1.4 Average Hedged Volumes non-D&C): 400 million to 490 Bcf or 94% of gas production…
  20. 3Q 2019 Earnings Results – CNX Resources – slide 20
    Hedge Book Reduces EBITDAX Sensitivity to Commodity Swings 2020E EBITDAX and FCF Sensitivity(1) (0.30) (0.20) (0.10) Base(2) 0.10 0.20 0.30 Average NYMEX (/MMBtu) 2.10 2.20 2.30 2.40 2.50 2.60 2.70 Each 0.10 move in 2020 NYMEX E&P…
  21. 3Q 2019 Earnings Results – CNX Resources – slide 21
    Prudent Thoughtful Financial Policy Low cost-structure, robust hedge book, and planned capital program are positioning the company to deliver significant free cash flow in 2020 and beyond Overview Free cash flow expected to be…
  22. 3Q 2019 Earnings Results – CNX Resources – slide 22
    Highly Resilient Balance Sheet Current Leverage (Net Debt + Off-Balance Sheet Obligations)(1) ( in billions) 29 Flexibility through low total liability positioning in Appalachia Net Debt 21 Off-Balance Sheet Obligations…
  23. 3Q 2019 Earnings Results – CNX Resources – slide 23
    CNX Screens Well on All-In Debt Metrics vs. Appalachian Peers Total Debt(1) as % of EV FT Commitments as % of EV Total Debt(1) + FT Commitments as a % of EV 85% 484% 82% 402% 77% 71% 67% 383% 316% 340% 58% 325% 268% 248%…
  24. 3Q 2019 Earnings Results – CNX Resources – slide 24
    Appendix
  25. 3Q 2019 Earnings Results – CNX Resources – slide 25
    Solid Financial and Operational Performance 1 Revenue Protection Active Long-term Cost Management 2 Active hedging program locks in revenue and de-risks Significant reduction to SG&A capital decisions prior to drilling Avoided…
  26. 3Q 2019 Earnings Results – CNX Resources – slide 26
    Q3 Activity Summary Q3 2019 YTD 2019 Average Rigs at Lateral Period ( in millions) TD FRAC TIL Length(1) End TD FRAC TIL Expect to run approximately two rigs SWPA Marcellus 11 10 10 11,169 1 34 29 32 Central and one frac crew in…
  27. 3Q 2019 Earnings Results – CNX Resources – slide 27
    Marketing Highlights and Liquids Realizations Marketing Highlights Natural Gas Liquids, Oil and Condensate Directly-marketed ethane volumes were 262,000 Q3 2019 liquids sold: 8.1 Bcfe barrels in Q3 and, on an equivalent basis, yielded a…
  28. 3Q 2019 Earnings Results – CNX Resources – slide 28
    Financial Guidance: 2019E Natural Gas Marketing Mix and Basis Volumes 2019E CY 2019 Michcon Northeast Pipeline Projects Market (000 MMBtu) Gas Sold (%) Basis 2019E Gas: 10% DOM South 24,788 5% (0.45) CY19 Basis: (0.19) ETNG Mainline…
  29. 3Q 2019 Earnings Results – CNX Resources – slide 29
    Financial Guidance: 2020E Natural Gas Marketing Mix and Basis Volumes 2020E CY 2020 Michcon Northeast Pipeline Projects Market (000 MMBtu) Gas Sold (%) Basis 2020E Gas: 9% DOM South 53,661 9% (0.44) CY20 Basis: (0.18) ETNG Mainline…
  30. 3Q 2019 Earnings Results – CNX Resources – slide 30
    Natural Gas Hedging and Basis Protection 550 500 5.6 Gas Volumes Hedged (Bcf) 450 400 1.8 - CNXs substantial 350 300 10.1 hedge book de-risks 250 200 403.4 484.0 414.2 rates of return and 2.5 150 100 268.0 creates time…
  31. 3Q 2019 Earnings Results – CNX Resources – slide 31
    Q4 2019E, 2019E, and 2020E Gas Hedging Gain/Loss Projections Q4 2019 CY2019 CY2020 Wtd. Avg. Avg. Forecasted Wtd. Avg. Avg. Forecasted Wtd. Avg. Avg. Forecasted (2) (2) Hedged Volumes Hedged Forward Gain/(Loss) Hedged Volumes Hedged…
  32. 3Q 2019 Earnings Results – CNX Resources – slide 32
    2019 AMT Credit and Additional Refunds September 30, December 31, 2019 2018 Current Assets Cash and Cash Equivalents 5,484 17,198 Combined AMT refund and additional tax refunds to Accounts and Notes Receivable drive total cash tax…
  33. 3Q 2019 Earnings Results – CNX Resources – slide 33
    SWPA Marcellus: Increased Results and Efficiencies Richhill (RHL) Marcellus 2018 vs. Now Ohio River Water Line (to Richhill) 5.0 9000' Normalized Cumulative (Bcf) 4.0 3.0 2.0 1.0 0.0 - 50 100 150 200 250 300 350 400…
  34. 3Q 2019 Earnings Results – CNX Resources – slide 34
    CPA Dry Utica Results Remain Consistent and Strong CPA Dry Utica Results CPA Dry Utica Cumulative Production Pressure Drawdown vs 7,000 Norm. Cumulative Production Normalized to 7000 16,000 100% 14,000 90% Cumulative…
  35. 3Q 2019 Earnings Results – CNX Resources – slide 35
    Integrating and Optimizing Operations To Drive Efficiencies Integrated Real-Time Operations Center Objective Functionality Key Results 99.5% production uptime 24/7 real time surveillance 60% reduction in NPT since 2016 Remote…
  36. 3Q 2019 Earnings Results – CNX Resources – slide 36
    Debt Discipline and EBITDAX Growth Drive Available Capacity Shares Repurchased Since Program Announced Stand-Alone and Consolidated Net Debt 250.0 in millions September 30, 2019 6.4 25.9 Stand-Alone Midstream Total 3.1 8.8 200.0…
  37. 3Q 2019 Earnings Results – CNX Resources – slide 37
    YE2018 Type Curve Area and Acreage Update Note: As of year-end 2018 as identified in 2018 10-K filed February 7, 2019. 38
  38. 3Q 2019 Earnings Results – CNX Resources – slide 38
    YE2018 Acreage and Undeveloped Location Update MARCELLUS UTICA TYPE CURVE AREAS TYPE CURVE AREAS SWPA Central Greater TOTAL SWPA SWPA Central Greater TOTAL SWPA Total Net Acres 98,100 33,700 131,800 Total Net Acres 120,500 55,100…
  39. 3Q 2019 Earnings Results – CNX Resources – slide 39
    Non-GAAP Reconciliation Three Months Ended September 30, 2019 2018 2019 2018 (1) (1) Stand-alone Stand-alone Total Company Total Company ( in thousands) Net Income from EBITDAX Reconciliation 102,219 115,583 143,960 146,756…
  40. 3Q 2019 Earnings Results – CNX Resources – slide 40
    Non-GAAP Reconciliation Price and Cost Data per Mcfe (/Mcfe) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Average Sales Price - Total Company 2.85 2.47 2.50 2.80 3.00 2.87 2.92 3.09 2.97 2.63…
  41. 3Q 2019 Earnings Results – CNX Resources – slide 41
    Non-GAAP Reconciliation Twelve Months Ended September 30, 2019 2019 2019 Stand-alone(1) Midstream Total Company ( in thousands) Net Income 243,371 158,047 401,418 Interest Expense 118,153 29,397 147,550 Interest Income (1,870) -…
  42. 3Q 2019 Earnings Results – CNX Resources – slide 42
    Non-GAAP Reconciliation Three Months Ended September 30, 2019 2019 2019 (1) Stand-alone Midstream Total Company ( in thousands) Net Income 102,219 41,741 143,960 Interest Expense 30,783 7,622 38,405 Interest Income (1,078) -…
  43. 3Q 2019 Earnings Results – CNX Resources – slide 43
    Non-GAAP Reconciliation Three Months Ended September 30, 2018 2018 2018 Stand-alone(1) Midstream Total Company ( in thousands) Net Income 115,583 31,173 146,756 Interest Expense 28,467 7,256 35,723 Interest Income (42) - (42)…
  44. 3Q 2019 Earnings Results – CNX Resources – slide 44
    Non-GAAP Reconciliation Three Months Ended June 30, 2019 2019 2019 (1) Stand-alone Midstream Total Company ( in thousands) Net Income 148,281 44,413 192,694 Interest Expense 32,467 7,685 40,152 Interest Income (71) - (71)…
  45. 3Q 2019 Earnings Results – CNX Resources – slide 45
    Non-GAAP Reconciliation Three Months Ended Twelve Months Ended Stand-alone(1) March 31, June 30, September 30, December 31, December 31, ( in thousands) 2018 2018 2018 2018 2018 Net Income 510,012 33,614 115,583 90,106 749,315…
  46. 3Q 2019 Earnings Results – CNX Resources – slide 46
    Non-GAAP Reconciliation Twelve Months Attributable to CNX Shareholders Three Months Ended Ended March 31, June 30, September 30, December 31, December 31, ( in thousands) 2017 2017 2017 2017 2017 Net (Loss) Income (38,966) 169,511…

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