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Q4 2019 Earnings Presentation – CNX Resources

CNX Resources · Jan 30, 2020 · 43 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. Q4 2019 Earnings Presentation – CNX Resources – slide 1
    Earnings Results Fourth Quarter 2019 January 30, 2020
  2. Q4 2019 Earnings Presentation – CNX Resources – slide 2
    CNX Highlights IDR elimination transaction simplifies capital structure CNXM Simplified Structure Reduces CNXMs cost of capital Aligns sponsor and public unitholder economic interests Beating guidance Operational Excellence…
  3. Q4 2019 Earnings Presentation – CNX Resources – slide 3
    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…
  4. Q4 2019 Earnings Presentation – CNX Resources – slide 4
    Excelling Through the Downturn 1 IDR Transaction Puts CNXM in Right Capital Structure 2 Beat Guidance Across the Board in 2019 3 Forecasting 250 million in FCF in 2020 4 Hedge Book Protects the Company for Several Years 5…
  5. Q4 2019 Earnings Presentation – CNX Resources – slide 5
    Milestones GP Acquisition & Enhanced HG Asset Exchange Agreement SWPA System Expansion IDR Elimination Transaction Commercial Agreement CNX acquires remaining 50% GP Additional +145mm minimum Significant investment year: IDRs…
  6. Q4 2019 Earnings Presentation – CNX Resources – slide 6
    Incentive Distribution Rights (IDR) Transaction Overview Transaction Overview Pro Forma Structure The incentive distribution rights and economic general partner interest in CNXM owned by CNX were exchanged for the following: 26 million…
  7. Q4 2019 Earnings Presentation – CNX Resources – slide 7
    CNXM is Crucial to CNXs Success CNXM Adjusted EBITDA 2015-2021E 300 Following IDR Elimination Transaction, 250 CNX now owns 47.7 200 million common units. The transaction also in millions 150 includes 3 million Class 100…
  8. Q4 2019 Earnings Presentation – CNX Resources – slide 8
    Strong Full Year 2019 Financial and Operational Performance Actuals 2019 Guidance Actuals vs. ( in millions) 2019 Low High Avg. Midpoint Guidance Production Volumes (Bcfe) 539 530 540 535 4 Adjusted EBITDAX 772 745 765 755 17…
  9. Q4 2019 Earnings Presentation – CNX Resources – slide 9
    2019 Capital and Operations Improvements Capital Continuous Improvements Operations Continuous Improvements Completion design optimization Decreased water disposal through increased reuse Cycle time efficiencies Combined midstream and…
  10. Q4 2019 Earnings Presentation – CNX Resources – slide 10
    SWPA Marcellus: Increased Results and Efficiencies Richhill (RHL) Marcellus - 2018 vs. Now Ohio River Water Line (to Richhill) 6.0 9000' Normalized Cumulative (Bcf) 5.0 4.0 3.0 2.0 1.0 - - 50 100 150 200 250 300 350 400…
  11. Q4 2019 Earnings Presentation – 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 Only completing enough to blend over the next several years - 1 SWPA dry…
  12. Q4 2019 Earnings Presentation – CNX Resources – slide 12
    Operational Highlights Dry Ridge Compressor Station Highlights Richhill Area - Marcellus drilling cost per foot decreased 23% in 2019, compared to 2018 - Marcellus stimulation lateral footage per day improved 9% in 2019, compared to…
  13. Q4 2019 Earnings Presentation – CNX Resources – slide 13
    Low Production Cash Costs Create Competitive Advantage 2.25 2.18 TTM Q3/Q4 2019 Production Cash Costs per Mcfe(1) 1.69 CNXs top-tier production cash 1.50 1.25 1.31 costs, substantial 1.13 1.13 hedge book, and midstream control…
  14. Q4 2019 Earnings Presentation – CNX Resources – slide 14
    Proactive Business Management: Cumulative Changes Since Q2 2019 Call OLD (Q2 2019) NEW (Q4 2019) 2020 NYMEX 2.55/MMBtu (0.46)/MMBtu 2.09/MMBtu(1) Macro Conditions Got Much Worse But CNX Got Much Stronger E&P Capex Decreased by…
  15. Q4 2019 Earnings Presentation – CNX Resources – slide 15
    Updated 2020 and 2021 Guidance Previous UPDATED 2020E 2020E Capital Expenditures Maintaining non-D&C capital in 2020 and expect this to be lower in 2021 Low High Low High ( millions) Drilling & Completions 400 450 360 410 Non-D&C 90…
  16. Q4 2019 Earnings Presentation – CNX Resources – slide 16
    Production Cadence and Hedge Advantage in 2020 1.8 Expected Daily Production 2020(1) 2021 Due to 1.6 minimum well Production commitments 2020 Sets Up 2021 Well 1.4 Growth Average Hedged Volumes: 498 Bcf or 98% of gas…
  17. Q4 2019 Earnings Presentation – CNX Resources – slide 17
    Substantial Hedges with Strongest Prices in 2020 and 2021 2020E(1) Hedged Gas Production 2021E(1) Hedged Gas Production 100 % 3.00 100% 2.96 3.00 57% of 2022(1) production 2.91 2.87 90% 2.88 hedged under maintenance 98% 2.90 2.90…
  18. Q4 2019 Earnings Presentation – CNX Resources – slide 18
    Balance Sheet is Getting Stronger in millions December 31, 2019 Stand-Alone Net Debt and Leverage Stand-Alone LP-Adjusted(1) Total Long-Term Debt (GAAP) 2,048.5 2,048.5 Less: Cash and Cash Equivalents 15.3 15.3 Less: Forecasted 2020…
  19. Q4 2019 Earnings Presentation – CNX Resources – slide 19
    Highly Resilient Balance Sheet Net Debt + Off-Balance Sheet Obligations / 22.0 x 2021E EBITDA(1) Under current strip, CNX expects to generate FCF and reduce Net Debt leverage in 2020 and 2021 Off-Balance Sheet Obligations 16.8 x…
  20. Q4 2019 Earnings Presentation – CNX Resources – slide 20
    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 484% 81% 80% 73% 403% 66% 65% 368% 319% 316% 54% 302% 251% 246%…
  21. Q4 2019 Earnings Presentation – CNX Resources – slide 21
    2022 Senior Notes Maturities Easily Addressed 2022 FCF also expected to be additional source of funds 780M CNXM Units(1) in millions Ability to 1.2B payoff or Revolver Liquidity refinance Note: CNX is unable to…
  22. Q4 2019 Earnings Presentation – CNX Resources – slide 22
    What Lies Ahead in 2021 CNX has taken a deliberate approach, focusing on flexibility to appropriately manage through the commodity cycle Expect to generate approximately 250 million in total FCF in each 2020 and 2021 Leverage…
  23. Q4 2019 Earnings Presentation – CNX Resources – slide 23
    Appendix
  24. Q4 2019 Earnings Presentation – CNX Resources – slide 24
    Financial Guidance PREVIOUS (10/30/2019) UPDATE (1/30/2020) 2020E 2020E Revenue and Other Operating Income E&P Consolidated E&P Consolidated Production Volumes: Natural Gas (Bcf) 505-535 495-525 NGLs (MBbls) 4,490-4,715 4,535-4,760…
  25. Q4 2019 Earnings Presentation – CNX Resources – slide 25
    Realignment Driving Expected Best-In-Class SG&A 350 TTM Q3/Q4 2019 SG&A(1) 0.20 Expect 30 million in total expected consolidated cash SG&A savings 0.18 300 since 2018 306 0.16 Combined upstream and midstream teams Total SG&A…
  26. Q4 2019 Earnings Presentation – CNX Resources – slide 26
    Q4 2019 Financial Results Summary Quarter Quarter Quarter Quarter Ended Ended Ended Ended December 31, December 31, December 31, December 31, 2019 2018 2019 2018 % Increase/ % Increase/ ( in millions, except per share data)…
  27. Q4 2019 Earnings Presentation – CNX Resources – slide 27
    Q4 2019 Operational Results Summary Y/Y Q/Q Marcellus Shale cash production costs were 1.28 per Mcfe in Q4 (/Mcfe) 4Q 2019 4Q 2018 Change 4Q 2019 3Q 2019 Change 2019, up 0.08 from 1.20 per Mcfe in Q4 2018, or a 7% increase (1) Average…
  28. Q4 2019 Earnings Presentation – CNX Resources – slide 28
    Q4 2019 Activity Summary Q4 2019 2019 Average Rigs at Lateral Period ( in millions) TD FRAC TIL Length (1) End TD FRAC TIL SWPA Marcellus 4 6 4 9,850 - 38 34 36 Central Utica 1 1 1 5,925 - 13 9 8 WV Marcellus 4 - - - 1 9 5 5…
  29. Q4 2019 Earnings Presentation – CNX Resources – slide 29
    Executive Summary Q4 2019 EXPECTATION STRATEGIC INITIATIVE 98% of 2020 gas volumes hedged at NYMEX 2.96 Hedge book protects our returns and margins for the Substantial Hedge Position per Mcf; 83% of 2021 gas volumes hedged at majority…
  30. Q4 2019 Earnings Presentation – CNX Resources – slide 30
    Cumulative Changes Since Q2 2019 Call Q2 2019 Earnings Call (7/30/2019) Q4 2019 Earnings Call (1/30/2020) Midpoints of Guidance Ranges 2019 Actuals/Midpoints of 2020 Guidance Total Changes ( in millions) 2019 2020E Total 2019A 2020E…
  31. Q4 2019 Earnings Presentation – CNX Resources – slide 31
    Marketing Highlights and Liquids Realizations Marketing Highlights Natural Gas Liquids, Oil and Condensate Directly-marketed ethane volumes were 273,000 Q4 2019 liquids sold: 10.5 Bcfe barrels in Q4 and, on an equivalent basis, yielded…
  32. Q4 2019 Earnings Presentation – CNX Resources – slide 32
    Financial Guidance: 2020E Natural Gas Marketing Mix and Basis Volumes 2020E CY 2020 Northeast Pipeline Projects Market Gas Sold (%) Michcon (000 MMBtu) Basis 2020E Gas: 10% DOM South 42,496 8% (0.44) CY20 Basis: (0.18) ETNG Mainline…
  33. Q4 2019 Earnings Presentation – CNX Resources – slide 33
    Natural Gas Hedging and Basis Protection 550 500 Gas Volumes Hedged (Bcf) 450 400 CNXs substantial 350 300 hedge book de-risks 250 490.8 200 417.0 rates of return and 150 100 281.0 creates time to adjust 164.7 147.7 50…
  34. Q4 2019 Earnings Presentation – CNX Resources – slide 34
    Q1 2020 and 2020 Gas Hedging Gain/Loss Projections Q1 2020 CY2020 Wtd. Avg. Avg. Forecasted Wtd. Avg. Avg. Forecasted (2) Hedged Volumes Hedged Forward Gain/(Loss) Hedged Volumes Hedged Forward Gain/(Loss)(2) (000 MMBtu) Price…
  35. Q4 2019 Earnings Presentation – CNX Resources – slide 35
    2020 AMT Credit and Additional Refunds December 31, December 31, 2019 2018 Current Assets 138 million of AMT and other tax refunds Cash and Cash Equivalents 16,283 17,198 Accounts and Notes Receivable received in 2019 Trade 133,480…
  36. Q4 2019 Earnings Presentation – CNX Resources – slide 36
    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 100% 16,000 90% 14,000 Cumulative…
  37. Q4 2019 Earnings Presentation – CNX Resources – slide 37
    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…
  38. Q4 2019 Earnings Presentation – CNX Resources – slide 38
    Non-GAAP Reconciliation Three Months Ended December 31, 2019 2018 2019 2018 (1) (1) Stand-alone Stand-alone Total Company Total Company ( in thousands) Net (Loss) Income from EBITDAX Reconciliation (287,970) 90,106 (240,055)…
  39. Q4 2019 Earnings Presentation – CNX Resources – slide 39
    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 Q4 2019 Average Sales Price - Total Company 2.85 2.47 2.50 2.80 3.00 2.87 2.92 3.09…
  40. Q4 2019 Earnings Presentation – CNX Resources – slide 40
    Non-GAAP Reconciliation Twelve Months Ended December 31, 2019 2019 2019 Stand-alone(1) Midstream Total Company ( in thousands) Net (Loss) Income (134,706) 166,654 31,948 Interest Expense 121,054 30,325 151,379 Interest Income…
  41. Q4 2019 Earnings Presentation – CNX Resources – slide 41
    Non-GAAP Reconciliation Three Months Ended December 31, 2019 2019 2019 Stand-alone(1) Midstream Total Company ( in thousands) Net (Loss) Income (287,970) 47,915 (240,055) Interest Expense 29,372 7,679 37,051 Interest Income (66)…
  42. Q4 2019 Earnings Presentation – CNX Resources – slide 42
    Non-GAAP Reconciliation Three Months Ended December 31, 2018 2018 2018 Stand-alone(1) Midstream Total Company ( in thousands) Net Income 90,106 39,309 129,415 Interest Expense 26,471 6,751 33,222 Interest Income 1 - 1 Income Tax…
  43. Q4 2019 Earnings Presentation – CNX Resources – slide 43
    Non-GAAP Reconciliation Three Months Three Months Three Months Three Months Twelve Months Ended Ended Ended Ended Ended March 31, June 30, September 30, December 31, December 31, ( in thousands) 2019 2019 2019 2019 2019 Net (Loss)…

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