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1Q 2020 Earnings Results – CNX Resources

CNX Resources · Apr 30, 2020 · 59 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. 1Q 2020 Earnings Results – CNX Resources – slide 1
    Earnings Results First Quarter 2020 April 27, 2020
  2. 1Q 2020 Earnings Results – CNX Resources – slide 2
    Executive Summary
  3. 1Q 2020 Earnings Results – CNX Resources – slide 3
    The CNX Philosophy and Approach to Making Decisions Our Approach: 1. We optimize long term net asset value (NAV) per share above all else 2. The best metric for optimizing NAV per share is consolidated free cash flow (FCF);…
  4. 1Q 2020 Earnings Results – CNX Resources – slide 4
    CNXs Approach in Action Philosophy continues to Successful execution in CNX near-term maturities drive tactics in Q2 2020 2019 positioned company were reduced by over CNX poised and beyond to navigate for 2020 and beyond 300MM in Q1…
  5. 1Q 2020 Earnings Results – CNX Resources – slide 5
    Q1 2020 Highlights
  6. 1Q 2020 Earnings Results – CNX Resources – slide 6
    Significant Free Cash Flow (FCF) Generation in Q1 2020 129MM Consolidated FCF (1) in Q1 2020 129MM in Consolidated FCF(1) 267 During Q1 2020, we restructured a (152) portion of our 2022 through 2024 hedges in millions for 55…
  7. 1Q 2020 Earnings Results – CNX Resources – slide 7
    Cardinal States Gathering (CSG) Financing Overview 175 million loan: 125 million tranche and 50 milliontranche Deal Terms Blended average loan tenor is 7.8 years Blended average loan interest rate is 6.5% Debt in an Unrestricted…
  8. 1Q 2020 Earnings Results – CNX Resources – slide 8
    Repurchased 79 Million of 2022 Notes at Significant Discount ( in millions) Average Bonds Current Percent Repurchase Savings to Balance YE2019 Repurchased Balance Reduction Price Cash Outlay Par 894 79(1) 815 8.7% 84.7 67 (12)…
  9. 1Q 2020 Earnings Results – CNX Resources – slide 9
    2020 Plan Update
  10. 1Q 2020 Earnings Results – CNX Resources – slide 10
    Spring 2020 Borrowing Base Redetermination Completed Borrowing Base and Revolving Credit Commitments redetermined at 1.9 billion ( in billions) CSG + Hedges Two significant transactions reduced the engineered value of the companys…
  11. 1Q 2020 Earnings Results – CNX Resources – slide 11
    2020 Super Contango Gas Markets NYMEX Henry Hub Forward Strip CNX has the flexibility to modify its production profile allowing 3.10 company to save some production to sell during significantlyhigher prices this winter and next year…
  12. 1Q 2020 Earnings Results – CNX Resources – slide 12
    Production Profile and Hedge Management Expected Daily Production 2020(1) Low end of 2020 production range 1.7 assumes production weighted towards 2.90/MMBtu 1.6 winter and into 2021, while high end of production guidance assumes…
  13. 1Q 2020 Earnings Results – CNX Resources – slide 13
    2020 Wet Gas Markets: Minimal Impact Q2 2020 Q3 2020 Q4 2020 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 (Forecast) (Forecast) (Forecast) Guidance assumes conservative NGLs (/Bbl) 26.76 18.36 13.68 19.20 14.04 4.59 6.35 8.54 prices for…
  14. 1Q 2020 Earnings Results – CNX Resources – slide 14
    2020 AMT Credit and Additional Refunds AMT credit refund expected in 2020 of approximately 102 million due Refund Reconciliation ( in millions): to accelerating the receipt of the AMT refund previously expected in AMT Credit 102 2021,…
  15. 1Q 2020 Earnings Results – CNX Resources – slide 15
    Updated 2020 Guidance Previous UPDATED 2020E 2020E Capital Expenditures ( millions) Low High Low High Drilling & Completions 360 410 330 380 Non- 90 100 75 85 Total consolidated capital expenditures down 10% D&C Total E&P Capital…
  16. 1Q 2020 Earnings Results – CNX Resources – slide 16
    CNXM Ownership: Valuable Midstream Company Business Update Significant SWPA gas infrastructure build for core Marcellus and Utica is in close-out phase in 2020 Positive operating leverage from the build out results in lower go-forward…
  17. 1Q 2020 Earnings Results – CNX Resources – slide 17
    2022 Bond Retirement Addressed
  18. 1Q 2020 Earnings Results – CNX Resources – slide 18
    CNX Reduces Near-Term Debt by Over 500 Million in 2020 Over 500MM in 200MM Remaining CNX debt reduced 25 160 200 Reduced 300MM+ debt in Q1 ( in millions) Project Financing 175 12MM Bond Buy Back 300 Savings to Date E&P…
  19. 1Q 2020 Earnings Results – CNX Resources – slide 19
    CNX Net Debt Significantly Reduced & 2022s Addressed E&P Net Debt at CNX(1) 2022s RBL 2027s CNX will have 1.6B of liquidity 2,033 with no debt maturities until 2027 1,630 895 1,550 634M CNXM LP ( in millions) 350 Unit…
  20. 1Q 2020 Earnings Results – CNX Resources – slide 20
    Balance Sheet is Getting Stronger in millions March 31, 2020 Stand-Alone E&P Net Debt Stand-Alone LP-Adjusted(3) and Leverage(1) Total Long-Term Debt (GAAP)(2) 1,757.2 1,757.2 Less: Cash and Cash Equivalents 31.7 31.7 Less:…
  21. 1Q 2020 Earnings Results – CNX Resources – slide 21
    The HY Credit Market Reflects CNXs Strength 5,000 High-Yield E&P Maturities 4,746 4,500 4,000 CNX 5.875s of 22: 97.50 3,589 CNX has outperformed on 3,500 a relative value basis 2,505 2,977 3,000 2,387 in millions…
  22. 1Q 2020 Earnings Results – CNX Resources – slide 22
    7-Year Free Cash Flow Plan
  23. 1Q 2020 Earnings Results – CNX Resources – slide 23
    7-Year Plan Overview 2020-2021: 2-Year Bond Paydown Plan 2022-2026: 5-Year FCF Plan 2020 and 2021 plans developed to maximize FCF and to ensure Major infrastructure and land cost spend behind us for our MOP CNX paydown of the 2022…
  24. 1Q 2020 Earnings Results – CNX Resources – slide 24
    2021 is Positioned for Optionality FCF plan produces over 400 million in consolidated FCF(1) in If Commodity Prices 2021 at the current strip Remain Depressed - Sets 2022 to easily grow 5% if natural gas prices and capital markets…
  25. 1Q 2020 Earnings Results – CNX Resources – slide 25
    Free Cash Flow Plan Provides Opportunity Methodically Develop Drill 25 wells per year Assets at High Internal Average 7-year annual production of approximately 540 Bcfe Rates of Return at Current Strip Pricing Operational…
  26. 1Q 2020 Earnings Results – CNX Resources – slide 26
    FCF Plan Assumptions Capital plan Estimated 2022E 2024E cash costs ( / Mcfe) 2022E - 2026E (annual avg.) TIL Count 25 2.50 2.44 2.43 Net production (Bcfe) 560 Capital Expenditures ( in millions) Drilling & Completion 230 Other 40 1.03…
  27. 1Q 2020 Earnings Results – CNX Resources – slide 27
    7-Year Plan Generates Substantial Free Cash Flow Annual 2022E-2026E Consolidated FCF(1) at Current Strip Pricing Aggregate consolidated FCF of 700 700 3.00 million for 2020 and 2021 protected by Annual consolidated FCF for 2022E-…
  28. 1Q 2020 Earnings Results – CNX Resources – slide 28
    CNX is Uniquely Differentiated
  29. 1Q 2020 Earnings Results – CNX Resources – slide 29
    Differentiating Highlights Strong Hedge Position Protects Future Cash Flows and Ensures Capital Returns Low Operating Cash Costs Matter Even More in a Low Price Environment Substantial Free Cash Flow Each Year Across 7-Year Plan at…
  30. 1Q 2020 Earnings Results – CNX Resources – slide 30
    Best Downside Protection in the E&P Space 2020E(1) Hedged Gas Production 2021E(1) Hedged Gas Production 100% 3.00 100 % 3.00 2.95 97% 94% 2.90 60% of 2022(1) production 2.87 89% 2.88 2.90 95% 2.90 hedged under maintenance 2.79…
  31. 1Q 2020 Earnings Results – CNX Resources – slide 31
    E&P Leading Consolidated Cash Costs 2.25 2.15 TTM Q1 2020/Q4 2019 Production Cash Costs per Mcfe(1) 1.65 CNXs top-tier production cash 1.50 1.26 1.30 costs, substantial 1.10 1.13 hedge book, and midstream control 0.75 0.70…
  32. 1Q 2020 Earnings Results – CNX Resources – slide 32
    Highly Resilient Balance Sheet Net Debt + Off-Balance Sheet Obligations / 2021E EBITDA(1) 22.8 x Under current strip, CNX expects to generate FCF and reduce Net Debt leverage Off-Balance Sheet Obligations 17.4 x 17.5 x 15.0 x 14.2…
  33. 1Q 2020 Earnings Results – CNX Resources – slide 33
    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 88% 86% 71% 395% 61% 57% 309% 301% 281% 272% 240% 244% 39%…
  34. 1Q 2020 Earnings Results – CNX Resources – slide 34
    CNX Acreage Position Remains Top-Tier in Appalachia CNX SWPA Central Marcellus Locations(1) Assuming a run rate of 25 Appalachian Peer Group Net Acres SWPA Central Marcellus TILs 1,200,000 per year: SWPA Marcellus inventory to stay…
  35. 1Q 2020 Earnings Results – CNX Resources – slide 35
    CPA Dry Utica Results Remain Consistent and Strong 50 CPA Dry Utica Cumulative Production CPA Dry Utica Results Normalized to 7000 45 Daily Production Normalized to 7000 16,000 40 14,000 BP6 Cumulative Production (MMcf) 35…
  36. 1Q 2020 Earnings Results – CNX Resources – slide 36
    CNX is a Compelling Investment Opportunity with Best in Class FCF Generation, In-line Leverage, and a Discounted Valuation 2021E Free Cash Flow Yield(1) CNX Appalachia peers Other E&P Mid-caps Appalachia peers median: (5%) 18% 14% 10%…
  37. 1Q 2020 Earnings Results – CNX Resources – slide 37
    We are Well Positioned for Substantial FCF Generation Strong Balance Sheet More than Adequate Liquidity Easily manageable debt and leverage Current E&P liquidity of 1.3 billion and metrics relative to Appalachian peers consolidated…
  38. 1Q 2020 Earnings Results – CNX Resources – slide 38
    Appendix
  39. 1Q 2020 Earnings Results – CNX Resources – slide 39
    Operational Highlights CNX Drilling Operations Drilling Improved efficiencies in lateral feet per day leading to capital expenditure reductions in West Virginia Marcellus and Ohio Utica of 50 per foot and 150 per foot, respectively…
  40. 1Q 2020 Earnings Results – CNX Resources – slide 40
    COVID-19 Response Plan Mandatory Work From Home for all office-based employees and contractors, except for Gas Control Personnel - Gas Control Personnel have been separated to different floors andlocations - Multiple back up locations…
  41. 1Q 2020 Earnings Results – CNX Resources – slide 41
    Natural Gas Hedging and Basis Protection 500 450 Despite cashing in Gas Volumes Hedged (Bcf) 400 350 55M of value and 300 250 resetting 2022-2024 200 451.1 433.5 hedges, still 150 100 279.8 maintain strong 162.9 149.7…
  42. 1Q 2020 Earnings Results – CNX Resources – slide 42
    Financial Guidance PREVIOUS (1/30/2020) UPDATE (4/27/2020) 2020E 2020E Revenue and Other Operating Income E&P Consolidated E&P Consolidated Production Volumes: Natural Gas (Bcf) 495-525 465-500 NGLs (MBbls) 4,535-4,760 3,485-4,400…
  43. 1Q 2020 Earnings Results – CNX Resources – slide 43
    Realignment Driving Expected Best-In-Class SG&A 350 TTM Q1 2020/Q4 2019 SG&A(1) 0.25 Expect 30 million in total expected consolidated cash SG&A savings 300 since 2018 253 0.20 Combined upstream and midstream 250 teams Total SG&A…
  44. 1Q 2020 Earnings Results – CNX Resources – slide 44
    Q1 2020 Financial Results Summary Quarter Quarter Quarter Quarter Ended Ended Ended Ended March 31, March 31, March 31, March 31, 2020 2019 2020 2019 % Increase/ % Increase/ ( in millions, except per share data) Stand-alone…
  45. 1Q 2020 Earnings Results – CNX Resources – slide 45
    Q1 2020 Operational Results Summary Y/Y Q/Q Marcellus Shale cash production costs were 1.27 per Mcfe in Q1 (/Mcfe) 1Q 2020 1Q 2019 Change 1Q 2020 4Q 2019 Change 2020, down 0.06 from 1.33 per Mcfe in Q1 2019, or a 5%decrease Average…
  46. 1Q 2020 Earnings Results – CNX Resources – slide 46
    Q1 2020 Activity Summary Q1 2020 Average Rigs at Lateral Period ( in millions) TD FRAC TIL Length(1) End SWPA Marcellus - 10 10 13,730 1 Central Utica 1 3 4 9,050 1 WV Marcellus 7 - - - - Shirley-Penns Utica - - - - - CPA South…
  47. 1Q 2020 Earnings Results – CNX Resources – slide 47
    Natural Gas and Liquids Realizations Natural Gas Price Reconciliation Natural Gas Liquids, Oil and Condensate 2020 2019 Q1 2020 liquids sold: 8.7 Bcfe Q1 Q1 Total weighted average price of all liquids decreased 45% to 15.14 NYMEX…
  48. 1Q 2020 Earnings Results – CNX Resources – slide 48
    Financial Guidance: 2020E Natural Gas Marketing Mix and Basis 2020E CY 2020 Northeast Pipeline Projects Market Gas Sold (%) Basis Michcon 2020E Gas: 11% DOM South 7% (0.47) CY20 Basis: (0.18) ETNG Mainline 5% 0.13 DOM South TETCO…
  49. 1Q 2020 Earnings Results – CNX Resources – slide 49
    Q2 2020 and 2020 Gas Hedging Gain/Loss Projections Q2 2020 CY2020 Wtd. Avg. Avg. Forecasted Wtd. Avg. Avg. Forecasted Hedged Volumes Hedged Forward Gain/(Loss)(2) Hedged Volumes Hedged Forward Gain/(Loss)(2) (000 MMBtu) Price…
  50. 1Q 2020 Earnings Results – CNX Resources – slide 50
    YE2019 Type Curve Area and Acreage Update Note: As of year-end 2019 as identified in 2019 10-K filed February 10, 2020. 51
  51. 1Q 2020 Earnings Results – CNX Resources – slide 51
    YE2019 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 88,300 30,600 118,900 Total Net Acres 114,800 57,100…
  52. 1Q 2020 Earnings Results – CNX Resources – slide 52
    Non-GAAP Reconciliation Three Months Ended March 31, 2020 2019 2020 2019 Stand-alone(1) Stand-alone(1) Total Company Total Company ( in thousands) Net Income (Loss) from EBITDAX Reconciliation 124,322 (97,235) (305,222) (64,651)…
  53. 1Q 2020 Earnings Results – CNX Resources – slide 53
    Non-GAAP Reconciliation Cash from Operations and Capital Expenditures by Segment ( in millions) E&P CNX Total Q1 2020 Standalone + Gathering(1) = CNX + MLP(1) = Consolidated Cash from Operations 227.3 1.4 228.7 38.7 267.4 Capital…
  54. 1Q 2020 Earnings Results – CNX Resources – slide 54
    Non-GAAP Reconciliation Organic Free Cash Flow Three Months Ended Three Months Ended March 31, March 31, ( in thousands) 2020 2019 Net Cash provided by Operating Activities 267,387 308,652 Capital Expenditures (152,049) (299,138)…
  55. 1Q 2020 Earnings Results – CNX Resources – slide 55
    Non-GAAP Reconciliation Price and Cost Data per Mcfe (/Mcfe) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Average Sales Price - Total Company 2.97 2.63 2.51 2.54 2.59 Lease Operating Expense 0.14 0.15 0.11 0.09 0.07 Transportation,…
  56. 1Q 2020 Earnings Results – CNX Resources – slide 56
    Non-GAAP Reconciliation Three Months Ended March 31, 2020 2020 2020 Stand-alone(1) Midstream Total Company ( in thousands) Net Income (Loss) 124,322 (429,544) (305,222) Interest Expense 40,186 8,809 48,995 Interest Income (92) -…
  57. 1Q 2020 Earnings Results – CNX Resources – slide 57
    Non-GAAP Reconciliation Twelve Months Ended March 31, 2020 2020 2020 Stand-alone(1) Midstream Total Company ( in thousands) Net Income (Loss) 86,852 (295,475) (208,623) Interest Expense 132,808 31,795 164,603 Interest Income…
  58. 1Q 2020 Earnings Results – CNX Resources – slide 58
    Non-GAAP Reconciliation Three Months Ended March 31, 2019 2019 2019 Stand-alone(1) Midstream Total Company ( in thousands) Net (Loss) Income (97,235) 32,584 (64,651) Interest Expense 28,432 7,339 35,771 Interest Income (722) -…
  59. 1Q 2020 Earnings Results – CNX Resources – slide 59
    Non-GAAP Reconciliation Three Months Three Months Three Months Three Months Twelve Months Ended Ended Ended Ended Ended June 30, September 30, December 31, March 31, March 31, ( in thousands) 2019 2019 2019 2020 2020 Net Income (Loss)…

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