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CNX acquires CNX Midstream – CNX Resources

CNX Resources · Jul 27, 2020 · 31 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. CNX acquires CNX Midstream – CNX Resources – slide 1
    The New CNX: Non-Replicable Best-in-Class Appalachian E&P July 27, 2020
  2. CNX acquires CNX Midstream – CNX Resources – slide 2
    CNX Acquisition of CNX Midstream Partners LP Transaction Overview Rationale and Benefits CNX Resources to acquire all of the outstanding publicly- owned units of CNX Midstream in an all equity merger CNX solidified as lowest cost…
  3. CNX acquires CNX Midstream – CNX Resources – slide 3
    6 Reasons Why CNX is a Non-Replicable Best-In-Class E&P Production cash costs lowest in basin and declining over time The Lowest Cost E&P 1 Fully burdened cash costs expected to drop significantly over time Company Costs position…
  4. CNX acquires CNX Midstream – CNX Resources – slide 4
    1. The Lowest Cost E&P Company
  5. CNX acquires CNX Midstream – CNX Resources – slide 5
    Best-In-Class Production Cash Costs TTM Production Cash Costs per Mcfe(1) 2.25 2.12 The CNXM 1.61 transaction 1.50 1.36 lowered 1.14 1.26 CNXs production 0.75 0.73 0.77 cash costs by 0.40 per Mcfe - CNX Peer 6 Peer 5…
  6. CNX acquires CNX Midstream – CNX Resources – slide 6
    Corporate Costs Decline Rapidly Over 7-Year Plan 0.60 0.34 0.50 0.07 0.40 0.20 0.04 0.16 0.30 0.27 0.04 0.12 0.04 /Mcfe 0.19 0.08 0.20 0.16 0.04 0.13 0.01 0.00 0.09 0.10 0.04 0.16 0.03 0.12 0.03 0.01 0.09…
  7. CNX acquires CNX Midstream – CNX Resources – slide 7
    Fully Burdened Cash Costs Under 0.90 Per Mcfe 2020E-2026E Average Prices 2020E-2026E Fully Burdened Costs /MMBtu 1.40 NYMEX 2.40 1.22 In Basin Price 1.95 1.20 CNX Realized Price (/Mcf) 2.38 0.34 1.01 1.00 0.93 BTU Conversion…
  8. CNX acquires CNX Midstream – CNX Resources – slide 8
    2. Low Capital Intensity
  9. CNX acquires CNX Midstream – CNX Resources – slide 9
    Current F&D At Much Higher Capital Efficiency Than Historical D&C DD&A 1.20 Marcellus Well Cost per Mcfe DD&A ( / Mcfe) 2019 1.00 Land 0.10 Gathering/Water Infrastructure 0.07 0.80 Well (D&C, Water, Pad/Facilities) 0.68 Well Closing…
  10. CNX acquires CNX Midstream – CNX Resources – slide 10
    Non-D&C: Midstream, Land, and Water Capital Drastically Reduced Non-D&C Capital Significant past investments have 550 created the infrastructure that support 510 low cost MOP plan By 2021, midstream capital will 450 primarily…
  11. CNX acquires CNX Midstream – CNX Resources – slide 11
    Low Base Decline Rate Drives Low Capital Intensity Capital plan 2022E - 2026E (annual avg.) As PDPs build over time, base decline shallows to TIL Count 25 average 20% in 2022E-2026E Net production (Bcfe) 560 Capital Expenditures ( in…
  12. CNX acquires CNX Midstream – CNX Resources – slide 12
    3. Substantial Free Cash Flow
  13. CNX acquires CNX Midstream – CNX Resources – slide 13
    Why CNX Generates 3 Billion Over 7-Year Plan 2022E-2026E Fully Burdened Costs 2022E-2026E Average Prices 2.50 /MMBtu NYMEX 2.44 CNX Expected Realized Price: 2.32 / Mcfe 2.00 In Basin Price 1.99 CNX Realized Price (/Mcfe) 2.32 BTU…
  14. CNX acquires CNX Midstream – CNX Resources – slide 14
    Substantial Cumulative Free Cash Flow and Yield 3 billion of cumulative FCF over 7-year plan Cumulative Free Cash Flow(1) 2020E-2026E (1) (2) Cumulative Free Cash Flow FCF Yield at Current Share Price 3,500 30% 3,000 25% CNX Pro…
  15. CNX acquires CNX Midstream – CNX Resources – slide 15
    4. Strong Balance Sheet
  16. CNX acquires CNX Midstream – CNX Resources – slide 16
    Strong Balance Sheet and Near-Term Maturities Easily Addressable in millions Revolving Credit Facility 671 Senior Notes 550 E&P Debt 414 345 Convertible Debt Maturities CSG Term Loan 2020 2021 2022 2023 2024 2025 2026 2027 and…
  17. CNX acquires CNX Midstream – CNX Resources – slide 17
    Significant Reduction to Leverage Ratio Driven By Free Cash Flow Leverage Significantly Reduced Over 7-Year Plan Hedge book and maintenance of 3,000 Net Debt Leverage Ratio 3.00x production (MOP) plan sets clear path to 2,500…
  18. CNX acquires CNX Midstream – CNX Resources – slide 18
    5. Low-Risk Business Model
  19. CNX acquires CNX Midstream – CNX Resources – slide 19
    Low-Risk Business Model Conservative assumptions using NYMEX forward prices Revenue Best-in-class hedge book with long-duration basis hedges Best-in-class cost structure allows programmatic hedging to continue High NRIs and HBP…
  20. CNX acquires CNX Midstream – CNX Resources – slide 20
    Best Downside Protection in the E&P Space 2021E(1) Hedged Gas Production 2022E(1) Hedged Gas Production 3.00 3.00 104% 2.94 38% of 2023(1) production 63% 100 % 2.90 2.90 hedged under maintenance 2.85 60 % scenario at 2.81 NYMEX…
  21. CNX acquires CNX Midstream – CNX Resources – slide 21
    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…
  22. CNX acquires CNX Midstream – CNX Resources – slide 22
    6. Growing Intrinsic Value Per Share
  23. CNX acquires CNX Midstream – CNX Resources – slide 23
    CNX Debt to Equity in millions Illustrative CNX Firm Value Composition Over Time(1) 4,494 4,494 4,494 4,494 4,494 4,494 4,494 424 939 1,454 1,969 2,394 4,586 5,029 4,071 3,556 3,041 2,526 2,101 (91) (535) 2020E…
  24. CNX acquires CNX Midstream – CNX Resources – slide 24
    Relative Free Cash Flow Yield 2021E Free Cash Flow Yield(1) CNX Appalachia Peers Top 10 XOP S&P 500 Sectors CNX 2021E-2026E Average Expected FCF Yield: 26% Implied CNX share price of 35 assuming a 6.5% yield Source: Public…
  25. CNX acquires CNX Midstream – CNX Resources – slide 25
    Non-Replicable Business Model Deserves Premium Valuation Midstream Ownership Our peers have outsourced their midstream services at high costs, reducing their margins Firm Transport Position Our peers will have expensive fixed…
  26. CNX acquires CNX Midstream – CNX Resources – slide 26
    CNX Enjoys Substantial Upside If the forward gas strip moves up to the consensus estimate of 2.75 NYMEX Gas Price Upside pricing, CNXs annual long-term EBITDA and free cash flow would increase by 150 million each year Incremental…
  27. CNX acquires CNX Midstream – CNX Resources – slide 27
    Flexible FCF Allocation Options Under All Scenarios High Gas Price Low Gas Price The company is Increase D&C activity Rich land acquisition and M&A environment for a strong deleveraging in High Share Price Accelerate development to…
  28. CNX acquires CNX Midstream – CNX Resources – slide 28
    CNX Presents a Unique Investment Opportunity 9.00 Current CNX Share Price 2.40 NYMEX, No FCF Yield 2.40 NYMEX, 6.5% FCF Yield 2.75 NYMEX, 6.5% FCF Yield Valuation, but Equity to Debt Valuation Used in Other Industries Valuation Used…
  29. CNX acquires CNX Midstream – CNX Resources – slide 29
    Why Invest in the New CNX Lowest cost Appalachian E&P Average annual go forward FCF of 500 million assuming current 2.40 NYMEX Safety in paying down debt to increase equity value Immense upside in normal or high gas price…
  30. CNX acquires CNX Midstream – CNX Resources – slide 30
    Appendix
  31. CNX acquires CNX Midstream – CNX Resources – slide 31
    CNX Acquisition of CNX Midstream Partners Status Quo Pro Forma Legacy CNX Legacy Public Merger Transaction Shareholders CNXM Unitholders 0.88 CNX Shares for each CNXM LP Unit 187.4mm shares 37.1mm shares CNX Resources 187.4mm…

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