NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
NOTE 1—BASIS OF PRESENTATION:
The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the
three
months ended
March 31, 2017
are not necessarily indicative of the results that may be expected for future periods.
The Consolidated Balance Sheet at
December 31, 2016
has been derived from the Audited Consolidated Financial Statements at that date but does not include all the notes required by generally accepted accounting principles for complete financial statements. For further information, refer to the Consolidated Financial Statements and related notes for the year ended
December 31, 2016
included in CONSOL Energy Inc.'s Annual Report on Form 10-K.
Certain amounts in prior periods, primarily relating to discontinued operations, have been reclassified to conform with the report classifications of the year ended December 31, 2016, with no effect on previously reported net income or stockholders' equity.
In March 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update on stock compensation that intends to simplify and improve the accounting and statement of cash flow presentation for income taxes at settlement, forfeitures, and net settlements for withholding tax. The guidance is effective for public entities for fiscal years beginning after December 15, 2016. In accordance with this Update,
$4,609
of additional income tax expense was recognized in the Consolidated Statements of Income for the three months ended
March 31, 2017
. Also in accordance with this update, the value of shares withheld for employee tax withholding purposes of
$6,278
and
$1,510
for the three months ended March 31, 2017 and March 31, 2016, respectively, were reclassified between Net Cash Provided by Operating Activities and Net Cash Used in Financing Activities of the Consolidated Statements of Cash Flows. As permitted by this update, the Company has elected to account for forfeitures of stock compensation as they occur. The cumulative effect of the policy election to recognize forfeitures as they occur was immaterial.
Basic earnings per share are computed by dividing net income attributable to CONSOL Energy Inc. ("CONSOL Energy" or the "Company") shareholders by the weighted average shares outstanding during the reporting period. Dilutive earnings per share are computed similarly to basic earnings per share, except that the weighted average shares outstanding are increased to include additional shares from stock options, performance stock options, restricted stock units and performance share units, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options and performance share options were exercised, that outstanding restricted stock units and performance share units were released, and that the proceeds from such activities were used to acquire shares of common stock at the average market price during the reporting period.
The table below sets forth the share-based awards that have been excluded from the computation of the diluted earnings per share because their effect would be anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2017
|
|
2016
|
Anti-Dilutive Options
|
5,472,165
|
|
|
5,365,686
|
|
Anti-Dilutive Restricted Stock Units
|
951,320
|
|
|
868,842
|
|
Anti-Dilutive Performance Share Units
|
1,762,690
|
|
|
113,531
|
|
Anti-Dilutive Performance Stock Options
|
802,804
|
|
|
802,804
|
|
|
8,988,979
|
|
|
7,150,863
|
|
The table below sets forth the share-based awards that have been exercised or released:
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2017
|
|
2016
|
Options
|
61,624
|
|
|
—
|
|
Restricted Stock Units
|
334,040
|
|
|
484,680
|
|
Performance Share Units
|
560,936
|
|
|
—
|
|
|
956,600
|
|
|
484,680
|
|
The computations for basic and dilutive earnings per share are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2017
|
|
2016
|
Numerator:
|
|
|
|
Loss from Continuing Operations
|
$
|
(33,502
|
)
|
|
$
|
(43,291
|
)
|
Less: Net Income Attributable to Non-Controlling Interest
|
5,464
|
|
|
1,114
|
|
Net Loss from Continuing Operations Attributable to CONSOL Energy Shareholders
|
$
|
(38,966
|
)
|
|
$
|
(44,405
|
)
|
Loss from Discontinued Operations
|
—
|
|
|
(53,167
|
)
|
Net Loss Attributable to CONSOL Energy Shareholders
|
$
|
(38,966
|
)
|
|
$
|
(97,572
|
)
|
|
|
|
|
Denominator:
|
|
|
|
Weighted-average shares of common stock outstanding
|
229,817,169
|
|
|
229,259,228
|
|
Effect of dilutive shares
|
—
|
|
|
—
|
|
Weighted-average diluted shares of common stock outstanding
|
229,817,169
|
|
|
229,259,228
|
|
Loss per Share:
|
|
|
|
Basic (Continuing Operations)
|
$
|
(0.17
|
)
|
|
$
|
(0.19
|
)
|
Basic (Discontinued Operations)
|
—
|
|
|
(0.24
|
)
|
Total Basic
|
$
|
(0.17
|
)
|
|
$
|
(0.43
|
)
|
|
|
|
|
Dilutive (Continuing Operations)
|
$
|
(0.17
|
)
|
|
$
|
(0.19
|
)
|
Dilutive (Discontinued Operations)
|
—
|
|
|
(0.24
|
)
|
Total Dilutive
|
$
|
(0.17
|
)
|
|
$
|
(0.43
|
)
|
Changes in Accumulated Other Comprehensive Loss by component, net of tax, were as follows:
|
|
|
|
|
|
|
|
Postretirement Benefits
|
Balance at December 31, 2016
|
$
|
(392,556
|
)
|
Amounts Reclassified from Accumulated Other Comprehensive Loss
|
3,502
|
|
Add: Other Comprehensive Loss Attributable to Non-Controlling Interest
|
12
|
|
Balance at March 31, 2017
|
$
|
(389,042
|
)
|
The following table shows the reclassification of adjustments out of Accumulated Other Comprehensive Loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2017
|
|
2016
|
Derivative Instruments (Note 12)
|
|
|
|
Natural Gas Price Swaps and Options
|
$
|
—
|
|
|
$
|
(15,438
|
)
|
Tax Expense
|
—
|
|
|
5,624
|
|
Net of Tax
|
$
|
—
|
|
|
$
|
(9,814
|
)
|
Actuarially Determined Long-Term Liability Adjustments* (Note 4 and Note 5)
|
|
|
|
Amortization of Prior Service Costs
|
$
|
(749
|
)
|
|
$
|
(148
|
)
|
Recognized Net Actuarial Loss
|
6,303
|
|
|
5,511
|
|
Total
|
5,554
|
|
|
5,363
|
|
Tax Benefit
|
(2,052
|
)
|
|
(2,018
|
)
|
Net of Tax
|
$
|
3,502
|
|
|
$
|
3,345
|
|
*Excludes amounts related to the remeasurement of the Actuarially Determined Long-Term Liabilities for the three months ended
March 31, 2016
.
NOTE 2—DISCONTINUED OPERATIONS:
In August 2016, CONSOL Energy completed the sale of its Miller Creek and Fola Mining Complex subsidiaries. In the transaction, the buyer acquired the Miller Creek and Fola assets and assumed the Miller Creek and Fola mine closing and reclamation liabilities. In order to equalize the value exchange, CONSOL Energy paid
$28,271
of cash at closing, which included property taxes associated with the properties sold and other closing costs (a portion of which will be held in escrow for purposes of obtaining the surety bonds required for the permits to transfer). CONSOL Energy will also pay a total of
$13,700
in remaining installments over the next three years ending in January 2020.
In March 2016, CONSOL Energy completed the sale of its membership interests in CONSOL Buchanan Mining Company, LLC (BMC), which owned and operated the Buchanan Mine located in Mavisdale, Virginia; various assets relating to the Amonate Mining Complex located in Amonate, Virginia; Russell County, Virginia coal reserves and Pangburn Shaner Fallowfield coal reserves located in Southwestern, Pennsylvania to Coronado IV LLC ("Coronado"). Various CONSOL Energy assets were excluded from the sale including coalbed methane, natural gas and minerals other than coal, current assets of BMC, certain coal seams, certain surface rights, and the Amonate Preparation Plant. Coronado assumed only specified liabilities and various CONSOL Energy liabilities were excluded and not assumed. The excluded liabilities included BMC’s indebtedness, trade payables and liabilities arising prior to closing, as well as the liabilities of the subsidiaries other than BMC which are parties to the sale. In addition, the buyer agreed to pay CONSOL Energy for Buchanan Mine coal sold outside the U.S. and Canada during the five years following closing a royalty of
20%
of any excess of the gross sales price per ton over the following amounts: (1) year one,
$75.00
per ton; (2) year two,
$78.75
per ton; (3) year three,
$82.69
per ton; (4) year four,
$86.82
per ton; (5) year five,
$91.16
per ton. Total royalty income recognized under the year one agreement was
$5,262
and was included in Miscellaneous Other Income on the Consolidated Statement of Income for the three months March 31, 2017. At closing, the parties entered into several agreements including, among others, agreements relating to the coordination and conduct of gas operations at the mines, an option to purchase the Amonate Preparation Plant and transition services. Cash proceeds of
$402,799
were received at closing and are included in Net Cash Provided by Discontinued Investing Activities on the Consolidated Statements of Cash Flows for the three months ended March 31, 2016. The net loss on the sale was
$38,364
and was included in Loss from Discontinued Operations, net on the Consolidated Statements of Income for the three months ended March 31, 2016.
For all periods presented in the accompanying Consolidated Statements of Income, BMC along with the various other assets and the Miller Creek and Fola Mining Complexes are classified as discontinued operations.
The following table details selected financial information for the divested business included within discontinued operations:
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2017
|
|
2016
|
Coal Sales
|
$
|
—
|
|
|
$
|
76,519
|
|
Freight-Outside Coal
|
—
|
|
|
1,012
|
|
Miscellaneous Other Income
|
—
|
|
|
43
|
|
Loss on Sale of Assets
|
—
|
|
|
(38,364
|
)
|
Total Revenue and Other Income
|
$
|
—
|
|
|
$
|
39,210
|
|
Total Costs
|
—
|
|
|
88,066
|
|
Loss From Operations Before Income Taxes
|
$
|
—
|
|
|
$
|
(48,856
|
)
|
Income Tax Expense
|
—
|
|
|
4,311
|
|
Loss From Discontinued Operations, net
|
$
|
—
|
|
|
$
|
(53,167
|
)
|
The following table details the major classes of assets and liabilities of discontinued operations:
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
December 31,
2016
|
Assets:
|
|
|
|
Accounts Receivable - Trade
|
$
|
—
|
|
|
$
|
83
|
|
Total Current Assets
|
$
|
—
|
|
|
$
|
83
|
|
Total Assets of Discontinued Operations
|
$
|
—
|
|
|
$
|
83
|
|
Liabilities:
|
|
|
|
Accounts Payable
|
$
|
—
|
|
|
$
|
36
|
|
Other Current Liabilities
|
5,892
|
|
|
6,014
|
|
Total Current Liabilities
|
$
|
5,892
|
|
|
$
|
6,050
|
|
Total Liabilities of Discontinued Operations
|
$
|
5,892
|
|
|
$
|
6,050
|
|
NOTE 3—MISCELLANEOUS OTHER INCOME:
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
March 31,
|
|
2017
|
|
2016
|
Equity in Earnings of Affiliates - CONE
|
$
|
11,938
|
|
|
$
|
14,351
|
|
Rental Income
|
8,842
|
|
|
9,196
|
|
Royalty Income - Non-Operated Coal
|
8,785
|
|
|
2,230
|
|
Purchased Coal Sales
|
3,541
|
|
|
—
|
|
Gathering Revenue
|
3,153
|
|
|
2,748
|
|
Interest Income
|
1,543
|
|
|
214
|
|
Right of Way Issuance
|
1,001
|
|
|
15,733
|
|
Equity in Earnings of Affiliates - Other
|
392
|
|
|
2,314
|
|
Other
|
1,501
|
|
|
1,345
|
|
Miscellaneous Other Income
|
$
|
40,696
|
|
|
$
|
48,131
|
|
NOTE 4—COMPONENTS OF PENSION AND OTHER POST-EMPLOYMENT BENEFIT (OPEB) PLANS NET PERIODIC BENEFIT COSTS:
Components of Net Periodic Benefit (Credit) Cost are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Post-Employment Benefits
|
|
For the Three Months Ended March 31,
|
|
For the Three Months Ended March 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Service Cost
|
$
|
846
|
|
|
$
|
482
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest Cost
|
6,428
|
|
|
6,841
|
|
|
5,986
|
|
|
6,060
|
|
Expected Return on Plan Assets
|
(10,596
|
)
|
|
(11,869
|
)
|
|
—
|
|
|
—
|
|
Amortization of Prior Service Credits
|
(148
|
)
|
|
(147
|
)
|
|
(601
|
)
|
|
—
|
|
Recognized Net Actuarial Loss
|
2,351
|
|
|
2,116
|
|
|
5,778
|
|
|
4,792
|
|
Net Periodic Benefit (Credit) Cost
|
$
|
(1,119
|
)
|
|
$
|
(2,577
|
)
|
|
$
|
11,163
|
|
|
$
|
10,852
|
|
NOTE 5—COMPONENTS OF COAL WORKERS’ PNEUMOCONIOSIS (CWP) AND WORKERS’ COMPENSATION NET PERIODIC BENEFIT COSTS:
Components of Net Periodic Benefit Cost (Credit) are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CWP
|
|
Workers' Compensation
|
|
For the Three Months Ended March 31,
|
|
For the Three Months Ended March 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Service Cost
|
$
|
1,129
|
|
|
$
|
1,204
|
|
|
$
|
1,463
|
|
|
$
|
1,904
|
|
Interest Cost
|
1,013
|
|
|
1,123
|
|
|
592
|
|
|
638
|
|
Amortization of Actuarial Gain
|
(1,908
|
)
|
|
(1,383
|
)
|
|
(153
|
)
|
|
(101
|
)
|
Administrative Fees
|
151
|
|
|
—
|
|
|
138
|
|
|
—
|
|
State Administrative Fees and Insurance Bond Premiums
|
—
|
|
|
—
|
|
|
799
|
|
|
731
|
|
Curtailment Gain
|
—
|
|
|
(1,307
|
)
|
|
—
|
|
|
—
|
|
Net Periodic Benefit Cost (Credit)
|
$
|
385
|
|
|
$
|
(363
|
)
|
|
$
|
2,839
|
|
|
$
|
3,172
|
|
Income attributable to discontinued operations included in the CWP net periodic credit above was
$1,290
for the
three
months ended
March 31, 2016
and was included in Loss from Discontinued Operations, net on the Consolidated Statements of Income.
On March 31, 2016, CONSOL Energy completed the sale of its membership interests in BMC (See Note 2 - Discontinued Operations). As a result of the sale, certain obligations of the CWP plan were transferred to the buyer. This transfer triggered a curtailment gain of
$1,307
which was included in Loss from Discontinued Operations, net on the Consolidated Statements of Income. The curtailment resulted in a plan remeasurement which increased the plan liabilities by
$7,713
at March 31, 2016.
NOTE 6—INCOME TAXES:
The effective tax rate for the
three
months ended
March 31, 2017
and
2016
was
58.0%
and
34.9%
, respectively. The effective tax rate for the three months ended
March 31, 2017
differs from the U.S. federal statutory rate of 35% primarily due to the income tax benefit for excess percentage depletion. The effective tax rate for the three months ended
March 31, 2016
differs from the U.S. federal statutory rate primarily due to the income tax benefit for excess percentage depletion, partially offset by a charge to record a state valuation allowance resulting from the Buchanan sale.
The total amount of uncertain tax positions at
March 31, 2017
and
December 31, 2016
was
$9,103
. If these uncertain tax positions were recognized, approximately
$666
would affect CONSOL Energy's effective tax rate at
March 31, 2017
and
December 31, 2016
. There was no change to the unrecognized tax benefits during the
three
months ended
March 31, 2017
.
CONSOL Energy recognizes accrued interest related to uncertain tax positions in interest expense. As of
March 31, 2017
and
December 31, 2016
, the Company reported an accrued interest liability relating to uncertain tax positions of
$385
and
$305
, respectively, in Other Liabilities on the Consolidated Balance Sheets. The accrued interest liability includes
$80
of accrued interest expense that is reflected in the Company's Consolidated Statements of Income for the
three
months ended
March 31, 2017
.
CONSOL Energy recognizes penalties accrued related to uncertain tax positions in its income tax expense. As of
March 31, 2017
and
December 31, 2016
, CONSOL Energy had no accrued liabilities for tax penalties related to uncertain tax positions.
CONSOL Energy and its subsidiaries file federal income tax returns with the United States and tax returns within various states and Canadian jurisdictions. With few exceptions, the Company is no longer subject to United States federal, state, local, or non-U.S. income tax examinations by tax authorities for the years before 2010. The Company expects the Joint Committee on Taxation to conclude its review of the audit of tax years 2010 through 2014 in the third quarter of 2017.
NOTE 7—INVENTORIES:
Inventory components consist of the following:
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
December 31,
2016
|
Coal
|
$
|
12,626
|
|
|
$
|
7,800
|
|
Supplies
|
56,992
|
|
|
57,661
|
|
Total Inventories
|
$
|
69,618
|
|
|
$
|
65,461
|
|
Inventories are stated at the lower of cost or net realizable value. The cost of coal inventories is determined by the first-in, first-out (FIFO) method. Coal inventory costs include labor, supplies, equipment costs, operating overhead, depreciation, depletion and amortization, and other related costs. The cost of supplies inventory is determined by the average cost method and includes operating and maintenance supplies to be used in the Company's E&P and coal operations.
NOTE 8—PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
December 31,
2016
|
E&P Property, Plant and Equipment
|
|
|
|
Intangible drilling cost
|
$
|
3,465,645
|
|
|
$
|
3,583,565
|
|
Proved gas properties
|
1,982,134
|
|
|
2,016,916
|
|
Unproved gas properties
|
1,045,437
|
|
|
1,116,282
|
|
Gas gathering equipment
|
1,127,614
|
|
|
1,138,299
|
|
Gas wells and related equipment
|
763,248
|
|
|
791,996
|
|
Other gas assets
|
189,481
|
|
|
190,406
|
|
Gas advance royalties
|
13,186
|
|
|
13,762
|
|
Total E&P Property, Plant and Equipment
|
$
|
8,586,745
|
|
|
$
|
8,851,226
|
|
Less: Accumulated Depreciation, Depletion and Amortization
|
3,126,778
|
|
|
3,106,296
|
|
Total E&P Property, Plant and Equipment - Net
|
$
|
5,459,967
|
|
|
$
|
5,744,930
|
|
|
|
|
|
PA Mining Operations Property, Plant and Equipment
|
|
|
|
Coal and other plant and equipment
|
$
|
2,318,308
|
|
|
$
|
2,307,668
|
|
Coal properties and surface lands
|
458,976
|
|
|
458,398
|
|
Airshafts
|
372,656
|
|
|
371,752
|
|
Mine development
|
326,152
|
|
|
326,152
|
|
Coal advance mining royalties
|
16,108
|
|
|
16,224
|
|
Leased coal lands
|
26,556
|
|
|
26,566
|
|
Total PA Mining Operations and Other Property, Plant and Equipment
|
$
|
3,518,756
|
|
|
$
|
3,506,760
|
|
Less: Accumulated Depreciation, Depletion and Amortization
|
1,810,108
|
|
|
1,768,712
|
|
Total PA Mining Operations and Other Property, Plant and Equipment - Net
|
$
|
1,708,648
|
|
|
$
|
1,738,048
|
|
|
|
|
|
Other Property, Plant and Equipment
|
|
|
|
Coal and other plant and equipment
|
531,692
|
|
|
532,919
|
|
Coal properties and surface lands
|
481,037
|
|
|
481,126
|
|
Airshafts
|
10,002
|
|
|
10,003
|
|
Mine development
|
17,988
|
|
|
17,988
|
|
Coal advance mining royalties
|
311,205
|
|
|
310,530
|
|
Leased coal lands
|
60,836
|
|
|
60,836
|
|
Total Other Property, Plant and Equipment
|
$
|
1,412,760
|
|
|
$
|
1,413,402
|
|
Less: Accumulated Depreciation, Depletion and Amortization
|
758,456
|
|
|
755,941
|
|
Total Other Property, Plant and Equipment - Net
|
$
|
654,304
|
|
|
$
|
657,461
|
|
|
|
|
|
Total Company Property, Plant and Equipment - Continuing Operations
|
$
|
13,518,261
|
|
|
$
|
13,771,388
|
|
Less - Total Company Accumulated Depreciation, Depletion and Amortization
|
5,695,342
|
|
|
5,630,949
|
|
Total Company Property, Plant and Equipment - Held for Sale - Net
|
163,622
|
|
|
—
|
|
Total Property, Plant and Equipment of Continuing Operations - Net
|
$
|
7,986,541
|
|
|
$
|
8,140,439
|
|
Property, Plant and Equipment Held for Sale
In February 2017, the Company approved a plan to sell subsidiaries Knox Energy LLC and Coalfield Pipeline Company (“Knox”). Knox met all of the criteria to be classified as held for sale in February 2017. The potential disposal of Knox did not represent a strategic shift that will have a major effect on the Company’s operations and financial results and is, therefore, not classified as discontinued operations in accordance with ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360). As part of the required evaluation under the held for sale guidance, the asset’s book value is to be evaluated and adjusted to the lower of its carrying amount or fair value less cost to sell. The Company determined that the approximate fair value less costs to sell Knox was less than the carrying value of the net assets which resulted in an impairment of
$137,865
in February 2017, included in Impairment of Exploration and Production Properties within the Other Gas segment of the Consolidated Statements of Income. The sale of Knox closed in the second quarter of 2017 (see Note 18 Subsequent Events for additional information).
In March 2017, the Company approved a plan to sell approximately 6,300 net undeveloped acres of the Utica-Point Pleasant Shale in Jefferson, Belmont and Guernsey counties, Ohio. This transaction closed in the second quarter of 2017 (see Note 18 Subsequent Events for additional information). Additionally, a plan to sell 12 producing wells, 15 DUCs, and approximately 15,500
net developed and undeveloped acres in Doddridge and Wetzel Counties in West Virginia was approved. These assets met all of the criteria to be classified as held for sale in the first quarter of 2017. The potential disposal of these assets did not represent a strategic shift that will have a major effect on the Company’s operations and financial results and is, therefore, not classified as discontinued operations in accordance with ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360). As part of the required evaluation under the held for sale guidance, the Company determined that the approximate fair value less costs to sell exceeded the carrying value of the net assets and thus no impairment charge was recorded. The final sale of these assets will be subject to our ability to negotiate acceptable terms and conditions and the Company anticipates completing the sale of these assets before year-end.
Industry Participation Agreements
CONSOL Energy had two significant industry participation agreements (referred to as "joint ventures" or "JVs") that provided drilling and completion carries for the Company's retained interests.
CNX Gas Company is party to a joint development agreement with Hess Ohio Developments, LLC (Hess) with respect to approximately 155 thousand net Utica Shale acres in Ohio in which each party has a 50% undivided interest. Under the agreement, as amended, Hess was obligated to pay a total of approximately $335,000 in the form of a 50% drilling carry of certain CONSOL Energy working interest obligations as the acreage is developed. As of December 31, 2016, Hess' entire carry obligation has been met.
CNX Gas Company was party to a joint development agreement with Noble Energy, Inc. (Noble) with respect to approximately 700 thousand net Marcellus Shale oil and gas acres in West Virginia and Pennsylvania, in which each party owned a 50% undivided interest. On October 29, 2016, CNX Gas entered into an Exchange Agreement with Noble Energy, which terminated the joint development agreement related to the jointly owned gas assets held in connection with the joint venture with Noble and divided such jointly owned gas assets among CNX Gas and Noble Energy. The transactions contemplated by the Exchange Agreement were closed on December 1, 2016 with an effective date of October 1, 2016. As part of the exchange: each party now owns and operates a 100% interest in properties and wells in two separate operating areas; each party has independent control and flexibility with respect to the scope and timing of future development over its operating area; and all acreage operated by CONSOL Energy and Noble Energy, Inc. in their respective operating areas will remain fully dedicated to CONE Midstream Partners LP. The exchange was accounted for as a mineral conveyance, thus no gain or loss was recorded in connection with the transaction.
NOTE 9—SHORT-TERM NOTES PAYABLE:
CONSOL Energy's senior secured credit agreement expires on June 18, 2019. The credit facility allows for up to $
2,000,000
of borrowings, which includes a $
750,000
letters of credit sub-limit. CONSOL Energy can also request an additional $
500,000
increase in the aggregate borrowing limit amount.
The facility is secured by substantially all of the assets of CONSOL Energy and certain of its subsidiaries. Fees and interest rate spreads are based on the percentage of facility utilization, measured quarterly. Availability under the facility is limited to a borrowing base, which is determined by the lenders syndication agent and approved by the required number of lenders in good faith by calculating a value of CONSOL Energy's proved natural gas reserves.
The current facility contains a number of affirmative and negative covenants that limit the Company's ability to dispose of assets, make investments, purchase or redeem CONSOL Energy common stock, pay dividends, merge with another corporation and amend, modify or restate the senior unsecured notes. In April 2016, the facility was amended to require that the Company must: (i) prepay outstanding loans under the revolving credit facility to the extent that cash on hand exceeds $150,000 for two consecutive business days; (ii) mortgage 85% of its proved reserves and 80% of its proved developed producing reserves, in each case, which are included in the borrowing base; (iii) maintain applicable deposit, securities and commodities accounts with the lenders or affiliates thereof; and (iv) enter into control agreements with respect to such applicable accounts. In addition, the Company pledged the equity interest it holds in CONE Gathering, LLC, and CONE Midstream Partners, LP as collateral to secure loans under the credit agreement.
The facility also requires that CONSOL Energy maintain a minimum interest coverage ratio of no less than
2.50
to 1.00, which is calculated as the ratio of Adjusted EBITDA to cash interest expense of CONSOL Energy and certain of its subsidiaries, measured quarterly. CONSOL Energy must also maintain a minimum current ratio of no less than
1.00
to 1.00, which is calculated as the ratio of current assets, plus revolver availability, to current liabilities, excluding borrowings under the revolver, measured quarterly. At
March 31, 2017
, the interest coverage ratio was
3.94
to 1.00 and the current ratio was
2.41
to 1.00. Further, the credit facility allows unlimited investments in joint ventures for the development and operation of natural gas gathering systems and permits CONSOL Energy to separate its E&P and coal businesses if the leverage ratio (which is, essentially, the ratio of debt to
EBITDA) of the E&P business immediately after the separation would not be greater than
2.75
to 1.00. The calculation of all of the ratios exclude CNX Coal Resources LP ("CNXC").
At
March 31, 2017
, the
$2,000,000
facility had no borrowings outstanding and $
333,322
of letters of credit outstanding, leaving $
1,666,678
of unused capacity. At
December 31, 2016
, the
$2,000,000
facility had no borrowings outstanding and $
325,676
of letters of credit outstanding, leaving $
1,674,324
of unused capacity.
NOTE 10—LONG-TERM DEBT:
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
December 31,
2016
|
Debt:
|
|
|
|
Senior Notes due April 2022 at 5.875% (Principal of $1,750,044 and $1,850,000 plus Unamortized Premium of $4,266 and $4,731, respectively)
|
$
|
1,754,310
|
|
|
$
|
1,854,731
|
|
Senior Notes due April 2023 at 8.00% (Principal of $500,000 less Unamortized Discount of $5,430 and $5,656, respectively)
|
494,570
|
|
|
494,344
|
|
Revolving Credit Facility - CNX Coal Resources LP
|
197,000
|
|
|
201,000
|
|
MEDCO Revenue Bonds in Series due September 2025 at 5.75%
|
102,865
|
|
|
102,865
|
|
Senior Notes due April 2020 at 8.25%, Issued at Par Value
|
74,470
|
|
|
74,470
|
|
Senior Notes due March 2021 at 6.375%, Issued at Par Value
|
20,611
|
|
|
20,611
|
|
Advance Royalty Commitments (7.73% Weighted Average Interest Rate)
|
2,678
|
|
|
2,678
|
|
Other Long-Term Note Maturing in 2018 (Principal of $1,431 and $1,789 less Unamortized Discount of $78 and $117, respectively)
|
1,353
|
|
|
1,672
|
|
Less: Unamortized Debt Issuance Costs
|
25,499
|
|
|
27,699
|
|
|
2,622,358
|
|
|
2,724,672
|
|
Less: Amounts Due in One Year*
|
1,660
|
|
|
1,677
|
|
Long-Term Debt
|
$
|
2,620,698
|
|
|
$
|
2,722,995
|
|
* Excludes current portion of Capital Lease Obligations of
$10,191
and $
10,323
at
March 31, 2017
and
December 31, 2016
, respectively.
In the first quarter of 2017, CONSOL Energy purchased $
99,956
of its outstanding
5.875%
senior notes due in 2022. As part of this transaction, $
822
was included in Gain on Debt Extinguishment on the Consolidated Statements of Income.
NOTE 11—COMMITMENTS AND CONTINGENT LIABILITIES:
CONSOL Energy and its subsidiaries are subject to various lawsuits and claims with respect to such matters as personal injury, wrongful death, damage to property, exposure to hazardous substances, governmental regulations including environmental remediation, employment and contract disputes and other claims and actions arising out of the normal course of business. CONSOL Energy accrues the estimated loss for these lawsuits and claims when the loss is probable and can be estimated. The Company's current estimated accruals related to these pending claims, individually and in the aggregate, are immaterial to the financial position, results of operations or cash flows of CONSOL Energy. It is possible that the aggregate loss in the future with respect to these lawsuits and claims could ultimately be material to the financial position, results of operations or cash flows of CONSOL Energy; however, such amounts cannot be reasonably estimated. The amount claimed against CONSOL Energy is disclosed below when an amount is expressly stated in the lawsuit or claim, which is not often the case. The maximum aggregate amount claimed in those lawsuits and claims, regardless of probability, where a claim is expressly stated or can be estimated, exceeds the aggregate amounts accrued for all lawsuits and claims by approximately
$549,758
.
The following lawsuits and claims include those for which a loss is probable and an accrual has been recognized:
Hale Litigation: This class action lawsuit was filed on September 23, 2010 in the U.S. District Court in Abingdon, Virginia. The putative class consists of force-pooled unleased gas owners whose ownership of the coalbed methane (CBM) gas was declared to be in conflict with rights of others. The lawsuit seeks a judicial declaration of ownership of the CBM and damages based on allegations CNX Gas Company failed to either pay royalties due to conflicting claimants or deemed lessors or paid them less than required because of the alleged practice of improper below market sales and/or taking alleged improper post-production deductions. On September 30, 2013, the District Judge entered an Order certifying the class, and CNX Gas Company appealed the Order to the U.S. Fourth Circuit Court of Appeals. On August 19, 2014, the Fourth Circuit agreed with CNX Gas Company, reversed the Order certifying the class and remanded the case to the trial court for further proceedings consistent with the decision. On April 23, 2015, Plaintiffs
filed a Renewed Motion for Class Certification, which CNX opposed. On March 29, 2017, the Court issued an Order certifying four issues for class treatment: (1) allegedly excessive deductions; (2) royalties based on purported improperly low prices; (3) deduction of severance taxes; and (4) Plaintiffs' request for an accounting. On April 13, 2017, CNX filed a Petition for Allowance of Appeal with the Fourth Circuit seeking review of the Order and on April 24, 2017, Plaintiffs filed its answer to the Petition. CONSOL Energy continues to believe this action cannot properly proceed as a class action in any form, believes the case has meritorious defenses, and intends to defend it vigorously. The Company has established an accrual to cover its estimated liability for this case. This accrual is immaterial to the overall financial position of CONSOL Energy and is included in Other Accrued Liabilities on the Consolidated Balance Sheets.
Addison Litigation: This class action lawsuit was filed on April 28, 2010 in the U.S. District Court in Abingdon, Virginia. The putative class consists of gas lessors whose gas ownership is in conflict. The lawsuit seeks a judicial declaration of ownership of the CBM and damages based on the allegations that CNX Gas Company failed to either pay royalties due to these conflicting claimant lessors or paid them less than required because of the alleged practice of improper below market sales and/or taking alleged improper post-production deductions. On September 30, 2013, the District Judge entered an Order certifying the class, and CNX Gas Company appealed the Order to the U.S. Fourth Circuit Court of Appeals. On August 19, 2014, the Fourth Circuit agreed with CNX Gas Company, reversed the Order certifying the class and remanded the case to the trial court for further proceedings consistent with the decision. On April 23, 2015, Plaintiffs filed a Renewed Motion for Class Certification, which CNX opposed. On March 29, 2017, the Court issued an Order denying class certification in this matter. CONSOL Energy believes the case has meritorious defenses, and intends to defend it vigorously. The Company has established an accrual to cover its estimated liability for this case. This accrual is immaterial to the overall financial position of CONSOL Energy and is included in Other Accrued Liabilities on the Consolidated Balance Sheets.
The following royalty, land rights and other lawsuits and claims include those for which a loss is reasonably possible, but not probable, and accordingly, an accrual has not been recognized. These claims are influenced by many factors which prevent the estimation of a range of potential loss. These factors include, but are not limited to, generalized allegations of unspecified damages (such as improper deductions), discovery having not commenced or not having been completed, unavailability of expert reports on damages and non-monetary issues being tried. For example, in instances where a gas lease termination is sought, damages would depend on speculation as to if and when the gas production would otherwise have occurred, how many wells would have been drilled on the lease premises, what their production would be, what the cost of production would be, and what the price of gas would be during the production period. An estimate is calculated, if applicable, when sufficient information becomes available.
Fitzwater Litigation: Three nonunion retired coal miners have sued CONSOL Energy Inc., Fola Coal Company, Consolidation Coal Company and CONSOL of Kentucky Inc. (COK) in West Virginia Federal Court alleging ERISA violations in the termination of retiree health care benefits. The Plaintiffs contend they relied to their detriment on oral statements and promises of "lifetime health benefits" allegedly made by various members of management during Plaintiffs' employment and that they were allegedly denied access to Summary Plan Documents that clearly reserved to the Company the right to modify or terminate the CONSOL Energy Inc. Retiree Health and Welfare Plan. Pursuant to plaintiffs amended complaint filed on April 24, 2017, plaintiffs request that retiree health benefits be reinstated and seek to represent a class of all nonunion retirees who were associated with AMVEST and COK areas of operation.The Company believes it has meritorious defense and intends to vigorously defend this suit.
Virginia Mine Void Litigation: The Company is currently defending three lawsuits naming Consolidation Coal Company (CCC), Island Creek Coal Company (ICCC), CNX Gas Company, and/or CONSOL Energy. The lawsuits are pending in the U.S. District Court for the Western District of Virginia. On October 26, 2015, the trial court granted summary judgment in favor of the defendants in two of the actions upon its finding that plaintiffs' claims are barred by the applicable statutes of limitation. Plaintiffs appealed both cases to the U.S. Court of Appeals for the Fourth Circuit. On March 9, 2017, the Fourth Circuit affirmed and entered judgment in favor of the CONSOL entities. As a direct result of the Fourth Circuit action, Motions for Voluntary Dismissal have been, or shortly will be, filed in both of the two remaining cases. On January 26, 2016, six mine void lawsuits that have twice before been filed and voluntarily dismissed, were refiled for a third time in state court but have not been served. Under these procedural circumstances, these actions should no longer be viable under federal or Virginia state law.
At
March 31, 2017
, CONSOL Energy has provided the following financial guarantees, unconditional purchase obligations and letters of credit to certain third parties, as described by major category in the following table. These amounts represent the maximum potential of total future payments that the Company could be required to make under these instruments. These amounts have not been reduced for potential recoveries under recourse or collateralization provisions. Generally, recoveries under reclamation bonds would be limited to the extent of the work performed at the time of the default. No amounts related to these financial guarantees and letters of credit are recorded as liabilities in the financial statements. CONSOL Energy management believes that these guarantees will expire without being funded, and therefore the commitments will not have a material adverse effect on financial condition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Commitment Expiration Per Period
|
|
Total
Amounts
Committed
|
|
Less Than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
Beyond
5 Years
|
Letters of Credit:
|
|
|
|
|
|
|
|
|
|
Employee-Related
|
$
|
84,086
|
|
|
$
|
64,783
|
|
|
$
|
19,303
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Environmental
|
998
|
|
|
398
|
|
|
600
|
|
|
—
|
|
|
—
|
|
Other
|
248,238
|
|
|
247,266
|
|
|
972
|
|
|
—
|
|
|
—
|
|
Total Letters of Credit
|
333,322
|
|
|
312,447
|
|
|
20,875
|
|
|
—
|
|
|
—
|
|
Surety Bonds:
|
|
|
|
|
|
|
|
|
|
Employee-Related
|
112,560
|
|
|
79,680
|
|
|
32,880
|
|
|
—
|
|
|
—
|
|
Environmental
|
516,349
|
|
|
475,312
|
|
|
41,037
|
|
|
—
|
|
|
—
|
|
Other
|
20,179
|
|
|
19,275
|
|
|
903
|
|
|
1
|
|
|
—
|
|
Total Surety Bonds
|
649,088
|
|
|
574,267
|
|
|
74,820
|
|
|
1
|
|
|
—
|
|
Guarantees:
|
|
|
|
|
|
|
|
|
|
Other
|
41,554
|
|
|
10,737
|
|
|
17,067
|
|
|
12,821
|
|
|
929
|
|
Total Guarantees
|
41,554
|
|
|
10,737
|
|
|
17,067
|
|
|
12,821
|
|
|
929
|
|
Total Commitments
|
$
|
1,023,964
|
|
|
$
|
897,451
|
|
|
$
|
112,762
|
|
|
$
|
12,822
|
|
|
$
|
929
|
|
Included in the above table are commitments and guarantees entered into in conjunction with the sale of Consolidation Coal Company and certain of its subsidiaries, which contain all five of its longwall coal mines in West Virginia, and its river operations to a subsidiary of Murray Energy Corporation (Murray Energy). As part of the sales agreement, CONSOL Energy has guaranteed certain equipment lease obligations and coal sales agreements that were assumed by Murray Energy. In the event that Murray Energy would default on the obligations defined in the agreements, CONSOL Energy would be required to perform under the guarantees. If CONSOL Energy would be required to perform, the stock purchase agreement provides various recourse actions. At
March 31, 2017
and December 31, 2016, the fair value of these guarantees was
$1,285
and
$1,362
, respectively, and is included in Other Accrued Liabilities on the Consolidated Balance Sheets. The fair value of certain of the guarantees was determined using CONSOL Energy’s risk-adjusted interest rate. Significant increases or decreases in the risk-adjusted interest rates may result in a significantly higher or lower fair value measurement. Coal sales agreement guarantees were valued based on an evaluation of coal market pricing compared to contracted sales price and includes an adjustment for nonperformance risk. No other amounts related to financial guarantees and letters of credit are recorded as liabilities in the financial statements. Significant judgment is required in determining the fair value of these guarantees. The guarantees of the leases and sales agreements are classified within Level 3 of the fair value hierarchy.
As part of the sale of the Buchanan Mine (See Note 2 - Discontinued Operations), CONSOL Energy has guaranteed certain equipment lease obligations that were assumed by Coronado. In the event that Coronado would default on the obligations defined in the agreements, CONSOL Energy would be required to perform under the guarantees.
CONSOL Energy regularly evaluates the likelihood of default for all guarantees based on an expected loss analysis and records the fair value, if any, of its guarantees as an obligation in the consolidated financial statements.
CONSOL Energy and CNX Gas Company enter into long-term unconditional purchase obligations to procure major equipment purchases, natural gas firm transportation, gas drilling services and other operating goods and services. These purchase obligations are not recorded on the Consolidated Balance Sheets. As of
March 31, 2017
, the purchase obligations for each of the next five years and beyond were as follows:
|
|
|
|
|
Obligations Due
|
Amount
|
Less than 1 year
|
$
|
204,580
|
|
1 - 3 years
|
280,593
|
|
3 - 5 years
|
243,595
|
|
More than 5 years
|
598,135
|
|
Total Purchase Obligations
|
$
|
1,326,903
|
|
NOTE 12—DERIVATIVE INSTRUMENTS:
CONSOL Energy enters into financial derivative instruments to manage its exposure to commodity price volatility. These natural gas and NGL commodity hedges are accounted for on a mark-to-market basis with changes in fair value recorded in current period earnings.
CONSOL Energy is exposed to credit risk in the event of non-performance by counterparties. The creditworthiness of counterparties is subject to continuing review. The Company has not experienced any issues of non-performance by derivative counterparties.
None of the Company's counterparty master agreements currently require CONSOL Energy to post collateral for any of its positions. However, as stated in the counterparty master agreements, if CONSOL Energy's obligations with one of its counterparties cease to be secured on the same basis as similar obligations with the other lenders under the credit facility, CONSOL Energy would have to post collateral for instruments in a liability position in excess of defined thresholds. All of the Company's derivative instruments are subject to master netting arrangements with our counterparties. CONSOL Energy recognizes all financial derivative instruments as either assets or liabilities at fair value on the Consolidated Balance Sheets on a gross basis.
Each of CONSOL Energy's counterparty master agreements allows, in the event of default, the ability to elect early termination of outstanding contracts. If early termination is elected, CONSOL Energy and the applicable counterparty would net settle all open hedge positions.
The total notional amounts of production of CONSOL Energy's derivative instruments at
March 31, 2017
and
December 31, 2016
were as follows:
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
Forecasted to
|
|
2017
|
|
2016
|
|
Settle Through
|
Natural Gas Commodity Swaps (Bcf)
|
819.1
|
|
744.7
|
|
|
2021
|
Natural Gas Basis Swaps (Bcf)
|
476.8
|
|
482.0
|
|
|
2021
|
Propane Commodity Swaps (Mbbls)
|
—
|
|
|
126.0
|
|
|
—
|
The gross fair value of CONSOL Energy's derivative instruments at
March 31, 2017
and
December 31, 2016
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivative Instruments
|
|
Liability Derivative Instruments
|
|
March 31,
|
|
December 31,
|
|
|
March 31,
|
|
December 31,
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
Commodity Swaps:
|
|
|
|
|
|
|
|
|
Prepaid Expense
|
$
|
6,408
|
|
|
$
|
16
|
|
|
Other Accrued Liabilities
|
$
|
122,747
|
|
|
$
|
209,980
|
|
Other Assets
|
58,422
|
|
|
29,596
|
|
|
Other Liabilities
|
25,838
|
|
|
67,139
|
|
Total Asset
|
$
|
64,830
|
|
|
$
|
29,612
|
|
|
Total Liability
|
$
|
148,585
|
|
|
$
|
277,119
|
|
|
|
|
|
|
|
|
|
|
Basis Only Swaps:
|
|
|
|
|
|
|
|
|
Prepaid Expense
|
$
|
2,745
|
|
|
$
|
56,916
|
|
|
Other Accrued Liabilities
|
$
|
70,281
|
|
|
$
|
21,593
|
|
Other Assets
|
12,722
|
|
|
35,603
|
|
|
Other Liabilities
|
24,946
|
|
|
11,575
|
|
Total Asset
|
$
|
15,467
|
|
|
$
|
92,519
|
|
|
Total Liability
|
$
|
95,227
|
|
|
$
|
33,168
|
|
The effect of derivative instruments on CONSOL Energy's Consolidated Statements of Income was as follows:
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
March 31,
|
|
2017
|
|
2016
|
Cash (Paid) Received in Settlement of Commodity Derivative Instruments:
|
|
|
|
Commodity Swaps:
|
|
|
|
Natural Gas
|
$
|
(24,607
|
)
|
|
$
|
82,146
|
|
Propane
|
(1,216
|
)
|
|
—
|
|
Natural Gas Basis Swaps
|
(21,280
|
)
|
|
2,185
|
|
Total Cash (Paid) Received in Settlement of Commodity Derivative Instruments
|
(47,103
|
)
|
|
84,331
|
|
|
|
|
|
Unrealized Gain (Loss) on Commodity Derivative Instruments:
|
|
|
|
Commodity Swaps:
|
|
|
|
Natural Gas
|
162,604
|
|
|
(38,023
|
)
|
Propane
|
1,147
|
|
|
(265
|
)
|
Natural Gas Basis Swaps
|
(139,111
|
)
|
|
(6,421
|
)
|
Reclassified from Accumulated OCI
|
—
|
|
|
15,438
|
|
Total Unrealized Gain (Loss) on Commodity Derivative Instruments
|
24,640
|
|
|
(29,271
|
)
|
|
|
|
|
(Loss) Gain on Commodity Derivative Instruments:
|
|
|
|
Commodity Swaps:
|
|
|
|
Natural Gas
|
137,997
|
|
|
44,123
|
|
Propane
|
(69
|
)
|
|
(265
|
)
|
Natural Gas Basis Swaps
|
(160,391
|
)
|
|
(4,236
|
)
|
Reclassified from Accumulated OCI
|
—
|
|
|
15,438
|
|
Total (Loss) Gain on Commodity Derivative Instruments
|
$
|
(22,463
|
)
|
|
$
|
55,060
|
|
Changes in Accumulated OCI, net of tax, attributable to cash flow hedges that were de-designated at December 31, 2014 were as follows:
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
March 31,
|
|
2017
|
|
2016
|
Beginning Balance – Accumulated OCI
|
$
|
—
|
|
|
$
|
43,470
|
|
Less: Gain Reclassified from Accumulated OCI (Net of tax: $5,624)
|
—
|
|
|
(9,814
|
)
|
Ending Balance – Accumulated OCI
|
$
|
—
|
|
|
$
|
33,656
|
|
The Company also enters into fixed price natural gas sales agreements that are satisfied by physical delivery. These physical commodity contracts qualify for the normal purchases and sales exception and are not subject to derivative instrument accounting.
NOTE 13—FAIR VALUE OF FINANCIAL INSTRUMENTS:
CONSOL Energy determines the fair value of assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. The fair value hierarchy is based on whether the inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources (including NYMEX forward curves, LIBOR-based discount rates and basis forward curves), while unobservable inputs reflect the Company's own assumptions of what market participants would use.
The fair value hierarchy includes three levels of inputs that may be used to measure fair value as described below:
Level One - Quoted prices for identical instruments in active markets.
Level Two - The fair value of the assets and liabilities included in Level 2 are based on standard industry income approach models that use significant observable inputs, including NYMEX forward curves, LIBOR-based discount rates and basis forward curves.
Level Three - Unobservable inputs significant to the fair value measurement supported by little or no market activity. The significant unobservable inputs used in the fair value measurement of the Company's third-party guarantees are the credit risk of the third-party and the third-party surety bond markets. A significant increase or decrease in these values, in isolation, would have a directionally similar effect resulting in higher or lower fair value measurement of the Company's Level 3 guarantees.
In those cases when the inputs used to measure fair value meet the definition of more than one level of the fair value hierarchy, the lowest level input that is significant to the fair value measurement in its totality determines the applicable level in the fair value hierarchy.
The financial instruments measured at fair value on a recurring basis are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at March 31, 2017
|
|
Fair Value Measurements at December 31, 2016
|
Description
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
Gas Derivatives
|
$
|
—
|
|
|
$
|
(163,515
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(188,156
|
)
|
|
$
|
—
|
|
Murray Energy Guarantees
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,285
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,362
|
)
|
The following methods and assumptions were used to estimate the fair value for which the fair value option was not elected:
Cash and cash equivalents:
The carrying amount reported in the Consolidated Balance Sheets for cash and cash equivalents approximates its fair value due to the short-term maturity of these instruments.
Long-term debt:
The fair value of long-term debt is measured using unadjusted quoted market prices or estimated using discounted cash flow analyses. The discounted cash flow analyses are based on current market rates for instruments with similar cash flows.
The carrying amounts and fair values of financial instruments for which the fair value option was not elected are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
Cash and Cash Equivalents
|
$
|
61,266
|
|
|
$
|
61,266
|
|
|
$
|
60,475
|
|
|
$
|
60,475
|
|
Long-Term Debt
|
$
|
2,647,857
|
|
|
$
|
2,628,205
|
|
|
$
|
2,752,371
|
|
|
$
|
2,717,582
|
|
Cash and cash equivalents represent highly- liquid instruments and constitute Level 1 fair value measurements. Certain of the Company’s debt is actively traded on a public market and, as a result, constitute Level 1 fair value measurements. The portion of the Company’s debt obligations that are not actively traded are valued through reference to the applicable underlying benchmark rate and, as a result, constitute Level 2 fair value measurements.
NOTE 14—SEGMENT INFORMATION:
CONSOL Energy consists of two principal business divisions: Exploration and Production (E&P) and Pennsylvania (PA) Mining Operations. The principal activity of the E&P division, which includes four reportable segments, is to produce pipeline quality natural gas for sale primarily to gas wholesalers. The E&P division's reportable segments are Marcellus Shale, Utica Shale, Coalbed Methane, and Other Gas. The Other Gas segment is primarily related to shallow oil and gas production and the Chattanooga Shale in Tennessee, neither of which are significant to the Company. It also includes the Company's purchased gas activities, unrealized gain or loss on commodity derivative instruments, exploration and production related other costs, other corporate expenses, selling, general and administrative activities, as well as various other activities assigned to the E&P division but not allocated to each individual segment. The principal activities of the PA Mining Operations division are mining, preparation and marketing of thermal coal, sold primarily to power generators. It also includes selling, general and administrative activities, as well as various other activities assigned to the PA Mining Operations division.
CONSOL Energy’s Other division includes expenses from various corporate and diversified business activities that are not allocated to the E&P or PA Mining Operations divisions. The diversified business activities include coal terminal operations, closed and idle mine activities, water operations, selling, general and administrative activities, as well as various other non-operated activities, none of which are individually significant to the Company.
Prior to the sale of the Buchanan Mine on March 31, 2016 and the Miller Creek and Fola Complexes on August 1, 2016 (see Note 2 - Discontinued Operations), CONSOL Energy had a Coal division. The Coal division had three reportable segments; PA Operations, Virginia (VA) Operations and Other Coal. The VA Operations segment included the Buchanan Mine and the Other Coal segment was primarily comprised of the assets and operations of the Miller Creek and Fola Complexes, as well as coal terminal operations, closed and idle mine activities, selling, general and administrative activities and various other non-operated activities. PA Operations now constitutes its own division and reportable segment, and the remaining activity in the Other Coal segment became part of CONSOL Energy's diversified business activities in the Other division. The prior period has been reclassified to align with the current period presentation.
In the preparation of the following information, intersegment sales have been recorded at amounts approximating market. Operating profit for each segment is based on sales less identifiable operating and non-operating expenses. Assets are reflected at the division level for E&P and are not allocated between each individual E&P segment. These assets are not allocated to each individual segment due to the diverse asset base controlled by CONSOL Energy, whereby each individual asset may service more than one segment within the division. An allocation of such asset base would not be meaningful or representative on a segment by segment basis.
Industry segment results for the
three months
ended
March 31, 2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcellus
Shale
|
|
Utica Shale
|
|
Coalbed Methane
|
|
Other
Gas
|
|
Total
E&P
|
|
PA Mining Operations
|
|
Other
|
|
Adjustments and
Eliminations
|
|
Consolidated
|
|
Sales—Outside
|
$
|
189,175
|
|
|
$
|
53,668
|
|
|
$
|
58,626
|
|
|
$
|
16,294
|
|
|
$
|
317,763
|
|
|
$
|
316,448
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
634,211
|
|
|
(Loss) Gain on Commodity Derivative Instruments
|
(32,665
|
)
|
|
(2,688
|
)
|
|
(9,198
|
)
|
|
22,088
|
|
|
(22,463
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,463
|
)
|
|
Other Outside Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,053
|
|
|
—
|
|
|
13,053
|
|
|
Sales—Purchased Gas
|
—
|
|
|
—
|
|
|
—
|
|
|
8,979
|
|
|
8,979
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,979
|
|
|
Freight—Outside
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,282
|
|
|
—
|
|
|
—
|
|
|
12,282
|
|
|
Intersegment Transfers
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,574
|
|
|
(4,574
|
)
|
|
—
|
|
|
Total Sales and Freight
|
$
|
156,510
|
|
|
$
|
50,980
|
|
|
$
|
49,428
|
|
|
$
|
47,361
|
|
|
$
|
304,279
|
|
|
$
|
328,730
|
|
|
$
|
17,627
|
|
|
$
|
(4,574
|
)
|
|
$
|
646,062
|
|
|
Earnings (Loss) From Continuing Operations Before Income Tax
|
$
|
29,969
|
|
|
$
|
17,807
|
|
|
$
|
3,608
|
|
|
$
|
(144,886
|
)
|
|
$
|
(93,502
|
)
|
|
$
|
61,015
|
|
|
$
|
(50,230
|
)
|
|
$
|
(4,574
|
)
|
|
$
|
(87,291
|
)
|
(A)
|
Segment Assets
|
|
|
|
|
|
|
|
|
$
|
6,074,299
|
|
|
$
|
1,955,172
|
|
|
$
|
1,029,724
|
|
|
$
|
4,574
|
|
|
$
|
9,063,769
|
|
(B)
|
Depreciation, Depletion and Amortization
|
|
|
|
|
|
|
|
|
$
|
95,348
|
|
|
$
|
42,301
|
|
|
$
|
11,104
|
|
|
$
|
—
|
|
|
$
|
148,753
|
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
|
$
|
100,793
|
|
|
$
|
8,118
|
|
|
$
|
4,067
|
|
|
$
|
—
|
|
|
$
|
112,978
|
|
|
(A) Includes equity in earnings of unconsolidated affiliates of
$12,140
and
$190
for Total E&P and Other, respectively.
(B) Includes investments in unconsolidated equity affiliates of
$194,607
and
$2,778
for Total E&P and Other, respectively.
Industry segment results for the
three months
ended
March 31, 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcellus
Shale
|
|
Utica
Shale
|
|
Coalbed Methane
|
|
Other
Gas
|
|
Total
E&P
|
|
PA Mining Operations
|
|
Other
|
|
Adjustments and
Eliminations
|
|
Consolidated
|
|
Sales—Outside
|
$
|
96,138
|
|
|
$
|
34,261
|
|
|
$
|
41,920
|
|
|
$
|
8,936
|
|
|
$
|
181,255
|
|
|
$
|
226,164
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
407,419
|
|
|
Gain (Loss) on Commodity Derivative Instruments
|
48,564
|
|
|
10,009
|
|
|
19,121
|
|
|
(22,634
|
)
|
|
55,060
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55,060
|
|
|
Other Outside Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,766
|
|
|
—
|
|
|
7,766
|
|
|
Sales—Purchased Gas
|
—
|
|
|
—
|
|
|
—
|
|
|
8,618
|
|
|
8,618
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,618
|
|
|
Freight—Outside
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,110
|
|
|
—
|
|
|
—
|
|
|
13,110
|
|
|
Intersegment Transfers
|
—
|
|
|
—
|
|
|
424
|
|
|
—
|
|
|
424
|
|
|
—
|
|
|
—
|
|
|
(424
|
)
|
|
—
|
|
|
Total Sales and Freight
|
$
|
144,702
|
|
|
$
|
44,270
|
|
|
$
|
61,465
|
|
|
$
|
(5,080
|
)
|
|
$
|
245,357
|
|
|
$
|
239,274
|
|
|
$
|
7,766
|
|
|
$
|
(424
|
)
|
|
$
|
491,973
|
|
|
Earnings (Loss) From Continuing Operations Before Income Tax
|
$
|
19,482
|
|
|
$
|
3,256
|
|
|
$
|
12,606
|
|
|
$
|
(58,223
|
)
|
|
$
|
(22,879
|
)
|
|
$
|
23,074
|
|
|
$
|
(66,862
|
)
|
|
$
|
(424
|
)
|
|
$
|
(67,091
|
)
|
(C)
|
Segment Assets
|
|
|
|
|
|
|
|
|
$
|
6,814,568
|
|
|
$
|
2,078,559
|
|
|
$
|
1,295,011
|
|
|
$
|
527,736
|
|
|
$
|
10,715,874
|
|
(D)
|
Depreciation, Depletion and Amortization
|
|
|
|
|
|
|
|
|
$
|
105,715
|
|
|
$
|
41,266
|
|
|
$
|
8,007
|
|
|
$
|
—
|
|
|
$
|
154,988
|
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
|
$
|
62,862
|
|
|
$
|
12,904
|
|
|
$
|
1,890
|
|
|
$
|
—
|
|
|
$
|
77,656
|
|
|
|
|
(C)
|
Includes equity in earnings of unconsolidated affiliates of
$15,598
and
$1,067
for Total E&P and Other, respectively.
|
(D) Includes investments in unconsolidated equity affiliates of
$248,034
and
$3,594
for Total E&P and Other, respectively.
Reconciliation of Segment Information to Consolidated Amounts:
Loss From Continuing Operations Before Income Tax:
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2017
|
|
2016
|
Segment (Loss) Income Before Income Taxes for reportable business segments
|
$
|
(32,487
|
)
|
|
$
|
195
|
|
Segment Loss Before Income Taxes for all other business segments
|
(6,619
|
)
|
|
(16,997
|
)
|
Interest expense
|
(44,433
|
)
|
|
(49,865
|
)
|
Eliminations
|
(4,574
|
)
|
|
(424
|
)
|
Gain on debt extinguishment
|
822
|
|
|
—
|
|
Loss From Continuing Operations Before Income Tax
|
$
|
(87,291
|
)
|
|
$
|
(67,091
|
)
|
Total Assets:
|
|
|
|
|
|
|
|
|
|
March 31,
|
2017
|
|
2016
|
Segment assets for total reportable business segments
|
$
|
8,029,471
|
|
|
$
|
8,893,127
|
|
Segment assets for all other business segments
|
810,939
|
|
|
876,286
|
|
Items excluded from segment assets:
|
|
|
|
Cash and other investments
|
54,630
|
|
|
416,854
|
|
Recoverable income taxes
|
124,555
|
|
|
1,871
|
|
Deferred tax assets
|
44,174
|
|
|
—
|
|
Discontinued Operations
|
—
|
|
|
527,736
|
|
Total Consolidated Assets
|
$
|
9,063,769
|
|
|
$
|
10,715,874
|
|
NOTE 15—GUARANTOR SUBSIDIARIES FINANCIAL INFORMATION:
The payment obligations under the
$74,470
,
8.250%
per annum senior notes due
April 1, 2020
, the
$20,611
,
6.375%
per annum senior notes due
March 1, 2021
, the
$1,754,310
,
5.875%
per annum senior notes due
April 15, 2022
, and the
$494,570
,
8.000%
per annum senior notes due
April 1, 2023
issued by CONSOL Energy are jointly and severally, and also fully and unconditionally, guaranteed by certain subsidiaries of CONSOL Energy. In accordance with positions established by the Securities and Exchange Commission (SEC), the following financial information sets forth separate financial information with respect to the parent, CNX Gas, a guarantor subsidiary, CNX Coal Resources LP (CNXC), a non-guarantor subsidiary, and the remaining guarantor and non-guarantor subsidiaries. The principal elimination entries include investments in subsidiaries and certain intercompany balances and transactions. CONSOL Energy, the parent, and a guarantor subsidiary manage several assets and liabilities of all other wholly owned subsidiaries. These include, for example, deferred tax assets, cash and other post-employment liabilities. These assets and liabilities are reflected as parent company or guarantor company amounts for purposes of this presentation.
On September 30, 2016, CNXC acquired an additional 5% undivided interest in the Pennsylvania Mining Complex from CONSOL Energy, increasing their total undivided interest to 25%. To account for the acquisition, CNXC recast its consolidated financial statements to retrospectively reflect the additional 5% interest as if the business was owned for all periods presented. This resulted in corresponding retrospective adjustments between the Other Subsidiary Guarantors and the CNXC Non-Guarantor columns below. See Note 16 - Related Party Transactions of the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
Income Statement for the
Three Months Ended
March 31, 2017
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Issuer
|
|
CNX Gas
Guarantor
|
|
Other
Subsidiary
Guarantors
|
|
CNXC Non-Guarantor
|
|
Elimination
|
|
Consolidated
|
Revenues and Other Income:
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas, NGLs and Oil Sales
|
$
|
—
|
|
|
$
|
317,763
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
317,763
|
|
Loss on Commodity Derivative Instruments
|
—
|
|
|
(22,463
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,463
|
)
|
Coal Sales
|
—
|
|
|
—
|
|
|
237,336
|
|
|
79,112
|
|
|
—
|
|
|
316,448
|
|
Other Outside Sales
|
—
|
|
|
—
|
|
|
13,053
|
|
|
—
|
|
|
—
|
|
|
13,053
|
|
Purchased Gas Sales
|
—
|
|
|
8,979
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,979
|
|
Freight-Outside Coal
|
—
|
|
|
—
|
|
|
9,212
|
|
|
3,070
|
|
|
—
|
|
|
12,282
|
|
Miscellaneous Other Income
|
(8,486
|
)
|
|
15,842
|
|
|
23,753
|
|
|
1,101
|
|
|
8,486
|
|
|
40,696
|
|
Gain (Loss) on Sale of Assets
|
—
|
|
|
3,606
|
|
|
8,348
|
|
|
(3
|
)
|
|
—
|
|
|
11,951
|
|
Total Revenue and Other Income
|
(8,486
|
)
|
|
323,727
|
|
|
291,702
|
|
|
83,280
|
|
|
8,486
|
|
|
698,709
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and Production Costs
|
|
|
|
|
|
|
|
|
|
|
|
Lease Operating Expense
|
—
|
|
|
21,633
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,633
|
|
Transportation, Gathering and Compression
|
—
|
|
|
94,332
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
94,332
|
|
Production, Ad Valorem, and Other Fees
|
—
|
|
|
9,329
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,329
|
|
Depreciation, Depletion and Amortization
|
—
|
|
|
95,348
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
95,348
|
|
Exploration and Production Related Other Costs
|
—
|
|
|
9,786
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,786
|
|
Purchased Gas Costs
|
—
|
|
|
8,895
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,895
|
|
Other Corporate Expenses
|
—
|
|
|
17,930
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,930
|
|
Impairment of Exploration and Production Properties
|
—
|
|
|
137,865
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
137,865
|
|
Selling, General, and Administrative Costs
|
—
|
|
|
21,490
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,490
|
|
Total Exploration and Production Costs
|
—
|
|
|
416,608
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
416,608
|
|
PA Mining Operations Costs
|
|
|
|
|
|
|
|
|
|
|
|
Operating and Other Costs
|
—
|
|
|
—
|
|
|
149,932
|
|
|
49,883
|
|
|
—
|
|
|
199,815
|
|
Depreciation, Depletion and Amortization
|
—
|
|
|
—
|
|
|
31,780
|
|
|
10,521
|
|
|
—
|
|
|
42,301
|
|
Freight Expense
|
—
|
|
|
—
|
|
|
9,212
|
|
|
3,070
|
|
|
—
|
|
|
12,282
|
|
Selling, General, and Administrative Costs
|
—
|
|
|
—
|
|
|
11,585
|
|
|
3,283
|
|
|
—
|
|
|
14,868
|
|
Total PA Mining Operations Costs
|
—
|
|
|
—
|
|
|
202,509
|
|
|
66,757
|
|
|
—
|
|
|
269,266
|
|
Other Costs
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous Operating Expense
|
10,278
|
|
|
—
|
|
|
32,922
|
|
|
—
|
|
|
—
|
|
|
43,200
|
|
Selling, General, and Administrative Costs
|
—
|
|
|
—
|
|
|
2,211
|
|
|
—
|
|
|
—
|
|
|
2,211
|
|
Depreciation, Depletion and Amortization
|
1
|
|
|
—
|
|
|
11,103
|
|
|
—
|
|
|
—
|
|
|
11,104
|
|
Gain on Debt Extinguishment
|
(822
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(822
|
)
|
Interest Expense
|
39,570
|
|
|
621
|
|
|
1,785
|
|
|
2,457
|
|
|
—
|
|
|
44,433
|
|
Total Other Costs
|
49,027
|
|
|
621
|
|
|
48,021
|
|
|
2,457
|
|
|
—
|
|
|
100,126
|
|
Total Costs And Expenses
|
49,027
|
|
|
417,229
|
|
|
250,530
|
|
|
69,214
|
|
|
—
|
|
|
786,000
|
|
(Loss) Earnings Before Income Tax
|
(57,513
|
)
|
|
(93,502
|
)
|
|
41,172
|
|
|
14,066
|
|
|
8,486
|
|
|
(87,291
|
)
|
Income Tax (Benefit) Expense
|
(18,547
|
)
|
|
(37,158
|
)
|
|
1,916
|
|
|
—
|
|
|
—
|
|
|
(53,789
|
)
|
Income (Loss) From Continuing Operations
|
(38,966
|
)
|
|
(56,344
|
)
|
|
39,256
|
|
|
14,066
|
|
|
8,486
|
|
|
(33,502
|
)
|
Less: Net Income Attributable to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,464
|
|
|
5,464
|
|
Net (Loss) Income Attributable to CONSOL Energy Shareholders
|
$
|
(38,966
|
)
|
|
$
|
(56,344
|
)
|
|
$
|
39,256
|
|
|
$
|
14,066
|
|
|
$
|
3,022
|
|
|
$
|
(38,966
|
)
|
Balance Sheet at
March 31, 2017
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Issuer
|
|
CNX Gas
Guarantor
|
|
Other
Subsidiary
Guarantors
|
|
CNXC
Non-Guarantor
|
|
Other Subsidiary
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
$
|
53,786
|
|
|
$
|
85
|
|
|
$
|
—
|
|
|
$
|
6,534
|
|
|
$
|
861
|
|
|
$
|
—
|
|
|
$
|
61,266
|
|
Accounts and Notes Receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
|
—
|
|
|
111,679
|
|
|
78,622
|
|
|
25,028
|
|
|
—
|
|
|
—
|
|
|
215,329
|
|
Other Receivables
|
46,992
|
|
|
39,475
|
|
|
13,215
|
|
|
1,267
|
|
|
—
|
|
|
—
|
|
|
100,949
|
|
Inventories
|
—
|
|
|
14,551
|
|
|
42,351
|
|
|
12,716
|
|
|
—
|
|
|
—
|
|
|
69,618
|
|
Recoverable Income Taxes
|
171,857
|
|
|
(47,302
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
124,555
|
|
Prepaid Expenses
|
12,879
|
|
|
12,502
|
|
|
15,600
|
|
|
3,517
|
|
|
—
|
|
|
—
|
|
|
44,498
|
|
Total Current Assets
|
285,514
|
|
|
130,990
|
|
|
149,788
|
|
|
49,062
|
|
|
861
|
|
|
—
|
|
|
616,215
|
|
Property, Plant and Equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment
|
115,021
|
|
|
8,591,319
|
|
|
3,932,232
|
|
|
879,689
|
|
|
—
|
|
|
—
|
|
|
13,518,261
|
|
Less-Accumulated Depreciation, Depletion and Amortization
|
85,851
|
|
|
3,126,778
|
|
|
2,030,186
|
|
|
452,527
|
|
|
—
|
|
|
—
|
|
|
5,695,342
|
|
Property, Plant and Equipment of Assets Held for Sale, Net
|
—
|
|
|
163,622
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
163,622
|
|
Total Property, Plant and Equipment-Net
|
29,170
|
|
|
5,628,163
|
|
|
1,902,046
|
|
|
427,162
|
|
|
—
|
|
|
—
|
|
|
7,986,541
|
|
Other Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Income Taxes
|
40,354
|
|
|
3,820
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,174
|
|
Investment in Affiliates
|
7,514,120
|
|
|
194,607
|
|
|
35,852
|
|
|
—
|
|
|
—
|
|
|
(7,547,194
|
)
|
|
197,385
|
|
Other
|
19,206
|
|
|
73,237
|
|
|
107,670
|
|
|
19,341
|
|
|
—
|
|
|
—
|
|
|
219,454
|
|
Total Other Assets
|
7,573,680
|
|
|
271,664
|
|
|
143,522
|
|
|
19,341
|
|
|
—
|
|
|
(7,547,194
|
)
|
|
461,013
|
|
Total Assets
|
$
|
7,888,364
|
|
|
$
|
6,030,817
|
|
|
$
|
2,195,356
|
|
|
$
|
495,565
|
|
|
$
|
861
|
|
|
$
|
(7,547,194
|
)
|
|
$
|
9,063,769
|
|
Liabilities and Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable
|
$
|
15,629
|
|
|
$
|
174,002
|
|
|
$
|
54,508
|
|
|
$
|
15,221
|
|
|
$
|
—
|
|
|
$
|
11,379
|
|
|
$
|
270,739
|
|
Accounts Payable (Recoverable)-Related Parties
|
1,556,254
|
|
|
980,682
|
|
|
(2,504,736
|
)
|
|
1,764
|
|
|
(22,585
|
)
|
|
(11,379
|
)
|
|
—
|
|
Current Portion of Long-Term Debt
|
1,511
|
|
|
6,452
|
|
|
3,797
|
|
|
91
|
|
|
—
|
|
|
—
|
|
|
11,851
|
|
Other Accrued Liabilities
|
103,235
|
|
|
305,012
|
|
|
253,750
|
|
|
42,370
|
|
|
—
|
|
|
—
|
|
|
704,367
|
|
Current Liabilities of Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,892
|
|
|
—
|
|
|
5,892
|
|
Total Current Liabilities
|
1,676,629
|
|
|
1,466,148
|
|
|
(2,192,681
|
)
|
|
59,446
|
|
|
(16,693
|
)
|
|
—
|
|
|
992,849
|
|
Long-Term Debt:
|
2,322,906
|
|
|
25,265
|
|
|
114,925
|
|
|
194,198
|
|
|
—
|
|
|
—
|
|
|
2,657,294
|
|
Deferred Credits and Other Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement Benefits Other Than Pensions
|
—
|
|
|
—
|
|
|
656,890
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
656,890
|
|
Pneumoconiosis Benefits
|
—
|
|
|
—
|
|
|
105,456
|
|
|
2,336
|
|
|
—
|
|
|
—
|
|
|
107,792
|
|
Mine Closing
|
—
|
|
|
—
|
|
|
214,667
|
|
|
9,388
|
|
|
—
|
|
|
—
|
|
|
224,055
|
|
Gas Well Closing
|
—
|
|
|
196,473
|
|
|
28,013
|
|
|
102
|
|
|
—
|
|
|
—
|
|
|
224,588
|
|
Workers’ Compensation
|
—
|
|
|
—
|
|
|
63,393
|
|
|
3,036
|
|
|
—
|
|
|
—
|
|
|
66,429
|
|
Salary Retirement
|
108,485
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
108,485
|
|
Other
|
16,541
|
|
|
89,783
|
|
|
12,271
|
|
|
453
|
|
|
—
|
|
|
—
|
|
|
119,048
|
|
Total Deferred Credits and Other Liabilities
|
125,026
|
|
|
286,256
|
|
|
1,080,690
|
|
|
15,315
|
|
|
—
|
|
|
—
|
|
|
1,507,287
|
|
Total CONSOL Energy Inc. Stockholders’ Equity
|
3,763,803
|
|
|
4,253,148
|
|
|
3,192,422
|
|
|
226,606
|
|
|
17,554
|
|
|
(7,689,730
|
)
|
|
3,763,803
|
|
Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
142,536
|
|
|
142,536
|
|
Total Liabilities and Equity
|
$
|
7,888,364
|
|
|
$
|
6,030,817
|
|
|
$
|
2,195,356
|
|
|
$
|
495,565
|
|
|
$
|
861
|
|
|
$
|
(7,547,194
|
)
|
|
$
|
9,063,769
|
|
Income Statement for the
Three Months Ended
March 31, 2016
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Issuer
|
|
CNX Gas
Guarantor
|
|
Other
Subsidiary
Guarantors
|
|
CNXC
Non-Guarantor
|
|
Other
Subsidiary
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
Revenues and Other Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas, NGLs and Oil Sales
|
$
|
—
|
|
|
$
|
181,680
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(425
|
)
|
|
$
|
181,255
|
|
Gain on Commodity Derivative Instruments
|
—
|
|
|
55,060
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55,060
|
|
Coal Sales
|
—
|
|
|
—
|
|
|
169,623
|
|
|
56,541
|
|
|
—
|
|
|
—
|
|
|
226,164
|
|
Other Outside Sales
|
—
|
|
|
—
|
|
|
7,766
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,766
|
|
Purchased Gas Sales
|
—
|
|
|
8,618
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,618
|
|
Freight-Outside Coal
|
—
|
|
|
—
|
|
|
9,841
|
|
|
3,269
|
|
|
—
|
|
|
—
|
|
|
13,110
|
|
Miscellaneous Other Income
|
(66,640
|
)
|
|
30,161
|
|
|
17,969
|
|
|
1
|
|
|
—
|
|
|
66,640
|
|
|
48,131
|
|
Loss on Sale of Assets
|
—
|
|
|
(7,143
|
)
|
|
(120
|
)
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(7,276
|
)
|
Total Revenue and Other Income
|
(66,640
|
)
|
|
268,376
|
|
|
205,079
|
|
|
59,798
|
|
|
—
|
|
|
66,215
|
|
|
532,828
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and Production Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease Operating Expense
|
—
|
|
|
27,739
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,739
|
|
Transportation, Gathering and Compression
|
—
|
|
|
93,974
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
93,974
|
|
Production, Ad Valorem, and Other Fees
|
—
|
|
|
8,303
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,303
|
|
Depreciation, Depletion and Amortization
|
—
|
|
|
105,715
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
105,715
|
|
Exploration and Production Related Other Costs
|
—
|
|
|
1,747
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,747
|
|
Purchased Gas Costs
|
—
|
|
|
7,868
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,868
|
|
Other Corporate Expenses
|
—
|
|
|
22,798
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,798
|
|
Selling, General, and Administrative Costs
|
—
|
|
|
22,458
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,458
|
|
Total Exploration and Production Costs
|
—
|
|
|
290,602
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
290,602
|
|
PA Mining Operations Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and Other Costs
|
—
|
|
|
—
|
|
|
115,611
|
|
|
38,490
|
|
|
—
|
|
|
—
|
|
|
154,101
|
|
Depreciation, Depletion and Amortization
|
—
|
|
|
—
|
|
|
30,949
|
|
|
10,317
|
|
|
—
|
|
|
—
|
|
|
41,266
|
|
Freight Expense
|
—
|
|
|
—
|
|
|
9,841
|
|
|
3,269
|
|
|
—
|
|
|
—
|
|
|
13,110
|
|
Selling, General, and Administrative Costs
|
—
|
|
|
—
|
|
|
3,848
|
|
|
1,928
|
|
|
—
|
|
|
—
|
|
|
5,776
|
|
Total PA Mining Operations Costs
|
—
|
|
|
—
|
|
|
160,249
|
|
|
54,004
|
|
|
—
|
|
|
—
|
|
|
214,253
|
|
Other Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous Operating Expense
|
3,720
|
|
|
—
|
|
|
31,597
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
35,339
|
|
Selling, General, and Administrative Costs
|
—
|
|
|
—
|
|
|
1,853
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,853
|
|
Depreciation, Depletion and Amortization
|
153
|
|
|
—
|
|
|
7,854
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,007
|
|
Interest Expense
|
45,880
|
|
|
653
|
|
|
1,354
|
|
|
1,978
|
|
|
—
|
|
|
—
|
|
|
49,865
|
|
Total Other Costs
|
49,753
|
|
|
653
|
|
|
42,658
|
|
|
1,978
|
|
|
22
|
|
|
—
|
|
|
95,064
|
|
Total Costs And Expenses
|
49,753
|
|
|
291,255
|
|
|
202,907
|
|
|
55,982
|
|
|
22
|
|
|
—
|
|
|
599,919
|
|
(Loss) Earnings From Continuing Operations Before Income Tax
|
(116,393
|
)
|
|
(22,879
|
)
|
|
2,172
|
|
|
3,816
|
|
|
(22
|
)
|
|
66,215
|
|
|
(67,091
|
)
|
Income Tax (Benefit) Expense
|
(18,821
|
)
|
|
(9,355
|
)
|
|
4,384
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(23,800
|
)
|
(Loss) Income From Continuing Operations
|
(97,572
|
)
|
|
(13,524
|
)
|
|
(2,212
|
)
|
|
3,816
|
|
|
(14
|
)
|
|
66,215
|
|
|
(43,291
|
)
|
Loss From Discontinued Operations, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(53,167
|
)
|
|
—
|
|
|
(53,167
|
)
|
Net (Loss) Income
|
(97,572
|
)
|
|
(13,524
|
)
|
|
(2,212
|
)
|
|
3,816
|
|
|
(53,181
|
)
|
|
66,215
|
|
|
(96,458
|
)
|
Less: Net Income Attributable to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,114
|
|
|
1,114
|
|
Net (Loss) Income Attributable to CONSOL Energy Shareholders
|
$
|
(97,572
|
)
|
|
$
|
(13,524
|
)
|
|
$
|
(2,212
|
)
|
|
$
|
3,816
|
|
|
$
|
(53,181
|
)
|
|
$
|
65,101
|
|
|
$
|
(97,572
|
)
|
Balance Sheet at
December 31, 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Issuer
|
|
CNX Gas
Guarantor
|
|
Other
Subsidiary
Guarantors
|
|
CNXC Non-Guarantor
|
|
Other
Subsidiary
Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
$
|
49,722
|
|
|
$
|
83
|
|
|
$
|
—
|
|
|
$
|
9,785
|
|
|
$
|
885
|
|
|
$
|
—
|
|
|
$
|
60,475
|
|
Accounts and Notes Receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
|
—
|
|
|
124,509
|
|
|
72,295
|
|
|
23,418
|
|
|
—
|
|
|
—
|
|
|
220,222
|
|
Other Receivables
|
20,097
|
|
|
34,773
|
|
|
14,516
|
|
|
515
|
|
|
—
|
|
|
—
|
|
|
69,901
|
|
Inventories
|
—
|
|
|
15,301
|
|
|
38,669
|
|
|
11,491
|
|
|
—
|
|
|
—
|
|
|
65,461
|
|
Recoverable Income Taxes
|
175,877
|
|
|
(59,026
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
116,851
|
|
Prepaid Expenses
|
12,828
|
|
|
60,500
|
|
|
16,306
|
|
|
3,512
|
|
|
—
|
|
|
—
|
|
|
93,146
|
|
Current Assets of Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83
|
|
|
—
|
|
|
83
|
|
Total Current Assets
|
258,524
|
|
|
176,140
|
|
|
141,786
|
|
|
48,721
|
|
|
968
|
|
|
—
|
|
|
626,139
|
|
Property, Plant and Equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment
|
114,611
|
|
|
8,851,226
|
|
|
3,928,861
|
|
|
876,690
|
|
|
—
|
|
|
—
|
|
|
13,771,388
|
|
Less-Accumulated Depreciation, Depletion and Amortization
|
84,788
|
|
|
3,106,296
|
|
|
1,997,687
|
|
|
442,178
|
|
|
—
|
|
|
—
|
|
|
5,630,949
|
|
Total Property, Plant and Equipment-Net
|
29,823
|
|
|
5,744,930
|
|
|
1,931,174
|
|
|
434,512
|
|
|
—
|
|
|
—
|
|
|
8,140,439
|
|
Other Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Income Taxes
|
25,904
|
|
|
(21,614
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,290
|
|
Investment in Affiliates
|
7,974,260
|
|
|
188,376
|
|
|
27,269
|
|
|
—
|
|
|
—
|
|
|
(7,998,941
|
)
|
|
190,964
|
|
Other
|
19,960
|
|
|
67,096
|
|
|
114,030
|
|
|
21,063
|
|
|
—
|
|
|
—
|
|
|
222,149
|
|
Total Other Assets
|
8,020,124
|
|
|
233,858
|
|
|
141,299
|
|
|
21,063
|
|
|
—
|
|
|
(7,998,941
|
)
|
|
417,403
|
|
Total Assets
|
$
|
8,308,471
|
|
|
$
|
6,154,928
|
|
|
$
|
2,214,259
|
|
|
$
|
504,296
|
|
|
$
|
968
|
|
|
$
|
(7,998,941
|
)
|
|
$
|
9,183,981
|
|
Liabilities and Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable
|
$
|
48,666
|
|
|
$
|
127,309
|
|
|
$
|
36,039
|
|
|
$
|
18,797
|
|
|
$
|
—
|
|
|
$
|
10,805
|
|
|
$
|
241,616
|
|
Accounts Payable (Recoverable)-Related Parties
|
1,832,908
|
|
|
1,034,138
|
|
|
(2,648,416
|
)
|
|
1,666
|
|
|
(209,491
|
)
|
|
(10,805
|
)
|
|
—
|
|
Current Portion of Long-Term Debt
|
1,533
|
|
|
6,369
|
|
|
4,010
|
|
|
88
|
|
|
—
|
|
|
—
|
|
|
12,000
|
|
Other Accrued Liabilities
|
75,039
|
|
|
337,374
|
|
|
223,705
|
|
|
44,230
|
|
|
—
|
|
|
—
|
|
|
680,348
|
|
Current Liabilities of Discontinued Operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,050
|
|
|
—
|
|
|
6,050
|
|
Total Current Liabilities
|
1,958,146
|
|
|
1,505,190
|
|
|
(2,384,662
|
)
|
|
64,781
|
|
|
(203,441
|
)
|
|
—
|
|
|
940,014
|
|
Long-Term Debt:
|
2,421,511
|
|
|
26,884
|
|
|
115,685
|
|
|
197,989
|
|
|
—
|
|
|
—
|
|
|
2,762,069
|
|
Deferred Credits and Other Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement Benefits Other Than Pensions
|
—
|
|
|
—
|
|
|
659,474
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
659,474
|
|
Pneumoconiosis Benefits
|
—
|
|
|
—
|
|
|
106,016
|
|
|
2,057
|
|
|
—
|
|
|
—
|
|
|
108,073
|
|
Mine Closing
|
—
|
|
|
—
|
|
|
209,384
|
|
|
9,247
|
|
|
—
|
|
|
—
|
|
|
218,631
|
|
Gas Well Closing
|
—
|
|
|
195,704
|
|
|
27,549
|
|
|
99
|
|
|
—
|
|
|
—
|
|
|
223,352
|
|
Workers’ Compensation
|
—
|
|
|
—
|
|
|
64,187
|
|
|
3,090
|
|
|
—
|
|
|
—
|
|
|
67,277
|
|
Salary Retirement
|
112,543
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
112,543
|
|
Other
|
17,876
|
|
|
117,658
|
|
|
15,663
|
|
|
463
|
|
|
—
|
|
|
—
|
|
|
151,660
|
|
Total Deferred Credits and Other Liabilities
|
130,419
|
|
|
313,362
|
|
|
1,082,273
|
|
|
14,956
|
|
|
—
|
|
|
—
|
|
|
1,541,010
|
|
Total CONSOL Energy Inc. Stockholders’ Equity
|
3,798,395
|
|
|
4,309,492
|
|
|
3,400,963
|
|
|
226,570
|
|
|
204,409
|
|
|
(8,141,434
|
)
|
|
3,798,395
|
|
Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
142,493
|
|
|
142,493
|
|
Total Liabilities and Equity
|
$
|
8,308,471
|
|
|
$
|
6,154,928
|
|
|
$
|
2,214,259
|
|
|
$
|
504,296
|
|
|
$
|
968
|
|
|
$
|
(7,998,941
|
)
|
|
$
|
9,183,981
|
|
Cash Flow for the
Three Months Ended
March 31, 2017
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
CNX Gas
Guarantor
|
|
Other Subsidiary Guarantors
|
|
CNXC Non-Guarantor
|
|
Other
Subsidiary Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
Net Cash Provided by (Used in) Continuing Operations
|
$
|
109,039
|
|
|
$
|
87,898
|
|
|
$
|
(873
|
)
|
|
$
|
17,662
|
|
|
$
|
51
|
|
|
$
|
(8,583
|
)
|
|
$
|
205,194
|
|
Net Cash Used in Discontinued Operating Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(75
|
)
|
|
—
|
|
|
(75
|
)
|
Net Cash Provided by (Used in) Operating Activities
|
$
|
109,039
|
|
|
$
|
87,898
|
|
|
$
|
(873
|
)
|
|
$
|
17,662
|
|
|
$
|
(24
|
)
|
|
$
|
(8,583
|
)
|
|
$
|
205,119
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
$
|
(1,087
|
)
|
|
$
|
(100,793
|
)
|
|
$
|
(9,068
|
)
|
|
$
|
(2,030
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(112,978
|
)
|
Proceeds From Sales of Assets
|
—
|
|
|
8,518
|
|
|
10,909
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,427
|
|
Net Distributions from Equity Affiliates
|
—
|
|
|
5,909
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,909
|
|
Net Cash (Used in) Provided by Investing Activities
|
$
|
(1,087
|
)
|
|
$
|
(86,366
|
)
|
|
$
|
1,841
|
|
|
$
|
(2,030
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(87,642
|
)
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments on Miscellaneous Borrowings
|
$
|
(418
|
)
|
|
$
|
(1,530
|
)
|
|
$
|
(968
|
)
|
|
$
|
(26
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2,942
|
)
|
Payments on Long-Term Borrowings
|
(98,243
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(98,243
|
)
|
Net Payments on Revolver - CNX Coal Resources LP
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,000
|
)
|
|
—
|
|
|
—
|
|
|
(4,000
|
)
|
Distributions to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,050
|
)
|
|
—
|
|
|
8,583
|
|
|
(5,467
|
)
|
Issuance of Common Stock
|
494
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
494
|
|
Treasury Stock Activity
|
(5,471
|
)
|
|
—
|
|
|
—
|
|
|
(807
|
)
|
|
|
|
|
|
|
|
(6,278
|
)
|
Debt Repurchase and Financing Fees
|
(250
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(250
|
)
|
Net Cash (Used in) Provided by Financing Activities
|
$
|
(103,888
|
)
|
|
$
|
(1,530
|
)
|
|
$
|
(968
|
)
|
|
$
|
(18,883
|
)
|
|
$
|
—
|
|
|
$
|
8,583
|
|
|
$
|
(116,686
|
)
|
Cash Flow for the
Three Months Ended
March 31, 2016
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
CNX Gas
Guarantor
|
|
Other Subsidiary Guarantors
|
|
CNXC Non-Guarantor
|
|
Other Subsidiary Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Net Cash Provided by (Used in) Continuing Operations
|
$
|
456,851
|
|
|
$
|
58,594
|
|
|
$
|
13,434
|
|
|
$
|
3,511
|
|
|
$
|
(401,447
|
)
|
|
$
|
(7,281
|
)
|
|
$
|
123,662
|
|
Net Cash Provided by Discontinued Operating Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,290
|
|
|
—
|
|
|
6,290
|
|
Net Cash Provided by (Used in) Operating Activities
|
$
|
456,851
|
|
|
$
|
58,594
|
|
|
$
|
13,434
|
|
|
$
|
3,511
|
|
|
$
|
(395,157
|
)
|
|
$
|
(7,281
|
)
|
|
$
|
129,952
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
$
|
(1,281
|
)
|
|
$
|
(62,862
|
)
|
|
$
|
(10,288
|
)
|
|
$
|
(3,225
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(77,656
|
)
|
Proceeds From Sales of Assets
|
—
|
|
|
7,953
|
|
|
480
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
8,453
|
|
Net Investments in Equity Affiliates
|
—
|
|
|
(2,145
|
)
|
|
(3,433
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,578
|
)
|
Net Cash Used in Continuing Investing Activities
|
(1,281
|
)
|
|
(57,054
|
)
|
|
(13,241
|
)
|
|
(3,205
|
)
|
|
—
|
|
|
—
|
|
|
(74,781
|
)
|
Net Cash Provided by Discontinued Investing Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
395,757
|
|
|
—
|
|
|
395,757
|
|
Net Cash (Used in) Provided by Investing Activities
|
$
|
(1,281
|
)
|
|
$
|
(57,054
|
)
|
|
$
|
(13,241
|
)
|
|
$
|
(3,205
|
)
|
|
$
|
395,757
|
|
|
$
|
—
|
|
|
$
|
320,976
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments on Short-Term Borrowings
|
$
|
(100,500
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(100,500
|
)
|
Payments on Miscellaneous Borrowings
|
(353
|
)
|
|
(1,537
|
)
|
|
(193
|
)
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
(2,095
|
)
|
Net Proceeds from Revolver - CNX Coal Resources LP
|
—
|
|
|
—
|
|
|
—
|
|
|
15,000
|
|
|
—
|
|
|
—
|
|
|
15,000
|
|
Distributions to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,144
|
)
|
|
—
|
|
|
6,731
|
|
|
(5,413
|
)
|
Net Change in Parent Advancements
|
—
|
|
|
—
|
|
|
—
|
|
|
(550
|
)
|
|
—
|
|
|
550
|
|
|
—
|
|
Dividends Paid
|
(2,294
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,294
|
)
|
Issuance of Common Stock
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
Treasury Stock Activity
|
(1,510
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,510
|
)
|
Net Cash (Used in) Provided by Continuing Financing Activities
|
(104,654
|
)
|
|
(1,537
|
)
|
|
(193
|
)
|
|
2,294
|
|
|
—
|
|
|
7,281
|
|
|
(96,809
|
)
|
Net Cash Used in Discontinued Financing Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(47
|
)
|
|
—
|
|
|
(47
|
)
|
Net Cash (Used in) Provided by Financing Activities
|
$
|
(104,654
|
)
|
|
$
|
(1,537
|
)
|
|
$
|
(193
|
)
|
|
$
|
2,294
|
|
|
$
|
(47
|
)
|
|
$
|
7,281
|
|
|
$
|
(96,856
|
)
|
Statement of Comprehensive Income for the
Three Months Ended
March 31, 2017
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
CNX Gas
Guarantor
|
|
Other Subsidiary Guarantors
|
|
CNXC Non-
Guarantor
|
|
Other Subsidiary Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Net (Loss) Income
|
$
|
(38,966
|
)
|
|
$
|
(56,344
|
)
|
|
$
|
39,256
|
|
|
$
|
14,066
|
|
|
$
|
—
|
|
|
$
|
8,486
|
|
|
$
|
(33,502
|
)
|
Other Comprehensive Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarially Determined Long-Term Liability Adjustments
|
3,502
|
|
|
—
|
|
|
3,541
|
|
|
(39
|
)
|
|
—
|
|
|
(3,502
|
)
|
|
3,502
|
|
Other Comprehensive Income (Loss):
|
3,502
|
|
|
—
|
|
|
3,541
|
|
|
(39
|
)
|
|
—
|
|
|
(3,502
|
)
|
|
3,502
|
|
Comprehensive (Loss) Income
|
(35,464
|
)
|
|
(56,344
|
)
|
|
42,797
|
|
|
14,027
|
|
|
—
|
|
|
4,984
|
|
|
(30,000
|
)
|
Less: Comprehensive Income Attributable to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,452
|
|
|
5,452
|
|
Comprehensive (Loss) Income Attributable to CONSOL Energy Inc. Shareholders
|
$
|
(35,464
|
)
|
|
$
|
(56,344
|
)
|
|
$
|
42,797
|
|
|
$
|
14,027
|
|
|
$
|
—
|
|
|
$
|
(468
|
)
|
|
$
|
(35,452
|
)
|
Statement of Comprehensive Income for the
Three Months Ended
March 31, 2016
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
CNX Gas
Guarantor
|
|
Other Subsidiary Guarantors
|
|
CNXC Non-
Guarantor
|
|
Other Subsidiary Non-
Guarantors
|
|
Elimination
|
|
Consolidated
|
Net (Loss) Income
|
$
|
(97,572
|
)
|
|
$
|
(13,524
|
)
|
|
$
|
(2,212
|
)
|
|
$
|
3,816
|
|
|
$
|
(53,181
|
)
|
|
$
|
66,215
|
|
|
$
|
(96,458
|
)
|
Other Comprehensive (Loss) Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarially Determined Long-Term Liability Adjustments
|
(2,484
|
)
|
|
—
|
|
|
(2,459
|
)
|
|
(25
|
)
|
|
—
|
|
|
2,484
|
|
|
(2,484
|
)
|
Reclassification of Cash Flow Hedge from OCI to Earnings
|
(9,814
|
)
|
|
(9,814
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,814
|
|
|
(9,814
|
)
|
Other Comprehensive (Loss) Income:
|
(12,298
|
)
|
|
(9,814
|
)
|
|
(2,459
|
)
|
|
(25
|
)
|
|
—
|
|
|
12,298
|
|
|
(12,298
|
)
|
Comprehensive (Loss) Income
|
(109,870
|
)
|
|
(23,338
|
)
|
|
(4,671
|
)
|
|
3,791
|
|
|
(53,181
|
)
|
|
78,513
|
|
|
(108,756
|
)
|
Less: Comprehensive Income Attributable to Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,114
|
|
|
1,114
|
|
Comprehensive (Loss) Income Attributable to CONSOL Energy Inc. Shareholders
|
$
|
(109,870
|
)
|
|
$
|
(23,338
|
)
|
|
$
|
(4,671
|
)
|
|
$
|
3,791
|
|
|
$
|
(53,181
|
)
|
|
$
|
77,399
|
|
|
$
|
(109,870
|
)
|
NOTE 16—RELATED PARTY TRANSACTIONS:
CONE Gathering LLC and CONE Midstream Partners LP
In September 2011, CNX Gas Company, a wholly owned subsidiary of CONSOL Energy, and Noble Energy, Inc. (Noble Energy), an unrelated third-party, formed CONE Gathering LLC (CONE) to develop and operate each company's gas gathering system needs in the Marcellus Shale play. CONSOL Energy accounts for CNX Gas Company's 50% ownership interest in CONE under the equity method of accounting.
In May 2014, CONSOL Energy and Noble Energy (collectively, "the Sponsors") formed CONE Midstream Partners LP (the Partnership), a master limited partnership, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service each company's production in the Marcellus Shale in Pennsylvania and West Virginia. The Partnership's general partner is CONE Midstream GP LLC, a wholly owned subsidiary of CONE.
In September 2014, the Partnership closed its initial public offering of
20,125,000
common units representing limited partnership interests, which included a
2,625,000
common unit over-allotment option that was exercised in full by the underwriters. Following the IPO, CONE had a 2% general partner interest in the Partnership, while each sponsor had a 32.1% limited partner interest. CNX Gas Company accounts for its portion of the earnings in the Partnership under the equity method of accounting.
In November 2016, the Partnership acquired from CONE an additional
25%
ownership interest in CONE Midstream DevCo 1 LP, commonly referred to as the "Anchor Systems." The transaction included a total purchase consideration of $
248,000
, comprised of $
140,000
in cash and issuance of approximately
5,200,000
common limited partnership units to the Sponsors. Following the acquisition, CONE continues to have a 2% general partner interest in the Partnership, while each Sponsor's limited partner interest increased to 33.5%. At
March 31, 2017
, CNX Gas Company and Noble Energy each continue to own a 50% interest in the assets of CONE that were not contributed to the Partnership.
The following is a summary of the Company's Investment in Affiliates balances included within the Consolidated Balance Sheets associated with CONE and the Partnership, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONE
|
|
The Partnership
|
|
Total
|
Balance at December 31, 2016
|
$
|
151,075
|
|
|
$
|
18,133
|
|
|
$
|
169,208
|
|
Equity in Earnings
|
1,866
|
|
|
10,072
|
|
|
11,938
|
|
Distribution of Earnings
|
—
|
|
|
(5,909
|
)
|
|
(5,909
|
)
|
Balance at March 31, 2017
|
$
|
152,941
|
|
|
$
|
22,296
|
|
|
$
|
175,237
|
|
The following transactions were included within Miscellaneous Other Income and Transportation, Gathering and Compression within the Consolidated Statements of Income:
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2017
|
|
2016
|
Miscellaneous Other Income:
|
|
|
|
Equity in Earnings of Affiliates - CONE
|
$
|
1,866
|
|
|
$
|
6,393
|
|
Equity in Earnings of Affiliates - the Partnership
|
$
|
10,072
|
|
|
$
|
7,958
|
|
|
|
|
|
Transportation, Gathering and Compression:
|
|
|
|
Gathering Services - CONE
|
$
|
253
|
|
|
$
|
217
|
|
Gathering Services - the Partnership
|
$
|
34,054
|
|
|
$
|
31,645
|
|
At
March 31, 2017
and
December 31, 2016
, CONSOL Energy had a net payable of $
7,674
and $
5,815
respectively, due to both the Partnership and CONE primarily for accrued but unpaid gathering services.
CNX Coal Resources LP
In July 2015, CNXC closed its initial public offering of
5,000,000
common units representing limited partnership interests at a price to the public of
$15.00
per unit. Additionally, Greenlight Capital entered into a common unit purchase agreement with CNXC pursuant to which Greenlight Capital agreed to purchase, and CNXC agreed to sell,
5,000,000
common units at a price
per unit equal to
$15.00
, which equates to
$75,000
in net proceeds. CNXC's general partner is CNX Coal Resources GP, a wholly owned subsidiary of CONSOL Energy. The underwriters of the IPO filing exercised an over-allotment option of
561,067
common units to the public at
$15.00
per unit.
In connection with the Initial Public Offering (IPO), CNXC entered into a
$400,000
senior secured revolving credit facility with certain lenders and PNC Bank, National Association (PNC), as administrative agent. Obligations under the revolving credit facility are guaranteed by CNXC's subsidiaries (the "guarantor subsidiaries") and are secured by substantially all of CNXC's and CNXC's subsidiaries' assets pursuant to a security agreement and various mortgages. Under the new revolving credit facility, CNXC made an initial draw of
$200,000
, and after origination fees of
$3,000
, the net proceeds were
$197,000
.
The total net proceeds related to these transactions that were distributed to CONSOL Energy were
$342,711
.
In September 2016, CNXC and its wholly owned subsidiary, CNX Thermal Holdings LLC (CNX Thermal), entered into a Contribution Agreement with CONSOL Energy, CONSOL Pennsylvania Coal Company LLC and Conrhein Coal Company (the Contributing Parties) under which CNX Thermal acquired an additional 5% undivided interest in and to the Pennsylvania Mine Complex, in exchange for (i) cash consideration in the amount of
$21,500
and (ii) CNXC's issuance of
3,956,496
Class A Preferred Units representing limited partner interests in CNXC at an issue price of
$17.01
per Class A preferred Unit (the "Class A Preferred Unit Issue Price"), or an aggregate
$67,300
in equity consideration. The Class A Preferred Unit Issue Price was calculated as the volume-weighted average trading price of CNXC's common units (the "Common Units") over the trailing 15-day trading period ending on September 29, 2016 (or
$14.79
per unit), plus a 15% premium.
In connection with the PA Mining acquisition, in September 2016, the General Partner and CNXC entered into the First Amended and Restated Omnibus Agreement (the "Amended Omnibus Agreement") with CONSOL Energy and certain of its subsidiaries. Under the Amended Omnibus Agreement, CONSOL Energy indemnified CNXC for certain liabilities. The Amended Omnibus Agreement also amended CNXC's obligations to CONSOL Energy with respect to the payment of an annual administrative support fee and reimbursement for the provisions of certain management and operating services provided, in each case to reflect structural changes in how those services are provided to CNXC by CONSOL Energy.
Charges for services from CONSOL Energy include the following:
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
2017
|
|
2016
|
Operating and Other Costs
|
$
|
872
|
|
|
$
|
1,266
|
|
Selling, General and Administrative Expenses
|
717
|
|
|
1,116
|
|
Total Services from CONSOL Energy
|
$
|
1,589
|
|
|
$
|
2,382
|
|
At
March 31, 2017
and December 31, 2016, CNXC had a net payable to CONSOL Energy in the amount of
$1,764
and
$1,666
, respectively. This payable includes reimbursements for business expenses, executive fees, stock-based compensation and other items under the omnibus agreement.
NOTE 17—RECENT ACCOUNTING PRONOUNCEMENTS:
In March 2017, the FASB issued Update 2017-07 - Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which improves the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendments in the Update require that an employer report the service cost component in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented separately from the service cost component and outside a subtotal of income from operations, if one is presented. Because CONSOL Energy does not present an income from operations subtotal, that requirement is not applicable. Additionally, the Company's service cost component is deemed immaterial, and therefore, the other components of net benefit cost will not be presented separately. For public entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of a fiscal year for which financial statements have not been issued. The adoption of this guidance is not expected to have an impact on CONSOL Energy's financial statements
In August 2016, the FASB issued Update 2016-15 - Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments relate to debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, and beneficial interests in securitization transactions. The Update also states that, in the absence of specific guidance for cash receipts and payments that have aspects of more than one class of cash flows, an entity should classify each separately identifiable source or use within the cash receipts and payments on the basis of their nature in financing, investing, or operating activities. In situations in which cash receipts or payments cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. The amendments in the Update will be applied using a retrospective transition method to each period presented and, for public entities, are effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact this guidance may have on CONSOL Energy's financial statements.
In May 2014, the FASB issued Update 2014-09 - Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605 - Revenue Recognition and most industry-specific guidance throughout the Industry Topics of the Codification. The objective of the amendments in this Update is to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards (IFRS). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and should disclose sufficient information, both qualitative and quantitative, to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The following updates to Topic 606 were made during 2016:
|
|
•
|
In March 2016, the FASB issued Update 2016-08 - Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies how an entity determines whether it is a principal or an agent for goods or services promised to a customer as well as the nature of the goods or services promised to their customers.
|
|
|
•
|
In April 2016, the FASB issued Update 2016-10 - Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which seeks to address implementation issues in the areas of identifying performance obligations and licensing.
|
|
|
•
|
In May 2016, the FASB issued Update 2016-12 - Revenue from Contracts with Customers: Narrow Scope Improvements and Practical Expedients, which seeks to address implementation issues in the areas of collectibility, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition.
|
|
|
•
|
In December 2016, the FASB issued Update 2016-20 - Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which includes amendments related to loan guarantee fees, contract costs, provisions for losses on construction and production-type contracts, scope, disclosures, contract modification, contract asset versus receivable, refund liability and advertising costs.
|
The new standards are effective for annual reporting periods beginning after December 15, 2017, with the option to adopt as early as annual reporting periods beginning after December 15, 2016. Management continues to evaluate the impacts that these standards will have on CONSOL Energy's financial statements, specifically as it relates to contracts that contain positive electric power price related adjustments. CONSOL Energy anticipates using the modified retrospective approach to adoption as it relates to ASU 2014-09.
In February 2016, the FASB issued Update 2016-02 - Leases (Topic 842), which increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Update 2016-02 does retain a distinction between finance leases and operating leases, which is substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. Retaining this distinction allows the recognition, measurement and presentation of expenses and cash flows arising from a lease to not significantly change from previous GAAP. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities, but to recognize lease expense on a straight-line basis over the lease term. For both financing and operating leases, the right-to-use asset and lease liability will be initially measured at the present value of the lease payments in the statement of financial position.The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact this guidance may have on CONSOL Energy's financial statements.
NOTE 18—SUBSEQUENT EVENTS:
On April 3, 2017, CONSOL Energy finalized the sale of its Knox Energy LLC and Coalfield Pipeline Company subsidiaries that were previously classified as Held for Sale. At closing, CONSOL Energy received net cash proceeds of $
18,944
. Due to various post closing adjustments, the estimated gain on the sale of these assets was approximately $
500
.
On May 1, 2017 CONSOL Energy finalized the sale of approximately 6,300 net undeveloped acres of the Utica-Point Pleasant Shale in Jefferson, Belmont and Guernsey counties, Ohio that were previously classified as Held for Sale. CONSOL Energy received total cash proceeds of $
76,696
. The estimated gain on the sale of these assets was approximately $
72,000
.