PITTSBURGH, Aug. 1, 2017 /PRNewswire/ -- CONSOL Energy Inc.
(NYSE: CNX) reported net cash provided by operating activities in
the just-ended quarter of $89
million, compared to $95
million in the year-earlier quarter, which included
$13 million of net cash provided by
discontinued operating activities. The company reported net income
of $174 million for the quarter, less
$4 million of net income attributable
to noncontrolling interest, for net income attributable to CONSOL
Energy shareholders of $170 million
or earnings of $0.73 per diluted
share, compared to a net loss of $469
million in the year-earlier quarter, less $1 million of net income attributable to
noncontrolling interest, for a net loss attributable to CONSOL
Energy shareholders of $470 million,
or a loss of $2.05 per diluted share
in the second quarter of 2016.
Earnings before deducting net interest expense (interest expense
less interest income), income taxes and depreciation, depletion and
amortization (EBITDA) from continuing operations1 were
$395 million for the 2017 second
quarter, compared to a negative $153
million in the year-earlier quarter.
On a GAAP basis, the second quarter earnings included the
following pre-tax items attributable to continuing operations:
- Recorded $127 million in gains on
assets sales;
- Recorded a $116 million
unrealized gain on commodity derivative instruments, related to
changes in the fair market value of existing hedges on a
mark-to-market basis; and
- Recorded $35 million in various
other nonrecurring charges.
After adjusting for certain items, which are described in the
footnote to the EBITDA reconciliation table, the company had
adjusted net income attributable to CONSOL Energy
Shareholders1 in the 2017 second quarter of $39 million, or $0.17 per diluted share. Adjusted EBITDA
attributable to continuing operations1 was $177 million for the 2017 second quarter,
compared to $139 million in the
year-earlier quarter.
"We are at a pivotal point in our transformation as a company,"
commented Nicholas J. DeIuliis,
president and CEO. "The steady march of continuous improvement was
sustained this past quarter in our E&P operations in all phases
including drilling and completions. Despite short term turn-in-line
delays at two of our Monroe County Utica pads and
a post-closing adjustment from an asset sale, both of
which impacted quarterly production, our 2017 production guidance
remains unchanged. Closed asset sales did not disappoint and
beat our prior stated goals, helping to drive our leverage ratio
down to 3.0x at quarter-end, with an undrawn credit facility and
$300 million of cash on hand. To
top things off, we are fully immersed in preparing to spin and
separate the coal and E&P businesses."
"Increased efficiencies that we fought hard to achieve now allow
us to hold our 2017 production guidance and raise our 2018
production guidance for a modest amount of incremental capital. We
are raising 2017 capital by approximately $78 million, based on the midpoint of the
guidance. About half of the capital increase reflects expected
service cost inflation and the cost of the two pad delays. The
other half of the capital increase reflects continuous improvement
gains, which provide a 30 Bcfe production bump in 2018 guidance
while holding 2017 production guidance steady. This yields
compelling rates of return and NAV per share accretion."
"Assuming no additional asset sales beyond those currently under
contract or closed, we should finish the year at a leverage ratio
in the mid-2x range. Additional asset sales that get us to the
$600 million end of our asset sale
guidance range would drive leverage ratio even lower. Our
liquidity, leverage, and overall balance sheet strength have come a
long way since mid-2015 and now provide us the optionality we have
desired to grow NAV per share across what is an exciting game board
over the next 18 months."
During the second quarter, CONSOL Energy received approximately
$326 million in proceeds from asset
sales, which included four recently closed transactions for
approximately $215 million. The total
undeveloped acres sold in these transactions included approximately
22,500 Marcellus Shale acres, along with some associated Utica
Shale acres in Pennsylvania. The first transaction, which
resulted in assets being sold for approximately $130 million, included the sale of 12 proved
developed producing (PDP) wells averaging a total of approximately
20.0 MMcfe per day, 15 drilled but uncompleted (DUC) wells, and
approximately 11,000 undeveloped leasehold acres, in each case
located in Doddridge and
Wetzel counties, West Virginia. Also, as part of the
transaction, CONSOL received approximately 2,400 Marcellus and
Utica Shale acres within the company's Wadestown project area, which is located in
Monongalia County, West
Virginia. In aggregate, the other three transactions
consisted of the sale of non-producing scattered Marcellus Shale
acres, along with some associated Utica Shale acres, in
Westmoreland, Washington, and Allegheny counties, Pennsylvania. These three Pennsylvania transactions, which also included
an overriding royalty on future production associated with the
Utica Shale, consisted of the sale of 11,500 undeveloped acres and
totaled approximately $85 million, or
on average approximately $7,800 per
undeveloped acre. Lastly, the company expects to close another
transaction during the third quarter involving the sale of non-core
Marcellus Shale acres in Allegheny and Westmoreland counties, Pennsylvania, for approximately $30 million.
During the quarter, CONSOL Energy generated approximately
$273 million in free cash
flow1, which included proceeds from sales of assets.
Utilizing free cash flow generated during the quarter, the company
repurchased approximately $19 million
of its 2022 bonds at an average price of $99.51 in the open market, and increased its
liquidity to approximately $2.0
billion, which includes $292.5
million of cash. Also, after the end of the second quarter,
the company redeemed the outstanding balance on its 2020 and 2021
bonds, which was $74.5 million and
$20.6 million, respectively.
CONSOL Energy recently announced the filing of a Form 10
registration statement with the U.S. Securities and Exchange
Commission for a spin-off of its coal business, including the
Pennsylvania Mining Complex and other coal-related assets and
liabilities. This filing represents an important milestone for the
company to complete the separation of the coal and E&P
businesses, with each separate company being well capitalized and
free cash flow generating following the separation. The company has
been running dual processes to separate the businesses, and shortly
following the recent filing of the Form 10 registration statement,
the company concluded that the sale process did not produce
compelling results. Therefore, the company is now 100% focused on
executing a spin-off transaction of the coal business and expects
to be ready to spin no later than year-end 2017.
1The terms "adjusted net income attributable to
CONSOL Energy Shareholders," "EBITDA from continuing operations,"
and "adjusted EBITDA from continuing operations" are non-GAAP
financial measures, which are defined and reconciled to the GAAP
net income below, under the caption "Non-GAAP Financial Measures."
The terms "free cash flow," and "organic free cash flow from
continuing operations" are non-GAAP financial measures, which are
defined and reconciled to the GAAP Net Cash Provided by Operating
Activities, also under the caption "Non-GAAP Financial
Measures."
E&P Division:
During the second quarter of 2017, CONSOL's E&P Division
sold 92.2 Bcfe, or a decrease of 7% from the 99.3 Bcfe sold in the
year-earlier quarter, which resulted primarily from both timing
delays associated with the TIL schedule and from the company
selling approximately 3.0 Bcfe of production related to the net
developed acres located in Doddridge and Wetzel counties, West Virginia. As stated last quarter, the
company expected to TIL three pads in the second quarter; however,
due to operational delays, the company ended up turning-in-line one
pad. Therefore, the company expects to TIL five pads in the third
quarter, which includes the two delayed pads from the second
quarter. Lastly, the decrease of 3.0 Bcfe of production associated
with the West Virginia sale was
retroactive starting on January 1,
2017 through May 31,
2017.
During the quarter, total production costs decreased to
$2.20 per Mcfe, compared to the
year-earlier quarter of $2.27 per
Mcfe, driven primarily by reductions to depreciation, depletion and
amortization (DD&A), lease operating expense (LOE), and taxes.
These reductions were partially offset by an increase in gathering
costs related to the Marcellus Shale production mix increasing.
When compared to the first quarter of 2017, total production costs
decreased by $0.12 per Mcfe, despite
a modest decline in production of approximately 3%. These
sequential quarter-over-quarter cost reductions were driven in part
by improved gathering costs resulting from lower Marcellus Shale
production volumes, as well as improved processing costs related to
the sale of the West Virginia
assets.
E&P Division capital expenditures increased in the second
quarter to $142.3 million, compared
to $100.8 million spent in the first
quarter of 2017, due primarily to an increase in capital associated
with additional completion activity.
Marcellus Shale production volumes, including liquids, in the
2017 second quarter were 56.9 Bcfe, approximately 7% higher than
the 53.1 Bcfe produced in the 2016 second quarter. The increased
Marcellus production is due in part to CONSOL obtaining newer wells
and more flowing production as part of the dissolution of the
Marcellus Shale joint venture. Marcellus total production costs
were $2.05 per Mcfe in the just-ended
quarter, which is a $0.20 per Mcfe
improvement from the second quarter of 2016 of $2.25 per Mcfe, driven by reductions to LOE and
DD&A. The decrease in LOE is primarily driven by reductions to
water disposal costs resulting from increased use of produced water
in active completion operations.
CONSOL Energy's Utica Shale production volumes, including
liquids, in the 2017 second quarter were 13.8 Bcfe, down
approximately 41% from 23.3 Bcfe in the year-earlier quarter. The
decline in Utica Shale volumes was driven primarily from timing
delays associated with the TIL schedule, resulting in natural
production declines in both the wet and dry gas areas. Utica Shale
total production costs were $2.04 per
Mcfe in the just-ended quarter, which is a $0.28 per Mcfe impairment from the second quarter
of 2016 total production costs of $1.76 per Mcfe. The cost impairment was driven by
lower Utica Shale volumes resulting in increased LOE and firm
transportation and processing costs. Also, Utica Shale DD&A
rates increased, in part, due to higher capital costs associated
with the initial dry Utica
delineation wells in Pennsylvania.
These cost increases were partially offset by a decrease in
taxes due to an adjustment related to a non-operated area. CONSOL
Energy continues to expect Utica Shale total production costs to
improve to approximately $1.80 per
Mcfe for full year 2017, driven primarily by the addition of lower
operating cost dry Utica Shale wells becoming a larger part of the
production mix.
E&P Division Second Quarter Operations Summary:
In the quarter, CONSOL operated two horizontal rigs and drilled
seven dry Utica Shale wells: five wells located in Monroe County, Ohio and two wells (Aikens 5J
and 5M) located in Westmoreland County,
Pennsylvania, which are offset wells to the Gaut 4IH dry
Utica well. The Monroe County, Ohio, wells averaged
approximately 10,000 lateral feet and 19.7 drilling days per well,
compared to 21.5 drilling days per well during the first quarter of
2017. At the current pace, a single rig could drill 17.5
Ohio dry Utica Shale wells
averaging 10,000 foot laterals, per year, which is an 8%
improvement compared to the first quarter of 2017. Also during the
quarter, drilling costs in the Ohio Utica Shale improved by 5%,
compared to the first quarter of 2017. The Aikens 5J and 5M wells
averaged 7,500 foot laterals and 38.6 drilling days, with the
Aikens 5M well finishing in 34 days. The drilling costs associated
with the Aikens 5J and 5M wells are $5.5
million and $4.6 million,
respectively. Over the course of the first three Westmoreland County, Pennsylvania, dry Utica
Shale wells, CONSOL has reduced drilling capital by 71% or
$11.45 million, when comparing the
third well (Aikens 5M) to the first (Gaut 4IH).
Utilizing two frac crews, the company completed 15 wells in the
quarter: five Marcellus Shale wells and one Upper Devonian well
located in Greene County,
Pennsylvania; three West Virginia Marcellus Shale wells
located in Ritchie County, West
Virginia; and six dry Utica Shale wells located in
Monroe County, Ohio.
During the quarter, CONSOL turned-in-line six wells: five
Marcellus Shale wells located in Ritchie
County, West Virginia, and one wet Marcellus Shale well
located in Allegheny County,
Pennsylvania.
In the second half of 2017, the company expects to TIL slightly
more wells in the third quarter, compared to the fourth quarter.
Due to the timing associated with the TIL schedule, the company
expects sequential quarterly production growth in the third and
fourth quarters of 2017, with production highest in the fourth
quarter of 2017.
E&P DIVISION
RESULTS — Quarter-to-Quarter Comparison
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Quarter
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Quarter
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Quarter
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Ended
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Ended
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Ended
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June 30,
2017
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June 30,
2016
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March 31,
2017
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Sales -
Gas
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$
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233.7
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$
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140.3
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$
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273.6
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Sales -
Oil
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1.1
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0.6
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0.6
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Sales -
NGLs
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21.6
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19.2
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39.3
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Sales -
Condensate
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3.9
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7.8
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4.3
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Total Sales Revenue
($ MM)
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$
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260.3
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$
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167.9
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$
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317.8
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(Loss) Gain on
Commodity Derivative Instruments - Cash Settlement
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(32.3)
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80.3
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(47.1)
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Total
Revenue
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$
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228.0
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$
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248.2
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$
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270.7
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Earnings (Loss)
Before Income Tax ($ MM)
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$
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227.4
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$
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(294.6)
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$
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(93.5)
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Adjusted Earnings
(Loss) Before Income Tax ($MM)
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$
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5.7
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1
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$
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(7.3)
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2
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$
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23.6
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3
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Capital Expenditures
($ MM)
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$
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142.3
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$
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23.4
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$
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100.8
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1Adjusted
earnings before income tax for the E&P Division of $5.7 million
for the three months ended June 30, 2017 is calculated as GAAP
earnings before income tax of $227.4 million less total pre-tax
adjustments of $221.7 million. The $221.7 million of
adjustments are $116.0 million of pre-tax gain related to the
unrealized gain on commodity derivative instruments, $126.7 million
of pre-tax gains on asset sales, a pre-tax loss related to $16.9
million in lease expirations and a pre-tax charge of $4.1 million
related to stock-based compensation.
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2Adjusted
loss before income tax for the E&P Division of $7.3 million for
the three months ended June 30, 2016 is calculated as GAAP loss
before income tax of $294.6 million plus total pre-tax adjustments
of $273.1 million. The $273.1 million adjustment includes a $279.7
million pre-tax loss related to the unrealized loss on commodity
derivative instruments, a pre-tax charge of $7.1 million related to
stock-based compensation and a pre-tax loss of $0.5 million
related to severance expense.
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3Adjusted
earnings before income tax for the E&P Division of $23.6
million for the three months ended March 31, 2017 is calculated as
GAAP loss before income tax of $93.5 million plus total pre-tax
adjustments of $117.1 million. The $117.1 million adjustment
includes a $24.6 million pre-tax gain related to the unrealized
gain on commodity derivative instruments, a pre-tax loss of $137.9
million related to the impairment of exploration and production
assets, a pre-tax charge of $3.7 million related to stock-based
compensation and a pre-tax loss of $0.1 million related to
severance expense.
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CONSOL's E&P Division production in the quarter came from
the following categories:
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Quarter
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Quarter
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Quarter
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Ended
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Ended
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|
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Ended
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June 30,
2017
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June 30,
2016
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% Increase/
(Decrease)
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March 31,
2017
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% Increase/
(Decrease)
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GAS
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Marcellus Sales
Volumes (Bcf)1
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51.1
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47.2
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8.3
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%
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52.9
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(3.4)
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%
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Utica Sales Volumes
(Bcf)
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10.7
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18.7
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(42.8)
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%
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11.6
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(7.8)
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%
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CBM Sales Volumes
(Bcf)
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16.5
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17.1
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(3.5)
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%
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16.7
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(1.2)
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%
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Other Sales Volumes
(Bcf)2
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4.9
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5.7
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(14.0)
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%
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4.9
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—
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%
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LIQUIDS3
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NGLs Sales Volumes
(Bcfe)
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8.1
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9.0
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(10.0)
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%
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8.1
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—
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%
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Oil Sales Volumes
(Bcfe)
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0.2
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0.1
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|
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100.0
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%
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0.1
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|
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100.0
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%
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Condensate Sales
Volumes (Bcfe)
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0.7
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1.5
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(53.3)
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0.7
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—
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%
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TOTAL
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92.2
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99.3
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(7.2)
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%
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95.0
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(2.9)
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%
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Average Daily
Production (MMcfe)
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1,013.4
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1,090.9
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1,055.8
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1In the
quarter, the company sold approximately 3.0 Bcfe of production
related to the net developed acres located in Doddridge and Wetzel
counties, West Virginia, and the production was retroactive from
January 1, 2017 through May 31, 2017.
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2Other
Sales Volumes: primarily related to shallow oil and gas
production.
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3NGLs,
oil and Condensate are converted to Mcfe at the rate of one
barrel equals six Mcf based upon the approximate relative energy
content of oil and natural gas, which is not indicative of the
relationship of oil, NGLs, condensate, and natural gas
prices.
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E&P PRICE AND
COST DATA PER MCFE — Quarter-to-Quarter Comparison:
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Quarter
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Quarter
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Quarter
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Ended
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Ended
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Ended
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(Per Mcfe)
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June 30,
2017
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June 30,
2016
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March 31,
2017
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Average Sales Price -
Gas
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$
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2.81
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$
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1.58
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$
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3.18
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Average (Loss) Gain
on Commodity Derivative Instruments - Cash Settlement-
Gas
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|
$
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(0.39)
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$
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0.91
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$
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(0.55)
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Average Sales Price -
Oil*
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$
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8.03
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$
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5.62
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$
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7.40
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Average Sales Price -
NGLs*
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$
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2.66
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$
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2.14
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$
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4.86
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Average Sales Price -
Condensate*
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$
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5.69
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$
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5.28
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$
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5.64
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Average Sales Price -
Total Company
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$
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2.47
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$
|
2.50
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$
|
2.85
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Lease Operating
Expense
|
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$
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0.23
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$
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0.24
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$
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0.23
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Production, Ad
Valorem, and Other Fees
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0.05
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0.07
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0.09
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Transportation,
Gathering and Compression
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0.94
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0.92
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0.99
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Depreciation,
Depletion and Amortization (DD&A)
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0.98
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1.04
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1.01
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Total Production
Costs
|
|
$
|
2.20
|
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$
|
2.27
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$
|
2.32
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Margin
|
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$
|
0.27
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$
|
0.23
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$
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0.53
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Addback:
DD&A
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$
|
0.98
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$
|
1.04
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$
|
1.01
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Margin, before
DD&A
|
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$
|
1.25
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$
|
1.27
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$
|
1.54
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*Oil,
NGLs, and Condensate are converted to Mcfe at the rate of one
barrel equals six Mcf based upon the approximate relative energy
content of oil and natural gas, which is not indicative of the
relationship of oil, NGLs, condensate, and natural gas
prices.
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Note: "Total
Production Costs" excludes Selling, General, and Administration and
Other Corporate Expenses.
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The average sales price of $2.47
per Mcfe, when combined with unit costs of $2.20 per Mcfe, resulted in a margin of
$0.27 per Mcfe. This was an increase
when compared to the year-earlier quarter, due to improvements in
total production costs, offset by a reduction in average sales
price.
Marketing Update:
For the second quarter of 2017, CONSOL's average sales price for
natural gas, natural gas liquids (NGLs), oil, and condensate was
$2.47 per Mcfe. CONSOL's average
price for natural gas was $2.81 per
Mcf for the quarter and, including cash settlements from hedging,
was $2.42 per Mcf. The average
realized price for all liquids for the second quarter of 2017 was
$17.81 per barrel.
CONSOL's weighted average differential from NYMEX in the second
quarter of 2017 was negative $0.52
per MMBtu. CONSOL's average sales price for natural gas
before hedging was $0.37 per Mcf
lower than the $3.18 per Mcf reported
for the first quarter of 2017. The decrease results primarily from
a lower Henry Hub price coupled with a wider differential.
CONSOL continued to recover and sell discretionary ethane during
the quarter. Directly-marketed ethane volumes were 600,000 barrels
in the second quarter of 2017 and yielded a weighted average sales
price in excess of Mont Belvieu ethane and $1.14 per MMBtu higher than CONSOL's residue
natural gas alternative.
E&P Division Guidance:
CONSOL Energy maintains its E&P Division production guidance
for 2017 of approximately 420-440 Bcfe, while increasing its total
E&P capital expenditures in 2017 to approximately $620-$645 million, compared to previous guidance
of approximately $555 million. The
increase in 2017 capital is driven primarily by three areas:
additional capital associated with operational challenges in the
second quarter, service cost inflation related to pressure pumping
services, and continuous improvement progress. The continuous
improvement progress is driven by improved drilling cycle times
resulting in the company expecting to drill nine additional wells
in 2017 and by modifying production protocols, both of which are
expected to increase 2018 production to 520-550 Bcfe, compared to
previous guidance of 490-520 Bcfe. Also, the company has added
another layer of hedges for the expected incremental production in
2018 to help lock in returns and cash flows.
CONSOL Energy continued its programmatic hedge program to
further build out NYMEX and basis hedges through 2021. Total hedged
natural gas production in the 2017 third quarter is 81.7 Bcf. The
annual gas hedge position is shown in the table below:
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|
2017
|
|
2018
|
Volumes Hedged (Bcf),
as of 7/12/17
|
|
315.2*
|
|
329.1
|
|
|
|
|
|
|
|
*Includes
actual settlements of 177.3 Bcf.
|
CONSOL Energy's hedged gas volumes include a combination of
NYMEX financial hedges and index (NYMEX and basis) hedges and
contracts. In addition, to protect the NYMEX hedge volumes from
basis exposure, CONSOL enters into basis-only financial hedges and
physical sales with fixed basis at certain sales points. CONSOL
Energy's gas hedge position is shown in the table below:
|
|
Q3
2017
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
NYMEX Only
Hedges
|
|
|
|
|
|
|
|
|
|
|
Volumes
(Bcf)
|
|
73.5
|
|
|
282.4
|
|
|
311.9
|
|
|
217.6
|
|
|
134.1
|
|
Average Prices
($/Mcf)
|
|
$
|
3.15
|
|
|
$
|
3.14
|
|
|
$
|
3.14
|
|
|
$
|
3.02
|
|
|
$
|
3.05
|
|
Index Hedges and
Contracts
|
|
|
|
|
|
|
|
|
|
|
Volumes
(Bcf)
|
|
8.2
|
|
|
32.8
|
|
|
17.2
|
|
|
13.0
|
|
|
7.8
|
|
Average Prices
($/Mcf)
|
|
$
|
3.17
|
|
|
$
|
3.15
|
|
|
$
|
2.62
|
|
|
$
|
2.47
|
|
|
$
|
2.41
|
|
Total Volumes
Hedged (Bcf)
|
|
81.7
|
|
|
315.2
|
|
|
329.1
|
|
|
230.6
|
|
|
141.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NYMEX + Basis
(fully-covered volumes)1
|
|
|
|
|
|
|
|
|
|
|
Volumes
(Bcf)
|
|
77.7
|
|
|
309.8
|
|
|
308.0
|
|
|
200.0
|
|
|
120.2
|
|
Average Prices
($/Mcf)
|
|
$
|
2.54
|
|
|
$
|
2.59
|
|
|
$
|
2.81
|
|
|
$
|
2.73
|
|
|
$
|
2.78
|
|
NYMEX Only Hedges
Exposed to Basis
|
|
|
|
|
|
|
|
|
|
|
Volumes
(Bcf)
|
|
4.0
|
|
|
5.4
|
|
|
21.1
|
|
|
30.6
|
|
|
21.7
|
|
Average Prices
($/Mcf)
|
|
$
|
3.15
|
|
|
$
|
3.14
|
|
|
$
|
3.14
|
|
|
$
|
3.02
|
|
|
$
|
3.05
|
|
Total Volumes
Hedged (Bcf)
|
|
81.7
|
|
|
315.2
|
|
|
329.1
|
|
|
230.6
|
|
|
141.9
|
|
1Includes
physical sales with fixed basis in Q3 2017, 2017, 2018, 2019, and
2020 of 15.1 Bcf, 62.6 Bcf, 106.6 Bcf, 97.6 Bcf, and 48.1 Bcf,
respectively.
|
During the second quarter of 2017, CONSOL Energy added
additional NYMEX natural gas hedges of 40.5 Bcf, 27.6 Bcf, and 20.0
Bcf for 2018, 2019, and 2020, respectively. To help mitigate basis
exposure on NYMEX hedges, in the second quarter CONSOL added 52.6
Bcf, 28.7 Bcf, 9.9 Bcf, and 9.4 Bcf of basis hedges for 2018, 2019,
2020, and 2021, respectively.
Pennsylvania (PA) Mining
Operations Division:
CONSOL Energy's PA Mining Operations sold 6.8 million tons in
the 2017 second quarter, compared to 6.2 million tons during the
year-earlier quarter. During the quarter, the average cost of coal
sold increased slightly to $34.79 per
ton, compared to $34.46 per ton in
the year-earlier quarter due in part to additional equipment
maintenance.
Second Quarter Summary:
CNX Coal Resources LP ("CNXC") reported the following in its
second quarter 2017 earnings press release, dated July 31, 2017: "The CNXC marketing team was also
successful in placing significant volumes of coal under contract
for the 2019-2021 period... demonstrating our ability and
willingness to enter into longer term (3+ years) commitments with
the right partners. Approximately 30% of the PAMC's 2019 planned
production is now sold."
During the quarter, on a total consolidated basis, PA Mining
Operations Division generated $107
million of cash flow before capital expenditures.
PA MINING
OPERATIONS RESULTS - Quarter-To-Quarter Comparison
|
|
|
|
|
|
|
|
|
|
PA Mining
Ops
|
|
PA Mining
Ops
|
|
PA Mining
Ops
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
June
30,
|
|
June
30,
|
|
March
31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
|
|
|
|
|
|
Beginning Inventory
(millions of tons)
|
|
0.3
|
|
|
0.3
|
|
|
0.2
|
|
Coal Production
(millions of tons)
|
|
6.8
|
|
|
6.0
|
|
|
6.9
|
|
Ending Inventory
(millions of tons)
|
|
0.3
|
|
|
0.1
|
|
|
0.3
|
|
Sales - Company
Produced (millions of tons)
|
|
6.8
|
|
|
6.2
|
|
|
6.8
|
|
|
|
|
|
|
|
|
Sales Per
Ton
|
|
$
|
44.75
|
|
|
$
|
40.61
|
|
|
$
|
46.80
|
|
|
|
|
|
|
|
|
Average Cost of Coal
Sold Per Ton
|
|
$
|
34.79
|
|
|
$
|
34.46
|
|
|
$
|
34.52
|
|
|
|
|
|
|
|
|
Average Margin Per
Ton Sold
|
|
$
|
9.96
|
|
|
$
|
6.15
|
|
|
$
|
12.28
|
|
Addback: DD&A Per
Ton
|
|
$
|
5.71
|
|
|
$
|
6.50
|
|
|
$
|
5.77
|
|
Average Margin Per
Ton, before DD&A
|
|
$
|
15.67
|
|
|
$
|
12.65
|
|
|
$
|
18.05
|
|
Cash Flow before Cap.
Ex ($ MM)
|
|
$
|
107
|
|
|
$
|
78
|
|
|
$
|
123
|
|
Note: The PA
Mining Operations include Bailey, Enlow Fork, and Harvey mines.
Total Production Costs per Ton include: operating and other costs,
royalty and production taxes and depreciation, depletion and
amortization. Sales tons times Average Margin Per Ton, before
DD&A is meant to approximate the amount of cash generated by PA
Mining Operations. This cash generation will be offset by
maintenance of production (MOP) capital expenditures. Table may not
sum due to rounding.
|
CONSOL Energy maintains total consolidated PA Mining Operations
annual sales to be approximately 25.6-27.6 million tons for 2017.
Also, CONSOL Energy maintains total consolidated capital
expenditures for PA Mining Operations to be $120-$136 million for 2017.
2017 EBITDA
Guidance by Segment:
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
|
E&P
Division1
|
|
PA Mining
Operations
Division
|
|
Other
|
|
Total
|
Earnings Before
Interest, Taxes and DD&A (EBITDA)
|
|
$
|
665
|
|
|
$
|
410
|
|
|
$
|
(20)
|
|
|
$
|
1,055
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Unrealized Gain
on Commodity Derivative Instruments
|
|
(165)
|
|
|
-
|
|
-
|
|
(165)
|
|
Stock-Based
Compensation
|
|
20
|
|
|
10
|
|
|
-
|
|
30
|
|
Adjusted
EBITDA
|
|
$
|
520
|
|
|
$
|
420
|
|
|
$
|
(20)
|
|
|
920
|
|
Noncontrolling
Interest
|
|
-
|
|
$
|
(50)
|
|
|
-
|
|
(50)
|
|
Adjusted EBITDA
Attributable to CNX
|
|
$
|
520
|
|
|
$
|
370
|
|
|
$
|
(20)
|
|
|
$
|
870
|
|
Note: CONSOL Energy
is unable to provide a reconciliation of projected Adjusted EBITDA
to projected operating income, the most comparable financial
measure calculated in accordance with GAAP, due to the unknown
effect, timing and potential significance of certain income
statement items. EBITDA guidance based on the midpoint of
production guidance and assumes NYMEX as of 6/30/2017 of $3.17 +
weighted average basis of ($0.51) per MMBtu on open
volumes.
|
1Includes
forecasted Earnings of Equity Affiliates of $40 million in 2017
associated with CONSOL Energy's proportionate share of ownership in
CONE Midstream Partners. This income is reflected within
Miscellaneous Other Income in the CNX income statement.
|
During the quarter, EBITDA guidance for 2017 decreased for the
E&P Division by approximately $55
million, compared to the first quarter of 2017, due to
decreased NYMEX pricing and basis differentials. Specifically,
second quarter EBITDA guidance is based on NYMEX as of June 30, 2017 of $3.17 per MMBtu plus a weighted average basis of
negative $0.51 per MMBtu on open
volumes. This compares to the first quarter EBITDA guidance,
which was based on NYMEX as of April
4, 2017 of $3.40 per MMBtu
plus a weighted average basis of negative $0.29 per MMBtu on open volumes.
Liquidity:
As of June 30, 2017, CONSOL Energy
had $1,978.7 million in total
liquidity, which is comprised of $292.5
million of cash, excluding the CNXC cash balance, and
$1,686.2 million available to be
borrowed under its $2.0 billion bank
facility. In addition, CONSOL holds 16.6 million CNXC limited
partnership units, including 3.9 million class A preferred units,
with an aggregated current market value of approximately
$268 million and 21.7 million CONE
Midstream Partners LP ("CNNX") limited partnership units with a
current market value of approximately $432
million, in each case as of July 21,
2017.
CONSOL Energy's net leverage ratio at the end of the quarter was
3.0x, which is an improvement of 0.5x and 0.9x compared to 3.5x at
March 31, 2017 and 3.9x at
December 31, 2016, respectively.
Financial performance from operations along with asset sales and
debt reduction drove the decrease in leverage.
About CONSOL
CONSOL Energy Inc. (NYSE: CNX) is
a Pittsburgh-based energy producer, and one of the largest
independent natural gas exploration, development and production
companies, with operations centered in the major shale formations
of the Appalachian basin. The company deploys an organic growth
strategy focused on developing its substantial resource base. As
of December 31, 2016, CONSOL Energy had 6.3 trillion
cubic feet equivalent of proved natural gas
reserves. CONSOL Energy is a member of the Standard
& Poor's Midcap 400 Index. Additional information may be
found at www.consolenergy.com.
Non-GAAP Financial Measures
Definition: EBIT is
defined as earnings before deducting net interest expense (interest
expense less interest income) and income taxes. EBITDA is
defined as earnings before deducting net interest expense (interest
expense less interest income), income taxes and depreciation,
depletion and amortization. Adjusted EBITDA is defined as
EBITDA after adjusting for the discrete items listed below.
Although EBIT, EBITDA, and Adjusted EBITDA are not measures of
performance calculated in accordance with generally accepted
accounting principles, management believes that they are useful to
an investor in evaluating CONSOL Energy because they are widely
used to evaluate a company's operating performance. We exclude
stock-based compensation from Adjusted EBITDA because we do not
believe it accurately reflects the actual operating expense
incurred during the relevant period and may vary widely from period
to period irrespective of operating results. Investors should not
view these metrics as a substitute for measures of performance that
are calculated in accordance with generally accepted accounting
principles. In addition, because all companies do not
calculate EBIT, EBITDA, or Adjusted EBITDA identically, the
presentation here may not be comparable to similarly titled
measures of other companies.
Reconciliation of EBIT, EBITDA and Adjusted EBITDA to financial
net income attributable to CONSOL Energy Shareholders is as follows
(dollars in 000):
|
|
Three Months
Ended
|
|
|
June
30,
|
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
|
2016
|
Dollars in
thousands
|
|
E&P
Division
|
|
PA Mining
Operations
Division
|
|
Other1
|
|
Total
Company
|
|
Total
Company
|
Net Income
(Loss)
|
|
$
|
227,413
|
|
|
$
|
51,876
|
|
|
$
|
(105,466)
|
|
|
$
|
173,823
|
|
|
$
|
(468,649)
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Loss from
Discontinued Operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
234,605
|
|
Add: Interest
Expense
|
|
598
|
|
|
2,233
|
|
|
40,601
|
|
|
43,432
|
|
|
47,428
|
|
Less: Interest
Income
|
|
—
|
|
|
—
|
|
|
(6,533)
|
|
|
(6,533)
|
|
|
(547)
|
|
Add: Income
Taxes
|
|
—
|
|
|
—
|
|
|
66,993
|
|
|
66,993
|
|
|
(100,856)
|
|
Earnings Before
Interest & Taxes (EBIT)
|
|
228,011
|
|
|
54,109
|
|
|
(4,405)
|
|
|
277,715
|
|
|
(288,019)
|
|
|
|
|
|
|
|
|
|
|
|
|
Add:
Depreciation, Depletion & Amortization
|
|
91,287
|
|
|
41,402
|
|
|
(15,620)
|
|
|
117,069
|
|
|
135,220
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Before
Interest, Taxes and DD&A (EBITDA) from Continuing
Operations
|
|
$
|
319,298
|
|
|
$
|
95,511
|
|
|
$
|
(20,025)
|
|
|
$
|
394,784
|
|
|
$
|
(152,799)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Unrealized (Gain)
Loss on Commodity Derivative Instruments
|
|
(116,073)
|
|
|
—
|
|
|
—
|
|
|
(116,073)
|
|
|
279,715
|
|
Gain on Asset
Sales
|
|
(126,707)
|
|
|
—
|
|
|
—
|
|
|
(126,707)
|
|
|
—
|
|
Severance
Expense
|
|
10
|
|
|
—
|
|
|
103
|
|
|
113
|
|
|
1,451
|
|
Other Transaction
Fees
|
|
—
|
|
|
—
|
|
|
8,411
|
|
|
8,411
|
|
|
—
|
|
Loss on Debt
Extinguishment
|
|
—
|
|
|
—
|
|
|
36
|
|
|
36
|
|
|
—
|
|
Stock-Based
Compensation
|
|
4,148
|
|
|
5,332
|
|
|
495
|
|
|
9,975
|
|
|
10,430
|
|
Pension
Settlement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,696
|
|
Lease
Expirations
|
|
16,861
|
|
|
—
|
|
|
—
|
|
|
16,861
|
|
|
—
|
|
Coal Contract
Buyout
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,288)
|
|
Total Pre-tax
Adjustments
|
|
(221,761)
|
|
|
5,332
|
|
|
9,045
|
|
|
(207,384)
|
|
|
299,004
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA from
Continuing Operations
|
|
$
|
97,537
|
|
|
$
|
100,843
|
|
|
$
|
(10,980)
|
|
|
$
|
187,400
|
|
|
$
|
146,205
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Adjusted EBITDA
Attributable to Noncontrolling Interest2
|
|
—
|
|
|
10,302
|
|
|
—
|
|
|
10,302
|
|
|
6,942
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Attributable to Continuing Operations
|
|
$
|
97,537
|
|
|
$
|
90,541
|
|
|
$
|
(10,980)
|
|
|
$
|
177,098
|
|
|
$
|
139,263
|
|
Note: Income
tax effect of Total Pre-tax Adjustments was $76,732 and $110,631
for the three months ended June 30, 2017 and June 30, 2016,
respectively. Adjusted net income attributable to CONSOL Energy
Shareholders for the three months ended June 30, 2017 is calculated
as GAAP net income attributable to CONSOL Energy Shareholders of
$169,510 less total pre-tax adjustments from the above table of
$207,384, plus the associated tax expense of $76,732 equals the
adjusted net income attributable to CONSOL Energy Shareholders of
$38,858.
|
1CONSOL
Energy's Other Division includes expenses from various other
corporate and diversified business unit activities including legacy
liabilities costs and income tax expense that are not allocated to
E&P or PA Mining Operations Divisions.
|
2Adjusted
EBITDA Attributable to Noncontrolling Interest for the three months
ended June 30,2017 is Net Income Attributable to Noncontrolling
interest of $4,313 plus Depreciation, Depletion and Amortization of
$4,606, plus Interest Expense of $1,074, plus Stock-based
compensation of $309.
|
Adjusted EBITDA
Attributable to Noncontrolling Interest for the three months ended
June 30,2016 is Net Income Attributable to Noncontrolling interest
of $1,179 plus Depreciation, Depletion and Amortization of $4,646,
plus Interest Expense of $925 plus Stock-based compensation of
$192.
|
Free cash flow and organic free cash flow from continuing
operations are non-GAAP financial measures. Management believes
that these measures are meaningful to investors because management
reviews cash flows generated from operations and non-core asset
sales after taking into consideration capital expenditures due to
the fact that these expenditures are considered necessary to
maintain and expand CONSOL's asset base and are expected to
generate future cash flows from operations. It is important to note
that free cash flow and organic free cash flow from continuing
operations do not represent the residual cash flow available for
discretionary expenditures since other non-discretionary
expenditures, such as mandatory debt service requirements, are not
deducted from the measure.
Organic Free
Cash Flow from Continuing
Operations
|
Three Months
Ended
June 30, 2017
|
Net Cash Provided by
Continuing Operations
|
$
|
88,977
|
|
|
|
Capital
Expenditures
|
(160,348)
|
|
Net Distributions
from Equity Affiliates
|
18,791
|
|
Organic Free Cash
Flow from Continuing Operations
|
$
|
(52,580)
|
|
|
|
|
|
|
|
Free Cash
Flow
|
Three Months
Ended
June 30, 2017
|
Net Cash Provided by
Operating Activities
|
$
|
88,777
|
|
|
|
Capital
Expenditures
|
(160,348)
|
|
Net Distributions
from Equity Affiliates
|
18,791
|
|
Proceeds From Sales
of Assets
|
325,724
|
|
Free Cash
Flow
|
$
|
272,944
|
|
Cautionary Statements
Various statements in this release, including those that express
a belief, expectation or intention, may be considered
forward-looking statements under federal securities laws including
Section 21E of the Securities Exchange Act of 1934 (the "Exchange
Act") that involve risks and uncertainties that could cause actual
results to differ materially from projected results. Accordingly,
investors should not place undue reliance on forward-looking
statements as a prediction of actual results. The forward-looking
statements may include projections and estimates concerning the
timing and success of specific projects and our future production,
revenues, income and capital spending. When we use the words
"believe," "intend," "expect," "may," "should," "anticipate,"
"could," "estimate," "plan," "predict," "project," "will," or their
negatives, or other similar expressions, the statements which
include those words are usually forward-looking statements. When we
describe strategy that involves risks or uncertainties, we are
making forward-looking statements. The forward-looking statements
in this press release, if any, speak only as of the date of this
press release; we disclaim any obligation to update these
statements. We have based these forward-looking statements on our
current expectations and assumptions about future events. While our
management considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks, contingencies
and uncertainties, most of which are difficult to predict and many
of which are beyond our control. These risks, contingencies and
uncertainties relate to, among other matters, the following:
uncertainties as to the timing and manner of the separation
(whether by sale or spin-off) and whether it will be completed
(including any dropdowns of the coal business); the possibility
that various closing conditions for the separation may not be
satisfied; the impact of the separation on our business; the
expected tax treatment of the separation; the risk that the coal
and natural gas exploration and production businesses will not be
separated successfully or such separation may be more difficult,
time-consuming or costly than expected, which could result in
additional demands on our resources, systems, procedures and
controls, disruption of our ongoing business and diversion of
management's attention from other business concerns; competitive
responses to the separation; deterioration in economic conditions
in any of the industries in which our customers operate may
decrease demand for our products, impair our ability to collect
customer receivables and impair our ability to access capital;
prices for natural gas, natural gas and other liquids and coal are
volatile and can fluctuate widely based upon a number of factors
beyond our control including oversupply relative to the demand
available for our products, weather and the price and availability
of alternative fuels; an extended decline in the prices we receive
for our natural gas, natural gas liquids and coal affecting our
operating results and cash flows; foreign currency fluctuations
could adversely affect the competitiveness of our coal and natural
gas liquids abroad; our customers extending existing contracts or
entering into new long-term contracts for coal on favorable terms;
our reliance on major customers; our inability to collect payments
from customers if their creditworthiness declines or if they fail
to honor their contracts; the disruption of rail, barge, gathering,
processing and transportation facilities and other systems that
deliver our natural gas, natural gas liquids and coal to market; a
loss of our competitive position because of the competitive nature
of the natural gas and coal industries, or a loss of our
competitive position because of overcapacity in these industries
impairing our profitability; coal users switching to other fuels in
order to comply with various environmental standards related to
coal combustion emissions; the impact of potential, as well as any
adopted environmental regulations including any relating to
greenhouse gas emissions on our operating costs as well as on the
market for natural gas and coal and for our securities; the risks
inherent in natural gas and coal operations, including our reliance
upon third party contractors, being subject to unexpected
disruptions, including geological conditions, equipment failure,
timing of completion of significant construction or repair of
equipment, fires, explosions, accidents and weather conditions
which could impact financial results; decreases in the availability
of, or increases in, the price of commodities or capital equipment
used in our mining and transportation operations; obtaining and
renewing governmental permits and approvals for our natural gas and
coal operations; the effects of government regulation on the
discharge into the water or air, and the disposal and clean-up of,
hazardous substances and wastes generated during our natural gas
and coal operations; our ability to find adequate water sources for
our use in natural gas drilling, or our ability to dispose of water
used or removed from strata in connection with our natural gas
operations at a reasonable cost and within applicable environmental
rules; the effects of stringent federal and state employee health
and safety regulations, including the ability of regulators to shut
down our operations; the potential for liabilities arising from
environmental contamination or alleged environmental contamination
in connection with our past or current natural gas and coal
operations; the effects of mine closing, reclamation, gas well
closing and certain other liabilities; uncertainties in estimating
our economically recoverable natural gas, oil and coal reserves;
defects may exist in our chain of title and we may incur additional
costs associated with perfecting title for natural gas and coal
rights on some of our properties or failing to acquire these
additional rights may result in a reduction of our estimated
reserves; the outcomes of various legal proceedings, which are more
fully described in our reports filed under the Securities Exchange
Act of 1934; exposure to employee-related long-term liabilities;
acquisitions and divestitures we anticipate may not occur or
produce anticipated benefits; our participation in joint ventures
may restrict our operational and corporate flexibility, and actions
taken by a joint venture partner may impact our financial position
and operational results; risks associated with our debt; replacing
our natural gas and oil reserves, which if not replaced, will cause
our natural gas and oil reserves and production to decline;
declines in our borrowing base could occur for a variety of
reasons, including lower natural gas or oil prices, declines in
natural gas and oil proved reserves, and lending regulations
requirements or regulations; our hedging activities may prevent us
from benefiting from nearterm price increases and may expose us to
other risks; changes in federal or state income tax laws,
particularly in the area of percentage depletion and intangible
drilling costs, could cause our financial position and
profitability to deteriorate; failure to appropriately allocate
capital and other resources among our strategic opportunities may
adversely affect our financial condition; failure by Murray Energy
to satisfy liabilities it acquired from us, or failure to perform
its obligations under various arrangements, which we guaranteed,
could materially or adversely affect our results of operations,
financial position, and cash flows; information theft, data
corruption, operational disruption and/or financial loss resulting
from a terrorist attack or cyber incident; operating in a single
geographic area; certain provisions in our multi-year coal sales
contracts may provide limited protection during adverse economic
conditions, and may result in economic penalties or permit the
customer to terminate the contract; a majority of our common units
in CNX Coal Resources LP and CONE Midstream Partners LP are
subordinated, and we may not receive distributions from CNX Coal
Resources LP or CONE Midstream Partners LP; with respect to the
sale of the Buchanan and Amonate mines and other coal assets to
Coronado IV LLC - disruption to our business, including customer,
employee and supplier relationships resulting from this
transaction, and the impact of the transaction on our future
operating results; with respect to the termination of the joint
venture with Noble - disruption to our business, including customer
and supplier relationships resulting from this transaction, and the
impact of the transaction on our future operating and financial
results and liquidity; other factors discussed in the 2016 Form
10-K under "Risk Factors," as updated by any subsequent Form 10-Qs,
which are on file at the Securities and Exchange Commission. We
disclaim any obligation to update publicly any forward-looking
statements, whether in response to new information, future events
or otherwise, except as required by applicable law
The SEC permits oil and gas companies, in their filings with the
SEC, to disclose only proved, probable, and possible oil and gas
reserves that a company anticipates as of a given date to be
economically and legally producible and deliverable by application
of development projects to known accumulations. We may use certain
terms in this press release, such as EUR (estimated ultimate
recovery), unproved reserves and total resource potential, that the
SEC's rules strictly prohibit us from including in filings with the
SEC. These measures are by their nature more speculative than
estimates of reserves prepared in accordance with SEC definitions
and guidelines and accordingly are less certain. We also note that
the SEC strictly prohibits us from aggregating proved, probable and
possible reserves in filings with the SEC due to the different
levels of certainty associated with each reserve category.
This announcement does not constitute an offer to sell, or the
solicitation of an offer to buy, any securities of CNX Coal
Resources LP.
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME
|
|
|
|
|
(Dollars in
thousands, except per share data)
|
Three Months
Ended
|
|
Six Months
Ended
|
(Unaudited)
|
June
30,
|
|
June
30,
|
Revenues and Other
Income:
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Natural Gas, NGLs and
Oil Sales
|
$
|
260,305
|
|
|
$
|
167,931
|
|
|
$
|
578,068
|
|
|
$
|
349,188
|
|
Gain (Loss) on
Commodity Derivative Instruments
|
83,788
|
|
|
(199,380)
|
|
|
61,325
|
|
|
(144,320)
|
|
Coal Sales
|
303,707
|
|
|
250,562
|
|
|
620,155
|
|
|
476,726
|
|
Other Outside
Sales
|
15,974
|
|
|
8,207
|
|
|
29,027
|
|
|
15,973
|
|
Purchased Gas
Sales
|
10,316
|
|
|
7,929
|
|
|
19,294
|
|
|
16,547
|
|
Freight-Outside
Coal
|
17,763
|
|
|
11,447
|
|
|
30,045
|
|
|
24,557
|
|
Miscellaneous Other
Income
|
33,937
|
|
|
33,636
|
|
|
74,633
|
|
|
81,766
|
|
Gain (Loss) on Sale
of Assets
|
140,162
|
|
|
5,614
|
|
|
152,113
|
|
|
(1,662)
|
|
Total Revenue and
Other Income
|
865,952
|
|
|
285,946
|
|
|
1,564,660
|
|
|
818,775
|
|
Costs and
Expenses:
|
|
|
|
|
|
|
|
Exploration and
Production Costs
|
|
|
|
|
|
|
|
Lease Operating
Expense
|
21,072
|
|
|
23,655
|
|
|
42,705
|
|
|
51,394
|
|
Transportation,
Gathering and Compression
|
86,599
|
|
|
90,983
|
|
|
180,931
|
|
|
184,957
|
|
Production, Ad
Valorem, and Other Fees
|
4,606
|
|
|
6,402
|
|
|
13,935
|
|
|
14,705
|
|
Depreciation,
Depletion and Amortization
|
91,287
|
|
|
105,151
|
|
|
186,635
|
|
|
210,866
|
|
Exploration and
Production Related Other Costs
|
19,715
|
|
|
2,905
|
|
|
29,501
|
|
|
4,652
|
|
Purchased Gas
Costs
|
10,194
|
|
|
8,884
|
|
|
19,089
|
|
|
16,752
|
|
Other Corporate
Expenses
|
23,398
|
|
|
21,422
|
|
|
41,328
|
|
|
44,220
|
|
Impairment of
Exploration and Production Properties
|
—
|
|
|
—
|
|
|
137,865
|
|
|
—
|
|
Selling, General, and
Administrative Costs
|
20,672
|
|
|
25,411
|
|
|
42,162
|
|
|
47,869
|
|
Total Exploration
and Production Costs
|
277,543
|
|
|
284,813
|
|
|
694,151
|
|
|
575,415
|
|
PA Mining
Operations Costs
|
|
|
|
|
|
|
|
Operating and Other
Costs
|
201,091
|
|
|
184,459
|
|
|
400,905
|
|
|
338,560
|
|
Depreciation,
Depletion and Amortization
|
41,402
|
|
|
41,698
|
|
|
83,703
|
|
|
82,964
|
|
Freight
Expense
|
17,763
|
|
|
11,447
|
|
|
30,045
|
|
|
24,557
|
|
Selling, General, and
Administrative Costs
|
17,104
|
|
|
6,779
|
|
|
31,972
|
|
|
12,554
|
|
Total PA Mining
Operations Costs
|
277,360
|
|
|
244,383
|
|
|
546,625
|
|
|
458,635
|
|
Other
Costs
|
|
|
|
|
|
|
|
Miscellaneous
Operating Expense
|
38,731
|
|
|
51,776
|
|
|
81,493
|
|
|
86,923
|
|
Selling, General, and
Administrative Costs
|
3,654
|
|
|
4,075
|
|
|
6,286
|
|
|
6,128
|
|
Depreciation,
Depletion and Amortization
|
(15,620)
|
|
|
(11,629)
|
|
|
(4,499)
|
|
|
(3,622)
|
|
Loss (Gain) on Debt
Extinguishment
|
36
|
|
|
—
|
|
|
(786)
|
|
|
—
|
|
Interest
Expense
|
43,432
|
|
|
47,428
|
|
|
87,865
|
|
|
97,292
|
|
Total Other
Costs
|
70,233
|
|
|
91,650
|
|
|
170,359
|
|
|
186,721
|
|
Total Costs And
Expenses
|
625,136
|
|
|
620,846
|
|
|
1,411,135
|
|
|
1,220,771
|
|
Earnings (Loss)
From Continuing Operations Before Income Tax
|
240,816
|
|
|
(334,900)
|
|
|
153,525
|
|
|
(401,996)
|
|
Income Tax Expense
(Benefit)
|
66,993
|
|
|
(100,856)
|
|
|
13,204
|
|
|
(124,656)
|
|
Income (Loss) From
Continuing Operations
|
173,823
|
|
|
(234,044)
|
|
|
140,321
|
|
|
(277,340)
|
|
Loss From
Discontinued Operations, net
|
—
|
|
|
(234,605)
|
|
|
—
|
|
|
(287,772)
|
|
Net Income
(Loss)
|
173,823
|
|
|
(468,649)
|
|
|
140,321
|
|
|
(565,112)
|
|
Less: Net Income
Attributable to Noncontrolling Interest
|
4,313
|
|
|
1,179
|
|
|
9,777
|
|
|
2,293
|
|
Net Income (Loss)
Attributable to CONSOL Energy Shareholders
|
$
|
169,510
|
|
|
$
|
(469,828)
|
|
|
$
|
130,544
|
|
|
$
|
(567,405)
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME (CONTINUED)
|
|
|
|
|
(Dollars in
thousands, except per share data)
|
Three Months
Ended
|
|
Six Months
Ended
|
(Unaudited)
|
June
30,
|
|
June
30,
|
Earnings (Loss)
Per Share
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Basic
|
|
|
|
|
|
|
|
Income (Loss) from
Continuing Operations
|
$
|
0.74
|
|
|
$
|
(1.03)
|
|
|
$
|
0.57
|
|
|
$
|
(1.22)
|
|
Loss from
Discontinued Operations
|
—
|
|
|
(1.02)
|
|
|
—
|
|
|
(1.25)
|
|
Total Basic
Earnings (Loss) Per Share
|
$
|
0.74
|
|
|
$
|
(2.05)
|
|
|
$
|
0.57
|
|
|
$
|
(2.47)
|
|
Dilutive
|
|
|
|
|
|
|
|
Income (Loss) from
Continuing Operations
|
$
|
0.73
|
|
|
$
|
(1.03)
|
|
|
$
|
0.56
|
|
|
$
|
(1.22)
|
|
Loss from
Discontinued Operations
|
—
|
|
|
(1.02)
|
|
|
—
|
|
|
(1.25)
|
|
Total Dilutive
Earnings (Loss) Per Share
|
$
|
0.73
|
|
|
$
|
(2.05)
|
|
|
$
|
0.56
|
|
|
$
|
(2.47)
|
|
|
|
|
|
|
|
|
|
Dividends Declared
Per Share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.0100
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(Dollars in
thousands)
|
June
30,
|
|
June
30,
|
(Unaudited)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net Income
(Loss)
|
$
|
173,823
|
|
|
$
|
(468,649)
|
|
|
$
|
140,321
|
|
|
$
|
(565,112)
|
|
Other Comprehensive
Income (Loss):
|
|
|
|
|
|
|
|
Actuarially
Determined Long-Term Liability Adjustments (Net of tax: ($2,034),
($5,008), ($4,086), ($4,326))
|
3,464
|
|
|
8,045
|
|
|
6,966
|
|
|
5,561
|
|
Reclassification of Cash Flow Hedges from OCI to Earnings (Net of
tax: $6,521, $12,145 )
|
—
|
|
|
(11,203)
|
|
|
—
|
|
|
(21,017)
|
|
|
|
|
|
|
|
|
|
Other Comprehensive
Income (Loss)
|
3,464
|
|
|
(3,158)
|
|
|
6,966
|
|
|
(15,456)
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
(Loss)
|
177,287
|
|
|
(471,807)
|
|
|
147,287
|
|
|
(580,568)
|
|
|
|
|
|
|
|
|
|
Less: Comprehensive
Income Attributable to Noncontrolling Interest
|
4,302
|
|
|
1,179
|
|
|
9,754
|
|
|
2,293
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
(Loss) Attributable to CONSOL Energy Inc. Shareholders
|
$
|
172,985
|
|
|
$
|
(472,986)
|
|
|
$
|
137,533
|
|
|
$
|
(582,861)
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
(Unaudited)
|
|
|
(Dollars in
thousands)
|
June 30,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and Cash
Equivalents
|
$
|
299,135
|
|
|
$
|
60,475
|
|
Accounts and Notes
Receivable:
|
|
|
|
Trade
|
215,650
|
|
|
220,222
|
|
Other
Receivables
|
77,609
|
|
|
69,901
|
|
Inventories
|
74,965
|
|
|
65,461
|
|
Recoverable Income
Taxes
|
115,558
|
|
|
116,851
|
|
Prepaid
Expenses
|
64,177
|
|
|
93,146
|
|
Current Assets of
Discontinued Operations
|
—
|
|
|
83
|
|
Total Current
Assets
|
847,094
|
|
|
626,139
|
|
Property, Plant and
Equipment:
|
|
|
|
Property, Plant and
Equipment
|
13,619,819
|
|
|
13,771,388
|
|
Less—Accumulated
Depreciation, Depletion and Amortization
|
5,825,601
|
|
|
5,630,949
|
|
Total Property,
Plant and Equipment—Net
|
7,794,218
|
|
|
8,140,439
|
|
Other
Assets:
|
|
|
|
Deferred Income
Taxes
|
—
|
|
|
4,290
|
|
Investment in
Affiliates
|
188,649
|
|
|
190,964
|
|
Other
|
195,231
|
|
|
222,149
|
|
Total Other
Assets
|
383,880
|
|
|
417,403
|
|
TOTAL
ASSETS
|
$
|
9,025,192
|
|
|
$
|
9,183,981
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
(Unaudited)
|
|
|
(Dollars in
thousands, except per share data)
|
June 30,
2017
|
|
December 31,
2016
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
Payable
|
$
|
265,125
|
|
|
$
|
241,616
|
|
Current Portion of
Long-Term Debt
|
11,385
|
|
|
12,000
|
|
Other Accrued
Liabilities
|
543,511
|
|
|
680,348
|
|
Current Liabilities
of Discontinued Operations
|
5,692
|
|
|
6,050
|
|
Total Current
Liabilities
|
825,713
|
|
|
940,014
|
|
Long-Term
Debt:
|
|
|
|
Long-Term
Debt
|
2,596,055
|
|
|
2,722,995
|
|
Capital Lease
Obligations
|
34,053
|
|
|
39,074
|
|
Total Long-Term
Debt
|
2,630,108
|
|
|
2,762,069
|
|
Deferred Credits and
Other Liabilities:
|
|
|
|
Deferred Income
Taxes
|
17,084
|
|
|
—
|
|
Postretirement
Benefits Other Than Pensions
|
652,206
|
|
|
659,474
|
|
Pneumoconiosis
Benefits
|
107,321
|
|
|
108,073
|
|
Mine
Closing
|
200,132
|
|
|
218,631
|
|
Gas Well
Closing
|
224,327
|
|
|
223,352
|
|
Workers'
Compensation
|
66,009
|
|
|
67,277
|
|
Salary
Retirement
|
104,463
|
|
|
112,543
|
|
Other
|
110,282
|
|
|
151,660
|
|
Total Deferred
Credits and Other Liabilities
|
1,481,824
|
|
|
1,541,010
|
|
TOTAL
LIABILITIES
|
4,937,645
|
|
|
5,243,093
|
|
Stockholders'
Equity:
|
|
|
|
Common Stock, $.01
Par Value; 500,000,000 Shares Authorized, 230,067,466 Issued and
Outstanding at June 30, 2017; 229,443,008 Issued and Outstanding at
December 31, 2016
|
2,304
|
|
|
2,298
|
|
Capital in Excess of
Par Value
|
2,476,552
|
|
|
2,460,864
|
|
Preferred Stock,
15,000,000 shares authorized, None issued and
outstanding
|
—
|
|
|
—
|
|
Retained
Earnings
|
1,852,048
|
|
|
1,727,789
|
|
Accumulated Other
Comprehensive Loss
|
(385,567)
|
|
|
(392,556)
|
|
Total CONSOL
Energy Inc. Stockholders' Equity
|
3,945,337
|
|
|
3,798,395
|
|
Noncontrolling
Interest
|
142,210
|
|
|
142,493
|
|
TOTAL
EQUITY
|
4,087,547
|
|
|
3,940,888
|
|
TOTAL LIABILITIES
AND EQUITY
|
$
|
9,025,192
|
|
|
$
|
9,183,981
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
Common
Stock
|
|
Capital in
Excess
of Par
Value
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total CONSOL
Energy Inc.
Stockholders'
Equity
|
|
Non-
Controlling
Interest
|
|
Total
Equity
|
December 31,
2016
|
$
|
2,298
|
|
|
$
|
2,460,864
|
|
|
$
|
1,727,789
|
|
|
$
|
(392,556)
|
|
|
$
|
3,798,395
|
|
|
$
|
142,493
|
|
|
$
|
3,940,888
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
—
|
|
|
—
|
|
|
130,544
|
|
|
—
|
|
|
130,544
|
|
|
9,777
|
|
|
140,321
|
|
Other Comprehensive
Income (Loss) (Net of ($4,086) Tax)
|
—
|
|
|
—
|
|
|
—
|
|
|
6,989
|
|
|
6,989
|
|
|
(23)
|
|
|
6,966
|
|
Comprehensive
Income
|
—
|
|
|
—
|
|
|
130,544
|
|
|
6,989
|
|
|
137,533
|
|
|
9,754
|
|
|
147,287
|
|
Issuance of Common
Stock
|
6
|
|
|
717
|
|
|
—
|
|
|
—
|
|
|
723
|
|
|
—
|
|
|
723
|
|
Treasury Stock
Activity
|
—
|
|
|
—
|
|
|
(6,285)
|
|
|
—
|
|
|
(6,285)
|
|
|
(808)
|
|
|
(7,093)
|
|
Amortization of
Stock-Based Compensation Awards
|
—
|
|
|
14,971
|
|
|
—
|
|
|
—
|
|
|
14,971
|
|
|
1,706
|
|
|
16,677
|
|
Distributions to
Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,935)
|
|
|
(10,935)
|
|
Balance at June
30, 2017
|
$
|
2,304
|
|
|
$
|
2,476,552
|
|
|
$
|
1,852,048
|
|
|
$
|
(385,567)
|
|
|
$
|
3,945,337
|
|
|
$
|
142,210
|
|
|
$
|
4,087,547
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
(Dollars in
thousands)
|
Three Months
Ended
|
|
Six Months
Ended
|
(Unaudited)
|
June
30,
|
|
June
30,
|
Cash Flows from
Operating Activities:
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net Income
(Loss)
|
$
|
173,823
|
|
|
$
|
(468,649)
|
|
|
$
|
140,321
|
|
|
$
|
(565,112)
|
|
Adjustments to
Reconcile Net Income (Loss) to Net Cash Provided By Operating
Activities:
|
|
|
|
|
|
|
|
Net Loss from
Discontinued Operations
|
—
|
|
|
234,605
|
|
|
—
|
|
|
287,772
|
|
Depreciation,
Depletion and Amortization
|
117,069
|
|
|
135,220
|
|
|
265,839
|
|
|
290,208
|
|
Impairment of
Exploration and Production Properties
|
—
|
|
|
—
|
|
|
137,865
|
|
|
—
|
|
Stock-Based
Compensation
|
9,975
|
|
|
10,430
|
|
|
16,677
|
|
|
16,054
|
|
(Gain) Loss on Sale
of Assets
|
(140,162)
|
|
|
(5,614)
|
|
|
(152,113)
|
|
|
1,662
|
|
Loss (Gain) on Debt
Extinguishment
|
36
|
|
|
—
|
|
|
(786)
|
|
|
—
|
|
(Gain) Loss on
Commodity Derivative Instruments
|
(83,788)
|
|
|
199,380
|
|
|
(61,325)
|
|
|
144,320
|
|
Net Cash (Paid)
Received in Settlement of Commodity Derivative
Instruments
|
(32,285)
|
|
|
80,335
|
|
|
(79,388)
|
|
|
164,666
|
|
Deferred Income
Taxes
|
59,224
|
|
|
(100,716)
|
|
|
17,288
|
|
|
(124,516)
|
|
Equity in Earnings of
Affiliates
|
(10,055)
|
|
|
(9,219)
|
|
|
(22,385)
|
|
|
(25,884)
|
|
Return on Equity
Investment
|
—
|
|
|
4,680
|
|
|
—
|
|
|
9,192
|
|
Changes in Operating
Assets:
|
|
|
|
|
|
|
|
Accounts and Notes
Receivable
|
23,805
|
|
|
32,934
|
|
|
(4,103)
|
|
|
18,101
|
|
Inventories
|
(5,483)
|
|
|
10,511
|
|
|
(9,798)
|
|
|
(7,947)
|
|
Prepaid
Expenses
|
10,645
|
|
|
28,156
|
|
|
11,515
|
|
|
47,136
|
|
Changes in Other
Assets
|
24,716
|
|
|
(5,434)
|
|
|
25,652
|
|
|
(15,298)
|
|
Changes in Operating
Liabilities:
|
|
|
|
|
|
|
|
Accounts
Payable
|
(1,492)
|
|
|
(35,808)
|
|
|
2,524
|
|
|
(44,124)
|
|
Accrued
Interest
|
(35,855)
|
|
|
(36,674)
|
|
|
(1,444)
|
|
|
(807)
|
|
Other Operating
Liabilities
|
(36,180)
|
|
|
(15,448)
|
|
|
(8,029)
|
|
|
(14,069)
|
|
Changes in Other
Liabilities
|
(11,295)
|
|
|
18,656
|
|
|
(21,331)
|
|
|
15,343
|
|
Other
|
26,279
|
|
|
5,556
|
|
|
37,192
|
|
|
9,648
|
|
Net Cash Provided by
Continuing Operating Activities
|
88,977
|
|
|
82,901
|
|
|
294,171
|
|
|
206,345
|
|
Net Cash (Used in)
Provided by Discontinued Operating Activities
|
(200)
|
|
|
12,545
|
|
|
(275)
|
|
|
19,053
|
|
Net Cash Provided by
Operating Activities
|
88,777
|
|
|
95,446
|
|
|
293,896
|
|
|
225,398
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
Capital
Expenditures
|
(160,348)
|
|
|
(37,601)
|
|
|
(273,326)
|
|
|
(115,257)
|
|
Proceeds from Sales
of Assets
|
325,724
|
|
|
9,831
|
|
|
345,151
|
|
|
18,284
|
|
Net Distributions
from (Investments in) Equity Affiliates
|
18,791
|
|
|
—
|
|
|
24,700
|
|
|
(5,578)
|
|
Net Cash Provided by
(Used in) Continuing Investing Activities
|
184,167
|
|
|
(27,770)
|
|
|
96,525
|
|
|
(102,551)
|
|
Net Cash (Used in)
Provided by Discontinued Investing Activities
|
—
|
|
|
(1,246)
|
|
|
—
|
|
|
394,511
|
|
Net Cash Provided by
(Used in) Investing Activities
|
184,167
|
|
|
(29,016)
|
|
|
96,525
|
|
|
291,960
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
Payments on
Short-Term Borrowings
|
—
|
|
|
(385,500)
|
|
|
—
|
|
|
(486,000)
|
|
Payments on
Miscellaneous Borrowings
|
(3,031)
|
|
|
(2,364)
|
|
|
(5,973)
|
|
|
(4,459)
|
|
Payments on Long-Term
Notes
|
(18,942)
|
|
|
—
|
|
|
(117,185)
|
|
|
—
|
|
Net (Payments on)
Proceeds from Revolver - CNX Coal Resources LP
|
(7,000)
|
|
|
(2,000)
|
|
|
(11,000)
|
|
|
13,000
|
|
Distributions to
Noncontrolling Interest
|
(5,468)
|
|
|
(5,412)
|
|
|
(10,935)
|
|
|
(10,825)
|
|
Dividends
Paid
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,294)
|
|
Issuance of Common
Stock
|
229
|
|
|
1
|
|
|
723
|
|
|
4
|
|
Treasury Stock
Activity
|
(815)
|
|
|
(147)
|
|
|
(7,093)
|
|
|
(1,657)
|
|
Debt Repurchase and
Financing Fees
|
(48)
|
|
|
—
|
|
|
(298)
|
|
|
—
|
|
Net Cash Used in
Continuing Financing Activities
|
(35,075)
|
|
|
(395,422)
|
|
|
(151,761)
|
|
|
(492,231)
|
|
Net Cash Used in
Discontinued Financing Activities
|
—
|
|
|
(28)
|
|
|
—
|
|
|
(75)
|
|
Net Cash Used in
Financing Activities
|
(35,075)
|
|
|
(395,450)
|
|
|
(151,761)
|
|
|
(492,306)
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
237,869
|
|
|
(329,020)
|
|
|
238,660
|
|
|
25,052
|
|
Cash and Cash
Equivalents at Beginning of Period
|
61,266
|
|
|
426,646
|
|
|
60,475
|
|
|
72,574
|
|
Cash and Cash
Equivalents at End of Period
|
$
|
299,135
|
|
|
$
|
97,626
|
|
|
$
|
299,135
|
|
|
$
|
97,626
|
|
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SOURCE CONSOL Energy Inc.