PITTSBURGH, Oct. 31, 2017 /PRNewswire/ -- CONSOL Energy
Inc. (NYSE: CNX) reported net cash provided by operating activities
in the just-ended quarter of $178
million, compared to $163
million in the year-earlier quarter, which included
$5 million of net cash used in
discontinued operating activities. The company reported a net loss
attributable to CONSOL Energy shareholders of $26 million, or a loss of $0.11 per diluted share, compared to net income
attributable to CONSOL Energy shareholders of $25 million, or earnings of $0.11 per diluted share, in the third 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
$190 million for the 2017 third
quarter, compared to $314 million in
the year-earlier quarter.
On a GAAP basis, the third quarter earnings included the
following pre-tax items attributable to continuing operations:
- Recorded $30 million in gains on
assets sales; and
- Recorded a $2 million unrealized
gain on commodity derivative instruments, related to changes in the
fair market value of existing hedges on a mark-to-market basis
After adjusting for certain items, which are described in the
footnote to the EBITDA reconciliation table, the company had an
adjusted net loss attributable to CONSOL Energy
Shareholders1 in the 2017 third quarter of $36 million, or a loss of $0.15 per diluted share. Adjusted EBITDA from
continuing operations1 was $168
million for the 2017 third quarter, compared to $158 million in the year-earlier
quarter.
"The company has been hard at work during the quarter finalizing
the process to separate the gas and coal businesses and recently
filed an amended Form 10," commented Nicholas J. DeIuliis, president and CEO. "Our
strategic goal of creating two successful, separately-traded, pure
play entities is expected to be complete in the coming weeks, and
as indicated by the press release this morning, the record and
distribution dates have been set for November 15, 2017 and November 28, 2017, respectively. Both of the
teams are executing at peak performance; respective company
financials and balance sheets are strong; and the future looks
bright for both the gas business, which will be renamed CNX
Resources Corporation after the separation, and the coal business,
which will be renamed CONSOL Energy Inc. after the separation. This
is truly a historic time for our company, and once the separation
is completed, we are looking forward to focusing 100% of our time
and energy on our core operations: as an industry leading pure play
Appalachian E&P company. Going into year-end, not only will our
businesses be separated, but our E&P operations will be growing
substantially, and we will continue to opportunistically buy back
shares."
"During the quarter, we had strong operational execution, and we
finished slightly above our previously stated production guidance
for the third quarter," continued Mr. DeIuliis. "This implies that
we expect fourth quarter volumes to be a little over 120 Bcfe based
on the midpoint of our full year 2017 production guidance range of
405-415 Bcfe. Our program is heavily weighted in the fourth
quarter, and our turn-in-line (TIL) schedule peaks in November.
This will help drive an estimated exit rate for the year of around
1.4 Bcfe per day, which will set us up to achieve our 2018
production guidance of 520-550 Bcfe. Also, this production ramp is
expected to correspondingly ramp EBITDA higher over the coming
quarters, which will naturally de-lever the balance sheet further
and help us quickly reach our targeted pro forma net debt to EBITDA
leverage ratio of around 2.5x."
During the third quarter, CONSOL Energy received approximately
$82 million in proceeds from asset
sales, which included the sale of non-core Marcellus Shale acres in
Allegheny, Westmoreland, Washington, and Greene counties, Pennsylvania, for approximately $55 million and surface acres and other
miscellaneous non-core assets for approximately $27 million. Including these recent transactions,
CONSOL Energy has closed on asset sales totaling $427 million year-to-date. The company continues
to pursue the sale of various non-core assets, including
its Virginia coalbed methane
project area and scattered Marcellus and Utica acres. Despite already being within the
full year 2017 asset sale guidance range of $400-$600 million, the company believes that it
could enter into agreements for some of these additional asset sale
transactions in the fourth quarter.
During the quarter, CONSOL Energy generated approximately
$94 million in free cash
flow1, which included proceeds from sales of assets. In
addition to the $286 million of cash
on the balance sheet as of the end of the quarter, as part of the
spin-off transaction, CONSOL expects to receive a cash distribution
from CoalCo of approximately $425
million, net of fees, which the company will use to achieve
its targeted leverage ratio. Following the end of the quarter and
through October 30, 2017, the company
utilized a portion of the $286
million of cash on the balance sheet to repurchase
$81 million of its common stock
through a Rule 10b5-1 plan under the one-year share repurchase
program of up to $450 million, which
was recently increased from the original $200 million program.
1The terms "adjusted net (loss) 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 third quarter of 2017, CONSOL's E&P Division sold
101.0 Bcfe, or an increase of 5% from the 96.4 Bcfe sold in the
year-earlier quarter, driven primarily from Marcellus Shale
volumes. Total quarterly production costs decreased to $2.26 per Mcfe, compared to the year-earlier
quarter of $2.36 per Mcfe, driven
primarily by reductions in operating expense, non-income based
taxes and depreciation, depletion and amortization (DD&A).
E&P Division capital expenditures increased in the third
quarter to $148 million, compared to
$49 million spent in year-earlier
quarter.
Marcellus Shale production volumes, including liquids, in the
2017 third quarter were 60.4 Bcfe, approximately 17% higher than
the 51.8 Bcfe produced in the 2016 third quarter. The increased
production is due to 16 new Marcellus Shale wells coming on line
during the quarter. Marcellus total production costs were
$2.20 per Mcfe in the just-ended
quarter, which is a $0.13 per Mcfe
improvement from the third quarter of 2016 of $2.33 per Mcfe, driven by reductions to
depreciation, depletion and amortization (DD&A) and production,
ad valorem and other fees. The decrease in DD&A is primarily
driven by increased reserves.
CONSOL Energy's Utica Shale production volumes, including
liquids, in the 2017 third quarter were 20.1 Bcfe, down
approximately 11% from 22.5 Bcfe in the year-earlier quarter, which
is due to natural production declines in the Ohio wet Utica Shale area. Utica Shale total
production costs were $1.91 per Mcfe
in the just-ended quarter, which is a $0.10 per Mcfe increase from the third quarter of
2016 total production costs of $1.81
per Mcfe. The cost increase was driven by lower Utica Shale volumes
resulting in increased lease operating expense (LOE). 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. Despite the year-over-year
production decline, quarterly Utica Shale volumes grew 45% from the
second quarter of 2017. This quarter-over-quarter growth was driven
by Monroe County, Ohio, dry Utica
Shale volumes, which grew 476% in the third quarter to 9.8 Bcf,
compared to 1.7 Bcf from the second quarter of 2017. For the fourth
quarter of 2017, the company expects further growth in Utica Shale
volumes to approximately 33.4 Bcfe, or an increase of approximately
66%, compared to the third quarter of 2017. The fourth quarter
growth will also be driven by Monroe
County, Ohio, dry Utica Shale volumes, which the company
expects to increase approximately 125% to approximately 22.0 Bcfe,
compared to the third quarter of 2017. With the continued ramp in
Monroe County, Ohio, volumes
through the remainder of the year, the company expects Utica Shale
total production costs to improve to approximately $1.70 per Mcfe in the fourth quarter of 2017.
E&P Division Third Quarter Operations Summary:
In the quarter, CONSOL operated two horizontal rigs and drilled
six Greene County, Pennsylvania,
Marcellus Shale wells and four Monroe
County, Ohio, dry Utica Shale wells. The Marcellus and Utica
Shale laterals averaged 9,576 feet and 9,007 feet, respectively.
The company averaged 17 days to drill the Marcellus Shale wells,
which included two wells that the company drilled in less than 14
days. For the Utica Shale wells, the company averaged 17.4 drilling
days, which is a 2% improvement when compared to the second quarter
of 2017 and a 10% improvement, compared to the first quarter of
2017.
The company utilized three frac crews and completed 21 wells in
the third quarter: five Marcellus Shale wells located in
Tyler County, West Virginia; seven
Marcellus Shale wells located in Ritchie
County, West Virginia; and nine dry Utica Shale wells
located in Monroe County,
Ohio.
During the quarter, CONSOL turned-in-line 29 wells: seven
Marcellus Shale wells located in Ritchie
County, West Virginia; four Marcellus Shale wells located in
Tyler County, West Virginia; five
Marcellus Shale wells and one Burkett
Shale well located in Washington
County, Pennsylvania; and 12 dry Utica Shale wells in
Monroe County, Ohio. The company
is on schedule to TIL 15 wells in the fourth quarter of 2017,
including its Aikens 5J and 5M dry Utica Shale wells in
Westmoreland County,
Pennsylvania.
In the quarter, CONSOL Energy continued to improve production
and capital efficiency performance in two core areas: the Morris
Marcellus Shale field in Greene County,
PA, and the Switz Utica Shale field in Monroe County, Ohio. Compared to legacy
results, CONSOL Energy increased the estimated ultimate recovery
(EUR) and capital efficiency in the Morris Marcellus Shale field by
77% and 311%, respectively. Similarly, the company achieved
performance results in the Switz Utica Shale field by increasing
EURs and capital efficiency by 38% and 258%, respectively. The
company delivered these results through drilling and completion
(D&C) advancements and reservoir optimization initiatives.
Reservoir modeling advancements have driven increased sand loading
in each area by 40%-150%, compared to previous designs. Extended
laterals combined with increased proppant loading, azimuth
optimization, diversion technology, and perforation efficiency have
been the key drivers in yielding superior results.
E&P DIVISION
RESULTS — Quarter-to-Quarter Comparison
|
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|
|
|
|
|
|
|
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Quarter
|
|
Quarter
|
|
Quarter
|
|
|
|
Ended
|
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Ended
|
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Ended
|
|
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|
September 30,
2017
|
|
September 30,
2016
|
|
June 30,
2017
|
|
Sales -
Gas
|
|
$
|
196.3
|
|
$
|
170.7
|
|
$
|
233.7
|
|
Sales -
Oil
|
|
0.6
|
|
0.6
|
|
1.1
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|
Sales -
NGLs
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|
33.2
|
|
27.1
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|
21.6
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|
Sales -
Condensate
|
|
4.3
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|
7.5
|
|
3.9
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|
Total Sales Revenue
($ MM)
|
|
$
|
234.4
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|
$
|
205.9
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|
$
|
260.3
|
|
Gain (Loss) on
Commodity Derivative Instruments - Cash Settlement
|
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17.7
|
|
38.6
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|
(32.3)
|
|
Total
Revenue
|
|
$
|
252.1
|
|
$
|
244.5
|
|
$
|
228.0
|
|
|
|
|
|
|
|
|
|
Earnings Before
Income Tax ($ MM)
|
|
$
|
20.2
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|
$
|
161.1
|
|
$
|
227.4
|
|
Adjusted Earnings
(Loss) Before Income Tax ($MM)
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|
$
|
12.3
|
1
|
$
|
6.4
|
2
|
$
|
5.7
|
3
|
Capital Expenditures
($ MM)
|
|
$
|
147.5
|
|
$
|
48.7
|
|
$
|
142.3
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|
1Adjusted earnings before income tax for the E&P
Division of $12.3 million for the
three months ended September 30, 2017
is calculated as GAAP earnings before income tax of $20.2 million less total pre-tax adjustments of
$7.9 million. The $7.9 million of adjustments are $1.5 million of pre-tax gain related to the
unrealized gain on commodity derivative instruments, $11.6 million of pre-tax gains on asset sales, a
pre-tax charge of $4.8 million
related to stock-based compensation and a pre-tax charge of
$0.4 million related to severance
expense.
2Adjusted earnings before income tax for the E&P
Division of $6.4 million for the
three months ended September 30, 2016
is calculated as GAAP earnings before income tax of $161.1 million less total pre-tax adjustments of
$154.7 million. The $154.7 million adjustment includes a $159.6 million pre-tax gain related to the
unrealized gain on commodity derivative instruments, a pre-tax
charge of $4.8 million related to
stock-based compensation and a pre-tax loss of $0.1 million related to severance expense.
3Adjusted 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.
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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|
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Ended
|
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Ended
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|
|
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Ended
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|
|
September 30,
2017
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September 30,
2016
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% Increase/
(Decrease)
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|
June 30,
2017
|
|
% Increase/
(Decrease)
|
GAS
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|
|
|
|
|
|
|
|
|
|
Marcellus Sales
Volumes (Bcf)1
|
|
52.1
|
|
|
43.0
|
|
|
21.2
|
%
|
|
51.1
|
|
|
2.0
|
%
|
Utica Sales Volumes
(Bcf)
|
|
17.5
|
|
|
17.7
|
|
|
(1.1)
|
%
|
|
10.7
|
|
|
63.6
|
%
|
CBM Sales Volumes
(Bcf)
|
|
16.2
|
|
|
17.0
|
|
|
(4.7)
|
%
|
|
16.5
|
|
|
(1.8)
|
%
|
Other Sales Volumes
(Bcf)2
|
|
4.2
|
|
|
5.1
|
|
|
(17.6)
|
%
|
|
4.9
|
|
|
(14.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
LIQUIDS3
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|
|
|
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|
|
|
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NGLs Sales Volumes
(Bcfe)
|
|
10.3
|
|
|
12.3
|
|
|
(16.3)
|
%
|
|
8.1
|
|
|
27.2
|
%
|
Oil Sales Volumes
(Bcfe)
|
|
0.1
|
|
|
0.1
|
|
|
—
|
%
|
|
0.2
|
|
|
(50.0)
|
%
|
Condensate Sales
Volumes (Bcfe)
|
|
0.6
|
|
|
1.2
|
|
|
(50.0)
|
%
|
|
0.7
|
|
|
(14.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
101.0
|
|
|
96.4
|
|
|
4.8
|
%
|
|
92.2
|
|
|
9.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Average Daily
Production (MMcfe)
|
|
1,098.1
|
|
|
1,047.7
|
|
|
|
|
1,013.4
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|
1In the quarter ended June
30 2017, 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.
2Other Sales Volumes: primarily related to shallow
oil and gas production.
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.
E&P PRICE AND
COST DATA PER MCFE — Quarter-to-Quarter Comparison:
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Quarter
|
|
Quarter
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|
Quarter
|
|
|
Ended
|
|
Ended
|
|
Ended
|
(Per Mcfe)
|
|
September 30,
2017
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|
September 30,
2016
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|
June 30,
2017
|
Average Sales Price -
Gas
|
|
$
|
2.18
|
|
|
$
|
2.06
|
|
|
$
|
2.81
|
|
Average Gain (Loss)
on Commodity Derivative Instruments - Cash Settlement-
Gas
|
|
$
|
0.20
|
|
|
$
|
0.47
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|
|
$
|
(0.39)
|
|
Average Sales Price -
Oil*
|
|
$
|
6.99
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|
|
$
|
7.01
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|
|
$
|
8.03
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|
Average Sales Price -
NGLs*
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|
$
|
3.22
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|
|
$
|
2.19
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|
|
$
|
2.66
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|
Average Sales Price -
Condensate*
|
|
$
|
6.89
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|
|
$
|
6.21
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|
|
$
|
5.69
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|
|
|
|
|
|
|
|
Average Sales Price -
Total Company
|
|
$
|
2.50
|
|
|
$
|
2.54
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|
|
$
|
2.47
|
|
|
|
|
|
|
|
|
Lease Operating
Expense
|
|
$
|
0.22
|
|
|
$
|
0.23
|
|
|
$
|
0.23
|
|
Production, Ad
Valorem, and Other Fees
|
|
0.06
|
|
|
0.10
|
|
|
0.05
|
|
Transportation,
Gathering and Compression
|
|
0.98
|
|
|
0.98
|
|
|
0.94
|
|
Depreciation,
Depletion and Amortization (DD&A)
|
|
1.00
|
|
|
1.05
|
|
|
0.98
|
|
Total Production
Costs
|
|
$
|
2.26
|
|
|
$
|
2.36
|
|
|
$
|
2.20
|
|
Margin
|
|
$
|
0.24
|
|
|
$
|
0.18
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
Addback:
DD&A
|
|
$
|
1.00
|
|
|
$
|
1.05
|
|
|
$
|
0.98
|
|
Margin, before
DD&A
|
|
$
|
1.24
|
|
|
$
|
1.23
|
|
|
$
|
1.25
|
|
*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.
Note: "Total Production Costs" excludes Selling, General, and
Administration and Other Corporate Expenses.
The average sales price of $2.50
per Mcfe, when combined with unit costs of $2.26 per Mcfe, resulted in a margin of
$0.24 per Mcfe. This was an increase
when compared to the year-earlier quarter, due to improvements in
total production costs, partially offset by a reduction in average
sales price.
Marketing Update:
For the third quarter of 2017, CONSOL's average sales price for
natural gas, natural gas liquids (NGLs), oil, and condensate was
$2.50 per Mcfe. CONSOL's average
price for natural gas was $2.18 per
Mcf for the quarter and, including cash settlements from hedging,
was $2.38 per Mcf. The average
realized price for all liquids for the third quarter of 2017 was
$20.77 per barrel.
CONSOL's weighted average differential from NYMEX in the third
quarter of 2017 was negative $0.94
per MMBtu. CONSOL's average sales price for natural gas
before hedging was $0.63 per Mcf
lower than the $2.81 per Mcf reported
for the second quarter of 2017. This decrease results primarily
from a lower Henry Hub price coupled with a wider differential.
Including the impact of cash settlements from hedging, the average
sales price for natural gas was $0.04
per Mcf lower than the second quarter.
CONSOL continued to recover and sell discretionary ethane during
the quarter. Directly-marketed ethane volumes were 637,000 barrels
in the third quarter of 2017 and yielded a weighted average sales
price that was $1.52 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 405-415 Bcfe and total E&P capital
expenditures in 2017 of approximately $620-$645 million. For full year 2018, the
company maintains production guidance of 520-550 Bcfe.
CONSOL Energy continued its programmatic hedge program to
further build out NYMEX and basis hedges through 2021. Total hedged
natural gas production in the 2017 fourth quarter is 83.1 Bcf. The
annual gas hedge position is shown in the table below:
|
|
2017
|
|
2018
|
Volumes Hedged (Bcf),
as of 10/17/17
|
|
316.6*
|
|
333.3
|
|
*Includes actual settlements of 258.2 Bcf.
CONSOL Energy's hedged gas volumes include a combination of
NYMEX financial hedges and index (NYMEX and basis) hedges and
contracts. In addition, to protect the NYMEX hedge volumes from
basis exposure, CONSOL enters into basis-only financial hedges and
physical sales with fixed basis at certain sales points. CONSOL
Energy's gas hedge position is shown in the table below:
|
|
Q4
2017
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
NYMEX Only
Hedges
|
|
|
|
|
|
|
|
|
|
|
Volumes
(Bcf)
|
|
73.5
|
|
|
282.4
|
|
|
316.1
|
|
|
226.3
|
|
|
161.6
|
|
Average Prices
($/Mcf)
|
|
$
|
3.16
|
|
|
$
|
3.14
|
|
|
$
|
3.14
|
|
|
$
|
2.99
|
|
|
$
|
2.89
|
|
Index Hedges and
Contracts
|
|
|
|
|
|
|
|
|
|
|
Volumes
(Bcf)
|
|
9.6
|
|
|
34.2
|
|
|
17.2
|
|
|
13.1
|
|
|
11.9
|
|
Average Prices
($/Mcf)
|
|
$
|
3.01
|
|
|
$
|
3.11
|
|
|
$
|
2.62
|
|
|
$
|
2.44
|
|
|
$
|
2.27
|
|
Total Volumes
Hedged (Bcf)1
|
|
83.1
|
|
|
316.6
|
|
|
333.3
|
|
|
239.4
|
|
|
173.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NYMEX + Basis
(fully-covered volumes)2
|
|
|
|
|
|
|
|
|
|
|
Volumes
(Bcf)
|
|
81.7
|
|
|
311.3
|
|
|
333.3
|
|
|
239.1
|
|
|
166.2
|
|
Average Prices
($/Mcf)
|
|
$
|
2.62
|
|
|
$
|
2.59
|
|
|
$
|
2.78
|
|
|
$
|
2.69
|
|
|
$
|
2.59
|
|
NYMEX Only Hedges
Exposed to Basis
|
|
|
|
|
|
|
|
|
|
|
Volumes
(Bcf)
|
|
1.4
|
|
|
5.3
|
|
|
—
|
|
|
0.3
|
|
|
7.3
|
|
Average Prices
($/Mcf)
|
|
$
|
3.16
|
|
|
$
|
3.14
|
|
|
$
|
—
|
|
|
$
|
2.99
|
|
|
$
|
2.89
|
|
Total Volumes
Hedged (Bcf)1
|
|
83.1
|
|
|
316.6
|
|
|
333.3
|
|
|
239.4
|
|
|
173.5
|
|
12018 excludes 9.1 Bcf of physical basis sales not
matched with NYMEX hedges.
2Includes physical sales with fixed basis in Q4 2017,
2017, 2018, 2019, and 2020 of 19.1 Bcf, 64.0 Bcf, 97.5 Bcf, 103.9
Bcf, and 65.0 Bcf, respectively.
During the third quarter of 2017, CONSOL Energy added additional
NYMEX natural gas hedges of 4.3 Bcf, 7.0 Bcf, 21.9 Bcf, and 94.1
Bcf for 2018, 2019, 2020, and 2021, respectively. To help mitigate
basis exposure on NYMEX hedges, in the third quarter CONSOL added
1.4 Bcf, 34.4 Bcf, 37.7 Bcf, 41.4 Bcf, and 54.2 Bcf of basis hedges
for 2017, 2018, 2019, 2020, and 2021, respectively.
Pennsylvania (PA) Mining
Operations Division:
CONSOL Energy's PA Mining Operations sold 6.3 million tons in
the 2017 third quarter, compared to 6.0 million tons during the
year-earlier quarter. During the quarter, the average cost of coal
sold increased slightly to $37.32 per
ton, compared to $35.79 per ton in
the year-earlier quarter.
Third Quarter Summary:
CNX Coal Resources LP ("CNXC") reported the following in its
third quarter 2017 earnings press release, dated October 30, 2017: "The marketing team did an
excellent job of communicating with our customers to make sure that
shipments were managed to meet their requirements during the
quarter when we were volume-constrained due to Enlow Fork
geological conditions in July, and one idled Bailey longwall in
September. The operations team added incremental shifts at other
longwalls to make up for some of the lost production and we expect
to do this in the fourth quarter as well. I am very pleased to
announce that all of our longwalls resumed production in the first
week of October, and we expect to meet our contractual obligations
and previously-provided sales guidance for the full year."
During the quarter, on a total consolidated basis, PA Mining
Operations Division generated $83
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
|
|
|
September
30,
|
|
September
30,
|
|
June
30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
|
|
|
|
|
|
Beginning Inventory
(millions of tons)
|
|
0.3
|
|
|
0.1
|
|
|
0.3
|
|
Coal Production
(millions of tons)
|
|
6.1
|
|
|
6.2
|
|
|
6.8
|
|
Ending Inventory
(millions of tons)
|
|
0.2
|
|
|
0.2
|
|
|
0.3
|
|
Sales - Company
Produced (millions of tons)
|
|
6.3
|
|
|
6.0
|
|
|
6.8
|
|
|
|
|
|
|
|
|
Sales Per
Ton
|
|
$
|
44.16
|
|
|
$
|
44.30
|
|
|
$
|
44.75
|
|
|
|
|
|
|
|
|
Average Cost of Coal
Sold Per Ton
|
|
$
|
37.32
|
|
|
$
|
35.79
|
|
|
$
|
34.79
|
|
|
|
|
|
|
|
|
Average Margin Per
Ton Sold
|
|
$
|
6.84
|
|
|
$
|
8.51
|
|
|
$
|
9.96
|
|
Addback: DD&A Per
Ton
|
|
$
|
6.38
|
|
|
$
|
6.50
|
|
|
$
|
5.71
|
|
Average Margin Per
Ton, before DD&A
|
|
$
|
13.22
|
|
|
$
|
15.01
|
|
|
$
|
15.67
|
|
Cash Flow before Cap.
Ex ($ MM)
|
|
$
|
83
|
|
|
$
|
90
|
|
|
$
|
107
|
|
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 expects total consolidated PA Mining Operations
annual sales to be approximately 26.0-27.0 million tons for 2017.
Also, CONSOL Energy reduces total consolidated capital expenditures
for PA Mining Operations to $92-$108
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)
|
|
$
|
615
|
|
|
$
|
365
|
|
|
$
|
(20)
|
|
|
$
|
960
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Unrealized Gain
on Commodity Derivative Instruments
|
|
(140)
|
|
|
-
|
|
-
|
|
(140)
|
|
Stock-Based
Compensation
|
|
20
|
|
|
15
|
|
|
-
|
|
35
|
|
Adjusted
EBITDA
|
|
$
|
495
|
|
|
$
|
380
|
|
|
$
|
(20)
|
|
|
855
|
|
Noncontrolling
Interest
|
|
-
|
|
$
|
(40)
|
|
|
-
|
|
(40)
|
|
Adjusted EBITDA
Attributable to CNX
|
|
$
|
495
|
|
|
$
|
340
|
|
|
$
|
(20)
|
|
|
$
|
815
|
|
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
9/29/2017 of $3.14 + weighted average differential of
($0.61) per MMBtu.
1Includes forecasted Earnings of Equity Affiliates of
$40 million in 2017 associated with
CONSOL Energy's proportionate share of ownership in CONE Midstream
Partners LP and CONE Gathering LLC. This income is reflected within
Miscellaneous Other Income in the CNX income statement.
Liquidity:
As of September 30, 2017, CONSOL
Energy had $1,967.9 million in total
liquidity, which is comprised of $282.1
million of cash, excluding the CNXC cash balance, and
$1,685.8 million available to be
borrowed under its $2.0 billion bank
facility. In addition, CONSOL holds 16.6 million CNXC limited
partnership units with an aggregated current market value of
approximately $247 million and 21.7
million CONE Midstream Partners LP ("CNNX") limited partnership
units with a current market value of approximately $357 million, in each case as of October 16, 2017.
CONSOL Energy's net leverage ratio at the end of the quarter was
2.8x, which is an improvement of 0.2x and 1.1x compared to 3.0x at
June 30, 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. Lastly, following
the end of the third quarter, the company's $2.0 billion bank facility borrowing base was
reaffirmed.
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.
Important Information about Company Names and Stock
Trading Symbols
Effective November 28, 2017, the company known as CONSOL
Energy Inc. (NYSE: CNX) expects to separate its gas business (GasCo
or RemainCo) and its coal business (CoalCo or SpinCo) into two
independent, publicly traded companies by means of a separation of
CoalCo from RemainCo.
- The gas business will be named CNX Resources Corporation
(RemainCo, GasCo or CNX) and will continue to be listed on the New
York Stock Exchange (NYSE), retaining the ticker symbol "CNX".
After the spin-off occurs, information regarding CNX and its
natural gas business will be available at www.cnx.com.
- The coal business will be named CONSOL Energy Inc. (SpinCo,
CoalCo or CONSOL) and will be listed on the NYSE under a new ticker
symbol: "CEIX". CoalCo will own, operate and develop all of the
company's coal assets, including its interest in the Pennsylvania
Mining Complex, the Baltimore Marine Terminal, and approximately
1.6 billion tons of greenfield coal reserves. After the spin-off
occurs, information regarding the new CONSOL Energy and its coal
business will be available at www.consolenergy.com.
- The master limited partnership that is currently named CNX
Coal Resources LP (NYSE: CNXC) will change its name to CONSOL Coal
Resources LP and will trade on the NYSE under a new ticker symbol:
"CCR". CoalCo will own 100% of the general partner of CONSOL Coal
Resources LP (representing a 1.7% general partner interest), as
well as all of the incentive distribution rights and the common and
subordinated interests in CNX Coal Resources LP that are currently
owned by CONSOL Energy Inc. After the spin-off occurs, information
regarding CONSOL Coal Resources LP will be available at
www.ccrlp.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
|
|
|
September
30,
|
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
|
2016
|
Dollars in
thousands
|
|
E&P
Division
|
|
PA Mining
Operations Division
|
|
Other1
|
|
Total
Company
|
|
Total
Company
|
Net Income
(Loss)
|
|
$
|
20,226
|
|
|
$
|
21,011
|
|
|
$
|
(66,888)
|
|
|
$
|
(25,651)
|
|
|
$
|
27,593
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Loss from
Discontinued Operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,975
|
|
Add: Interest
Expense
|
|
575
|
|
|
2,164
|
|
|
38,763
|
|
|
41,502
|
|
|
47,317
|
|
Less: Interest
Income
|
|
(3)
|
|
|
—
|
|
|
(1,303)
|
|
|
(1,306)
|
|
|
(214)
|
|
Add: Income
Taxes
|
|
—
|
|
|
—
|
|
|
26,758
|
|
|
26,758
|
|
|
52,858
|
|
Earnings Before
Interest & Taxes (EBIT)
|
|
20,798
|
|
|
23,175
|
|
|
(2,670)
|
|
|
41,303
|
|
|
162,529
|
|
|
|
|
|
|
|
|
|
|
|
|
Add:
Depreciation, Depletion & Amortization
|
|
101,585
|
|
|
41,638
|
|
|
5,545
|
|
|
148,768
|
|
|
151,712
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Before
Interest, Taxes and DD&A (EBITDA) from Continuing
Operations
|
|
$
|
122,383
|
|
|
$
|
64,813
|
|
|
$
|
2,875
|
|
|
$
|
190,071
|
|
|
$
|
314,241
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Unrealized Gain on
Commodity Derivative Instruments
|
|
(1,512)
|
|
|
—
|
|
|
—
|
|
|
(1,512)
|
|
|
(159,555)
|
|
Gain on Asset
Sales
|
|
(11,557)
|
|
|
—
|
|
|
(18,758)
|
|
|
(30,315)
|
|
|
—
|
|
Severance
Expense
|
|
348
|
|
|
4,563
|
|
|
509
|
|
|
5,420
|
|
|
229
|
|
Other Transaction
Fees
|
|
—
|
|
|
—
|
|
|
6,387
|
|
|
6,387
|
|
|
—
|
|
Loss on Debt
Extinguishment
|
|
—
|
|
|
—
|
|
|
2,019
|
|
|
2,019
|
|
|
—
|
|
Stock-Based
Compensation
|
|
4,788
|
|
|
5,882
|
|
|
798
|
|
|
11,468
|
|
|
7,771
|
|
Pension
Settlement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,651
|
|
Lease
Expirations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Coal Contract
Buyout
|
|
—
|
|
|
(8,410)
|
|
|
—
|
|
|
(8,410)
|
|
|
—
|
|
Total Pre-tax
Adjustments
|
|
(7,933)
|
|
|
2,035
|
|
|
(9,045)
|
|
|
(14,943)
|
|
|
(147,904)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA from
Continuing Operations
|
|
$
|
114,450
|
|
|
$
|
66,848
|
|
|
$
|
(6,170)
|
|
|
$
|
175,128
|
|
|
$
|
166,337
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Adjusted EBITDA
Attributable to Noncontrolling Interest2
|
|
—
|
|
|
7,065
|
|
|
—
|
|
|
7,065
|
|
|
8,812
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Attributable to Continuing Operations
|
|
$
|
114,450
|
|
|
$
|
59,783
|
|
|
$
|
(6,170)
|
|
|
$
|
168,063
|
|
|
$
|
157,525
|
|
Note: Income tax effect of Total Pre-tax Adjustments was
$5,530 and $48,784 for the three months ended September 30, 2017 and September 30, 2016, respectively. Adjusted net
income attributable to CONSOL Energy Shareholders for the three
months ended September 30, 2017 is
calculated as GAAP net loss attributable to CONSOL Energy
Shareholders of $26,441 less total
pre-tax adjustments from the above table of $14,943, plus the associated tax expense of
$5,530 equals the adjusted net loss
attributable to CONSOL Energy Shareholders of $35,854.
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 September 30,2017 is Net Income Attributable to
Noncontrolling interest of $790 plus
Depreciation, Depletion and Amortization of $4,640, plus Interest Expense of $1,077, plus Stock-based compensation of
$558.
Adjusted EBITDA Attributable to Noncontrolling Interest for the
three months ended September 30,2016
is Net Income Attributable to Noncontrolling interest of
$2,248 plus Depreciation, Depletion
and Amortization of $5,233, plus
Interest Expense of $1,098 plus
Stock-based compensation of $233.
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
September 30, 2017
|
Net Cash Provided by
Continuing Operations
|
$
|
178,667
|
|
|
|
Capital
Expenditures
|
(177,294)
|
|
Net Distributions
from Equity Affiliates
|
10,920
|
|
Organic Free Cash
Flow from Continuing Operations
|
$
|
12,293
|
|
Free Cash
Flow
|
Three Months
Ended
September 30, 2017
|
Net Cash Provided by
Operating Activities
|
$
|
178,328
|
|
|
|
Capital
Expenditures
|
(177,294)
|
|
Net Distributions
from Equity Affiliates
|
10,920
|
|
Proceeds From Sales
of Assets
|
81,727
|
|
Free Cash
Flow
|
$
|
93,681
|
|
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 of the separation and whether it
will be completed; the possibility that various closing conditions
for the separation (as set forth in the information statement
attached as an exhibit to the Form 10 filed with the SEC by CONSOL
Mining Corporation, as amended) 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 near-term 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
|
|
Nine Months
Ended
|
(Unaudited)
|
September
30,
|
|
September
30,
|
Revenues and Other
Income:
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Natural Gas, NGLs and
Oil Sales
|
$
|
234,443
|
|
|
$
|
205,913
|
|
|
$
|
812,511
|
|
|
$
|
555,101
|
|
Gain on Commodity
Derivative Instruments
|
19,183
|
|
|
198,192
|
|
|
80,508
|
|
|
53,872
|
|
Coal Sales
|
279,245
|
|
|
267,685
|
|
|
899,400
|
|
|
744,411
|
|
Other Outside
Sales
|
16,959
|
|
|
4,714
|
|
|
45,986
|
|
|
20,687
|
|
Purchased Gas
Sales
|
13,384
|
|
|
12,086
|
|
|
32,678
|
|
|
28,633
|
|
Freight-Outside
Coal
|
21,803
|
|
|
9,392
|
|
|
51,847
|
|
|
33,949
|
|
Miscellaneous Other
Income
|
41,036
|
|
|
32,393
|
|
|
115,669
|
|
|
114,159
|
|
Gain on Sale of
Assets
|
45,230
|
|
|
15,203
|
|
|
197,343
|
|
|
13,541
|
|
Total Revenue and
Other Income
|
671,283
|
|
|
745,578
|
|
|
2,235,942
|
|
|
1,564,353
|
|
Costs and
Expenses:
|
|
|
|
|
|
|
|
Exploration and
Production Costs
|
|
|
|
|
|
|
|
Lease Operating
Expense
|
21,754
|
|
|
22,602
|
|
|
64,459
|
|
|
73,996
|
|
Transportation,
Gathering and Compression
|
98,768
|
|
|
94,796
|
|
|
279,699
|
|
|
279,753
|
|
Production, Ad
Valorem, and Other Fees
|
5,919
|
|
|
9,027
|
|
|
19,854
|
|
|
23,732
|
|
Depreciation,
Depletion and Amortization
|
101,585
|
|
|
101,257
|
|
|
288,220
|
|
|
312,122
|
|
Exploration and
Production Related Other Costs
|
4,479
|
|
|
384
|
|
|
33,980
|
|
|
5,036
|
|
Purchased Gas
Costs
|
13,142
|
|
|
11,940
|
|
|
32,231
|
|
|
28,692
|
|
Other Corporate
Expenses
|
26,844
|
|
|
21,760
|
|
|
68,172
|
|
|
65,980
|
|
Impairment of
Exploration and Production Properties
|
—
|
|
|
—
|
|
|
137,865
|
|
|
—
|
|
Selling, General, and
Administrative Costs
|
20,328
|
|
|
26,198
|
|
|
62,490
|
|
|
74,067
|
|
Total Exploration
and Production Costs
|
292,819
|
|
|
287,964
|
|
|
986,970
|
|
|
863,378
|
|
PA Mining
Operations Costs
|
|
|
|
|
|
|
|
Operating and Other
Costs
|
207,772
|
|
|
182,717
|
|
|
608,678
|
|
|
521,277
|
|
Depreciation,
Depletion and Amortization
|
41,638
|
|
|
42,370
|
|
|
125,341
|
|
|
125,334
|
|
Freight
Expense
|
21,803
|
|
|
9,392
|
|
|
51,847
|
|
|
33,949
|
|
Selling, General, and
Administrative Costs
|
18,664
|
|
|
7,653
|
|
|
50,637
|
|
|
20,207
|
|
Total PA Mining
Operations Costs
|
289,877
|
|
|
242,132
|
|
|
836,503
|
|
|
700,767
|
|
Other
Costs
|
|
|
|
|
|
|
|
Miscellaneous
Operating Expense
|
35,518
|
|
|
39,658
|
|
|
117,007
|
|
|
126,580
|
|
Selling, General, and
Administrative Costs
|
2,896
|
|
|
4,996
|
|
|
9,182
|
|
|
11,124
|
|
Depreciation,
Depletion and Amortization
|
5,545
|
|
|
8,085
|
|
|
1,047
|
|
|
4,463
|
|
Loss on Debt
Extinguishment
|
2,019
|
|
|
—
|
|
|
1,233
|
|
|
—
|
|
Interest
Expense
|
41,502
|
|
|
47,317
|
|
|
129,367
|
|
|
144,609
|
|
Total Other
Costs
|
87,480
|
|
|
100,056
|
|
|
257,836
|
|
|
286,776
|
|
Total Costs And
Expenses
|
670,176
|
|
|
630,152
|
|
|
2,081,309
|
|
|
1,850,921
|
|
Earnings (Loss)
From Continuing Operations Before Income Tax
|
1,107
|
|
|
115,426
|
|
|
154,633
|
|
|
(286,568)
|
|
Income Tax Expense
(Benefit)
|
26,758
|
|
|
52,858
|
|
|
39,962
|
|
|
(71,798)
|
|
(Loss) Income From
Continuing Operations
|
(25,651)
|
|
|
62,568
|
|
|
114,671
|
|
|
(214,770)
|
|
Loss From
Discontinued Operations, net
|
—
|
|
|
(34,975)
|
|
|
—
|
|
|
(322,747)
|
|
Net (Loss)
Income
|
(25,651)
|
|
|
27,593
|
|
|
114,671
|
|
|
(537,517)
|
|
Less: Net Income
Attributable to Noncontrolling Interest
|
790
|
|
|
2,248
|
|
|
10,567
|
|
|
4,541
|
|
Net (Loss) Income
Attributable to CONSOL Energy Shareholders
|
$
|
(26,441)
|
|
|
$
|
25,345
|
|
|
$
|
104,104
|
|
|
$
|
(542,058)
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
(CONTINUED)
|
|
|
|
|
(Dollars in
thousands, except per share data)
|
Three Months
Ended
|
|
Nine Months
Ended
|
(Unaudited)
|
September
30,
|
|
September
30,
|
(Loss) Earnings
Per Share
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Basic
|
|
|
|
|
|
|
|
(Loss) Income from
Continuing Operations
|
$
|
(0.11)
|
|
|
$
|
0.26
|
|
|
$
|
0.45
|
|
|
$
|
(0.96)
|
|
Loss from
Discontinued Operations
|
—
|
|
|
(0.15)
|
|
|
—
|
|
|
(1.40)
|
|
Total Basic (Loss)
Earnings Per Share
|
$
|
(0.11)
|
|
|
$
|
0.11
|
|
|
$
|
0.45
|
|
|
$
|
(2.36)
|
|
Dilutive
|
|
|
|
|
|
|
|
(Loss) Income from
Continuing Operations
|
$
|
(0.11)
|
|
|
$
|
0.26
|
|
|
$
|
0.45
|
|
|
$
|
(0.96)
|
|
Loss from
Discontinued Operations
|
—
|
|
|
(0.15)
|
|
|
—
|
|
|
(1.40)
|
|
Total Dilutive
(Loss) Earnings Per Share
|
$
|
(0.11)
|
|
|
$
|
0.11
|
|
|
$
|
0.45
|
|
|
$
|
(2.36)
|
|
|
|
|
|
|
|
|
|
Dividends Declared
Per Share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.0100
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
(Dollars in
thousands)
|
September
30,
|
|
September
30,
|
(Unaudited)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net (Loss)
Income
|
$
|
(25,651)
|
|
|
$
|
27,593
|
|
|
$
|
114,671
|
|
|
$
|
(537,517)
|
|
Other Comprehensive
Income (Loss) :
|
|
|
|
|
|
|
|
Actuarially
Determined Long-Term Liability Adjustments (Net of tax: ($2,034),
($1,043), ($6,121), ($5,369))
|
3,464
|
|
|
1,305
|
|
|
10,430
|
|
|
6,866
|
|
Reclassification of Cash Flow Hedges from OCI to Earnings (Net of
tax: $7,139, $19,284)
|
—
|
|
|
(12,458)
|
|
|
—
|
|
|
(33,475)
|
|
|
|
|
|
|
|
|
|
Other Comprehensive
Income (Loss)
|
3,464
|
|
|
(11,153)
|
|
|
10,430
|
|
|
(26,609)
|
|
|
|
|
|
|
|
|
|
Comprehensive (Loss)
Income
|
(22,187)
|
|
|
16,440
|
|
|
125,101
|
|
|
(564,126)
|
|
|
|
|
|
|
|
|
|
Less: Comprehensive
Income Attributable to Noncontrolling Interest
|
779
|
|
|
2,248
|
|
|
10,533
|
|
|
4,541
|
|
|
|
|
|
|
|
|
|
Comprehensive (Loss)
Income Attributable to CONSOL Energy Inc. Shareholders
|
$
|
(22,966)
|
|
|
$
|
14,192
|
|
|
$
|
114,568
|
|
|
$
|
(568,667)
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS
|
|
|
|
|
|
(Unaudited)
|
|
|
(Dollars in
thousands)
|
September 30,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and Cash
Equivalents
|
$
|
285,708
|
|
|
$
|
60,475
|
|
Accounts and Notes
Receivable:
|
|
|
|
Trade
|
193,778
|
|
|
220,222
|
|
Other
Receivables
|
77,746
|
|
|
69,901
|
|
Inventories
|
63,182
|
|
|
65,461
|
|
Recoverable Income
Taxes
|
105,432
|
|
|
116,851
|
|
Prepaid
Expenses
|
79,437
|
|
|
93,146
|
|
Current Assets of
Discontinued Operations
|
—
|
|
|
83
|
|
Total Current
Assets
|
805,283
|
|
|
626,139
|
|
Property, Plant and
Equipment:
|
|
|
|
Property, Plant and
Equipment
|
13,738,388
|
|
|
13,771,388
|
|
Less—Accumulated
Depreciation, Depletion and Amortization
|
5,939,426
|
|
|
5,630,949
|
|
Total Property,
Plant and Equipment—Net
|
7,798,962
|
|
|
8,140,439
|
|
Other
Assets:
|
|
|
|
Deferred Income
Taxes
|
—
|
|
|
4,290
|
|
Investment in
Affiliates
|
190,154
|
|
|
190,964
|
|
Other
|
185,169
|
|
|
222,149
|
|
Total Other
Assets
|
375,323
|
|
|
417,403
|
|
TOTAL
ASSETS
|
$
|
8,979,568
|
|
|
$
|
9,183,981
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS
|
|
|
|
|
|
(Unaudited)
|
|
|
(Dollars in
thousands, except per share data)
|
September 30,
2017
|
|
December 31,
2016
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
Payable
|
$
|
303,196
|
|
|
$
|
241,616
|
|
Current Portion of
Long-Term Debt
|
10,971
|
|
|
12,000
|
|
Other Accrued
Liabilities
|
540,672
|
|
|
680,348
|
|
Current Liabilities
of Discontinued Operations
|
5,353
|
|
|
6,050
|
|
Total Current
Liabilities
|
860,192
|
|
|
940,014
|
|
Long-Term
Debt:
|
|
|
|
Long-Term
Debt
|
2,500,782
|
|
|
2,722,995
|
|
Capital Lease
Obligations
|
31,530
|
|
|
39,074
|
|
Total Long-Term
Debt
|
2,532,312
|
|
|
2,762,069
|
|
Deferred Credits and
Other Liabilities:
|
|
|
|
Deferred Income
Taxes
|
44,720
|
|
|
—
|
|
Postretirement
Benefits Other Than Pensions
|
649,565
|
|
|
659,474
|
|
Pneumoconiosis
Benefits
|
106,837
|
|
|
108,073
|
|
Mine
Closing
|
198,764
|
|
|
218,631
|
|
Gas Well
Closing
|
223,446
|
|
|
223,352
|
|
Workers'
Compensation
|
66,165
|
|
|
67,277
|
|
Salary
Retirement
|
100,510
|
|
|
112,543
|
|
Other
|
125,822
|
|
|
151,660
|
|
Total Deferred
Credits and Other Liabilities
|
1,515,829
|
|
|
1,541,010
|
|
TOTAL
LIABILITIES
|
4,908,333
|
|
|
5,243,093
|
|
Stockholders'
Equity:
|
|
|
|
Common Stock, $.01
Par Value; 500,000,000 Shares Authorized, 230,090,909 Issued and
Outstanding at September 30, 2017; 229,443,008 Issued and
Outstanding at December 31, 2016
|
2,305
|
|
|
2,298
|
|
Capital in Excess of
Par Value
|
2,486,071
|
|
|
2,460,864
|
|
Preferred Stock,
15,000,000 shares authorized, None issued and
outstanding
|
—
|
|
|
—
|
|
Retained
Earnings
|
1,825,547
|
|
|
1,727,789
|
|
Accumulated Other
Comprehensive Loss
|
(382,092)
|
|
|
(392,556)
|
|
Total CONSOL
Energy Inc. Stockholders' Equity
|
3,931,831
|
|
|
3,798,395
|
|
Noncontrolling
Interest
|
139,404
|
|
|
142,493
|
|
TOTAL
EQUITY
|
4,071,235
|
|
|
3,940,888
|
|
TOTAL LIABILITIES
AND EQUITY
|
$
|
8,979,568
|
|
|
$
|
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
|
Balance at
December 31, 2016
|
$
|
2,298
|
|
|
$
|
2,460,864
|
|
|
$
|
1,727,789
|
|
|
$
|
(392,556)
|
|
|
$
|
3,798,395
|
|
|
$
|
142,493
|
|
|
$
|
3,940,888
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
—
|
|
|
—
|
|
|
104,104
|
|
|
—
|
|
|
104,104
|
|
|
10,567
|
|
|
114,671
|
|
Other Comprehensive
Income (Loss) (Net of ($6,121) Tax)
|
—
|
|
|
—
|
|
|
—
|
|
|
10,464
|
|
|
10,464
|
|
|
(34)
|
|
|
10,430
|
|
Comprehensive
Income
|
—
|
|
|
—
|
|
|
104,104
|
|
|
10,464
|
|
|
114,568
|
|
|
10,533
|
|
|
125,101
|
|
Issuance of Common
Stock
|
7
|
|
|
852
|
|
|
—
|
|
|
—
|
|
|
859
|
|
|
—
|
|
|
859
|
|
Treasury Stock
Activity
|
—
|
|
|
—
|
|
|
(6,346)
|
|
|
—
|
|
|
(6,346)
|
|
|
(1,009)
|
|
|
(7,355)
|
|
Amortization of
Stock-Based Compensation Awards
|
—
|
|
|
24,355
|
|
|
—
|
|
|
—
|
|
|
24,355
|
|
|
3,790
|
|
|
28,145
|
|
Distributions to
Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,403)
|
|
|
(16,403)
|
|
Balance at
September 30, 2017
|
$
|
2,305
|
|
|
$
|
2,486,071
|
|
|
$
|
1,825,547
|
|
|
$
|
(382,092)
|
|
|
$
|
3,931,831
|
|
|
$
|
139,404
|
|
|
$
|
4,071,235
|
|
CONSOL ENERGY INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
|
|
(Dollars in
thousands)
|
Three Months
Ended
|
|
Nine Months
Ended
|
(Unaudited)
|
September
30,
|
|
September
30,
|
Cash Flows from
Operating Activities:
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net (Loss)
Income
|
$
|
(25,651)
|
|
|
$
|
27,593
|
|
|
$
|
114,671
|
|
|
$
|
(537,517)
|
|
Adjustments to
Reconcile Net (Loss) Income to Net Cash Provided By Operating
Activities:
|
|
|
|
|
|
|
|
Net Loss from
Discontinued Operations
|
—
|
|
|
34,975
|
|
|
—
|
|
|
322,747
|
|
Depreciation,
Depletion and Amortization
|
148,768
|
|
|
151,712
|
|
|
414,608
|
|
|
441,919
|
|
Impairment of
Exploration and Production Properties
|
—
|
|
|
—
|
|
|
137,865
|
|
|
—
|
|
Stock-Based
Compensation
|
11,468
|
|
|
7,771
|
|
|
28,145
|
|
|
23,825
|
|
Gain on Sale of
Assets
|
(45,230)
|
|
|
(15,203)
|
|
|
(197,343)
|
|
|
(13,541)
|
|
Loss on Debt
Extinguishment
|
2,019
|
|
|
—
|
|
|
1,233
|
|
|
—
|
|
Gain on Commodity
Derivative Instruments
|
(19,183)
|
|
|
(198,192)
|
|
|
(80,508)
|
|
|
(53,872)
|
|
Net Cash Received
(Paid) in Settlement of Commodity Derivative Instruments
|
17,671
|
|
|
38,637
|
|
|
(61,717)
|
|
|
203,303
|
|
Deferred Income
Taxes
|
25,600
|
|
|
51,650
|
|
|
42,888
|
|
|
(72,866)
|
|
Equity in Earnings of
Affiliates
|
(12,425)
|
|
|
(15,355)
|
|
|
(34,810)
|
|
|
(41,239)
|
|
Return on Equity
Investment
|
—
|
|
|
13,076
|
|
|
—
|
|
|
22,268
|
|
Changes in Operating
Assets:
|
|
|
|
|
|
|
|
Accounts and Notes
Receivable
|
22,334
|
|
|
(13,546)
|
|
|
18,231
|
|
|
4,555
|
|
Inventories
|
11,772
|
|
|
12,116
|
|
|
1,974
|
|
|
4,169
|
|
Prepaid
Expenses
|
(9,646)
|
|
|
24,287
|
|
|
1,869
|
|
|
71,423
|
|
Changes in Other
Assets
|
11,705
|
|
|
1,057
|
|
|
37,357
|
|
|
(14,241)
|
|
Changes in Operating
Liabilities:
|
|
|
|
|
|
|
|
Accounts
Payable
|
21,176
|
|
|
33,139
|
|
|
23,700
|
|
|
(10,985)
|
|
Accrued
Interest
|
32,537
|
|
|
36,792
|
|
|
31,093
|
|
|
35,985
|
|
Other Operating
Liabilities
|
(5,394)
|
|
|
(7,301)
|
|
|
(13,423)
|
|
|
(21,370)
|
|
Changes in Other
Liabilities
|
(9,890)
|
|
|
(17,963)
|
|
|
(31,221)
|
|
|
(2,620)
|
|
Other
|
1,036
|
|
|
2,290
|
|
|
38,226
|
|
|
11,937
|
|
Net Cash Provided by
Continuing Operating Activities
|
178,667
|
|
|
167,535
|
|
|
472,838
|
|
|
373,880
|
|
Net Cash (Used in)
Provided by Discontinued Operating Activities
|
(339)
|
|
|
(4,626)
|
|
|
(614)
|
|
|
14,427
|
|
Net Cash Provided by
Operating Activities
|
178,328
|
|
|
162,909
|
|
|
472,224
|
|
|
388,307
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
Capital
Expenditures
|
(177,294)
|
|
|
(64,132)
|
|
|
(450,620)
|
|
|
(179,389)
|
|
Proceeds from Sales
of Assets
|
81,727
|
|
|
20,693
|
|
|
426,878
|
|
|
38,977
|
|
Net Distributions
from (Investments in) Equity Affiliates
|
10,920
|
|
|
1,023
|
|
|
35,620
|
|
|
(4,555)
|
|
Net Cash (Used in)
Provided by Continuing Investing Activities
|
(84,647)
|
|
|
(42,416)
|
|
|
11,878
|
|
|
(144,967)
|
|
Net Cash (Used in)
Provided by Discontinued Investing Activities
|
—
|
|
|
(28,260)
|
|
|
—
|
|
|
366,251
|
|
Net Cash (Used in)
Provided by Investing Activities
|
(84,647)
|
|
|
(70,676)
|
|
|
11,878
|
|
|
221,284
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
Payments on
Short-Term Borrowings
|
—
|
|
|
(112,000)
|
|
|
—
|
|
|
(598,000)
|
|
Payments on
Miscellaneous Borrowings
|
(2,971)
|
|
|
(1,763)
|
|
|
(8,944)
|
|
|
(6,222)
|
|
Payments on Long-Term
Notes
|
(96,543)
|
|
|
—
|
|
|
(213,728)
|
|
|
—
|
|
Net (Payments on)
Proceeds from Revolver - CNX Coal Resources LP
|
(2,000)
|
|
|
10,000
|
|
|
(13,000)
|
|
|
23,000
|
|
Distributions to
Noncontrolling Interest
|
(5,468)
|
|
|
(5,416)
|
|
|
(16,403)
|
|
|
(16,241)
|
|
Dividends
Paid
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,294)
|
|
Issuance of Common
Stock
|
136
|
|
|
—
|
|
|
859
|
|
|
4
|
|
Treasury Stock
Activity
|
(262)
|
|
|
(12)
|
|
|
(7,355)
|
|
|
(1,669)
|
|
Debt Repurchase and
Financing Fees
|
—
|
|
|
(482)
|
|
|
(298)
|
|
|
(482)
|
|
Net Cash Used in
Continuing Financing Activities
|
(107,108)
|
|
|
(109,673)
|
|
|
(258,869)
|
|
|
(601,904)
|
|
Net Cash Provided by
(Used in) Discontinued Financing Activities
|
—
|
|
|
61
|
|
|
—
|
|
|
(14)
|
|
Net Cash Used in
Financing Activities
|
(107,108)
|
|
|
(109,612)
|
|
|
(258,869)
|
|
|
(601,918)
|
|
Net (Decrease)
Increase in Cash and Cash Equivalents
|
(13,427)
|
|
|
(17,379)
|
|
|
225,233
|
|
|
7,673
|
|
Cash and Cash
Equivalents at Beginning of Period
|
299,135
|
|
|
97,626
|
|
|
60,475
|
|
|
72,574
|
|
Cash and Cash
Equivalents at End of Period
|
$
|
285,708
|
|
|
$
|
80,247
|
|
|
$
|
285,708
|
|
|
$
|
80,247
|
|
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SOURCE CONSOL Energy Inc.