PITTSBURGH, Feb. 8, 2024
/PRNewswire/ -- CNX Resources Corporation (NYSE: CNX) ("CNX" or
"the company") announced today its year-end reserves update as of
December 31, 2023.
- The Company reported 2023 total proved reserves of 8,741 Bcfe,
comprised of 6,028 Bcfe of proved developed reserves and 2,713 Bcfe
of proved undeveloped reserves.
- Development activity in 2023 converted 819 Bcfe of proved
undeveloped reserves, achieving a 1.46x proved developed
replacement ratio.
- Future finding and development costs for proved undeveloped
reserves of $0.43 per Mcfe and
$0.50 per Mcfe when including
midstream and water infrastructure investments.
- Average EUR of proved undeveloped reserves in Marcellus and
Utica shales of 2.57 Bcfe and 2.73
Bcfe per thousand feet of completed lateral, respectively.
- Upward proved reserves adjustments of 467 Bcfe due to positive
well performance and other changes, primarily offset by downward
adjustments of 709 Bcfe due to the SEC five-year booking rule and
465 Bcfe due to lower commodity prices.
"The 2023 year-end reserve update highlights the company's
continued replacement of production with capital-efficient
development of highly productive reserves against a challenging
commodity pricing backdrop," commented Navneet Behl, Chief Operating Officer. "Well and
cost performance remain strong, and we continue to refine well
timing and placement to optimize reserve development and free cash
flow generation as we execute our maintenance of production plan.
In addition to the reported proved reserves, CNX has an extensive
inventory of high-quality acreage and locations that provides
decades of runway for long term intrinsic per share value creation
at our current development pace."
Proved Developed Reserves
Summary of Changes in
Proved Developed Reserves (Bcfe)
|
Balance at December 31,
2022
|
6,221
|
Production
|
(560)
|
Sale of
Reserves
|
(168)
|
Price
Revisions
|
(283)
|
Transferred from
Undeveloped
|
819
|
Extensions and
Discoveries
|
42
|
Other
Revisions
|
(43)
|
Balance at December 31,
2023
|
6,028
|
Proved developed reserves reported at 6,028 Bcfe, or a decrease
of 193 Bcfe, compared to 2022. This decrease was driven by
production, asset sales during the year, and commodity price
adjustments affecting the long-term tail production economics;
offset in part, by the conversion of undeveloped reserves.
Proved Undeveloped
Summary of Changes in
Proved Undeveloped Reserves (Bcfe)
|
Balance at December 31,
2022
|
3,585
|
Undeveloped Reserves
Transferred to Developed
|
(819)
|
Price
Revisions
|
(182)
|
Revisions Due to Plan
Changes
|
(169)
|
Revisions Due to SEC
5-Year Booking Rule
|
(709)
|
Revisions Due to Well
Performance and Other
|
467
|
Extensions and
Discoveries
|
540
|
Balance at December 31,
2023
|
2,713
|
Proved undeveloped reserves reported at 2,713 Bcfe, a decrease
of 872 Bcfe compared to 2022. The decline was primarily driven by a
709 Bcfe SEC 5-Year booking rule adjustment due to changes in the
development schedule that shifted previously proved undeveloped
reserves outside the SEC's five-year development window. The rule
requires that wells not developed within the first five years of
their initial booking must be excluded in the current year from the
proved reserve calculation. The company's focus on capital
efficiency and a maintenance of production program has lowered the
rate of inventory consumption and deferred development of certain
reserves when compared to prior reserve reports. We anticipate that
these undeveloped reserves will be added back in future years.
Proved undeveloped reserves finding and development cost (PUD
F&D) are $0.43 per Mcfe and
$0.50 per Mcfe when including
midstream and water infrastructure costs. PUD F&D excludes
plugging and abandonment costs.
The following table presents the summary of proved reserves by
category:
Bcfe
|
Years Ended December
31,
|
|
2023
|
2022
|
PDP Reserves
|
6,028
|
6,118
|
PDNP
Reserves
|
-
|
104
|
PUD Reserves
|
2,713
|
3,585
|
Total Proved
Reserves
|
8,741
|
9,807
|
|
Note: The proved
reserve estimate as of December 31, 2023, was prepared by CNX
Resources and audited by Netherland, Sewell & Associates, Inc.
The SEC PUD guidelines allow a company to book PUD reserves
associated with projects that are to occur within the next five
years.
|
Total Reserves: Proved, Probable, and Possible Reserves (3P)
and Other Resource Potential
As of December 31, 2023, CNX has
total proved, probable, and possible reserves (also known as "3P
reserves") of 11.1 Tcfe, which are comprised of developed reserves
and reserves expected to be developed in the company's five-year
plan. There are an additional 107 Tcfe of recoverable
resources that are economic at the commodity futures strip as of
December 30, 2023 in the "Other
Resource Potential" that the company expects to develop beyond the
five-year plan. This large inventory of proved and probable (2P),
3P and Other Resource assets, in addition to our peer leading cost
implies meaningful future upside in both the Marcellus and
Utica shales in Pennsylvania and West Virginia and will continue to allow the
company to add extensions and discoveries over the foreseeable
future. The company's 3P reserves have been determined in
accordance with the guidelines of the Society of Petroleum
Engineers Petroleum Resources Management System.
The following table shows the breakdown of reserves and
resource, in Bcfe, from the company's current development and
exploration plays:
|
Proved
Developed
|
Proved
Developed
Non-
Producing
|
Proved
Un-
Developed
|
Total
Proved
|
Probable
|
Possible
|
Total
3P
|
Other
Resource
Potential
|
Total
Reserve
&
Resource
|
Marcellus
Shale
|
5,166
|
-
|
1,814
|
6,980
|
1,164
|
536
|
8,680
|
62,223
|
70,903
|
Coalbed
Methane
|
522
|
-
|
290
|
812
|
-
|
-
|
812
|
956
|
1,768
|
Utica
Shale
|
335
|
-
|
608
|
943
|
611
|
104
|
1,658
|
35,084
|
36,742
|
Other
(1)
|
5
|
-
|
-
|
5
|
-
|
-
|
5
|
9,218
|
9,223
|
Total, Year End
2023
|
6,028
|
-
|
2,713
|
8,741
|
1,775
|
640
|
11,156
|
107,480
|
118,636
|
Total, Year End
2022
|
6,118
|
104
|
3,585
|
9,807
|
1,227
|
654
|
11,687
|
109,629
|
121,317
|
Totals may not add
due to rounding.
|
Note: (1) Other
includes Conventional and Other Shale formations.
|
|
Definition: Total
Reserve & Resource includes total 3P and other resource
potential outside of 3P.
|
The estimates of
reserves and future revenue were prepared in accordance with the
definitions and guidelines of the SEC Regulation S-X Rule
4.10(a).
|
Standardized Measure of Discounted Future Net Cash
Flows
The following information was prepared in accordance with the
provisions of the Financial Accounting Standards Board's Accounting
Standards Update No. 2010-03, "Extractive Activities-Oil and
Gas (Topic 932)." This topic requires the standardized measure of
discounted future net cash flows to be based on the average, first
day-of-the-month price for the year ended December 31, 2023.
Because prices used in the calculation are average prices for that
year, the standardized measure could vary significantly from
year-to-year based on the market conditions that occurred.
The projections should not be viewed as realistic estimates of
future cash flows, nor should the "standardized measure" be
interpreted as representing current value to CNX. Material
revisions to estimates of proved reserves may occur in the future;
development and production of the reserves may not occur in the
periods assumed; actual prices realized are expected to vary
significantly from those used and actual costs may vary. CNX's
investment and operating decisions are not based on the information
presented, but on a wide range of reserve estimates that include
probable as well as proved reserves and on different price and cost
assumptions.
The standardized measure is intended to provide a better means
for comparing the value of CNX's proved reserves at a given time
with those of other gas producing companies than is provided by a
comparison of raw proved reserve quantities.
Reconciliation of
PV-10 to Standardized Measure
|
|
|
|
|
December 31,
|
(Dollars in millions,
except gas price/MMBtu)
|
|
2023
|
|
2022
|
|
2021
|
Average Henry Hub Price
($/MMBtu)
|
|
$ 2.637
|
|
$ 6.357
|
|
$ 3.598
|
Future cash
inflows
|
|
$
20,281
|
|
$
54,714
|
|
$
31,839
|
Future production
costs
|
|
(8,515)
|
|
(10,225)
|
|
(8,247)
|
Future development
costs (including abandonments)
|
|
(1,903)
|
|
(2,234)
|
|
(1,736)
|
Future net cash flows
(pre-tax)
|
|
9,863
|
|
42,255
|
|
21,856
|
10% discount
factor
|
|
(5,662)
|
|
(27,754)
|
|
(13,775)
|
PV-10 (Non-GAAP
measure) (1)
|
|
4,201
|
|
14,501
|
|
8,081
|
Undiscounted income
taxes
|
|
(2,507)
|
|
(10,696)
|
|
(5,839)
|
10% discount
factor
|
|
1,416
|
|
6,958
|
|
3,640
|
Discounted income
taxes
|
|
(1,091)
|
|
(3,738)
|
|
(2,199)
|
Standardized GAAP
measure
|
|
$
3,110
|
|
$
10,763
|
|
$
5,882
|
|
|
(1)
|
We calculate our
present value at 10% (PV-10) in accordance with the following
table. Management believes that the presentation of the
non-Generally Accepted Accounting Principle (GAAP) financial
measure of PV-10 provides useful information to investors because
it is widely used by professional analysts and sophisticated
investors in evaluating oil and gas companies. Because many factors
that are unique to each individual company impact the amount of
future income taxes estimated to be paid, the use of a pre-tax
measure is valuable when comparing companies based on reserves.
PV-10 is not a measure of the financial or operating performance
under GAAP. PV-10 should not be considered as an alternative to the
standardized measure as defined under GAAP. We have included a
reconciliation of the most directly comparable GAAP
measure-after-tax discounted future net cash flows.
|
Supplemental Reserves Information
Securities and Exchange Commission (SEC) pricing as of
December 31, 2023:
|
SEC
|
Adjusted
|
|
Pricing
(1)
|
Pricing
(2)
|
Benchmark
Pricing:
|
|
|
WTI Oil Price
($/Bbl)
|
$78.22
|
$73.22
|
Average Henry Hub Price
($/MMBtu)
|
$2.64
|
$2.23
|
C2+ Natural Gas Liquids
($/Bbl)
|
$18.54
|
$18.54
|
Condensate
($/Bbl)
|
$65.06
|
$65.06
|
|
|
(1)
|
The SEC rules
require that the proved reserve calculations be based on the first
day of the month unweighted arithmetic average prices over the
preceding twelve months.
|
(2)
|
The SEC Pricing is
adjusted for quality, hedges, transportation costs, and basis
differentials in the calculation of future net cash flows. Henry
Hub natural gas price presented in dollars per
Mcf.
|
Summary of Changes in Proved Reserves:
Summary of Changes
in Proved Reserves (Bcfe)
|
Balance at December 31,
2022
|
9,807
|
Extensions and
Discoveries
|
582
|
Revisions
|
(455)
|
Production
|
(560)
|
Price
Adjustments
|
(465)
|
Sales of
Reserves
|
(168)
|
Balance at December 31,
2023
|
8,741
|
|
Note: The proved
reserve estimate as of December 31, 2023, was prepared by CNX
Resources and audited by Netherland, Sewell & Associates,
Inc.
|
Future Capital Costs for Proved Reserves:
$
millions
|
Drilling and
Completions Capital
|
$1,158
|
Midstream and Water
Infrastructure
Capital
|
$210
|
Plugging and
Abandonment Costs
|
$535
|
|
Note: Represents the
development costs for wells the company expects to turn-in-line
over the next five years and plugging and abandonment costs for all
proved reserve wells.
|
About CNX Resources
CNX Resources Corporation is 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 responsibly developing its resource base. As of
December 31, 2023, CNX had 8.74
trillion cubic feet equivalent of proved natural gas, natural gas
liquids, condensate, and oil reserves. The company is a member of
the Standard & Poor's Midcap 400 Index. Additional information
may be found at www.cnx.com.
Cautionary Statements
We are including the following cautionary statement in this
press release to make applicable and take advantage of the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995 for any forward-looking statements made by, or on behalf of
us. With the exception of historical matters, the matters discussed
in this press release are forward-looking statements (as defined in
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. These 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 a strategy that involves risks or uncertainties, we are
making forward-looking statements. The forward-looking statements
in this press release 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: prices
for natural gas and natural gas liquids are volatile and can
fluctuate widely based upon a number of factors beyond our control
including oversupply relative to the demand for our products,
weather and the price and availability of alternative fuels;
unsuccessful drilling efforts or continued natural gas price
decreases requiring write downs of our proved natural gas
properties, or changes in assumptions impacting management's
estimates of future financial results as well as other assumptions
such as movement in our stock price, weighted-average cost of
capital, terminal growth rates and industry multiples, could cause
goodwill and other intangible assets we hold to become impaired and
result in material non-cash charges to earnings; a loss of our
competitive position because of the competitive nature of the
natural gas industry, consolidation within the industry or
overcapacity in the industry adversely affecting our ability to
sell our products and midstream services; deterioration in the
economic conditions in any of the industries in which our customers
operate, a domestic or worldwide financial downturn, or negative
credit market conditions; hedging activities may prevent us from
benefiting from price increases and may expose us to other risks;
negative public perception regarding our industry could have an
adverse effect on our operations; events beyond our control,
including a global or domestic health crisis; dependence on
gathering, processing and transportation facilities and other
midstream facilities owned by others, and disruption of, capacity
constraints in, or proximity to pipeline, and any decrease in
availability of pipelines or other midstream facilities;
uncertainties in estimating our economically recoverable natural
gas reserves, and inaccuracies in our estimates; the high-risk
nature of drilling, developing and operating natural gas wells; our
identified drilling locations are scheduled out over multiple
years, making them susceptible to uncertainties that could
materially alter the occurrence or timing of their development or
drilling; the substantial capital expenditures required for our
development and exploration projects, as well as midstream system
development; decreases in the availability of, or increases in the
price of, required personnel, services, equipment, parts and raw
materials in sufficient quantities or at reasonable costs to
support our operations; our ability to find adequate water sources
for our use in shale gas drilling and production operations, or our
ability to dispose of, transport or recycle water used or removed
in connection with our gas operations at a reasonable cost and
within applicable environmental rules; failure to successfully
estimate the rate of decline or existing reserves or to find or
acquire economically recoverable natural gas reserves to replace
our current natural gas reserves; losses incurred as a result of
title defects in the properties in which we invest or the loss of
certain leasehold or other rights related to our midstream
activities; the impact of climate change legislation, litigation
and potential, as well as any adopted, environmental regulations,
including those relating to greenhouse gas emissions; environmental
regulations can increase costs and introduce uncertainty that could
adversely impact the market for natural gas with potential short
and long-term liabilities; existing and future government laws,
regulations and other legal requirements and judicial decisions
that govern our business may increase our costs of doing business
and may restrict our operations; significant costs and liabilities
may be incurred as a result of pipeline operations and related
increase in the regulation of gas gathering pipelines; changes in
federal or state income tax laws; the outcomes of various legal
proceedings, including those which are more fully described in our
reports filed under the Exchange Act; risks associated with our
current long-term debt obligations; a decrease in our borrowing
base, which could decrease for a variety of reasons including lower
natural gas prices, declines in natural gas proved reserves, asset
sales and lending requirements or regulations; Risks associated
with our convertible senior notes due May
2026 (the "Convertible Notes"), including the potential
impact that the Convertible Notes may have on our reported
financial results, potential dilution, our ability to raise funds
to repurchase the Convertible Notes, and that provisions of the
Convertible Notes could delay or prevent a beneficial takeover of
the Company; the potential impact of the capped call transaction
undertaken in tandem with the Convertible Notes issuance, including
counterparty risk; challenges associated with strategic
determinations, including the allocation of capital and other
resources to strategic opportunities; acquisitions and
divestitures, we anticipate may not occur or produce anticipated
benefits; there is no guarantee that we will continue to repurchase
shares of our common stock under our current or any future share
repurchase program at levels undertaken previously or at all; we
may operate a portion of our business with one or more joint
venture partners or in circumstances where we are not the operator,
which may restrict our operational and corporate flexibility and we
may not realize the benefits we expect to realize from a joint
venture; CONSOL Energy may not be able to satisfy its
indemnification obligations in the future and such indemnities may
not be sufficient to hold us harmless from the full amount of
liabilities for which CONSOL Energy will be allocated
responsibility; cyber-incidents could have a material adverse
effect on our business, financial condition or results of
operations; our success depends on key members of our management
and our ability to attract and retain experienced technical and
other professional personnel; terrorist activities could materially
adversely affect our business and results of operations.
Additional factors are described in detail under the captions
"Forward Looking Statements" and "Risk Factors" in our latest
annual report on Form 10-K filed with the Securities and Exchange
Commission, as supplemented by our quarterly reports on Form
10-Q.
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