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ThisisagraphofArkema,whichweboughtatthewrongpartofthelastcycle.
Thestockdeservedtofall,andwelookedandfeltstupidforowningit.
_____________
Source:BloombergLP,retrievedNovember2015.
AndthisisthegraphofCONSOL,anenergycompanythathasgonefrom$40to$7.
Again,wetimeditpoorly,initiallybuyinginthe30sandaddingallthewaydown.
_____________
Source:BloombergLPasofNovember13,2015.
CONSOLisat$7.40ashare,givingita$1.7billionmarketcap,anda$5.5billionenterprise
value.
_____________
Source:CNXfilingsavailableathttp://phx.corporateir.net/phoenix.zhtml?c=66439&p=irolsec;BloombergLP
pricingasofNovember13,2015;andGreenlightcalculations.Minorityinterestisbasedonthepublically
tradedvalueofCNXCoalResourcesLP(CNXC)notownedbyCNXasofNovember2015.
ThemarketviewsCONSOLasacoalcompany.Wedisagree,butlet'slookatitthroughthat
lensforamoment.
Thesearecoalstocks,andamongthemCONSOLisnotanoutlier.
Asyoucansee,thewholeindustryhaspracticallybeenleftfordead.EvenCONSOLsbonds
tradelikeitmightgooutofbusiness.
_____________
Source:GreenlightcalculationsbasedonpricingdatafromBloombergLPasofNovember13,2015.
ComparativecoalcompaniesselectedinthesolediscretionofGreenlight.
Adecadeago,coalwasusedtogenerateroughlyhalfofallelectricityintheU.S.
_____________
Source:GreenlightcalculationsusingU.S.EnergyInformationAdministration(EIA)monthlyU.S.electricity
generationdata,filteredontheelectricpowersector,retrievedNovember2015,fromEIAscustomtable
builderatwww.eia.gov/forecasts/steo/query.ClassificationsselectedinthesolediscretionofGreenlight.
Thankstotheshalegasrevolutionandenvironmentalregulations,coalisnolongerking.
Weburnlessofitanditspricehasdeclined.
_____________
Source:Source:Platts Coal,obtainedNovember2015.
WhilecoalusedtoprovidenearlyhalfofU.S.electricity,itsnowprovidinglessthan35%.
_____________
Source:GreenlightcalculationsusingEIAmonthlyU.S.electricitygenerationdata,filteredontheelectric
powersector,retrievedNovember2015,fromEIAscustomtablebuilderat
www.eia.gov/forecasts/steo/query.Figuresfor2015areyeartodatethroughSeptember30,3015.
ClassificationsselectedinthesolediscretionofGreenlight.
Wevegonefromproducingmorethanabilliontonsofthermalcoalannuallytolessthan
850milliontonsinthelastfiveyears,andeveryoneagreesthatthistrendwillcontinue.
_____________
Source:GreenlightcalculationsusingEIAannualU.S.coalsupply,consumption,andinventoriesdata,
retrievedNovember2015,fromEIAsshorttermenergyoutlookbrowser(beta)atwww.eia.gov/beta/steo/.
Thermalcoalistotalcoallessexportedmetallurgicalcoalandcokeplantconsumption.
10
Butcoalisntdisappearingaltogether.
11
Evenunderconservativeprojections,20yearsfromnowcoalwillstillprovide25%ofthe
countryselectricity.
Thatsabout760milliontonsannually.Someonehastosupplyit.
_____________
Source:GreenlightcalculationsusingEIAselectricitysupply,dispositions,prices,andemissionsreference
case,retrievedNovember2015,fromEIAsAnalysisoftheImpactsoftheCleanPowerPlan,filteredon
ElectricPowerSector,availableatwww.eia.gov/oiaf/aeo/tablebrowser.Classificationsselectedinthesole
discretionofGreenlight.
12
CoalisproducedinthreemajorbasinsacrossthecontinentalUnitedStates
Theexpenseofshippingmakescoalamostlyregionalbusiness.
_____________
Source:GreenlightcalculationsusingEIAsshorttermenergyoutlookforNovember2015at
www.eia.gov/forecasts/steo/tables/pdf/6tab.pdf,withAppalachiaadjustedforexportedmetallurgicalcoal
andcokeplantconsumption.ClassificationsselectedinthesolediscretionofGreenlight.
13
Incaseyoucan'treadthatcartoon,itsays,"Isuspectmyhusband'shikingonme.
WeregoingtofocusonthecoalcomingoutofAppalachia,anareaknownforbeinga
favoritehikingspotofSouthCarolinagovernors.
14
Appalachiahasbeenhitespeciallyhardbythefallingdemand.
Inthepastfewyearsweveseenatleast20coalcompaniesgointobankruptcy,liquidating
theirinventoriesintoanalreadyoversuppliedmarketastheydoso.
Thecurrentspotpriceisjust$43perton,downfromabout$80fouryearsago.
15
Thecontagionshouldcontinueforanother1218monthsuntiltheuncompetitivemines
closeandinventorycomesbackintoequilibrium.
Theplayerswhowillsurviveandultimatelyprosperaretheonesonthelowendofthe
regionalcostcurve.
16
ThisbringsustoCONSOLEnergy,acompanythathasbeenminingcoalinAppalachiafor
150years, andhashistoricallybeenveryprofitable.
_____________
Source:GreenlightestimatesandcalculationsbasedonCNXfilingsandearningspresentationsforreferenced
timeperiods,availableathttp://phx.corporateir.net/phoenix.zhtml?c=66439&p=irolirhome.
17
Inlate2013,managementsoldthebulkofitshighercostWestVirginiacoalassetsto
MurrayEnergyfor$3.5billion,leavingitwithlowcost,modernized,nonunionmines,
mostlyinPennsylvania.
18
ThemineshavesomeofthemostdesirablecoalinNorthernAppalachia,withhighheat
andlowsulphurcontent.
Higherheatmeansmoreenergy,andlowersulphurreducesthecoststoburnthecoal,
makingitmoreattractivetoutilities.
_____________
Source:CNXQ32015earningscallslides,availableathttp://phx.corporate
ir.net/phoenix.zhtml?c=66439&p=irolpresentations.ThroughoutthispresentationweuseCONSOLThermal
CoaltorefertoCNXsPennsylvaniaOperationssegment.
19
Themineshavethecapacitytoproduceupto28milliontonsayearforalongtimewithout
substantialinvestment.
_____________
Source:CNXQ32015earningscallslidesavailableathttp://phx.corporate
ir.net/phoenix.zhtml?c=66439&p=irolpresentations.GreenlightupdatedCNXs2014reserveestimateby
subtractingGreenlights estimateofannualactivityfor2015.
20
Assumingcleanenergyregulationsgetimplemented,theEIAexpectsAppalachiancoal
demandtodeclinenearly35%overthenext10yearsuntilitstabilizesataround110
milliontons.
_____________
Source:Greenlightestimatesfrom2020onwardbasedonEIAscoalproductionbyregionandtypereference
case,retrievedNovember2015,fromEIAsAnalysisoftheImpactsoftheCleanPowerPlan,filteredonCoal
SupplyandPrices,availableatwww.eia.gov/oiaf/aeo/tablebrowser.Greenlightcalculationsforprioryears
baseduponEIAdatautilizedinSlide10,withAppalachiaadjustedforexportedmetallurgicalcoalandcoke
plantconsumption.ClassificationsselectedinthesolediscretionofGreenlight.
21
Only12%ofexistingproductioninAppalachiaislowercostthanCONSOL.
Lookingattheentirecostcurvefortheregion,thecurrentequilibriumfor168milliontons
isapproximately$80perton.At2025demandlevels,equilibriumwouldfallto
approximately$50perton,assumingnocostinflation.
_____________
Source:SupplycurvebasedondatafromWoodMackenzie,providedtoGreenlightinNovember2015.Chart
excludesmineswithcashcostspertongreaterthan$100.Curvecovers145milliontonsofAppalachia
production.EventualclosuresreflectGreenlightestimates.
22
Weexpectaveryweakpricingenvironmentoverthenextyear.Fortunately,CONSOLis
protectedinthenearterm,havinglockedinpricingforthebalanceofthisyearat
approximately$57pertonandenoughfornextyeartorealizeover$50perton.
_____________
Source:GreenlightestimatesbaseduponCNXfilings,earningspresentations,andmanagementguidancefor
referencedtimeperiods,availableathttp://phx.corporateir.net/phoenix.zhtml?c=66439&p=irolirhome.
23
CONSOLsfallingcostsandrecentlyimplementedzerobasedbudgetingshouldbringcash
coststoward$33pertonnextyear,allowingittoremainquiteprofitableduringthe
dislocation.
Bytheendofnextyear,manyuncompetitivemineswillhaveclosedandpricesshouldbe
recovering.
_____________
Source:GreenlightestimateofCNXsthermalcoaloperationsisbaseduponCNXfilings,investor
presentationsandmanagementguidanceforreferencedtimeperiods,availableathttp://phx.corporate
ir.net/phoenix.zhtml?c=66439&p=irolirhome.
24
EBITDAshouldsettleataround$425millionperyearandEBITDAlessCapexshouldbe
around$280million.
_____________
Source:GreenlightestimateofCNXsthermalcoaloperationsisbaseduponCNXfilings,investor
presentationsandmanagementguidanceforreferencedtimeperiods,availableathttp://phx.corporate
ir.net/phoenix.zhtml?c=66439&p=irolirhome.
25
Wethinkthatthebestwaytovaluealonglastingpileofreservesofanytypeiswitha
discountedcashflowanalysis.Here,theDCFreflectsthevalueoftheentirethermal
reservebasedowntothefullrunoff.WewillreleasethefullDCFlaterthisweek,butthe
bottomlineisthethermalcoalbusinessisworth$3billion.Asacrosscheck,thatisabout
11xdepressedEBITDAlessCapex,andlessthanfourdollarspertonofreserves.
_____________
Source:Greenlightestimate.Pleaserefertoaccompanyingthermalcoaldiscountedcashflowmodelfor
detailsandassumptions.
26
CONSOLsBuchananmineisthelowestcostmetallurgicalcoalmineinAmerica.Itproduces
4milliontonsofcoaland16milliondollarsofEBITDAintodaysdepressedmarkets.Idont
havetimetogothroughthemetcoalindustry,butdoingthesameworkwedidforthermal
coalgeneratesaDCFvalueofapproximately$490million.
_____________
Source:Greenlightestimates.Pleaserefertoaccompanyingmetallurgicalcoaldiscountedcashflowmodelfor
detailsandassumptions.
27
CONSOLproducesabout100BillionCubicFeetEquivalents(Bcfe)ayearofcoalbed
methaneandotherlegacygasoutof2TrillionCubicFeetEquivalents(Tcfe)ofproved
reserves,80%ofwhicharedeveloped.Attodayspricesitdoesnotmakesensetoinvest
morethanthebareminimuminthisbusiness,andthatswhatCONSOLisdoing.
Nonetheless,productioncontinues.Weusearunoffanalysistovalueitat$900million.
_____________
Source:Greenlightestimates.Pleaserefertoaccompanyinglegacygasdiscountedcashflowmodelfordetails
andassumptions.ReservedatafromCNXForm10K,availableathttp://phx.corporate
ir.net/phoenix.zhtml?c=66439&p=irolreports.
28
CONSOLalsoownspublicshares,aretainedinterestingatheringsystems,andIncentive
DistributionRights(IDRs)inCONEMidstream,tickerCNNX,whichCONSOLandits
MarcellusjointventurepartnerNobletookpublicinSeptember2014.WevalueCONSOLs
stakeat$667million.
_____________
Source:Greenlightestimatebaseduponthefollowingvalues:(a)Common,subordinatedandGPunitsatthe
closingpriceofCNNX,asofNovember13,2015;(b)retainedinterestingatheringsystemsat1.75xtangible
book;and(c)Greenlights estimateofIDRvalue.
29
Managementplanstodivestsomenoncoreassetsoverthenextyear.Weestimate
proceedstobearound$500millioninadditiontoanyassetswearecountingelsewhere.
Webelievethevalueofthethermalcoal,metcoal,legacyoilandgas,andassetstobesold
equaltoday'senterprisevalue.
_____________
Source:Greenlightcalculationbaseduponpriorslides.
30
Ifthatsalltherewas,thenCONSOLwouldberoughlyfairlyvaluedattodaysprice.But,
wait
31
CONSOLownsalotofshalegas.
32
ItisoneofthelargestplayersintheMarcellusandUticashales.Ithasamillionnetacres
and54tcfe ofresourcesinthesetwobasins.
Thatisenoughgastosupplytheentirecountryfortwoyears.
Webelievethatsvaluable.
_____________
Source:CNXQ32015earningscallslides,availableathttp://phx.corporate
ir.net/phoenix.zhtml?c=66439&p=irolpresentations.
33
Andyes,IrememberthatIpresentedashortthesisonoilfrackersattheSohn Investing
ConferencelastMay,callingthemvaluedestroyers.
Butnotallfrackingiscreatedequal.Wenotedthenthatthenaturalgasfrackershad
attractiveeconomics,whichwastrueatthetime.Sincethen,thepriceofgashasfallen.
34
BeforegettingintoCONSOLsfrackingbusiness,letsbrieflyrevisitPioneer,whichwe
highlightedastheMotherFracker.InMayweshowedthatPioneerdidnothaveapositive
valueonaDCFbasis.AkeyassumptionwasbasedonPioneers2014findingcostsof
$20.66perBOEorbarrelofoilequivalentinitshorizontaldrillingprogram.
_____________
Source:GreenlightpresentationonMay4,2015,availableatwww.greenlightcapital.com.
35
Lastmonth,wehadalongvisitwithPioneermanagementandwentthroughourthesis.
Theirmainobjectionwasthatourcapitalintensitywastoohigh theysaidtheirwellswere
moreproductivethanwegavethemcreditfor,and$15perBOEwouldmakemoresenseas
alongtermtarget.
Thisisnotwhatthecompanydidlastyear,orwhatitwilldothisyear,butitswhat
managementsaidPioneercandolongerterm.
36
WeupdatedourPioneerDCFmodelbasedontheirfeedbackandthecurrentcommodity
stripprices,whichshowsPioneergeneratesabout$33perBOEinrevenuesand$19of
undiscountedcashflows.Thepresentvalueofthoseis$12perBOE,whichislessthan
managementstargetedlongtermcapexof$15.So,atcurrentstripprices,Pioneers
drillingprogramcontinuestodestroyshareholdervalue.
_____________
Source:RevenueperBOEforWTIoilandHenryHubnaturalgascalculatedusinganaverageof2016,2017,
and2018NYMEXfuturesprice,obtainedfromBloombergLPinNovember2015.RealizedrevenuesperBOE
foroil,naturalgasandNGLbasedonGreenlightestimates.Greenlights estimated%ofBOEmixfromoil,
naturalgas,andNGLbasedonestimatesfromITG.Greenlights estimatedcapitalandoperatingcostforPXD
basedonmanagementguidanceandQ32015results.
37
WeupdatedthePioneerDCFanalysisaswell.Whiletheimprovedcapitalefficiencyhelps,
thelowercommoditypricebringsthevaluebackto$7pershareattodayscurveasshown
intheorangeintersection.
_____________
Source:Greenlights DCFvaluefromMay2015ishighlightedinyellow.Greenlights DCFvaluefrom
November2015ishighlightedinorange.CriticalassumptionsintheupdatedDCFare:
Greenlights typecurvebasedondatafromWoodMackenzieandITG
Capexis37%higherinfirstyearand7%growththereafter
10.2billionBOEdevelopedover40years
Oilpriceatforwardcurveuntil2023,flatthereafter
Naturalgaspriceatforwardcurveuntil2027,thengrows2%peryear
Operatingcostsdown30%in2016from2014,thenflatthereafter
Capexat$15perBOE
CorporateWACCof7.7%
38
Ineffect,Pioneerisjustanoptiononmuchhigheroilprices.Withamarketcapof$21
billionandaDCFvalueofonly$1billion,investorsarepaying$20billioninthehopethat
longtermoilpriceswillbemuchhigherthanthefuturesmarketexpects.Thecurrentvalue
reflectsenergypricesmorethan30%higheracrossthecurve.
_____________
Source:Greenlightcalculationbaseduponpriorslides.
39
LetslookatCONSOLsMarcellusandUticaassetsonthesamebasis.
ThesearetheeconomicsforCONSOLtogetgasoutofthegroundandtomarketbasedon
todaysprices.
Similartotheoilfrackers,drillingnowdestroysvalue.Butitsnotasbadforgasasitisfor
oil.
_____________
Source:RevenueperMcfe forWTIoilandHenryHubnaturalgascalculatedusinganaverageof2016,2017,
and2018NYMEXfuturesprice,obtainedfromBloombergLPinNovember2015.RealizedrevenuesperBOE
foroil,naturalgasandNGLbasedonGreenlightestimates.Estimated%ofMcfe mixofnaturalgas,NGL,and
oilbasedonmodellednewwellproductionmix.Greenlights estimatedcapitalandoperatingcostforCNX
basedonmanagementguidanceandQ32015results.CriticalassumptionsaredisclosedinSlide49.
40
Drillingandcompletiontechniquesareprettymuchstandardwhetherfrackingforgasor
oil,andsoarethecosts.
_____________
Source:PictureofgasrigbyMichaelHenninger ofthePostGazette,copyrightownedbyPGPublishingCo.
PictureofoilrigbyBirrell Services,copyrightownedbyBirrell Services.
41
Butwhattheyproduceisnotthesame.Forexample,Marcelluswellsrecover2.5times
moreenergythanPermianwells.Evenattodaysincrediblydepressedgasprices,the
revenuesatspotpricesarehigherforaCONSOLMarcelluswellthanaPioneerPermian
well.
_____________
Source:RevenueatspotareGreenlightestimates,basedonthefollowing:
WTIoil,HenryHubnaturalgas,andMountBelvieu NGLpricingfromBloombergLPasofNovember13,
2015.
Bcfe mixforCNXbasedonmodellednewwellproductionmix.
BOEmixforPXDbasedonestimatesfromITG.
Totalrecoverables of15bcfe forCNXbasedondatainQ32015earningscallslidesavailableat
http://phx.corporateir.net/phoenix.zhtml?c=66439&p=irolpresentations.
Totalrecoverables of1mmboe forPXDbasedondatainQ3earningscallslidesavailableat
http://investors.pxd.com/phoenix.zhtml?c=90959&p=irolpresentations.
Noadjustmentfortransportdifferentialsorroyalties.
42
YoudexpecttheoilfrackerslikePioneertobecuttingcapexfasterthanthegascompanies.
Nope.Instead,whileCONSOLhasstoppeddrillingnewwells,Pioneerhasaddedrigs.
43
CONSOLwillspendmoneytocompleteandbringonlinewellsthathavealreadybeen
drilled,allowingittoshowproductiongrowththatwouldexcitemanyoilandgasanalysts.
Buttous,what'sexcitingisthatmanagementisdisciplinedenoughtodefernew
investmentuntiltheeconomicsmakesense.
_____________
Source:2012to2014reflectdatafromCNXForms10Kforperiodspresented,availableat
http://phx.corporateir.net/phoenix.zhtml?c=66439&p=irolsec.2015and2016estimatesreflect
managementguidance.
44
AndCONSOLcanaffordtobepatient.Thecompanyownsmuchofthislandoutright,so
unlikemanyofitspeersitdoesntpayroyaltiesanditdoesntneedtodrillinorderto
maintainitsrights.
45
LikePioneer,CONSOLneedshigherpricestodrillprofitably.Thedifferenceisthat
PittsburghbasedCONSOLisunwillingtoinvestCapexfornegativereturns,whileDallas
basedPioneerplanstoinvestrightthroughthem.
46
Justaswiththeoilfrackers,webelievethemostaccuratewaytomeasurevalueistodoa
longtermDCF.
47
ThisistheNYMEXfuturespricefornaturalgas.Thecurvereflectsarecovery,subjectto
seasonality.WeusethecommodityforwardcurveinourDCF.
_____________
Source:BloombergLP,retrievedNovember2015.
48
ThesearethecriticalassumptionsinourDCF.Notably,weassumedrillingrestartsin2018
eventhoughIthinkgaspriceswillimprovefasterthanthemarketthinks.Illgettothat
shortly.
_____________
Source:Greenlightestimates.Pleaserefertoaccompanyingshalegasdiscountedcashflowmodelfordetails
andassumptions.
49
Puttingitalltogether,thisleadstoatotalbasecasevalueforCONSOLsshalegasbusiness
of$6.6billion.
_____________
Source:GreenlightestimatebasedupondatapresentedinSlide49.Pleaserefertoaccompanyingshalegas
discountedcashflowfordetailsandassumptions.
50
TheDCFvalueconvertsto$6,200pernetacreand$0.12permcfe ofpotentialresource.
Here,wecomparethattothevaluesof6otherpureplaysintheMarcellus/Uticaonaper
acreandperpotentialresourcebasis.Theindustryexpertswilltellyouthatallacresarent
equal.But,thepointImmakingisthatourDCFderivedvalueisnttoofarfromthecurrent
marketvaluesofthepureplays.
_____________
Source:Greenlightestimatesandcalculations,asfollows:
ForCNX:
AdjustedEVistheenterprisevaluebasedonGreenlights shalegasDCF,
NetAcrebaseduponCNXinvestorpresentations,and
ResourcebaseduponCNXinvestorpresentationsandGreenlightestimates.
Forallotherissuers(whichwereselectedinthesolediscretionofGreenlight):
AdjustedEVistheenterprisevaluebaseduponissuerfilings,reducedbyGreenlightforbookvalueof
balancesheetderivativeassets,andwhereappropriate,reducedbyeitherthemarketvalueorbookvalue
ofequityinvestments,
NetAcreisbaseduponinvestorpresentations.TheEV/NetAcreCalculationreflectsonlyMarcellusand
Uticanetacres,withtheexceptionofCabot,whichalsoincludesEagleFordnetacres,and
Resourcebaseduponinvestorpresentations,analystresearchreports,andGreenlightestimates.
51
AndcomparedtooilfrackerslikePioneer,wellthereisnocomparison.WhereasPioneer
getsvaluedat$20billionforitsundrilledacreage,CONSOLsstockimpliesnegativevalue
foritsundrilledacreage.
ThatspuzzlingconsideringhowremarkabletheMarcellusandUticaare.
52
Thestoryof21stcenturynaturalgasisthestoryoftheMarcellus&Utica.
Fromastandingstartadecadeago,theareahasbeenvirtuallyallofthesupplygrowth,
andnowproducesmorethan20%ofAmerica'sgas.
_____________
Source:TotalU.S.naturalgasproductionfromEIAsU.S.naturalgassupply,consumption,andinventories
data,retrievedNovember2015,fromEIAsshorttermenergyoutlookbrowser(beta)at
www.eia.gov/beta/steo/.MarcellusandUticapercentoftotalcalculatedbyGreenlightfromEIAsdrilling
productivityreportsatwww.eia.gov/petroleum/drilling/xls/dprdata.xlsx,retrievedNovember2015.
53
TheEIAprojectstheregiontodoublefromherebytheendofthedecade,andwevestill
justscratchedthesurface.
ExpertsthinkthereisenoughrecoverablegastosupplyAmericaforthenextcentury.
54
Itisnotonlythemostprolificacreage;itsgasisbyfarthecheapesttoproduce.
_____________
Source:WoodMackenzie,9thAnnualSectorForum,CostEfficiency&CapitalDiscipline,October8,2015.
55
Allthelowcostgashasdrivendowntheprice.ThisisagraphofhistoricalHenryHub
naturalgas.
Inthelasttenyearsithasspikedintothedoubledigits.Today,itisnearitslowsaround$2.
_____________
Source:BloombergLP,retrievedNovember2015.
56
Historically,gasatDominionSouth,nearPittsburgh,hastradedatapremiumtoHenryHub.
Today,itsatabigdiscount.Thisgapisknownasthebasisorthedifferential.
Rightnow,allthenewproductionhascreatedashortageofpipelinetotakegasoutofthe
region,whichhascreatedalocalizedglut.
InearlyNovember,whenHenryHubgaswas$2.25,itwasabouthalfthatatDominion
South.
_____________
Source:GreenlightcalculationsbasedonpricingdatafromBloombergLP,retrievedNovember2015.
57
Generallyspeaking,whennewentrantsdisruptamarketasthelowcostproducer,the
disruptersstockssoar,whiletheincumbentsstocksfade.
Buthere,witheachdiscoveryofadditionallowcostsupply,themarketgroansatthe
disrupters.
TheMarcellusandUticagasfrackersstockshavefallen.CONSOLhasdoneevenworse
becausethemarketinsistsit'snothingbutacoalstock.
_____________
Source:GreenlightcalculationsbasedonpricingdatafromBloombergLP,retrievedNovember2015.
ComparativeE&PcompaniesselectedinthesolediscretionofGreenlight.
58
Ordinarily,Iwouldaddthisallupandsaythatthesumofthepartsis$8.2billion,or$35.81
pershare,andbedonewithit.
ButI'dliketospendacouplemoreminutesonnaturalgas.WevaluedCONSOLbasedon
thecurrentforwardcurvebutwhatifthepriceactuallywentup?
59
Optimismonnaturalgasisprettyunpopularthesedays.Eventhepermabullshavegiven
up.
InDallaslastmonth,T.BoonePickenssaid,Idontthinknaturalgaswillevergoup.
_____________
Source:GreatInvestorsBestIdeas9thAnnualInvestmentSymposiumonOctober6,2015.
60
Likeanycommoditythecureforlowpricesislowprices.
Pricescan'tstaybelowthecostofthelowestcostproducersforlong.
61
Atthebeginningoftheyear,producersreactedtolowerpricesanddramaticallyslowed
drillingfornaturalgas.
_____________
Source:BakerHughesweeklynaturalgasrigcount,retrievedfromBloombergLPinNovember2015.
62
Thereisalagbetweenwhendrillingstopsandvolumesfallbecausepartiallydrilledand
completedwellswillcontinuetocomeonlineforthenextcoupleyears.
63
Butsinceproductionfromexistingwellsdeclineabout25%peryear,supplyanddemand
cancorrectquickly.
_____________
Source:ITGnaturalgasbasedeclinerateforthelower48statesthroughDecember2014,obtainedfromITG
inOctober2015.
64
Thelaggedimpactofreduceddrillingmaybeshowingupnow,asyearoveryear
productiongrowthhasdeceleratedandispushingzero.
_____________
Source:EIAsweeklyproductiongrowthdata,retrievedNovember2015,availableat
www.eia.gov/naturalgas/weekly.
65
Whilelowpricespressuresupply,recentdemandhasbeenstrong,upmidsingledigits,
drivenprimarilybyelectricityusage.Longertermdemandshouldgrowalmost3%peryear.
_____________
Source:GreenlightestimatebasedupondataprovidedbyBTUAnalytics,LLC.
66
Andbecausegasishardtostore,wedon'tstoreverymuchofit usuallyonlyabout40
daysworth.
_____________
Source:GreenlightcalculationsbasedonEIAsU.S.drynaturalgasproductiondatathroughAugust2015,
retrievedNovember2015,availableatwww.eia.gov/dnav/ng/hist/n9070us2m.htm;EIAsweeklyproduction
growthdatafromAugust2015toNovember2015,retrievedNovember2015,availableat
www.eia.gov/naturalgas/weekly;andBloombergLPstoragedata(DOENUST1Index),retrievedNovember
2015.
67
Torecap:
supplyisdeceleratingandthreateningtofallduetolackofinvestment;
demandhasseculargrowth;
wedon'tstoreverymuch;
pricesarebelowthecostofthelowestcostproducers;and
everyoneisbearish.
SounlessAmazondecidestogointothegasbusiness,gaspricesarelikelytogoup.
68
AndthebasisproblemthatiskillingPennsylvaniapricesisbeingsolvedbythemarket.This
isatimelineofnewpipelinecapacitycomingtotheregion,andthesituationshouldstart
improvingnextyear.
_____________
Source:BTUAnalytics,LLC,AFirmDilemma,August2015.
69
Inthelongertermtheoutlookforgaspricingisupwardslopingwhiletheoilcurveflattens.
Ithinkthisisbecausethedemandoutlookisbetterforgas.
_____________
Source:BloombergLP,retrievedNovember2015.
70
WhenImetwithPioneermanagement,wediscussedtheconversionofthetransportation
fleettootherenergysources,whichwouldbebearishforoilandthelongtermvalueof
Pioneer'sresources.
TheCEOrespondedbyasking:DoyoudriveaTesla?IsaidthatIdid.Heresponded
Thoughtso.
71
But,thereisaseriouspointhere.IcanfillmyTeslawithelectricityfrommywallatthe
equivalentof3centspermileandtheonlyreasonformetogotoagasstationistobuy
Funyuns andSlimJims.
72
Overthenextnumberofyears,improvementsintechnologywillallowmoreefficient
utilizationoftheautofleet,andbatterytechnologywillallowmorecarstorunongasfired
electricity.Oilwillgetleftout.
73
Basedpurelyonenergycontent,sixMcfe isthesameasabarrelofoil.Pricesstopped
reflectingthisafewyearsagobecauseweranoutofplaceswherewecouldswitchoilto
gas.Withadditionalsubstitutionasweconvertthetransportationfleettoelectricity,prices
shouldatleastpartlyreconvergetowardenergyequivalenceoverthenextdecade.Thisis
whythelongtermgascurvecontinuestorisewhiletheoilcurvestaysflat.
_____________
Source:Greenlightcalculationsbaseduponpricingofthefirstactiveoilandgasfuturescontracts,retrieved
fromBloombergLPinNovember2015.
74
HereistheDCFsensitivityintheshalebusinesstohighergasprices,notcountingthe
additionaloptionalityforhighercoalprices,whichwouldprobablyfollowgaspriceshigher.
Remember,WallStreetinsiststhisisacoalcompany.
_____________
Source:Greenlightestimatesandcalculations.Pleaserefertoaccompanyingshalegasdiscountedcashflow
modelfordetailsassumptions.
75
Butitmaynotbeforlong.Wehaveaverygoodmanagementteamhere.Theyhavealong
historyofmakinggooddecisions.
_____________
Source:CNXfilingsandpressreleasesforreferencedtimeperiodsavailableathttp://phx.corporate
ir.net/phoenix.zhtml?c=66439&p=irolirhome.
76
Imentionedthatthecompanyissellingsomenoncoreassets.Onceitdoesandusesthe
proceedstopaydownsomedebt,itsverylikelythatmanagementwillseparatethegas
businessfromthecoalbusiness,whichwillforcethemarkettoreconsider.
77
AfterArkema wentto10,itturnedaroundandwentto70.
IthinkthereisadecentchancethanCONSOLwilldosomethinglikethat.
_____________
Source:BloombergLP,retrievedNovember2015.
78
Thankyouverymuch.
79
Thereareseveralappendicesattachedtothispresentation:
AppendixA:ShaleGasDCF
AppendixB:LegacyGasDCF
AppendixC:ThermalCoalDCF
AppendixD:MetallurgicalCoalandOtherDCF
80
Cost of Capital
Equity risk premium
Adjusted beta
Risk-free rate
Equity cost of capital
Debt cost of capital
Equity as % of EV
Calculated WACC
GL Dislocation Premium (a)
WACC
$6.6
5.4%
1.25
2.3%
9.0%
3.5%
75%
7.6%
0.8%
8.4%
$0.45
$2.2
$0.4
52.4
53.9
Commodity Assumptions
Current curve strip prices
Natural gas (2027)
NGL (2023)
Oil (2023)
Natural gas Terminal Growth Rate (c)
LT Production as % of mcfe
Natural gas
NGL
Oil (Condensate)
Opex / mcfe
Oil & gas production (d)(e)
Production taxes (e)
SG&A/Corp/Other (e)(f)
$1.08
5.2%
$0.22
$4.23
$21
$59
2.0%
85%
12%
3%
2.0%
35%
Notes:
Includes Marcellus and Utica segments.
Estimated % of mcfe mix of Natural Gas, NGLs and Oil (Condensate) based on recent production mix adjusting for increasing mix of dry gas Utica.
Marcellus and Utica horizontal type curves published by EQT, adjusted to terminal decline rate and economic life variables developed in discussion with CONSOL.
Cash tax calculation based on current & future estimated net operating loss carryforwards.
Hess drilling carry realized in 2016. Noble drilling carry realized when natural gas exceeds $4.00/mmbtu and is based on estimated Marcellus capital spend.
Incorporates pro rata share of CONSOL's in place gas hedges.
Assumed differentials are based on recent results adjusted for a modest improvement over the next several years as additional takeaway capacity comes online.
(a) To be conservative we made an adjustment to increase the cost of capital because our value was already plenty high.
(b) 2016-2035 CAGR.
(c) Terminal growth rate starting in 2028.
(d) Includes transportation, gathering and compression, lifting and direct administrative and selling segment level costs.
(e) Weighted average cost structure from 2016-2027.
(f) Incorporates pro rata net expenses from the Other Gas segment, not directly related to Other Gas segment production.
This includes G&A, corporate, net unutilized FT expense, net gas royalty income, net purchased gas income, exploration and other costs and other income.
A-1
Capex
Reserves Developed (bcfe)
2016
-450
640
2017
-232
244
2018
-557
586
2019
-723
761
2020
-793
835
2021
-847
891
2022
-879
925
2023
-935
984
2024
-949
999
2025
-902
950
2,344
294
2,320
268
2,590
316
2,960
390
3,329
465
3,683
537
4,007
602
4,324
666
4,602
721
4,796
755
2.62
771
2.73
732
2.84
897
2.94
1,149
3.05
1,421
3.19
1,713
3.33
2,006
3.47
2,313
3.61
2,601
3.74
2,824
1.61
474
1.57
421
1.52
481
1.47
576
1.47
683
1.47
788
1.46
882
1.47
977
1.47
1,057
1.46
1,106
EBITDA
Gross Capex
Drilling Carry Realization
Cash flow
Cash tax
297
-450
30
-124
0
311
-232
0
80
0
416
-557
0
-141
0
573
-723
0
-150
0
738
-793
0
-55
0
925
-847
0
78
0
1,124
-879
0
244
0
1,336
-935
0
402
0
1,544
-949
0
596
-149
1,718
-902
0
816
-285
-124
0
80
0
-141
0
-150
0
-55
0
78
0
244
0
402
0
447
0
530
0
A-2
Capex
Reserves Developed (bcfe)
2026
-899
947
2027
-886
933
2028
-920
950
2029
-958
970
2030
-999
991
2031
-1,041
1,012
2032
-1,085
1,035
2033
-1,113
1,040
2034
-1,157
1,060
2035
-1,202
1,080
4,960
783
5,090
802
5,217
823
5,344
843
5,470
864
5,597
886
5,724
908
5,837
927
5,950
947
6,063
967
3.86
3,024
3.98
3,197
4.06
3,336
4.13
3,481
4.20
3,633
4.28
3,791
4.36
3,956
4.44
4,114
4.52
4,278
4.60
4,449
1.46
1,145
1.46
1,173
1.49
1,226
1.52
1,282
1.55
1,341
1.58
1,402
1.61
1,465
1.65
1,526
1.68
1,590
1.71
1,656
EBITDA
Gross Capex
Drilling Carry Realization
Cash flow
Cash tax
1,880
-899
120
1,100
-385
2,024
-886
118
1,256
-440
2,109
-920
123
1,312
-459
2,199
-958
128
1,368
-479
2,292
-999
133
1,427
-499
2,389
-1,041
139
1,487
-521
2,491
-1,085
145
1,551
-543
2,588
-1,113
148
1,623
-568
2,688
-1,157
154
1,686
-590
2,792
-1,202
160
1,751
-613
715
0
816
0
853
0
889
0
927
0
967
0
1,008
0
1,055
0
1,096
0
1,138
0
A-3
2036
-1,098
967
2037
-1,120
967
2038
-1,142
967
2039
-1,165
967
2040
-1,188
967
2041
-1,212
967
2042
-1,236
967
2043
-1,261
967
2044
-1,286
967
2045
-1,312
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
4.68
4,530
4.77
4,613
4.86
4,698
4.95
4,784
5.04
4,872
5.13
4,962
5.23
5,054
5.32
5,147
5.42
5,243
5.52
5,340
1.75
1,689
1.78
1,723
1.82
1,758
1.85
1,793
1.89
1,829
1.93
1,865
1.97
1,902
2.01
1,940
2.05
1,979
2.09
2,019
2,841
-1,098
110
1,853
-648
2,890
-1,120
112
1,882
-659
2,940
-1,142
35
1,833
-641
2,992
-1,165
0
1,827
-639
3,044
-1,188
0
1,856
-649
3,097
-1,212
0
1,885
-660
3,152
-1,236
0
1,915
-670
3,207
-1,261
0
1,946
-681
3,264
-1,286
0
1,977
-692
3,321
-1,312
0
2,009
-703
1,204
0
1,223
0
1,191
0
1,187
0
1,206
0
1,225
0
1,245
0
1,265
0
1,285
0
1,306
0
Capex
Reserves Developed (bcfe)
EBITDA
Gross Capex
Drilling Carry Realization
Cash flow
Cash tax
After tax cash flow
A-4
2046
-1,338
967
2047
-1,365
967
2048
-1,392
967
2049
-1,420
967
2050
-1,449
967
2051
-1,478
967
2052
-1,507
967
2053
-1,537
967
2054
-1,568
967
2055
-1,599
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
5.63
5,439
5.73
5,541
5.84
5,644
5.95
5,749
6.06
5,857
6.17
5,966
6.29
6,078
6.40
6,192
6.52
6,308
6.65
6,427
2.13
2,059
2.17
2,100
2.22
2,142
2.26
2,185
2.31
2,229
2.35
2,274
2.40
2,319
2.45
2,365
2.50
2,413
2.55
2,461
3,380
-1,338
0
2,042
-715
3,440
-1,365
0
2,075
-726
3,502
-1,392
0
2,109
-738
3,564
-1,420
0
2,144
-750
3,628
-1,449
0
2,179
-763
3,693
-1,478
0
2,215
-775
3,759
-1,507
0
2,252
-788
3,827
-1,537
0
2,290
-801
3,896
-1,568
0
2,328
-815
3,966
-1,599
0
2,367
-828
1,327
0
1,349
0
1,371
0
1,394
0
1,417
0
1,440
0
1,464
0
1,488
0
1,513
0
1,538
0
Capex
Reserves Developed (bcfe)
EBITDA
Gross Capex
Drilling Carry Realization
Cash flow
Cash tax
After tax cash flow
A-5
2056
-1,631
967
2057
-1,664
967
2058
-1,697
967
2059
-1,731
967
2060
-1,766
967
2061
-1,801
967
2062
-1,837
967
2063
-1,874
967
2064
-1,911
967
2065
-1,950
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
6.77
6,548
6.90
6,671
7.03
6,797
7.16
6,926
7.30
7,057
7.44
7,190
7.58
7,327
7.72
7,466
7.87
7,607
8.02
7,752
2.60
2,510
2.65
2,560
2.70
2,612
2.75
2,664
2.81
2,717
2.87
2,771
2.92
2,827
2.98
2,883
3.04
2,941
3.10
3,000
4,038
-1,631
0
2,407
-842
4,111
-1,664
0
2,447
-857
4,186
-1,697
0
2,489
-871
4,262
-1,731
0
2,531
-886
4,340
-1,766
0
2,574
-901
4,419
-1,801
0
2,618
-916
4,500
-1,837
0
2,663
-932
4,582
-1,874
0
2,708
-948
4,666
-1,911
0
2,755
-964
4,752
-1,950
0
2,803
-981
1,564
0
1,591
0
1,618
0
1,645
0
1,673
0
1,702
0
1,731
0
1,760
0
1,791
0
1,822
0
Capex
Reserves Developed (bcfe)
EBITDA
Gross Capex
Drilling Carry Realization
Cash flow
Cash tax
After tax cash flow
A-6
2066
-1,989
967
2067
-2,028
967
2068
-2,069
967
2069
-2,110
967
2070
-2,152
967
2071
0
0
2072
0
0
2073
0
0
2074
0
0
2075
0
0
6,063
967
6,063
967
6,063
967
6,063
967
6,063
967
5,184
879
4,458
726
3,856
602
3,355
501
2,936
419
8.17
7,899
8.33
8,050
8.48
8,203
8.65
8,360
8.81
8,520
8.98
7,894
9.15
6,641
9.33
5,613
9.50
4,765
9.69
4,063
3.16
3,060
3.23
3,121
3.29
3,183
3.36
3,247
3.43
3,312
3.49
3,072
3.56
2,586
3.63
2,188
3.71
1,859
3.78
1,586
4,840
-1,989
0
2,851
-998
4,929
-2,028
0
2,901
-1,015
5,020
-2,069
0
2,951
-1,033
5,113
-2,110
0
3,002
-1,051
5,207
-2,152
0
3,055
-1,069
4,822
0
0
4,822
-1,688
4,055
0
0
4,055
-1,419
3,425
0
0
3,425
-1,199
2,906
0
0
2,906
-1,017
2,477
0
0
2,477
-867
1,853
0
1,885
0
1,918
0
1,952
0
1,986
0
3,135
0
2,636
0
2,226
0
1,889
0
1,610
0
Capex
Reserves Developed (bcfe)
EBITDA
Gross Capex
Drilling Carry Realization
Cash flow
Cash tax
After tax cash flow
A-7
Capex
Reserves Developed (bcfe)
2076
0
0
2077
0
0
2078
0
0
2079
0
0
2080
0
0
2081
0
0
2082
0
0
2083
0
0
2084
0
0
2085
0
0
2,583
352
2,286
297
2,035
251
1,821
214
1,639
182
1,475
164
1,328
148
1,195
133
1,075
119
968
108
9.87
3,478
10.06
2,989
10.26
2,579
10.45
2,233
10.65
1,940
10.86
1,780
11.07
1,633
11.28
1,498
11.50
1,374
11.72
1,261
3.86
1,359
3.93
1,169
4.01
1,009
4.09
875
4.18
760
4.26
698
4.34
641
4.43
588
4.52
540
4.61
496
EBITDA
Gross Capex
Drilling Carry Realization
Cash flow
Cash tax
2,119
0
0
2,119
-742
1,821
0
0
1,821
-637
1,570
0
0
1,570
-550
1,359
0
0
1,359
-476
1,180
0
0
1,180
-413
1,082
0
0
1,082
-379
992
0
0
992
-347
910
0
0
910
-318
834
0
0
834
-292
765
0
0
765
-268
1,377
0
1,183
0
1,021
0
883
0
767
0
703
0
645
0
591
0
542
0
497
0
A-8
2086
0
0
2087
0
0
2088
0
0
2089
0
0
2090
0
0
2091
0
0
2092
0
0
2093
0
0
2094
0
0
2095
0
0
871
97
784
87
706
78
635
71
571
63
514
57
463
51
417
46
375
42
337
37
11.95
1,157
12.18
1,061
12.42
973
12.66
893
12.90
819
13.15
752
13.41
690
13.67
633
13.93
581
14.20
533
4.70
455
4.80
418
4.89
384
4.99
352
5.09
323
5.19
297
5.30
272
5.40
250
5.51
230
5.62
211
EBITDA
Gross Capex
Drilling Carry Realization
Cash flow
Cash tax
701
0
0
701
-246
643
0
0
643
-225
590
0
0
590
-206
541
0
0
541
-189
496
0
0
496
-174
455
0
0
455
-159
417
0
0
417
-146
383
0
0
383
-134
351
0
0
351
-123
322
0
0
322
-113
456
0
418
0
383
0
352
0
322
0
296
0
271
0
249
0
228
0
209
0
Capex
Reserves Developed (bcfe)
Proved Developed Reserves (bcfe)
Production (bcfe)
A-9
2096
0
0
2097
0
0
2098
0
0
2099
0
0
2100
0
0
2101
0
0
2102
0
0
2103
0
0
2104
0
0
2105
0
0
304
34
273
30
246
27
221
25
199
22
179
20
161
18
145
16
131
15
118
13
14.48
489
14.76
448
15.05
411
15.34
377
15.64
346
15.95
318
16.26
292
16.58
268
16.90
246
17.23
225
5.73
193
5.85
178
5.96
163
6.08
150
6.20
137
6.33
126
6.46
116
6.58
106
6.72
98
6.85
90
EBITDA
Gross Capex
Drilling Carry Realization
Cash flow
Cash tax
295
0
0
295
-103
271
0
0
271
-95
248
0
0
248
-87
228
0
0
228
-80
209
0
0
209
-73
192
0
0
192
-67
176
0
0
176
-62
161
0
0
161
-56
148
0
0
148
-52
136
0
0
136
-47
192
0
176
0
161
0
148
0
136
0
125
0
114
0
105
0
96
0
88
0
Capex
Reserves Developed (bcfe)
Proved Developed Reserves (bcfe)
Production (bcfe)
A-10
2106
0
0
2107
0
0
2108
0
0
2109
0
0
2110
0
0
2111
0
0
2112
0
0
2113
0
0
2114
0
0
2115
0
0
106
12
95
11
86
10
77
9
69
8
63
7
56
7
49
7
42
7
35
7
17.57
207
17.91
190
18.26
174
18.62
160
18.98
147
19.35
134
19.73
137
20.12
140
20.52
143
20.92
145
6.99
82
7.13
75
7.27
69
7.41
64
7.56
58
7.71
54
7.87
55
8.03
56
8.19
57
8.35
58
EBITDA
Gross Capex
Drilling Carry Realization
Cash flow
Cash tax
124
0
0
124
-44
114
0
0
114
-40
105
0
0
105
-37
96
0
0
96
-34
88
0
0
88
-31
81
0
0
81
-28
82
0
0
82
-29
84
0
0
84
-29
86
0
0
86
-30
87
0
0
87
-31
81
0
74
0
68
0
62
0
57
0
53
0
54
0
55
0
56
0
57
0
Capex
Reserves Developed (bcfe)
Proved Developed Reserves (bcfe)
Production (bcfe)
A-11
2116
0
0
2117
0
0
2118
0
0
2119
0
0
2120
0
0
28
7
21
7
14
7
7
7
0
7
21.33
148
21.75
151
22.17
154
22.61
157
23.05
160
8.52
59
8.69
60
8.86
62
9.04
63
9.22
64
89
0
0
89
-31
91
0
0
91
-32
93
0
0
93
-32
94
0
0
94
-33
96
0
0
96
-34
58
0
59
0
60
0
61
0
62
0
Capex
Reserves Developed (bcfe)
Proved Developed Reserves (bcfe)
Production (bcfe)
EBITDA
Gross Capex
Drilling Carry Realization
Cash flow
Cash tax
After tax cash flow
A-12
$0.9
8.4%
Commodity Assumptions
Current curve strip prices
Natural gas (2027)
Oil (2023)
Natural gas Terminal Growth Rate (c)
$1.57
3.7%
$0.22
2.0%
$1.80
5.0%
$0.22
2.0%
LT Production as % of mcfe
Natural gas
NGL
Oil
$4.23
$59
2.0%
99%
0%
1%
$0.0
$0.0
0.0
1.6
35%
Notes:
Includes Coalbed Methane and Other Gas segments.
Estimated % of mcfe mix of Natural Gas and Oil based on recent segment level production mix.
Legacy gas production is forecast to decline until reported proven developed reserves (as of 12/31/14) are exhausted.
Cash tax calculation based on current & future estimated net operating loss carryforwards.
Incorporates pro rata share of CONSOL in place gas hedges.
Assumed differentials are based on recent results adjusted for a modest improvement over the next several years as additional takeaway capacity comes online.
(a) Using CONSOL corporate WACC calculated in Appendix A-1.
(b) To the extent CONSOL spends incremental capital in its legacy gas business we would expect it to generate incremental production and EBITDA to what is modelled herein.
(c) Terminal growth rate starting in 2028.
(d) Includes transportation, gathering and compression, lifting and direct administrative and selling segment level costs.
(e) Weighted average cost structure from 2016-2027.
(f) Incorporates pro rata net expenses from the Other Gas segment, not directly related to Other Gas segment production.
This includes G&A, corporate, net unutilized FT expense, net gas royalty income, net purchased gas income, exploration and other costs and other income.
B-1
Capex
Reserves Developed (bcfe)
2016
0
0
2017
0
0
2018
0
0
2019
0
0
2020
0
0
2021
0
0
2022
0
0
2023
0
0
2024
0
0
2025
0
0
1,472
96
1,379
93
1,290
90
1,203
86
1,120
83
1,041
80
964
76
891
73
820
70
753
68
2.68
257
2.67
248
2.73
245
2.82
243
2.94
244
3.08
245
3.23
247
3.39
249
3.55
250
3.70
251
2.02
194
2.02
187
1.99
178
1.96
169
1.96
163
1.97
157
1.97
151
1.98
145
1.98
140
1.99
134
EBITDA
Capex
Cash flow
Cash tax
64
0
64
0
61
0
61
0
67
0
67
0
74
0
74
0
81
0
81
0
88
0
88
0
96
0
96
0
104
0
104
-5
110
0
110
-6
116
0
116
-7
64
14
61
14
67
16
74
19
81
21
88
23
96
25
98
22
104
23
109
24
B-2
2026
0
0
2027
0
0
2028
0
0
2029
0
0
2030
0
0
2031
0
0
2032
0
0
2033
0
0
2034
0
0
2035
0
0
688
65
625
62
566
59
510
56
456
53
405
51
357
48
311
46
268
44
226
41
3.85
250
3.99
249
4.07
241
4.16
234
4.25
227
4.34
220
4.43
214
4.52
207
4.61
201
4.71
195
1.99
129
1.99
124
2.03
120
2.07
116
2.11
113
2.15
109
2.19
106
2.24
103
2.28
99
2.33
96
EBITDA
Capex
Cash flow
Cash tax
121
0
121
-8
125
0
125
-22
121
0
121
-23
118
0
118
-23
114
0
114
-22
111
0
111
-22
108
0
108
-22
105
0
105
-22
102
0
102
-21
99
0
99
-21
113
24
103
25
98
24
95
23
92
23
89
22
86
21
83
20
80
20
78
19
Capex
Reserves Developed (bcfe)
B-3
2036
0
0
2037
0
0
2038
0
0
2039
0
0
2040
0
0
2041
0
0
2042
0
0
2043
0
0
2044
0
0
2045
0
0
187
39
161
26
151
10
141
9
133
9
124
8
116
8
108
8
101
7
94
7
4.81
189
4.92
129
5.09
50
5.20
49
5.30
47
5.41
46
5.52
45
5.63
43
5.74
42
5.86
41
2.37
93
2.46
65
2.71
27
2.77
26
2.82
25
2.88
24
2.94
24
2.99
23
3.05
22
3.12
22
96
0
96
-21
65
0
65
-15
24
0
24
-6
23
0
23
-6
22
0
22
-6
21
0
21
-6
21
0
21
-6
20
0
20
-6
20
0
20
-5
19
0
19
-5
75
18
50
18
17
17
17
17
16
16
16
16
15
15
15
15
14
14
14
14
Capex
Reserves Developed (bcfe)
EBITDA
Capex
Cash flow
Cash tax
After tax cash flow
B-4
2046
0
0
2047
0
0
2048
0
0
2049
0
0
2050
0
0
2051
0
0
2052
0
0
2053
0
0
2054
0
0
2055
0
0
88
7
81
6
75
6
70
6
64
5
59
5
54
5
50
5
46
4
41
4
5.97
39
6.09
38
6.21
37
6.34
36
6.47
35
6.60
34
6.73
33
6.86
32
7.00
31
7.14
30
3.18
21
3.24
20
3.31
20
3.37
19
3.44
18
3.51
18
3.58
17
3.65
17
3.72
16
3.80
16
EBITDA
Capex
Cash flow
Cash tax
18
0
18
-5
18
0
18
-5
17
0
17
-5
17
0
17
-5
16
0
16
-5
16
0
16
-5
15
0
15
-4
15
0
15
-4
14
0
14
-4
14
0
14
-4
13
13
13
13
12
12
12
12
12
12
11
11
11
11
10
10
10
10
10
10
Capex
Reserves Developed (bcfe)
Proved Developed Reserves (bcfe)
Production (bcfe)
B-5
2056
0
0
2057
0
0
2058
0
0
2059
0
0
2060
0
0
2061
0
0
2062
0
0
2063
0
0
2064
0
0
2065
0
0
37
4
34
4
30
4
27
3
24
3
21
3
18
3
15
3
12
3
10
2
7.29
29
7.43
28
7.58
27
7.73
26
7.89
25
8.05
25
8.21
24
8.37
23
8.54
22
8.71
22
3.87
15
3.95
15
4.03
14
4.11
14
4.19
13
4.28
13
4.36
13
4.45
12
4.54
12
4.63
11
13
0
13
-4
13
0
13
-4
13
0
13
-4
12
0
12
-4
12
0
12
-4
11
0
11
-3
11
0
11
-3
11
0
11
-3
10
0
10
-3
10
0
10
-3
9
9
9
9
9
9
9
9
8
8
8
8
8
8
8
8
7
7
7
7
Capex
Reserves Developed (bcfe)
Proved Developed Reserves (bcfe)
Production (bcfe)
EBITDA
Capex
Cash flow
Cash tax
After tax cash flow
B-6
2066
0
0
2067
0
0
2068
0
0
2069
0
0
2070
0
0
7
2
5
2
3
2
1
2
0
1
8.89
21
9.06
20
9.25
20
9.43
19
9.62
10
4.72
11
4.82
11
4.91
10
5.01
10
5.11
5
10
0
10
-3
10
0
10
-3
9
0
9
-3
9
0
9
-3
5
0
5
-1
7
7
7
7
6
6
6
6
3
3
Capex
Reserves Developed (bcfe)
Proved Developed Reserves (bcfe)
Production (bcfe)
EBITDA
Capex
Cash flow
Cash tax
After tax cash flow
B-7
Cost of Capital
WACC (a)
$3.0
8.4%
1%
$55
762
26
2045
$6
$30
$1
$2
$1
25%
Notes:
Includes CONSOL's Pennsylvania Operations segment. Pennsylvania Operations include the Company's Bailey, Enlow Fork and Harvey Mines.
(a) Using CONSOL corporate WACC calculated in Appendix A-1.
(b) Reflects mix of contracted and open tons in 2016-2017, with open prices increasing modestly from 2018 to 2024.
C-1
C-2
2016
736
2017
710
2018
684
2019
658
2020
632
2021
606
2022
580
2023
554
2024
528
2025
502
26
26
26
26
26
26
26
26
26
26
50
1,310
51
1,315
49
1,281
50
1,294
51
1,319
52
1,348
53
1,381
54
1,414
55
1,430
55
1,430
33
858
33
858
33
858
33
858
33
858
33
858
33
858
33
858
33
858
33
858
1
28
1
28
1
28
1
28
1
28
1
28
1
28
1
28
1
28
1
28
423
-143
280
-58
429
-143
286
-59
394
-143
251
-51
408
-143
265
-54
433
-143
290
-60
462
-143
319
-68
494
-143
351
-76
528
-143
385
-84
544
-143
401
-88
544
-143
401
-88
222
227
200
210
229
251
276
301
312
312
C-3
2026
476
2027
450
2028
424
2029
398
2030
372
2031
346
2032
320
2033
294
2034
268
2035
242
26
26
26
26
26
26
26
26
26
26
55
1,430
55
1,430
55
1,430
55
1,430
55
1,430
55
1,430
55
1,430
55
1,430
55
1,430
55
1,430
33
858
33
858
33
858
33
858
33
858
33
858
33
858
33
858
33
858
33
858
1
28
1
28
1
28
1
28
1
28
1
28
1
28
1
28
1
28
1
28
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
312
312
312
312
312
312
312
312
312
312
C-4
2036
216
2037
190
2038
164
2039
138
2040
112
2041
86
2042
60
2043
34
2044
8
2045
0
26
26
26
26
26
26
26
26
26
55
1,430
55
1,430
55
1,430
55
1,430
55
1,430
55
1,430
55
1,430
55
1,430
55
1,430
55
459
33
858
33
858
33
858
33
858
33
858
33
858
33
858
33
858
33
858
33
276
1
28
1
28
1
28
1
28
1
28
1
28
1
28
1
28
1
28
1
6
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
544
-143
401
-88
177
-46
131
-29
312
312
312
312
312
312
312
312
312
102
Cost of Capital
WACC (a)
$0.5
8.4%
$51
$65
203
4
7
2046
$6
$39
$1
$3
$3
25%
Notes:
Includes CONSOL's Virginia Operations segment, Other Coal segment and Other Division (unallocated corporate activities).
Virginia Operations segment includes the Company's Buchanan mine.
Other Coal segment mine level activities include the Company's Miller Creek complex.
Other Coal segment non-mine level activities includes purchased coal, terminal operations, freight, rental income, royalty income, certain gain on sale of assets, right of way,
closed and idle mine costs, coal reserve holding costs, lease rental expense, certain pension and opeb plan expenses and other income and expenses.
Other Division activities include certain bank fees and other unallocated expenses.
(a) Using CONSOL corporate WACC calculated in Appendix A-1.
D-1
2016
200
2017
196
2018
189
2019
182
2020
176
2021
169
2022
162
2023
155
2024
149
2025
142
51
193
51
193
51
347
65
439
65
439
65
439
65
439
65
439
65
439
65
439
44
164
44
164
44
294
44
294
44
294
44
294
44
294
44
294
44
294
44
294
3
13
3
13
3
23
3
23
3
23
3
23
3
23
3
23
3
23
3
23
VA Ops EBITDA
16
16
30
121
121
121
121
121
121
121
2
11
2
16
2
16
2
16
2
16
2
16
2
16
2
16
2
16
0
0
-35
-29
-23
-17
-11
-5
13
-18
-14
-10
-10
-10
-10
-10
-10
-10
-10
Total EBITDA
Total Capex
Cash Flow
Cash tax
-25
-35
-60
26
-9
-35
-44
22
13
-53
-39
25
111
-53
58
0
117
-53
64
-1
123
-53
70
-3
129
-53
76
-4
135
-53
82
-6
141
-53
88
-7
111
-41
70
-9
-34
-22
-15
58
63
67
72
76
81
62
D-2
2026
135
2027
128
2028
122
2029
115
2030
108
2031
101
2032
95
2033
88
2034
81
2035
74
65
439
65
439
65
439
65
439
65
439
65
439
65
439
65
439
65
439
65
439
44
294
44
294
44
294
44
294
44
294
44
294
44
294
44
294
44
294
44
294
3
23
3
23
3
23
3
23
3
23
3
23
3
23
3
23
3
23
3
23
121
121
121
121
121
121
121
121
121
121
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
-10
-10
-10
-10
-10
-10
-10
-10
-10
-10
Total EBITDA
Total Capex
Cash Flow
Cash tax
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
62
62
62
62
62
62
62
62
62
62
D-3
2036
68
2037
61
2038
54
2039
47
2040
41
2041
34
2042
27
2043
20
2044
14
2045
7
2046
0
65
439
65
439
65
439
65
439
65
439
65
439
65
439
65
439
65
439
65
439
65
439
44
294
44
294
44
294
44
294
44
294
44
294
44
294
44
294
44
294
44
294
44
294
3
23
3
23
3
23
3
23
3
23
3
23
3
23
3
23
3
23
3
23
3
23
121
121
121
121
121
121
121
121
121
121
121
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
-10
-10
-10
-10
-10
-10
-10
-10
-10
-10
-10
Total EBITDA
Total Capex
Cash Flow
Cash tax
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
111
-41
70
-9
62
62
62
62
62
62
62
62
62
62
62
D-4