UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________

FORM 10-Q

__________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended ~~June~~September 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-14901

__________________________________________________

CNX Resources Corporation

(Exact name of registrant as specified in its charter)


Delaware						51-0337383
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

CNX Center

1000 CONSOL Energy Drive Suite 400

Canonsburg, PA 15317-6506

(724) 485-4000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common Stock ($.01 par value)

CNX

New York Stock Exchange

Preferred Share Purchase Rights

New York Stock Exchange

__________________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller Reporting Company ☐

Emerging Growth Company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Shares outstanding as of ~~July 17,~~October 15, 2020
Common stock, $0.01 par value						~~187,431,849~~224,528,583

TABLE OF CONTENTS

Page

PART I FINANCIAL INFORMATION

ITEM 1.

Unaudited Condensed Consolidated Financial Statements

Consolidated Statements of Income for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019

Consolidated Statements of Comprehensive Income for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019

Consolidated Balance Sheets at ~~June~~September 30, 2020 and December 31, 2019

Consolidated Statements of Stockholders’ Equity for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019

Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019

Notes to Unaudited Consolidated Financial Statements

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

3634

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

7160

ITEM 4.

Controls and Procedures

7362

PART II OTHER INFORMATION

ITEM 1.

Legal Proceedings

7362

ITEM 1A.

Risk Factors

7362

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

7866

ITEM 6.

Exhibits

7966

GLOSSARY OF CERTAIN OIL AND GAS TERMS

The following are certain terms and abbreviations commonly used in the oil and gas industry and included within this Form 10-Q:

Bbl - One stock tank barrel, or 42 U.S. gallons liquid volume, used in reference to oil or other liquid hydrocarbons.

Bcf - One billion cubic feet of natural gas.

Bcfe - One billion cubic feet of natural gas equivalents, with one barrel of oil being equivalent to 6,000 cubic feet of gas.

Btu - One British Thermal Unit.

BBtu - One billion British Thermal Units.

Mbbls - One thousand barrels of oil or other liquid hydrocarbons.

Mcf - One thousand cubic feet of natural gas.

Mcfe - One thousand cubic feet of natural gas equivalents, with one barrel of oil being equivalent to 6,000 cubic feet of gas.

MMbtu - One million British Thermal Units.

MMcfe - One million cubic feet of natural gas equivalents, with one barrel of oil being equivalent to 6,000 cubic feet of gas.

Tcfe - One trillion cubic feet of natural gas equivalents, with one barrel of oil being equivalent to 6,000 cubic feet of gas.

NGL - Natural gas liquids - those hydrocarbons in natural gas that are separated from the gas as liquids through the process.

net - “net” natural gas or “net” acres are determined by adding the fractional ownership working interests the Company has in gross wells or acres.

TIL - turn-in-line; a well turned to sales.

blending - process of mixing dry and damp gas in order to meet downstream pipeline specifications.

lease operating expense - costs of operating wells and equipment on a producing lease, many of which are recurring. Includes items such as water disposals, repairs and maintenance, equipment rental, and operating supplies, among others.

proved reserves - quantities of oil, natural gas, and NGL which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.

proved developed reserves (PDPs) - proved reserves which can be expected to be recovered through existing wells with existing equipment and operating methods.

proved undeveloped reserves (PUDs) - proved reserves that can be estimated with reasonable certainty to be recovered from new wells on undrilled proved acreage or from existing wells where a relatively major expenditure is required for completion.

reservoir - a porous and permeable underground formation containing a natural accumulation of producible natural gas and/or oil that is confined by impermeable rock or water barriers and is separate from other reservoirs.

development well - a well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive.

exploratory well - a well drilled to find a new field or to find a new reservoir in a field previously found to be productive of oil or gas in another reservoir. Generally, an exploratory well is any well that is not a development well, an extension well, a service well or a stratigraphic test well.

gob well - a well drilled or vent hole converted to a well which produces or is capable of producing coalbed methane or other natural gas from a distressed zone created above and below a mined-out coal seam by any prior full seam extraction of the coal.

service well - a well drilled or completed for the purpose of supporting production in an existing field. Specific purposes of service wells include, among other things, gas injection, water injection and salt-water disposal.

play - a proven geological formation that contains commercial amounts of hydrocarbons.

royalty interest - the land owner’s share of oil or gas production, historically 1/8.

throughput - the volume of natural gas transported or passing through a pipeline, plant, terminal, or other facility during a particular period.

transportation, gathering and compression - cost incurred related to transporting natural gas to the ultimate point of sale. These costs also include costs related to physically preparing natural gas, natural gas liquids and condensate for ultimate sale which include costs related to processing, compressing, dehydrating and fractionating, among others.

working interest - an interest that gives the owner the right to drill, produce and conduct operating activities on a property and receive a share of any production.

wet gas - natural gas that contains significant heavy hydrocarbons, such as propane, butane and other liquid hydrocarbons.

PART I : FINANCIAL INFORMATION

ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME


(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	Three Months Ended						Six Months Ended							(Dollars in thousands, except per share data)	Three Months Ended				Nine Months Ended
(Unaudited)	(Unaudited)	June 30,						June 30,							(Unaudited)	September 30,				September 30,
Revenue and Other Operating Income:	Revenue and Other Operating Income:	2020		2019		2020		2019		Revenue and Other Operating Income:	2020		2019			2020		2019
Natural Gas, NGL and Oil Revenue	Natural Gas, NGL and Oil Revenue	$	175,776	$	342,865	$	427,270	$	778,811	Natural Gas, NGL and Oil Revenue	$	182,213	$	265,051		$	609,483	$	1,043,862
(Loss) Gain on Commodity Derivative Instruments	(Loss) Gain on Commodity Derivative Instruments	(63,303)		221,581		51,839		26,205		(Loss) Gain on Commodity Derivative Instruments	(168,834)		213,913			(116,995)		240,118
Purchased Gas Revenue	Purchased Gas Revenue	20,424		18,768		46,783		34,989		Purchased Gas Revenue	31,541		29,192			78,324		64,181
Midstream Revenue		12,191		18,895		30,597		37,338
Other Operating Income		3,753		2,923		8,711		6,120

Other Revenue and Operating Income										Other Revenue and Operating Income	21,155		21,841			60,463		65,299
Total Revenue and Other Operating Income	Total Revenue and Other Operating Income	148,841		605,032		565,200		883,463		Total Revenue and Other Operating Income	66,075		529,997			631,275		1,413,460
Costs and Expenses:	Costs and Expenses:									Costs and Expenses:
Operating Expense	Operating Expense									Operating Expense
Lease Operating Expense	Lease Operating Expense	10,244		19,876		20,277		38,504		Lease Operating Expense	10,377		14,202			30,654		52,706
Production, Ad Valorem, and Other Fees										Production, Ad Valorem, and Other Fees	5,994		6,127			17,540		20,103
Transportation, Gathering and Compression	Transportation, Gathering and Compression	60,025		84,614		143,267		164,023		Transportation, Gathering and Compression	68,810		80,193			212,077		244,217
Production, Ad Valorem, and Other Fees		5,384		7,030		11,546		13,976
Depreciation, Depletion and Amortization	Depreciation, Depletion and Amortization	113,545		128,999		242,709		254,159		Depreciation, Depletion and Amortization	114,464		120,459			357,174		374,619
Exploration and Production Related Other Costs	Exploration and Production Related Other Costs	3,310		5,567		7,197		8,825		Exploration and Production Related Other Costs	2,141		6,075			9,339		14,900
Purchased Gas Costs	Purchased Gas Costs	19,989		18,772		44,987		34,986		Purchased Gas Costs	31,721		27,490			76,709		62,476
Impairment of Exploration and Production Properties	Impairment of Exploration and Production Properties	—		—		61,849		—		Impairment of Exploration and Production Properties	0		0			61,849		0
Impairment of Goodwill	Impairment of Goodwill	—		—		473,045		—		Impairment of Goodwill	0		0			473,045		0
Selling, General, and Administrative Costs	Selling, General, and Administrative Costs	23,419		48,970		53,657		84,709		Selling, General, and Administrative Costs	22,714		24,307			76,350		109,016
Other Operating Expense	Other Operating Expense	26,596		17,976		47,277		41,451		Other Operating Expense	23,284		19,746			70,561		61,197
Total Operating Expense	Total Operating Expense	262,512		331,804		1,105,811		640,633		Total Operating Expense	279,505		298,599			1,385,298		939,234
Other Expense	Other Expense									Other Expense
Other Expense (Income)		4,799		(99)		9,985		(681)
(Gain) Loss on Asset Sales and Abandonments		(5,938)		(387)		(17,992)		2,699
Other Expense										Other Expense	2,180		3,439			12,184		2,757
Gain on Asset Sales and Abandonments										Gain on Asset Sales and Abandonments	(3,567)		(3,308)			(21,559)		(610)

Loss (Gain) on Debt Extinguishment	Loss (Gain) on Debt Extinguishment	344		77		(10,919)		7,614		Loss (Gain) on Debt Extinguishment	108		0			(10,812)		7,614
Interest Expense	Interest Expense	46,256		40,152		95,252		75,923		Interest Expense	37,921		38,405			133,173		114,328
Total Other Expense	Total Other Expense	45,461		39,743		76,326		85,555		Total Other Expense	36,642		38,536			112,986		124,089
Total Costs and Expenses	Total Costs and Expenses	307,973		371,547		1,182,137		726,188		Total Costs and Expenses	316,147		337,135			1,498,284		1,063,323
(Loss) Earnings Before Income Tax	(Loss) Earnings Before Income Tax	(159,132)		233,485		(616,937)		157,275		(Loss) Earnings Before Income Tax	(250,072)		192,862			(867,009)		350,137
Income Tax (Benefit) Expense	Income Tax (Benefit) Expense	(28,646)		40,791		(181,228)		29,231		Income Tax (Benefit) Expense	(61,279)		48,902			(242,507)		78,133

Net (Loss) Income	Net (Loss) Income	(130,486)		192,694		(435,709)		128,044		Net (Loss) Income	(188,793)		143,960			(624,502)		272,004
Less: Net Income Attributable to Noncontrolling Interest	Less: Net Income Attributable to Noncontrolling Interest	15,263		30,217		39,126		52,904		Less: Net Income Attributable to Noncontrolling Interest	15,905		28,422			55,031		81,325
Net (Loss) Income Attributable to CNX Resources Shareholders	Net (Loss) Income Attributable to CNX Resources Shareholders	$	(145,749)	$	162,477	$	(474,835)	$	75,140	Net (Loss) Income Attributable to CNX Resources Shareholders	$	(204,698)	$	115,538		$	(679,533)	$	190,679

(Loss) Earnings per Share	(Loss) Earnings per Share									(Loss) Earnings per Share
Basic	Basic	$	(0.78)	$	0.85	$	(2.54)	$	0.39	Basic	$	(1.03)	$	0.62		$	(3.56)	$	1.01
Diluted	Diluted	$	(0.78)	$	0.84	$	(2.54)	$	0.38	Diluted	$	(1.03)	$	0.61		$	(3.56)	$	1.01

Dividends Declared	Dividends Declared	$	—	$	—	$	—	$	—	Dividends Declared	$	0	$	0		$	0	$	0

The accompanying notes are an integral part of these financial statements.

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


		Three Months Ended						Six Months Ended								Three Months Ended				Nine Months Ended
(Dollars in thousands)	(Dollars in thousands)	June 30,						June 30,							(Dollars in thousands)	September 30,				September 30,
(Unaudited)	(Unaudited)	2020		2019		2020		2019		(Unaudited)	2020		2019			2020		2019
Net (Loss) Income	Net (Loss) Income	$	(130,486)	$	192,694	$	(435,709)	$	128,044	Net (Loss) Income	$	(188,793)	$	143,960		$	(624,502)	$	272,004
Other Comprehensive Income:	Other Comprehensive Income:									Other Comprehensive Income:
Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($39), ($14), ($79), ($29))		111		41		223		85
Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($40), ($15), ($119), ($44))										Actuarially Determined Long-Term Liability Adjustments (Net of tax: ($40), ($15), ($119), ($44))	112		41			335		126

Comprehensive (Loss) Income	Comprehensive (Loss) Income	(130,375)		192,735		(435,486)		128,129		Comprehensive (Loss) Income	(188,681)		144,001			(624,167)		272,130

Less: Comprehensive Income Attributable to Noncontrolling Interest	Less: Comprehensive Income Attributable to Noncontrolling Interest	15,263		30,217		39,126		52,904		Less: Comprehensive Income Attributable to Noncontrolling Interest	15,905		28,422			55,031		81,325

Comprehensive (Loss) Income Attributable to CNX Resources Shareholders	Comprehensive (Loss) Income Attributable to CNX Resources Shareholders	$	(145,638)	$	162,518	$	(474,612)	$	75,225	Comprehensive (Loss) Income Attributable to CNX Resources Shareholders	$	(204,586)	$	115,579		$	(679,198)	$	190,805

The accompanying notes are an integral part of these financial statements.

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


		(Unaudited)					(Unaudited)
(Dollars in thousands)	(Dollars in thousands)	June 30, 2020		December 31, 2019		(Dollars in thousands)	September 30, 2020		December 31, 2019
ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash and Cash Equivalents	Cash and Cash Equivalents	$	19,607	$	16,283	Cash and Cash Equivalents	$	150,132	$	16,283
Restricted Cash	Restricted Cash	738		—		Restricted Cash	733		0
Accounts and Notes Receivable:	Accounts and Notes Receivable:					Accounts and Notes Receivable:
Trade, net	Trade, net	69,174		133,480		Trade, net	75,929		133,480
Other Receivables, net	Other Receivables, net	7,669		13,679		Other Receivables, net	4,653		13,679
Supplies Inventories	Supplies Inventories	10,317		6,984		Supplies Inventories	10,090		6,984

Recoverable Income Taxes	Recoverable Income Taxes	114,440		62,425		Recoverable Income Taxes	644		62,425
Derivative Instruments	Derivative Instruments	197,804		247,794		Derivative Instruments	77,608		247,794
Prepaid Expenses	Prepaid Expenses	10,973		17,456		Prepaid Expenses	12,450		17,456

Total Current Assets	Total Current Assets	430,722		498,101		Total Current Assets	332,239		498,101
Property, Plant and Equipment:	Property, Plant and Equipment:					Property, Plant and Equipment:
Property, Plant and Equipment	Property, Plant and Equipment	10,814,035		10,572,006		Property, Plant and Equipment	10,904,837		10,572,006
Less—Accumulated Depreciation, Depletion and Amortization	Less—Accumulated Depreciation, Depletion and Amortization	3,730,232		3,435,431		Less—Accumulated Depreciation, Depletion and Amortization	3,841,699		3,435,431

Total Property, Plant and Equipment—Net	Total Property, Plant and Equipment—Net	7,083,803		7,136,575		Total Property, Plant and Equipment—Net	7,063,138		7,136,575
Other Non-Current Assets:	Other Non-Current Assets:					Other Non-Current Assets:

Operating Lease Right-of-Use Assets	Operating Lease Right-of-Use Assets	141,198		187,097		Operating Lease Right-of-Use Assets	124,329		187,097
Investment in Affiliates	Investment in Affiliates	15,159		16,710		Investment in Affiliates	15,685		16,710
Derivative Instruments	Derivative Instruments	212,657		314,096		Derivative Instruments	160,098		314,096
Goodwill	Goodwill	323,314		796,359		Goodwill	323,314		796,359
Other Intangible Assets	Other Intangible Assets	93,371		96,647		Other Intangible Assets	91,733		96,647
Restricted Cash	Restricted Cash	5,576		—		Restricted Cash	5,456		0
Other	Other	13,884		15,221		Other	13,182		15,221

Total Other Non-Current Assets	Total Other Non-Current Assets	805,159		1,426,130		Total Other Non-Current Assets	733,797		1,426,130
TOTAL ASSETS	TOTAL ASSETS	$	8,319,684	$	9,060,806	TOTAL ASSETS	$	8,129,174	$	9,060,806

The accompanying notes are an integral part of these financial statements.

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


		(Unaudited)					(Unaudited)
(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)	June 30, 2020		December 31, 2019		(Dollars in thousands, except per share data)	September 30, 2020		December 31, 2019
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current Liabilities:	Current Liabilities:					Current Liabilities:
Accounts Payable	Accounts Payable	$	148,345	$	202,553	Accounts Payable	$	117,004	$	202,553
Derivative Instruments	Derivative Instruments	83,527		41,466		Derivative Instruments	144,545		41,466
Current Portion of Finance Lease Obligations	Current Portion of Finance Lease Obligations	7,295		7,164		Current Portion of Finance Lease Obligations	7,419		7,164
Current Portion of Long-Term Debt	Current Portion of Long-Term Debt	22,430		—		Current Portion of Long-Term Debt	22,488		0

Current Portion of Operating Lease Obligations	Current Portion of Operating Lease Obligations	52,110		61,670		Current Portion of Operating Lease Obligations	52,032		61,670
Other Accrued Liabilities	Other Accrued Liabilities	162,817		216,086		Other Accrued Liabilities	164,473		216,086

Total Current Liabilities	Total Current Liabilities	476,524		528,939		Total Current Liabilities	507,961		528,939
Non-Current Liabilities:	Non-Current Liabilities:					Non-Current Liabilities:
Long-Term Debt	Long-Term Debt	2,540,768		2,754,443		Long-Term Debt	2,577,974		2,754,443
Finance Lease Obligations	Finance Lease Obligations	4,225		7,706		Finance Lease Obligations	2,322		7,706
Operating Lease Obligations	Operating Lease Obligations	79,701		110,466		Operating Lease Obligations	66,180		110,466
Derivative Instruments	Derivative Instruments	178,187		115,862		Derivative Instruments	203,709		115,862
Deferred Income Taxes	Deferred Income Taxes	370,412		476,108		Deferred Income Taxes	398,878		476,108
Asset Retirement Obligations	Asset Retirement Obligations	62,543		63,377		Asset Retirement Obligations	61,761		63,377

Other	Other	40,370		41,596		Other	40,213		41,596

Total Non-Current Liabilities	Total Non-Current Liabilities	3,276,206		3,569,558		Total Non-Current Liabilities	3,351,037		3,569,558
TOTAL LIABILITIES	TOTAL LIABILITIES	3,752,730		4,098,497		TOTAL LIABILITIES	3,858,998		4,098,497
Stockholders’ Equity:	Stockholders’ Equity:					Stockholders’ Equity:
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 187,431,492 Issued and Outstanding at June 30, 2020; 186,642,962 Issued and Outstanding at December 31, 2019		1,878		1,870
Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 224,528,583 Issued and Outstanding at September 30, 2020; 186,642,962 Issued and Outstanding at December 31, 2019						Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 224,528,583 Issued and Outstanding at September 30, 2020; 186,642,962 Issued and Outstanding at December 31, 2019	2,249		1,870
Capital in Excess of Par Value	Capital in Excess of Par Value	2,261,729		2,199,605		Capital in Excess of Par Value	2,989,699		2,199,605
Preferred Stock, 15,000,000 shares authorized, None issued and outstanding	Preferred Stock, 15,000,000 shares authorized, None issued and outstanding	—		—		Preferred Stock, 15,000,000 shares authorized, None issued and outstanding	0		0
Retained Earnings	Retained Earnings	1,495,197		1,971,676		Retained Earnings	1,290,498		1,971,676
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss	(12,382)		(12,605)		Accumulated Other Comprehensive Loss	(12,270)		(12,605)

Total CNX Resources Stockholders’ Equity	Total CNX Resources Stockholders’ Equity	3,746,422		4,160,546		Total CNX Resources Stockholders’ Equity	4,270,176		4,160,546
Noncontrolling Interest	Noncontrolling Interest	820,532		801,763		Noncontrolling Interest	0		801,763
TOTAL STOCKHOLDERS' EQUITY	TOTAL STOCKHOLDERS' EQUITY	4,566,954		4,962,309		TOTAL STOCKHOLDERS' EQUITY	4,270,176		4,962,309
TOTAL LIABILITIES AND EQUITY	TOTAL LIABILITIES AND EQUITY	$	8,319,684	$	9,060,806	TOTAL LIABILITIES AND EQUITY	$	8,129,174	$	9,060,806

The accompanying notes are an integral part of these financial statements.

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in thousands)
(Unaudited) Common Stock Capital in
Excess
of Par
Value Retained Earnings (Deficit) Accumulated Other Comprehensive Income
(Loss) Total
CNX Resources Stockholders’ Equity Non- Controlling Interest Total Equity
March 31, 2020 $ 1,874 $ 2,205,941 $ 1,641,009 $ (12,493) $ 3,836,331 $ 808,379 $ 4,644,710
Net (Loss) Income — — (145,749) — (145,749) 15,263 (130,486)
Issuance of Common Stock 4 1,646 — — 1,650 — 1,650
Shares Withheld for Taxes — — (63) — (63) — (63)
Amortization of Stock-Based Compensation Awards — 2,186 — — 2,186 380 2,566
Equity Component of Convertible Senior Notes, net of Issuance Costs — 78,307 — — 78,307 — 78,307
Purchase of Capped Call — (26,351) — — (26,351) — (26,351)
Other Comprehensive Income — — — 111 111 — 111
Distributions to CNXM Noncontrolling Interest Holders — — — — — (3,490) (3,490)
June 30, 2020 $ 1,878 $ 2,261,729 $ 1,495,197 $ (12,382) $ 3,746,422 $ 820,532 $ 4,566,954
(Dollars in thousands)
(Unaudited)
March 31, 2019 $ 1,964 $ 2,249,511 $ 1,971,898 $ (7,860) $ 4,215,513 $ 759,296 $ 4,974,809
Net Income — — 162,477 — 162,477 30,217 192,694
Issuance of Common Stock 3 59 — — 62 — 62
Purchase and Retirement of Common Stock (88) (68,934) (5,261) — (74,283) — (74,283)
Shares Withheld for Taxes — — (1,487) — (1,487) (25) (1,512)
Amortization of Stock-Based Compensation Awards — 23,333 — — 23,333 540 23,873
Other Comprehensive Income — — — 41 41 — 41
Distributions to CNXM Noncontrolling Interest Holders — — — — — (15,689) (15,689)
June 30, 2019 $ 1,879 $ 2,203,969 $ 2,127,627 $ (7,819) $ 4,325,656 $ 774,339 $ 5,099,995


(Dollars in thousands) (Unaudited)	Common Stock		Capital in Excess of Par Value		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total CNX Resources Stockholders’ Equity		Non- Controlling Interest		Total Equity
June 30, 2020	$	1,878	$	2,261,729	$	1,495,197	$	(12,382)	$	3,746,422	$	820,532	$	4,566,954
Net (Loss) Income	—		—		(204,698)		—		(204,698)		15,905		(188,793)
Issuance of Common Stock	—		151		—		—		151		—		151

Shares Withheld for Taxes	—		—		(1)		—		(1)		—		(1)
Amortization of Stock-Based Compensation Awards	—		1,902		—		—		1,902		601		2,503
Equity Component of Convertible Senior Notes, net of Issuance Costs	—		10		—		—		10		—		10

Other Comprehensive Income	—		—		—		112		112		—		112
Distributions to CNXM Noncontrolling Interest Holders	—		—		—		—		—		(21,055)		(21,055)
CNXM Merger	371		725,907		—		—		726,278		(815,983)		(89,705)
September 30, 2020	$	2,249	$	2,989,699	$	1,290,498	$	(12,270)	$	4,270,176	$	0	$	4,270,176
(Dollars in thousands) (Unaudited)
June 30, 2019	$	1,879	$	2,203,969	$	2,127,627	$	(7,819)	$	4,325,656	$	774,339	$	5,099,995
Net Income	—		—		115,538		—		115,538		28,422		143,960
Issuance of Common Stock	1		48		—		—		49		—		49
Purchase and Retirement of Common Stock	(10)		(7,687)		—		—		(7,697)		—		(7,697)
Shares Withheld for Taxes	—		—		(61)		—		(61)		—		(61)
Amortization of Stock-Based Compensation Awards	—		1,453		—		—		1,453		328		1,781
Other Comprehensive Income	—		—		—		41		41		—		41
Distributions to CNXM Noncontrolling Interest Holders	—		—		—		—		—		(16,250)		(16,250)
September 30, 2019	$	1,870	$	2,197,783	$	2,243,104	$	(7,778)	$	4,434,979	$	786,839	$	5,221,818

The accompanying notes are an integral part of these financial statements.

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in thousands) Common
Stock Capital in
Excess
of Par
Value Retained
Earnings
(Deficit) Accumulated
Other
Comprehensive
Income
(Loss) Total
CNX Resources
Stockholders’
Equity Non-
Controlling
Interest Total
Equity
December 31, 2019 $ 1,870 $ 2,199,605 $ 1,971,676 $ (12,605) $ 4,160,546 $ 801,763 $ 4,962,309
(Unaudited)
Net (Loss) Income — — (474,835) — (474,835) 39,126 (435,709)
Issuance of Common Stock 8 1,646 — — 1,654 — 1,654
Shares Withheld for Taxes — — (1,644) — (1,644) (309) (1,953)
Amortization of Stock-Based Compensation Awards — 8,522 — — 8,522 884 9,406
Equity Component of Convertible Senior Notes, net of Issuance Costs — 78,307 — — 78,307 — 78,307
Purchase of Capped Call — (26,351) — — (26,351) — (26,351)
Other Comprehensive Income — — — 223 223 — 223
Distributions to CNXM Noncontrolling Interest Holders — — — — — (20,932) (20,932)
June 30, 2020 $ 1,878 $ 2,261,729 $ 1,495,197 $ (12,382) $ 3,746,422 $ 820,532 $ 4,566,954
(Dollars in thousands)
December 31, 2018 $ 1,990 $ 2,264,063 $ 2,071,809 $ (7,904) $ 4,329,958 $ 751,785 $ 5,081,743
(Unaudited)
Net Income — — 75,140 — 75,140 52,904 128,044
Issuance of Common Stock 8 153 — — 161 — 161
Purchase and Retirement of Common Stock (119) (93,871) (13,790) — (107,780) — (107,780)
Shares Withheld for Taxes — — (5,532) — (5,532) (690) (6,222)
Amortization of Stock-Based Compensation Awards — 33,624 — — 33,624 1,152 34,776
Other Comprehensive Income — — — 85 85 — 85
Distributions to CNXM Noncontrolling Interest Holders — — — — — (30,812) (30,812)
June 30, 2019 $ 1,879 $ 2,203,969 $ 2,127,627 $ (7,819) $ 4,325,656 $ 774,339 $ 5,099,995


(Dollars in thousands)	Common Stock		Capital in Excess of Par Value		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total CNX Resources Stockholders’ Equity		Non- Controlling Interest		Total Equity
December 31, 2019	$	1,870	$	2,199,605	$	1,971,676	$	(12,605)	$	4,160,546	$	801,763	$	4,962,309
(Unaudited)
Net (Loss) Income	—		—		(679,533)		—		(679,533)		55,031		(624,502)
Issuance of Common Stock	8		1,797		—		—		1,805		—		1,805

Shares Withheld for Taxes	—		—		(1,645)		—		(1,645)		(309)		(1,954)
Amortization of Stock-Based Compensation Awards	—		10,424		—		—		10,424		1,485		11,909
Equity Component of Convertible Senior Notes, net of Issuance Costs	—		78,317		—		—		78,317		—		78,317
Purchase of Capped Call	—		(26,351)		—		—		(26,351)		—		(26,351)
Other Comprehensive Income	—		—		—		335		335		—		335
Distributions to CNXM Noncontrolling Interest Holders	—		—		—		—		—		(41,987)		(41,987)
CNXM Merger	371		725,907		—		—		726,278		(815,983)		(89,705)
September 30, 2020	$	2,249	$	2,989,699	$	1,290,498	$	(12,270)	$	4,270,176	$	0	$	4,270,176
(Dollars in thousands)
December 31, 2018	$	1,990	$	2,264,063	$	2,071,809	$	(7,904)	$	4,329,958	$	751,785	$	5,081,743
(Unaudited)
Net Income	—		—		190,679		—		190,679		81,325		272,004
Issuance of Common Stock	9		202		—		—		211		—		211
Purchase and Retirement of Common Stock	(129)		(101,558)		(13,790)		—		(115,477)		—		(115,477)
Shares Withheld for Taxes	—		—		(5,594)		—		(5,594)		(690)		(6,284)
Amortization of Stock-Based Compensation Awards	—		35,076		—		—		35,076		1,481		36,557
Other Comprehensive Income	—		—		—		126		126		—		126
Distributions to CNXM Noncontrolling Interest Holders	—		—		—		—		—		(47,062)		(47,062)
September 30, 2019	$	1,870	$	2,197,783	$	2,243,104	$	(7,778)	$	4,434,979	$	786,839	$	5,221,818

The accompanying notes are an integral part of these financial statements.

CNX RESOURCES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)	(Unaudited)	Six Months Ended							(Unaudited)	Nine Months Ended
Dollars in Thousands	Dollars in Thousands	June 30,							Dollars in Thousands	September 30,
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:	2020		2019		Cash Flows from Operating Activities:	2020			2019
Net (Loss) Income	Net (Loss) Income	$	(435,709)	$	128,044	Net (Loss) Income	$	(624,502)		$	272,004
Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operating Activities:	Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operating Activities:					Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operating Activities:

Depreciation, Depletion and Amortization	Depreciation, Depletion and Amortization	242,709		254,159		Depreciation, Depletion and Amortization	357,174			374,619
Amortization of Deferred Financing Costs	Amortization of Deferred Financing Costs	8,795		4,408		Amortization of Deferred Financing Costs	14,602			6,057
Impairment of Exploration and Production Properties	Impairment of Exploration and Production Properties	61,849		—		Impairment of Exploration and Production Properties	61,849			0
Impairment of Goodwill	Impairment of Goodwill	473,045		—		Impairment of Goodwill	473,045			0
Stock-Based Compensation	Stock-Based Compensation	9,406		34,776		Stock-Based Compensation	11,909			36,557
(Gain) Loss on Asset Sales and Abandonments		(17,992)		2,699
Gain on Asset Sales and Abandonments						Gain on Asset Sales and Abandonments	(21,559)			(610)

(Gain) Loss on Debt Extinguishment	(Gain) Loss on Debt Extinguishment	(10,919)		7,614		(Gain) Loss on Debt Extinguishment	(10,812)			7,614
Gain on Commodity Derivative Instruments		(51,839)		(26,205)
Loss (Gain) on Commodity Derivative Instruments						Loss (Gain) on Commodity Derivative Instruments	116,995			(240,118)
Loss on Other Derivative Instruments	Loss on Other Derivative Instruments	14,237		—		Loss on Other Derivative Instruments	14,389			0
Net Cash Received (Paid) in Settlement of Commodity Derivative Instruments		293,417		(30,710)
Net Cash Received in Settlement of Commodity Derivative Instruments						Net Cash Received in Settlement of Commodity Derivative Instruments	383,727			26,331
Deferred Income Taxes	Deferred Income Taxes	(125,429)		29,231		Deferred Income Taxes	(186,707)			78,133
Equity in Loss (Earnings) of Affiliates	Equity in Loss (Earnings) of Affiliates	1,421		(1,030)		Equity in Loss (Earnings) of Affiliates	1,025			(1,703)
Return on Equity Investment	Return on Equity Investment	131		2,056		Return on Equity Investment	0			3,256
Changes in Operating Assets:	Changes in Operating Assets:					Changes in Operating Assets:
Accounts and Notes Receivable	Accounts and Notes Receivable	68,270		125,991		Accounts and Notes Receivable	64,843			154,715
Recoverable Income Taxes	Recoverable Income Taxes	(52,015)		35,888		Recoverable Income Taxes	61,781			138,406
Supplies Inventories	Supplies Inventories	(3,333)		(1,527)		Supplies Inventories	(3,106)			2,188
Prepaid Expenses	Prepaid Expenses	6,542		4,287		Prepaid Expenses	4,700			5,725
Changes in Other Assets	Changes in Other Assets	396		(105)		Changes in Other Assets	267			9
Changes in Operating Liabilities:	Changes in Operating Liabilities:					Changes in Operating Liabilities:
Accounts Payable	Accounts Payable	(15,488)		29,346		Accounts Payable	(29,641)			55,280
Accrued Interest	Accrued Interest	(5,558)		5,050		Accrued Interest	(13,967)			2,359
Other Operating Liabilities	Other Operating Liabilities	(49,620)		(36,392)		Other Operating Liabilities	(40,479)			(31,689)
Changes in Other Liabilities	Changes in Other Liabilities	(1,131)		(6,907)		Changes in Other Liabilities	(1,186)			(23,041)

Net Cash Provided by Operating Activities	Net Cash Provided by Operating Activities	411,185		560,673		Net Cash Provided by Operating Activities	634,347			866,092
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Capital Expenditures	Capital Expenditures	(286,901)		(628,365)		Capital Expenditures	(395,236)			(964,502)

Proceeds from Asset Sales	Proceeds from Asset Sales	26,126		7,087		Proceeds from Asset Sales	31,981			15,276

Net Cash Used in Investing Activities	Net Cash Used in Investing Activities	(260,775)		(621,278)		Net Cash Used in Investing Activities	(363,255)			(949,226)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:

Payments on Miscellaneous Borrowings	Payments on Miscellaneous Borrowings	(3,569)		(3,515)		Payments on Miscellaneous Borrowings	(5,348)			(5,322)
Payments on Long-Term Notes	Payments on Long-Term Notes	(468,865)		(405,876)		Payments on Long-Term Notes	(518,865)			(405,876)
Net Proceeds from CNXM Revolving Credit Facility	Net Proceeds from CNXM Revolving Credit Facility	7,250		124,000		Net Proceeds from CNXM Revolving Credit Facility	31,250			162,000
Net (Payments on) Proceeds from CNX Revolving Credit Facility	Net (Payments on) Proceeds from CNX Revolving Credit Facility	(111,000)		18,000		Net (Payments on) Proceeds from CNX Revolving Credit Facility	(251,000)			1,200
Proceeds from Issuance of CNX Senior Notes	Proceeds from Issuance of CNX Senior Notes	—		500,000		Proceeds from Issuance of CNX Senior Notes	207,000			500,000

Net Proceeds from CSG Non-Revolving Credit Facilities	Net Proceeds from CSG Non-Revolving Credit Facilities	169,583		—		Net Proceeds from CSG Non-Revolving Credit Facilities	164,381			0
Proceeds from Issuance of Convertible Senior Notes	Proceeds from Issuance of Convertible Senior Notes	334,650		—		Proceeds from Issuance of Convertible Senior Notes	334,650			0
Purchase of Capped Call Related to Convertible Senior Notes	Purchase of Capped Call Related to Convertible Senior Notes	(35,673)		—		Purchase of Capped Call Related to Convertible Senior Notes	(35,673)			0
Distributions to CNXM Noncontrolling Interest Holders	Distributions to CNXM Noncontrolling Interest Holders	(20,932)		(30,812)		Distributions to CNXM Noncontrolling Interest Holders	(41,987)			(47,062)
Proceeds from Issuance of Common Stock	Proceeds from Issuance of Common Stock	1,654		161		Proceeds from Issuance of Common Stock	1,805			210
Shares Withheld for Taxes	Shares Withheld for Taxes	(1,953)		(6,222)		Shares Withheld for Taxes	(1,954)			(6,284)
Purchases of Common Stock	Purchases of Common Stock	—		(109,780)		Purchases of Common Stock	0			(117,477)
Debt Issuance and Financing Fees	Debt Issuance and Financing Fees	(11,917)		(9,938)		Debt Issuance and Financing Fees	(15,313)			(9,969)

Net Cash (Used in) Provided by Financing Activities	Net Cash (Used in) Provided by Financing Activities	(140,772)		76,018		Net Cash (Used in) Provided by Financing Activities	(131,054)			71,420
Net Increase in Cash, Cash Equivalents and Restricted Cash		9,638		15,413
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash						Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	140,038			(11,714)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	16,283		17,198		Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	16,283			17,198
Cash, Cash Equivalents, and Restricted Cash at End of Period	Cash, Cash Equivalents, and Restricted Cash at End of Period	$	25,921	$	32,611	Cash, Cash Equivalents, and Restricted Cash at End of Period	$	156,321		$	5,484

The accompanying notes are an integral part of these financial statements.

CNX RESOURCES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 1—BASIS OF PRESENTATION:

The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and ~~six~~nine months ended ~~June~~September 30, 2020 are not necessarily indicative of the results that may be expected for future periods.

The Consolidated Balance Sheet at December 31, 2019 has been derived from the Audited Consolidated Financial Statements at that date but does not include all the notes required by generally accepted accounting principles for complete financial statements. For further information, refer to the Consolidated Financial Statements and related notes for the year ended December 31, 2019 included in CNX Resources Corporation's ("CNX," "CNX Resources," the "Company," "we," "us," or "our") Annual Report on Form 10-K as filed with the Securities and Exchange Commission (SEC) on February 10, 2020.

On September 28, 2020, the Merger (as defined in Note 13 – Acquisitions and Dispositions) of CNX Midstream Partners LP (CNXM) was completed. Prior to the Merger, public unitholders held a 46.9% equity interest in CNXM and CNX owned the remaining 53.1% equity interest. The earnings of CNXM that were attributed to its common units held by the public prior to the Merger are reflected in net income attributable to noncontrolling interest in the Consolidated Statements of Income. There were no changes in our ownership interest in CNXM during the three and nine months ended September 30, 2019.

Certain amounts in prior periods have been reclassified to conform to the current period presentation.

Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the statement of cash flows:


		June 30,							September 30,
		2020		2019			2020		2019
Cash and Cash Equivalents	Cash and Cash Equivalents	$	19,607	$	32,611	Cash and Cash Equivalents	$	150,132	$	5,484
Restricted Cash, Current Portion	Restricted Cash, Current Portion	738		—		Restricted Cash, Current Portion	733		0
Restricted Cash, Less Current Portion	Restricted Cash, Less Current Portion	5,576		—		Restricted Cash, Less Current Portion	5,456		0
Total Cash, Cash Equivalents, and Restricted Cash	Total Cash, Cash Equivalents, and Restricted Cash	$	25,921	$	32,611	Total Cash, Cash Equivalents, and Restricted Cash	$	156,321	$	5,484

Restricted Cash

~~Consists~~Restricted cash consists of cash that the Company is contractually obligated to maintain in accordance with the terms of the Cardinal States Gathering LLC and CSG Holdings II LLC Credit Agreement, each dated March 13, 2020 (See Note 9 - Long-Term Debt for more information).

Receivables

On January 1, 2020, CNX adopted ~~ASU~~Accounting Standards Update (ASU) 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. CNX adopted Topic 326 using the prospective transition method.

Prior to adopting Topic 326, CNX reserved for specific accounts receivable when it was probable that all or a part of an outstanding balance would not be collected, such as customer bankruptcies. Collectability was determined based on terms of sale, credit status of customers and various other circumstances. CNX regularly reviewed collectability and established or adjusted the allowance as necessary using the specific identification method. Account balances were charged off against the

allowance after all means of collection had been exhausted and the potential for recovery was considered remote. Reserves for uncollectable amounts were not material in the periods presented.

Under Topic 326, management records an allowance for credit losses related to the collectability of third-party ~~customers~~customers' receivables using the historical aging of the customer receivable balance. The collectability is determined based on past events, including historical experience, customer credit rating, as well as current market conditions. CNX monitors customer ratings

and collectability on an on-going basis. Account balances will be charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

As of September 30, 2020 and December 31, 2019, Accounts Receivable - Trade were $76,007 and $133,480, respectively, and Other Receivables were $9,167 and $16,142, respectively. The following represents the rollforward of the allowance for credit losses ~~are as follows:~~for the nine months ended:

June 30, December 31,
2020 2019
Accounts Receivable - Trade $ 69,252 $ 133,480
Allowance for Credit Losses (78) —
Accounts Receivable - Trade, net $ 69,174 $ 133,480
Other Receivables $ 12,800 $ 16,142
Allowance for Credit Losses (5,131) (2,463)
Other Receivables, net $ 7,669 $ 13,679


	September 30,
	2020		2019
Allowance for Credit Losses - Trade, Beginning of Year	$	0	$	0
Provision for Expected Credit Losses	78		0
Allowance for Credit Losses - Trade, End of Period	$	78	$	0

Allowance for Credit Losses - Other Receivables, Beginning of Year	$	2,463	$	2,038
Provision for Expected Credit Losses	2,974		389
Write-off of Uncollectible Accounts	(923)		(77)
Allowance for Credit Losses - Other Receivables, End of Period	$	4,514	$	2,350

NOTE 2—EARNINGS PER SHARE:

Basic earnings per share is computed by dividing net income attributable to CNX shareholders by the weighted average shares outstanding during the reporting period. Diluted earnings per share is computed similarly to basic earnings per share, except that the weighted average shares outstanding are increased to include, if dilutive, additional shares from stock options, performance stock options, restricted stock units, performance share units, and shares issuable upon conversion of ~~the~~CNX's outstanding Convertible ~~Notes.~~Notes (See Note 9 - Long-Term Debt). The number of additional shares is calculated by assuming that outstanding stock options and performance share options were exercised, that outstanding restricted stock units and performance share units were released, and that the proceeds from such activities were used to acquire shares of common stock at the average market price during the reporting period.

Pursuant to the Merger (See Note 13 - Acquisitions and Dispositions for more information), all outstanding phantom units previously granted under the CNXM long-term incentive plan were converted into the right to receive 0.88 shares of common stock of CNX. As such, all outstanding phantom units were converted, effective as of the closing of the Merger, into CNX ~~Midstream Partners LP's ("CNXM") dilutive units~~restricted stock units. Each CNX restricted stock unit will be subject to the same vesting, forfeiture and other terms and conditions applicable to the converted CNXM phantom units. Under Accounting Standards Codification Topic 718, Compensation - Stock Compensation, it was determined that there was no additional compensation cost to record as the conversion of awards did not ~~have a material impact on the Company's earnings per share calculations for the three or six months ended June 30, 2020 or June 30, 2019.~~result in incremental fair value.

The table below sets forth the share-based awards that have been excluded from the computation of diluted earnings per share because their effect would be antidilutive:


		For the Three Months Ended June 30,			For the Six Months Ended June 30,				For the Three Months Ended September 30,		For the Nine Months Ended September 30,
		2020	2019	2020	2019		2020	2019	2020	2019
Anti-Dilutive Options	Anti-Dilutive Options	4,256,409	2,041,273	4,256,409	2,041,273	Anti-Dilutive Options	4,237,319	2,035,273	4,237,319	2,035,273
Anti-Dilutive Restricted Stock Units	Anti-Dilutive Restricted Stock Units	2,009,678	150,007	2,009,678	220,858	Anti-Dilutive Restricted Stock Units	2,180,548	814,183	2,180,548	813,266
Anti-Dilutive Performance Share Units	Anti-Dilutive Performance Share Units	651,131	—	651,131	—	Anti-Dilutive Performance Share Units	780,335	0	780,335	0
Anti-Dilutive Performance Stock Options	Anti-Dilutive Performance Stock Options	—	927,268	—	927,268	Anti-Dilutive Performance Stock Options	0	927,268	0	927,268
		6,917,218	3,118,548	6,917,218	3,189,399		7,198,202	3,776,724	7,198,202	3,775,807

Additionally, the 32,242,975 shares underlying ~~CNX's~~the Convertible Notes ~~(See Note 10 - Long-Term Debt)~~ are not considered in the calculation of diluted net loss per share for the three and ~~six~~nine months ended ~~June~~September 30, 2020 as these Convertible Notes were not convertible as of~~June~~ September 30, 2020. The Company will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election, and therefore will use the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable.

The table below sets forth the share-based awards that have been exercised or released:


		For the Three Months Ended June 30,			For the Six Months Ended June 30,				For the Three Months Ended September 30,		For the Nine Months Ended September 30,
		2020	2019	2020	2019		2020	2019	2020	2019
Options	Options	239,839	7,093	239,839	20,841	Options	21,864	6,953	261,703	27,794
Restricted Stock Units	Restricted Stock Units	163,157	515,265	504,040	973,234	Restricted Stock Units	21,186	28,769	525,226	1,002,003
Performance Share Units	Performance Share Units	—	—	274,716	342,882	Performance Share Units	0	0	274,716	342,882
		402,996	522,358	1,018,595	1,336,957		43,050	35,722	1,061,645	1,372,679

Pursuant to the terms of the change in control severance agreements of certain CNX employees and CNX officers, outstanding equity awards held by such employees and officers vest upon a stockholder (or stockholder group) becoming the beneficial owner of more than 25% of the Company's outstanding common stock. During the ~~three~~nine months ended ~~June~~September 30, 2019, Southeastern Asset Management, Inc. and its affiliates ("SEAM") acquired shares of CNX's common stock in the open market which resulted in SEAM's aggregate share ownership exceeding more the 25% of CNX's common stock outstanding. This transaction, as such, constituted a change in control event under the severance agreements, resulting in the accelerated vesting of 473,126 restricted stock units and 903,100 performance share units held by the aforementioned employees and officers that were issued prior to 2019. Those affected employees and officers each consented to waive the change in control vesting provision included in the change in control severance agreements with respect to their restricted stock unit and performance share unit awards that were issued during 2019. The accelerated vesting resulted in $19,654 of additional long-term equity-based compensation expense for the ~~three and six~~nine months ended ~~June~~September 30, 2019, and is included in Selling, General and Administrative Costs in the Consolidated Statements of Income. The performance share unit awards that vested continue to be subject to the attainment of performance goals as determined by the Compensation Committee of CNX's Board of Directors after the end of the applicable performance period.

The computations for basic and diluted (loss) earnings per share are as follows:


		For the Three Months Ended June 30,						For the Six Months Ended June 30,							For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2020		2019		2020		2019			2020		2019		2020		2019
Net (Loss) Income	Net (Loss) Income	$	(130,486)	$	192,694	$	(435,709)	$	128,044	Net (Loss) Income	$	(188,793)	$	143,960	$	(624,502)	$	272,004
Less: Net Income Attributable to Non-Controlling Interest	Less: Net Income Attributable to Non-Controlling Interest	15,263		30,217		39,126		52,904		Less: Net Income Attributable to Non-Controlling Interest	15,905		28,422		55,031		81,325

Net (Loss) Income Attributable to CNX Resources Shareholders	Net (Loss) Income Attributable to CNX Resources Shareholders	$	(145,749)	$	162,477	$	(474,835)	$	75,140	Net (Loss) Income Attributable to CNX Resources Shareholders	$	(204,698)	$	115,538	$	(679,533)	$	190,679

Weighted-Average Shares of Common Stock Outstanding	Weighted-Average Shares of Common Stock Outstanding	187,316,463		191,524,289		187,117,412		194,483,555		Weighted-Average Shares of Common Stock Outstanding	198,727,472		187,448,749		191,015,680		188,012,044
Effect of Diluted Shares*	Effect of Diluted Shares*	—		1,256,443		—		1,507,800		Effect of Diluted Shares*	0		982,210		0		1,548,899
Weighted-Average Diluted Shares of Common Stock Outstanding	Weighted-Average Diluted Shares of Common Stock Outstanding	187,316,463		192,780,732		187,117,412		195,991,355		Weighted-Average Diluted Shares of Common Stock Outstanding	198,727,472		188,430,959		191,015,680		189,560,943

(Loss) Earnings per Share:	(Loss) Earnings per Share:									(Loss) Earnings per Share:

Basic	Basic	$	(0.78)	$	0.85	$	(2.54)	$	0.39	Basic	$	(1.03)	$	0.62	$	(3.56)	$	1.01

Diluted	Diluted	$	(0.78)	$	0.84	$	(2.54)	$	0.38	Diluted	$	(1.03)	$	0.61	$	(3.56)	$	1.01

*During periods in which the Company incurs a net loss, diluted weighted average shares outstanding are equal to basic weighted average shares outstanding because the effect of all equity awards is antidilutive.

NOTE 3—REVENUE FROM CONTRACTS WITH CUSTOMERS:

Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company has elected to exclude all taxes from the measurement of transaction price.

For natural gas, NGL and oil, and purchased gas revenue, the Company generally considers the delivery of each unit (MMBtu or Bbl) to be a separate performance obligation that is satisfied upon delivery. Payment terms for these contracts typically require payment within 25 days of the end of the calendar month in which the hydrocarbons are delivered. A significant number of these contracts contain variable consideration because the payment terms refer to market prices at future delivery dates. In these situations, the Company has not identified a standalone selling price because the terms of the variable payments relate specifically to the Company’s efforts to satisfy the performance obligations. A portion of the contracts contain fixed consideration (i.e. fixed price contracts or contracts with a fixed differential to NYMEX or index prices). The fixed consideration is allocated to each performance obligation on a relative standalone selling price basis, which requires judgment from management. For these contracts, the Company generally concludes that the fixed price or fixed differentials in the contracts are representative of the standalone selling price. Revenue associated with natural gas, NGL and oil as presented on the accompanying Consolidated Statements of Income represent the Company’s share of revenues net of royalties and excluding revenue interests owned by others. When selling natural gas, NGL and oil on behalf of royalty owners or working interest owners, the Company is acting as an agent and thus reports the revenue on a net basis.

~~Midstream revenue consists~~Included in Other Revenue and Operating Income in the Consolidated Statements of Income and in the below table, are revenues generated from natural gas gathering ~~activities.~~services provided to third-parties. The gas gathering services are interruptible in nature and include charges for the volume of gas actually gathered and do not guarantee access to the system. Volumetric based fees are based on actual volumes gathered. The Company generally considers the interruptible gathering of each unit (MMBtu) of natural gas as a separate performance obligation. Payment terms for these contracts typically require payment within 25 days of the end of the calendar month in which the hydrocarbons are gathered.

Disaggregation of Revenue

The following table is a disaggregation of revenue by major source:


		For the Three Months Ended June 30,									For the Six Months Ended June 30,									For the Three Months Ended September 30,						For the Nine Months Ended September 30,
				2020			2019			2020			2019			2020			2019			2020			2019
Revenue from Contracts with Customers	Revenue from Contracts with Customers												Revenue from Contracts with Customers
Natural Gas Revenue	Natural Gas Revenue	$	168,510		$	317,071		$	398,108		$	720,758	Natural Gas Revenue	$	163,054		$	245,815		$	561,162		$	966,574
NGL Revenue	NGL Revenue	6,226			24,025			25,638			53,790		NGL Revenue	15,053			18,305			40,691			72,095
Condensate Revenue		781			1,680			2,682			4,007
Oil Revenue		259			89			842			256
Oil/Condensate Revenue													Oil/Condensate Revenue	4,106			931			7,630			5,193
Total Natural Gas, NGL and Oil Revenue	Total Natural Gas, NGL and Oil Revenue	175,776			342,865			427,270			778,811		Total Natural Gas, NGL and Oil Revenue	182,213			265,051			609,483			1,043,862

Purchased Gas Revenue	Purchased Gas Revenue	20,424			18,768			46,783			34,989		Purchased Gas Revenue	31,541			29,192			78,324			64,181
Midstream Revenue		12,191			18,895			30,597			37,338

Other Sources of Revenue and Other Operating Income	Other Sources of Revenue and Other Operating Income												Other Sources of Revenue and Other Operating Income
(Loss) Gain on Commodity Derivative Instruments	(Loss) Gain on Commodity Derivative Instruments	(63,303)			221,581			51,839			26,205		(Loss) Gain on Commodity Derivative Instruments	(168,834)			213,913			(116,995)			240,118
Other Operating Income		3,753			2,923			8,711			6,120
Other Revenue and Operating Income													Other Revenue and Operating Income	21,155			21,841			60,463			65,299
Total Revenue and Other Operating Income	Total Revenue and Other Operating Income	$	148,841		$	605,032		$	565,200		$	883,463	Total Revenue and Other Operating Income	$	66,075		$	529,997		$	631,275		$	1,413,460

The disaggregated revenue corresponds with the Company’s segment reporting found in Note 14 - Segment Information.

Contract Balances

CNX invoices its customers once a performance obligation has been satisfied, at which point payment is unconditional. Accordingly, CNX's contracts with customers do not give rise to contract assets or liabilities under ASC 606. The Company has no contract assets recognized from the costs to obtain or fulfill a contract with a customer. The opening and closing balances of the Company’s receivables related to contracts with customers were $133,480 and ~~$69,174,~~$75,929, respectively, as of ~~June~~September 30, 2020.

Transaction Price Allocated to Remaining Performance Obligations

ASC 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied. However, the guidance provides certain practical expedients that limit this requirement, including when variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a series.

A significant portion of CNX's natural gas, NGL and oil and purchased gas revenue is short-term in nature with a contract term of one year or less. For those contracts, CNX has utilized the practical expedient in ASC 606-10-50-14 exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

For revenue associated with contract terms greater than one year, a significant portion of the consideration in those contracts is variable in nature and the Company allocates the variable consideration in its contract entirely to each specific performance obligation to which it relates. Therefore, any remaining variable consideration in the transaction price is allocated entirely to wholly unsatisfied performance obligations. As such, the Company has not disclosed the value of unsatisfied performance obligations pursuant to the practical expedient.

For revenue associated with contract terms greater than one year with a fixed price component, the aggregate amount of the transaction price allocated to remaining performance obligations was ~~$137,995~~$127,887 as of ~~June~~September 30, 2020. The Company expects

to recognize net revenue of ~~$46,189~~$50,125 in the next 12 months and ~~$45,754~~$41,379 over the following 12 months, with the remainder recognized thereafter.

For revenue associated with CNX's midstream contracts, which also have terms greater than one year, the interruptible gathering of each unit of natural gas represents a separate performance obligation; therefore, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required.

Prior-Period Performance Obligations

CNX records revenue in the month production is delivered to the purchaser. However, settlement statements for certain natural gas and NGL revenue may not be received for 30 to 90 days after the date production is delivered, and as a result, the Company is required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product. CNX records the differences between the estimate and the actual amounts received in the month that payment is received from the purchaser. The Company has existing internal controls for its revenue estimation process and the related accruals, and any identified differences between its revenue estimates and the actual revenue received historically have not been significant. For the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, revenue recognized in the current reporting period related to performance obligations satisfied in a prior reporting period was not material.

NOTE 4—INCOME TAXES:

The effective tax rates for the three and ~~six~~nine months ended ~~June~~September 30, 2020 were ~~18.0%~~24.5% and ~~29.4%~~28.0%, respectively. The effective tax rates for the three and ~~six~~nine months ended ~~June~~September 30, 2019 were ~~17.5%~~25.4% and ~~18.6%~~22.3%, respectively. The effective tax ~~rate~~rates for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 differ from the U.S. federal statutory rate of 21% primarily due to the impact of noncontrolling interest, equity compensation and state taxes.

Effective September 28, 2020, CNXM merged with a wholly-owned subsidiary of CNX with CNXM surviving as a wholly-owned subsidiary (See Note 13 - Acquisitions and Dispositions for more information). The tax effects of the Merger were reported as an adjustment to deferred income taxes and capital in excess of par value.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (the "Act") which, among other things, removed the 80% taxable income limitation for utilization of net operating losses generated in tax years 2018 through 2020, allowing for 5-year net operating loss carrybacks, increased the adjusted taxable income limitation for the disallowance of interest expense from 30% to 50%, and provided for refunds of any remaining alternative minimum tax (“AMT”) credits. As a result of the Act, the Company recorded AMT refunds of $102,482 in Recoverable Income Taxes in the Consolidated Balance Sheets in anticipation of the AMT refund being received in 2020. The Company received the AMT tax refund in the third quarter of 2020.The impact of other tax implications of the Act on the financial statements and related disclosures are immaterial.

In December 2019, the FASB issued Accounting Standards Update (ASU) 2019-12 - Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740), which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. This ASU removes the following exceptions: (1) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items; (2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; (3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; and (4) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments in this ASU also improve consistency and simplify other areas of Topic 740 by clarifying and amending existing guidance. The amendments in this ASU will be applied using different approaches depending on what the specific amendment relates to and, for public entities, are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company early adopted ASU 2019-12 as of January 1, 2020.

The total amount of uncertain tax positions at ~~June~~September 30, 2020 and December 31, 2019 was $33,243 and $31,516, respectively. If these uncertain tax positions were recognized, approximately $33,243 would affect CNX's effective tax rate at ~~June~~September 30, 2020 and December 31, 2019. The increase in the unrecognized tax benefits during the ~~six~~nine months ended ~~June~~September 30, 2020 iswas due to additional tax credits ~~to be~~ claimed on the 2019 federal income tax return.

CNX recognizes accrued interest and penalties related to uncertain tax positions in interest expense and income tax expense, respectively. As of ~~June~~September 30, 2020 and December 31, 2019, CNX had 0 accrued liabilities for interest and penalties related to uncertain tax positions.

CNX and its subsidiaries file federal income tax returns with the United States and tax returns within various ~~state jurisdictions.~~states. With few exceptions, the Company is no longer subject to United States federal, state, local, or non-U.S. income tax examinations by tax authorities for the years before 2016. The ~~Company expects the~~ Internal Revenue Service and the Joint Committee on Taxation ~~to conclude~~concluded its ~~audit~~review of tax years 2016 through 2017 during the third quarter of 2020.

NOTE 5—PROPERTY, PLANT AND EQUIPMENT:


		June 30, 2020		December 31, 2019			September 30, 2020		December 31, 2019
Intangible Drilling Cost	Intangible Drilling Cost	$	4,844,817	$	4,688,497	Intangible Drilling Cost	$	4,900,667	$	4,688,497
Gas Gathering Equipment	Gas Gathering Equipment	2,492,834		2,463,866		Gas Gathering Equipment	2,505,267		2,463,866
Proved Gas Properties	Proved Gas Properties	1,212,247		1,208,046		Proved Gas Properties	1,214,416		1,208,046
Gas Wells and Related Equipment	Gas Wells and Related Equipment	1,086,934		1,042,000		Gas Wells and Related Equipment	1,102,366		1,042,000
Unproved Gas Properties	Unproved Gas Properties	758,787		755,590		Unproved Gas Properties	765,008		755,590
Surface Land and Other Equipment	Surface Land and Other Equipment	225,375		226,285		Surface Land and Other Equipment	222,732		226,285
Other	Other	193,041		187,722		Other	194,381		187,722
Total Property, Plant and Equipment	Total Property, Plant and Equipment	10,814,035		10,572,006		Total Property, Plant and Equipment	10,904,837		10,572,006
Less: Accumulated Depreciation, Depletion and Amortization	Less: Accumulated Depreciation, Depletion and Amortization	3,730,232		3,435,431		Less: Accumulated Depreciation, Depletion and Amortization	3,841,699		3,435,431

Total Property, Plant and Equipment - Net	Total Property, Plant and Equipment - Net	$	7,083,803	$	7,136,575	Total Property, Plant and Equipment - Net	$	7,063,138	$	7,136,575

Impairment of Proved Property

CNX performs a quantitative impairment test whenever events or changes in circumstances indicate that an asset group's carrying amount may not be recoverable, over proved properties using the published forward prices, timing, methods and other assumptions consistent with historical periods. When indicators of impairment are present, tests require that the Company first compare expected future undiscounted cash flows by asset group to their respective carrying values. If the carrying amount exceeds the estimated undiscounted future cash flows, a reduction of the carrying amount of the natural gas properties to their estimated fair values is required, which is determined based on discounted cash flow techniques using significant assumptions including projected revenues, future commodity prices, and a market-specific weighted average cost of capital which are affected by expectations about future market and economic conditions.

During the ~~six~~nine months ended ~~June~~September 30, 2020, CNX recognized certain indicators of impairment specific to our Southwest Pennsylvania (SWPA) ~~CBM~~coalbed methane (CBM) asset group and determined that the carrying value of that asset group was not recoverable. The fair value of the asset group was estimated by using level 3 inputs which consisted of discounting the estimated future cash flows using discount rates and other assumptions that market participants would use in their estimates of fair value. As a result, an impairment of $61,849 was recognized and is included in Impairment of

Exploration and Production Properties in the Consolidated Statements of Income. The impairment was related to an economic decision to temporarily idle certain wells and the related processing facility during the first quarter.

NOTE 6—GOODWILL AND OTHER INTANGIBLE ASSETS:

In December 2017, CNX Gas entered into a purchase agreement with Noble Energy, pursuant to which CNX Gas acquired Noble’s 50% membership interest in CNX Gathering (then named "CONE Gathering LLC"), for a cash purchase price of $305,000 (the "Midstream Acquisition").

Prior to the Midstream Acquisition, the Company accounted for its 50% interest in CNX Gathering as an equity method investment as the Company had the ability to exercise significant influence, but not control, over the operating and financial policies of the midstream operations. In conjunction with the Midstream Acquisition, the Company obtained a controlling interest in CNX Gathering and control over the Partnership. Accordingly, the Midstream Acquisition was accounted for as a business combination using the acquisition method of accounting pursuant to ASC Topic 805, Business Combinations, or ASC 805. ASC 805 requires that, in circumstances where a business combination is achieved in stages (or step acquisition), previously held equity interests are remeasured at fair value. The fair value assigned to the previously held equity interest in CNX Gathering and CNXM was $799,033 and was determined using the income approach, based on a discounted cash flow methodology.

As part of the allocation of purchase price and in connection with the fair value of consideration transferred at closing on January 3, 2018, CNX recorded $796,359 of goodwill and $128,781 of other intangible assets which are comprised of customer relationships.

Impairment of Goodwill

All goodwill is attributed to the Midstream ~~reportable~~reporting unit within the Shale segment. Goodwill is evaluated for impairment at least annually and whenever events or changes in circumstance indicate that the fair value of a reporting unit is less than its carrying amount. In connection with the evaluation of goodwill for impairment, CNX may first consider qualitative factors to assess whether there are indicators that it is more likely than not that the fair value of a reporting unit may not exceed its carrying amount. If after assessing such factors or circumstances, CNX determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then a quantitative assessment is not required. If CNX chooses to bypass the qualitative assessment, or if it chooses to perform a qualitative assessment but is unable to qualitatively conclude that no impairment has occurred, then CNX will perform a quantitative assessment. If the estimated fair value of a reporting unit is less than its carrying value, an impairment charge is recognized for the excess of the reporting unit's carrying value over its fair value. The Company uses a combination of the income approach (generally a discounted cash flow method) and market approach (which may include the guideline public company method and/or the guideline transaction method) to estimate the fair value of a reporting unit.

During the first quarter of 2020, the Company identified indicators of impairment in the form of deteriorating macroeconomic conditions, and the decline in the observable market value of CNXM securities both in relation to the COVID-19 pandemic and the overall decline in the MLP market space. Management concluded that these factors presented indications that the fair value of the ~~midstream~~Midstream reporting unit was more likely than not below the reporting unit’s carrying value. CNX bypassed the qualitative assessment and performed a quantitative test that utilized a combination of the income and market approaches as described above to estimate the fair value of the Midstream reporting unit. As a result of this assessment, CNX concluded that the carrying value exceeded its estimated fair value, and a corresponding impairment of $473,045 was recorded, which was included in Impairment of Goodwill in the accompanying Consolidated Statements of Income. Any additional adverse changes in the future could reduce the underlying cash flows used to estimate fair values and could result in a decline in fair value that could trigger future impairment ~~charges relating to the Midstream reporting unit.~~charges.

In estimating the fair value of the ~~midstream~~Midstream reporting unit, the Company used the income approach’s discounted cash flow method, which applies significant inputs not observable in the public market (Level 3), including estimates and assumptions related to the use of an appropriate discount rate, future throughput volumes, operating costs and capital spending, discounted to present value using an industry rate adjusted for company-specific risk, which management feels reflects the overall level of inherent risk of the reporting unit. These assumptions are affected by expectations about future market, industry and economic conditions. Cash flow projections were derived from board approved budgeted amounts, a five-year operating forecast and an estimate of future cash flows. Subsequent cash flows were developed using growth or contraction rates that management believes are reasonably likely to occur. The Company used the market approach’s comparable company method. The comparable company method evaluates the value of a company using metrics of other businesses of similar size and industry.

The estimates of future cash flows are subjective in nature and are subject to impacts from business risks as described in “Item 1A. Risk Factors” in CNX's 2019 Annual Report on Form 10-K as filed with the SEC on February 10, 2020 ("2019 Form 10-K"). The fair value estimation process requires considerable judgment and determining the fair value is sensitive to changes in assumptions impacting management’s estimates of future financial results. Although CNX believes the estimates and assumptions used in estimating the fair value are reasonable and appropriate, different assumptions and estimates could materially impact the estimated fair value. Future results could differ from our current estimates and assumptions.

Changes in the carrying amount of goodwill consist of the following activity:


	Amount
December 31, 2019	$	796,359
Impairment	473,045
~~June~~September 30, 2020	$	323,314

Other Intangible Assets

The carrying amount and accumulated amortization of other intangible assets consist of the following:


		June 30, 2020		December 31, 2019			September 30, 2020		December 31, 2019
Other Intangible Assets	Other Intangible Assets					Other Intangible Assets
Gross Amortizable Asset - Customer Relationships	Gross Amortizable Asset - Customer Relationships	$	109,752	$	109,752	Gross Amortizable Asset - Customer Relationships	$	109,752	$	109,752
Less: Accumulated Amortization - Customer Relationships	Less: Accumulated Amortization - Customer Relationships	16,381		13,105		Less: Accumulated Amortization - Customer Relationships	18,019		13,105
Total Other Intangible Assets, net	Total Other Intangible Assets, net	$	93,371	$	96,647	Total Other Intangible Assets, net	$	91,733	$	96,647

The customer relationship intangible asset is being amortized on a straight-line basis over approximately 17 years. Amortization expense related to other intangible assets was $1,638 for the three months ended ~~June~~September 30, 2020 and 2019, and ~~$3,276~~$4,914 for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019. The estimated annual amortization expense is expected to approximate $6,552 per year for each of the next five years.

NOTE 7—REVOLVING CREDIT FACILITIES:

CNX ~~Resources Corporation (CNX)~~

In April 2019, CNX amended its senior secured revolving credit facility ("Credit Facility") and extended its maturity to April 2024. The lenders' commitments remained unchanged at $2,100,000, with an accordion feature that allows the Company to increase commitments to $3,000,000. In addition, the ~~Cumulative Credit Basket~~cumulative credit basket for dividends and distributions was replaced with a basket for dividends and distributions subject to a pro forma net leverage ratio of at least 3.00 to 1.00 and availability under the Credit Facility of at least 15% of the aggregate commitments. In April 2020, as part of the semi-annual borrowing base redetermination, both the lenders' commitments and borrowing base decreased to $1,900,000, and the $650,000 letters of credit aggregate sub-limit remained unchanged. The amount of balance sheet cash that CNX may have on hand is also limited to $150,000 when loans under the credit agreement are outstanding, subject to certain exceptions. If the aggregate principal amount of the existing 5.875% Senior Notes due in April 2022 and certain other publicly traded debt securities outstanding 91 days prior to the earliest maturity of such debt (the "Springing Maturity Date") is greater than $500,000, then the Credit Facility will mature on the Springing Maturity Date. In October 2020, as part of the semi-annual borrowing base redetermination, the lenders' reaffirmed CNX's $1,900,000 borrowing base.

Under the terms of the ~~redetermined~~ agreement, borrowings under the revolving credit facility will bear interest at CNX's option at either:

•the base rate, which is the highest of (i) the federal funds open rate plus 0.50%, (ii) PNC Bank, N.A.’s prime rate, or (iii) the one-month LIBOR rate plus 1.0%, in each case, plus a margin ranging from 0.75% to 1.75%; or

•the LIBOR rate, which is the LIBOR rate plus a margin ranging from 1.75% to 2.75%.

The CNX Credit Facility is secured by substantially all of the assets of CNX and certain of its subsidiaries (excluding the ~~Excluded Subsidiaries,~~certain excluded subsidiaries, which includes Cardinal States Gathering LLC, CNX Midstream GP LLC and CNXM, and their respective subsidiaries). Fees and interest rate spreads are based on the percentage of facility utilization, measured quarterly.

Availability under the Credit Facility is limited to a borrowing base, which is determined by the lenders' syndication agent and approved by the required number of lenders in good faith by calculating a value of CNX's proved natural gas reserves.

The CNX Credit Facility contains a number of affirmative and negative covenants including those that, except in certain circumstances, limit the Company and the subsidiary guarantors' ability to create, incur, assume or suffer to exist indebtedness, create or permit to exist liens on properties, dispose of assets, make investments, purchase or redeem CNX common stock, pay dividends, merge with another corporation or amend the senior unsecured notes. The Company must also mortgage 85% of the value of its proved reserves and 85% of the value of its proved developed producing reserves, in each case, which are included in the borrowing base, maintain applicable deposit, securities and commodities accounts with the lenders or affiliates thereof, and enter into control agreements with respect to such applicable accounts.

The CNX Credit Facility contains customary events of default, including, but not limited to, a cross-default to certain other debt, breaches of representations and warranties, change of control events and breaches of covenants.

The CNX Credit Facility also requires that CNX maintain a maximum net leverage ratio of no greater than 4.00 to 1.00, which is calculated as the ratio of debt less cash on hand to consolidated EBITDA, measured quarterly. CNX must also maintain a minimum current ratio of no less than 1.00 to 1.00, which is calculated as the ratio of current assets, plus revolver

availability, to current liabilities, excluding borrowings under the revolver, measured quarterly. The calculation of all of the ratios exclude CNXM. CNX was in compliance with all financial covenants as of ~~June~~September 30, 2020.

At ~~June~~September 30, 2020, the CNX Credit Facility had ~~$550,000~~$410,000 of borrowings outstanding and ~~$204,839~~$185,272 of letters of credit outstanding, leaving ~~$1,145,161~~$1,304,728 of unused capacity. At December 31, 2019, the CNX Credit Facility had $661,000 of borrowings outstanding and $204,726 of letters of credit outstanding, leaving $1,234,274 of unused capacity.

CNX Midstream Partners LP (CNXM)

CNXM’s revolving credit facility was not impacted by the Merger (See Note 13- Acquisitions and Dispositions).

In April 2019, CNXM amended its senior secured revolving credit facility and extended its maturity to April 2024. The lenders’ commitments remained unchanged at $600,000, with an accordion feature that allows CNXM to increase the available borrowings by up to an additional $250,000 under certain terms and conditions. Among other things, the revolving credit facility now includes (i) the addition of a restricted payment basket permitting cash repurchases of Incentive Distribution Rights (IDRs) subject to a pro forma secured leverage ratio of 3.00 to 1.00, a pro forma total leverage ratio of 4.00 to 1.00 and pro forma availability of 20% of commitments and (ii) a restricted payment basket for the repurchase of LP units not to exceed Available Cash (as defined in the partnership agreement) in any quarter, of up to $150,000 per year and up to $200,000 during the life of the facility.

Under the terms of the amended agreement, borrowings under the revolving credit facility will bear interest at CNXM's option at either:

•the LIBOR rate, plus a margin ranging from 1.50% to 2.50%.

Fees and interest rate spreads under the CNXM credit facility are based on the total leverage ratio, measured quarterly. The CNXM credit facility includes the ability to issue letters of credit up to $100,000 in the aggregate.

The CNXM revolving credit facility contains a number of affirmative and negative covenants that include, among others, covenants that, except in certain circumstances, restrict the ability of CNXM, its subsidiary guarantors and certain of its non-guarantor, non-wholly-owned subsidiaries, except in certain circumstances, to: (i) create, incur, assume or suffer to exist indebtedness; (ii) create or permit to exist liens on their properties; (iii) prepay certain indebtedness unless there is no default or event of default under the revolving facility; (iv) make or pay any dividends or distributions in excess of certain amounts; (v) merge with or into another person, liquidate or dissolve; or acquire all or substantially all of the assets of any going concern or going line of business or acquire all or a substantial portion of another person’s assets; (vi) make particular investments and loans; (vii) sell, transfer, convey, assign or dispose of its assets or properties other than in the ordinary course of business and other select instances; (viii) deal with any affiliate except in the ordinary course of business on terms no less favorable to CNXM than it would otherwise receive in an arm’s length transaction; and (ix) amend in any material manner its certificate of incorporation, bylaws, or other organizational documents without giving prior notice to the lenders and, in some cases, obtaining the consent of the lenders.

In addition, CNXM is obligated to maintain at the end of each fiscal quarter (w) for so long as at least $150,000 of the CNXM ~~senior notes~~6.50% Senior Notes due March 2026 (CNXM Senior Notes) are outstanding, a maximum total leverage ratio of no greater than 5.25 to 1.00 (which increases to no greater than 5.50 to 1.00 during qualifying acquisition periods); (x) if less than $150,000 of the CNXM ~~senior notes~~Senior Notes are outstanding, a maximum total leverage ratio of no greater than 4.75 to 1.00 (which increases to no greater than 5.25 to 1.00 during qualifying acquisition periods); (y) a maximum secured leverage ratio of no greater than 3.50 to 1.00 and (z) a minimum interest coverage ratio of no less than 2.50 to 1.00. CNXM was in compliance with all financial covenants as of ~~June~~September 30, 2020.

The CNXM revolving credit facility also contains customary events of default, including, but not limited to, a cross-default to certain other debt, breaches of representations and warranties, change of control events and breaches of covenants. The obligations under the revolving credit facility are secured by substantially all of the assets of CNXM and its wholly-owned subsidiaries. CNX is not a guarantor under the CNXM revolving credit facility.

At ~~June~~September 30, 2020, the CNXM credit facility had ~~$319,000~~$343,000 of borrowings outstanding and $30 of letters of credit outstanding, leaving ~~$280,970~~$256,970 of unused capacity. At December 31, 2019, the CNXM credit facility had $311,750 of borrowings outstanding, leaving $288,250 of unused capacity.

NOTE 8—OTHER ACCRUED LIABILITIES:


	September 30, 2020		December 31, 2019
Royalties	$	53,343	$	74,061
Transportation Charges	19,556		16,533
Accrued Interest	16,896		30,862
Accrued Other Taxes	9,681		9,115
Deferred Revenue	8,934		13,964
Short-Term Incentive Compensation	7,785		21,030
Accrued Payroll & Benefits	6,082		6,248
Other	35,471		37,610
Current Portion of Long-Term Liabilities:
Asset Retirement Obligations	5,076		5,076
Salary Retirement	1,649		1,587
Total Other Accrued Liabilities	$	164,473	$	216,086

1920

NOTE ~~8—OTHER ACCRUED LIABILITIES:~~

June 30,
2020 December 31,
2019
Royalties $ 50,831 $ 74,061
Accrued Interest 25,304 30,862
Transportation Charges 22,353 16,533
Accrued Other Taxes 11,660 9,115
Accrued Payroll & Benefits 6,608 6,248
Short-Term Incentive Compensation 5,178 21,030
Deferred Revenue 3,423 13,964
Other 30,755 37,610
Current Portion of Long-Term Liabilities:
Asset Retirement Obligations 5,076 5,076
Salary Retirement 1,629 1,587
Total Other Accrued Liabilities $ 162,817 $ 216,086

~~NOTE~~ 9—LONG-TERM DEBT:

June 30,
2020 December 31,
2019
CNX Revolving Credit Facility $ 550,000 $ 661,000
Senior Notes due March 2027 at 7.25%, Issued at Par Value 500,000 500,000
Senior Notes due April 2022 at 5.875% (Principal of $413,348 and $894,307
plus Unamortized Premium of $363 and $1,001, respectively) 413,711 895,308
CNX Midstream Partners LP Senior Notes due March 2026 at 6.50% (Principal of $400,000 less Unamortized Discount of $4,250 and $4,625, respectively)* 395,750 395,375
CNX Midstream Partners LP Revolving Credit Facility* 319,000 311,750
Convertible Senior Notes due May 2026 at 2.25% (Principal of $345,000 less Unamortized Discount and Issuance Costs of $115,420) 229,580 —
Cardinal States Gathering Company Credit Facility maturing in March 2028 (Principal of $122,517 less Unamortized Discount of $1,204) 121,313 —
CSG Holdings II LLC Credit Facility maturing in December 2026 (Principal of $48,815 less Unamortized Discount of $478) 48,337 —
Less: Unamortized Debt Issuance Costs 14,493 8,990
2,563,198 2,754,443
Less: Amounts Due in One Year 22,430 —
Long-Term Debt $ 2,540,768 $ 2,754,443


	September 30, 2020		December 31, 2019
Senior Notes due March 2027 at 7.25% (Principal of $700,000 and $500,000 plus Unamortized Premium of $6,955 at September 30, 2020)	$	706,955	$	500,000
CNX Revolving Credit Facility	410,000		661,000
CNX Midstream Partners LP Senior Notes due March 2026 at 6.50% (Principal of $400,000 less Unamortized Discount of $4,062 and $4,625, respectively)*	395,938		395,375
Senior Notes due April 2022 at 5.875% (Principal of $363,348 and $894,307 plus Unamortized Premium of $276 and $1,001, respectively)	363,624		895,308
CNX Midstream Partners LP Revolving Credit Facility*	343,000		311,750
Convertible Senior Notes due May 2026 at 2.25% (Principal of $345,000 less Unamortized Discount and Issuance Costs of $111,621)	233,379		0
Cardinal States Gathering Company Credit Facility maturing in March 2028 (Principal of $118,776 less Unamortized Discount of $1,165)	117,611		0
CSG Holdings II LLC Credit Facility maturing in December 2026 (Principal of $47,355 less Unamortized Discount of $460)	46,895		0
Less: Unamortized Debt Issuance Costs	16,940		8,990
	2,600,462		2,754,443
Less: Amounts Due in One Year	22,488		0
Long-Term Debt	$	2,577,974	$	2,754,443

*CNX is not a guarantor of CNXM's 6.50% senior notes due in March 2026 or CNXM's senior secured revolving credit facility.

CNXM’s revolving credit facility and the CNXM Senior Notes were not impacted by the Merger (See Note 13 - Acquisitions and Dispositions).

During the three and nine months ended September 30, 2020, CNX completed a private offering of $200,000 of 7.25% senior notes due in March 2027 plus $7,000 of unamortized bond premium. The notes are guaranteed by most of CNX's subsidiaries but do not include CNXM's general partner or CNXM.

During the three and nine months ended September 30, 2020, CNX purchased and retired $50,000 and $530,959, respectively, of its outstanding 5.875% senior notes due in April 2022. As part of these transactions, a loss of $108 and a gain of $10,812 were included in Loss (Gain) on Debt Extinguishment in the Consolidated Statements of Income during the three and nine months ended September 30, 2020, respectively. During the nine months ended September 30, 2019, CNX purchased and retired $400,000 of its outstanding 5.875% senior notes due in April 2022. As part of this transaction, a loss of $7,614 was included in Loss (Gain) on Debt Extinguishment in the Consolidated Statements of Income.

In April 2020, CNX issued $345,000 in aggregate principal amount of 2.25% convertible senior notes due May 2026 (the "Convertible Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, including $45,000 aggregate principal amount of Convertible Notes issued pursuant to the exercise in full of the initial purchasers’ option to purchase additional Convertible Notes. The Convertible Notes were issued pursuant to an indenture and are senior, unsecured obligations of the Company. The Convertible Notes bear interest at a fixed rate of 2.25% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2020. Proceeds from the issuance of the Convertible Notes totaled $334,650, net of initial purchaser discounts and issuance costs.

The initial conversion rate is 77.8816 shares of CNX's common stock per $1,000 principal amount of Convertible Notes, which represents an initial conversion price of approximately $12.84 per share, subject to adjustment upon the occurrence of specified events. The Convertible Notes will mature on May 1, 2026, unless earlier repurchased, redeemed or converted. Before February 1, 2026, note holders will have the right to convert their Convertible Notes only upon the occurrence of the following events:

•during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on June 30, 2020, if the Last Reported Sale Price per share of Common Stock exceeds one hundred and thirty percent (130%) of the Conversion Price for each of at least twenty (20) Trading Days (whether or not consecutive) during the

thirty (30) consecutive Trading Days ending on, and including, the last Trading Day of the immediately preceding calendar quarter.

•during the five (5) consecutive Business Days immediately after any ten (10) consecutive trading day period (such ten (10) consecutive Trading Day period, the “Measurement Period”) if the trading Price per $1,000 principal amount of

Notes, as determined following a request by a Holder in accordance with the procedures set forth below, for each trading day of the Measurement Period was less than ninety eight percent (98%) of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on such trading day.

•if we call any or all of the Convertible Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

•upon the occurrence of certain specified corporate events as set forth in the indenture governing the Convertible Notes.

From and after February 1, 2026, note holders may convert their Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

Upon conversion, the Company may satisfy its conversion obligation by paying and/or delivering, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the indenture governing the Convertible Notes. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the indenture governing the Convertible Notes. In addition, following certain corporate events, as described in the indenture governing the Convertible Notes, that occur prior to the maturity date, the Company will increase the conversion rate, in certain circumstances, for a holder who elects to convert its Convertible Notes in connection with such a corporate event.

The Company will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election. The Company’s current intent is to settle the ~~principle~~principal amount of the Convertible Notes in cash upon conversion.

If certain corporate events that constitute a “Fundamental Change” (as defined in the indenture governing the Convertible Notes) occur, then noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock. During the three and ~~six~~nine months ended ~~June~~September 30, 2020, the conditions allowing holders of the Convertible Notes to exercise their conversion right were not met and as of ~~June~~September 30, 2020, the notes were not convertible. The Convertible Notes are therefore ~~are~~ classified as long-term debt at ~~June~~September 30, 2020.

In accounting for the transaction, the Convertible Notes were separated into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated conversion feature. The fair value was based on market data available for publicly traded, senior, unsecured corporate bonds with similar ~~maturity. Assumptions used in the estimate~~maturity, which represent ~~what market participants would use in pricing the equity component, including market interest rates, credit standing, and yield curves, all of which are defined as~~ Level 2 observable inputs. The carrying amount of the equity component, representing the ~~Conversion Option~~conversion option, was determined by deducting the fair value of the liability component from the ~~proceeds received upon issuance~~principal value of the Convertible ~~Notes. The equity component~~Notes and was recorded in Capital in Excess of Par Value in the Consolidated Statement of Stockholders Equity and is not remeasured as long as it continues to meet the conditions for equity classification. The equity component is not remeasured as long as it continues to meet the condition for equity classification. The excess of the principal amount of the Convertible Notes over the liability component and the debt issuance costs are amortized to interest expense over the contractual term of the Convertible Notes using the effective interest method.

In accounting for the debt issuance costs of $10,350 related to the Convertible Notes, the Company allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds of the Convertible Notes. Issuance costs attributable to the liability component were $7,024 and will be amortized to interest expense using the effective interest method over the contractual term of the Convertible Notes. Issuance costs attributable to the equity component were $3,326 and were netted with the equity component in Capital in Excess of Par Value in the Consolidated Statement of Stockholders Equity and are not subject to amortization.

As of ~~June~~September 30, 2020, the if-converted value of the Convertible Notes did not exceed the outstanding principal amount.

2122

The net carrying amount of the liability and equity components of the Convertible Notes was as follows:


	~~June~~September 30, 2020
Liability Component:
Principal	$	345,000
Unamortized Discount	~~(108,558)~~(105,004)
Unamortized Issuance Costs	~~(6,862)~~(6,617)
Net Carrying Amount	~~229,580~~ $	233,379

Equity Component, net of Purchase Discounts and Issuance Costs	$	~~78,307~~78,317

Interest expense related to the Convertible Notes is as follows:


	~~For the Three and Six Months Ended June 30, 2020~~
~~Contractual Interest Expense~~	$	~~1,294~~
~~Amortization of Debt Discount~~	~~2,325~~
~~Amortization of Issuance Costs~~	~~161~~
~~Total Interest Expense~~	$	~~3,780~~


	For the Three Months Ended		For the Nine Months Ended
	September 30, 2020		September 30, 2020
Contractual Interest Expense	$	1,941	$	3,234
Amortization of Debt Discount	3,554		5,879
Amortization of Issuance Costs	245		407
Total Interest Expense	$	5,740	$	9,520

In connection with the offering of the Convertible Notes, the Company entered into privately negotiated capped call transactions with certain counterparties, (the “Capped Calls”). The Capped Calls each have an initial strike price of $12.84 per share, subject to certain adjustments, which correspond to the initial conversion price of the Convertible Notes. The Capped Calls have an initial cap price of $18.19 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, the aggregate number of shares of the Company’s common stock that initially underlie the Convertible Notes, and are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Call Transactions. The conditions that cause adjustments to the initial strike price of the Capped Calls mirror the conditions that result in corresponding adjustments for the Convertible Notes. For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the Convertible Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $35,673 incurred in connection with the Capped Calls was recorded as a reduction to Capital in Excess of Par Value. The impact of the Capped Calls related to stockholders’ equity has been included in Capital in Excess of Par Value in the Consolidated Statement of Stockholders Equity and includes taxes in the amount of $9,322, for a net impact of $26,351.

During the three and six months ended June 30, 2020, CNX purchased and retired $409,625 and $480,959, respectively, of its outstanding 5.875% senior notes due in April 2022. As part of these transactions, a loss of $344 and a gain of $10,919 were included in Loss (Gain) on Debt Extinguishment in the Consolidated Statements of Income during the three and six months ended June 30, 2020, respectively. During the six months ended June 30, 2019, CNX purchased and retired $400,000 of its outstanding 5.875% senior notes due in April 2022. As part of this transaction, a loss of $7,614 was included in Loss (Gain) on Debt Extinguishment in the Consolidated Statements of Income, which includes an adjustment to the final settlement amount of $77 that was included in Loss (Gain) on Debt Extinguishment in the Consolidated Statements of Income during the three months ended June 30, 2019.

During the ~~six~~nine months ended ~~June~~September 30, 2020, CNX's wholly-owned subsidiary Cardinal States Gathering Company LLC ("Cardinal States") entered into a $125,000 non-revolving credit facility agreement (the "Cardinal States Facility"). The Cardinal States Facility matures in 2028, has an interest rate of 3-month LIBOR + 475 basis points and includes an excess cash flow sweep in an amount required to achieve a quarterly targeted debt balance. The facility is secured by substantially all of the Cardinal States assets, requires a minimum level of hedging of the variable interest rate exposure and is non-recourse to CNX.

Additionally, during the ~~six~~nine months ended ~~June~~September 30, 2020, CNX's wholly-owned subsidiary CSG Holdings II LLC (CSG Holdings) entered into a $50,000 non-revolving credit facility agreement (the "CSG Holdings Facility"). The CSG Holdings Facility matures in 2026, has interest rate of 3-month LIBOR + 675 basis points and includes a full excess cash sweep. The facility is secured by substantially all of the CSG Holding assets, requires a minimum level of hedging of the variable interest rate exposure and is non-recourse to CNX.

During the ~~six~~nine months ended ~~June~~September 30, 2019, CNX completed a private offering of $500,000 of 7.25% senior notes due in March 2027. The notes are guaranteed by most of CNX's subsidiaries but do not include CNXM's general partner or CNXM.

NOTE 10—COMMITMENTS AND CONTINGENT LIABILITIES:

CNX and its subsidiaries are subject to various lawsuits and claims with respect to such matters as personal injury, royalty accounting, damage to property, climate change, governmental regulations including environmental violations and remediation, employment and contract disputes and other claims and actions arising out of the normal course of business. CNX accrues the estimated loss for these lawsuits and claims when the loss is probable and can be estimated. The Company's current estimated accruals related to these pending claims, individually and in the aggregate, are immaterial to the financial position, results of operations or cash flows of CNX. It is possible that the aggregate loss in the future with respect to these lawsuits and claims could ultimately be material to the financial position, results of operations or cash flows of CNX; however, such amounts cannot be reasonably estimated.

The 1992 Coal Industry Retiree Health Benefit Act (“Coal Act”), in Section 9711, requires coal companies that were providing health benefits to United Mine Workers of America (“UMWA”) retirees as of February 1993 to continue providing health benefits to such individuals, in substantially the same coverages, for as long as the last signatory operator remains in business. Section 9711 also requires any “related person” to be joint and severally liable for the provision of these health benefits. On May 1, 2020, the court in the Murray Energy Corporation (“Murray”) bankruptcy proceedings approved a settlement agreement between Murray and the UMWA that transferred to the UMWA 1992 Benefit Plan the Coal Act liabilities for retirees in Murray’s Section 9711 plan. The retirees transferred by Murray to the 1992 Benefit Plan include approximately 2,159 retirees allegedly traced to the December 2013 sale by CONSOL Energy Inc. to Murray Energy of the following possible last signatory operators: Consolidation Coal Company, McElroy Coal Company, Southern Ohio Coal Company, Central Ohio Coal Company, Keystone Coal Mining Corp., and Eight-Four Coal Mining Company (the “Sold Subsidiaries”). On May 2, 2020, the Trustees of the UMWA 1992 Benefit Plan sued CNX ~~Resources Corporation~~ and CONSOL Energy Inc. (“CONSOL”) in federal court contending that the Sold Subsidiaries were last signatory operators and that CNX and ~~CEIX~~CONSOL are related persons to the Sold Subsidiaries and, as such, CNX and CONSOL are jointly and severally liable for the Coal Act health benefits allegedly owed to the eligible retirees traced to the Sold Subsidiaries. The 1992 Plan seeks, among other relief, a declaration that ~~the~~ CNX and CONSOL are obligated to enroll the eligible retirees attributed to the Sold Subsidiaries in a Section 9711 Plan; that CNX and CONSOL are liable to post the security required by Section 9712; and, that CNX and CONSOL are liable to pay per beneficiary premiums until the eligible retirees are enrolled in a Section 9711 plan, and other fees, costs and disbursements under the Coal Act. We disagree with the suit filed by the UMWA 1992 Plan, have filed a Motion to Dismiss and intend to defend this action. Further, under the Separation and Distribution Agreement that was entered into at the time we ~~spun~~spun-out our coal business in 2017, CONSOL agreed to indemnify CNX for all coal-related liabilities, including this lawsuit. With respect to this matter although a loss is possible, it is not probable, and accordingly no accrual has been recognized.

At ~~June~~September 30, 2020, CNX has provided the following financial guarantees, unconditional purchase obligations, and letters of credit to certain third-parties as described by major category in the following tables. These amounts represent the maximum potential of total future payments that the Company could be required to make under these instruments. These amounts have not been reduced for potential recoveries under recourse or collateralization provisions. Generally, recoveries under reclamation bonds would be limited to the extent of the work performed at the time of the default. No amounts related to these unconditional purchase obligations and letters of credit are recorded as liabilities in the financial statements. CNX management believes that the commitments in the following table will expire without being funded, and therefore will not have a material adverse effect on financial condition.


	Amount of Commitment Expiration Per Period
	Total Amounts Committed		Less Than 1 Year		1-3 Years		3-5 Years		Beyond 5 Years
Letters of Credit:
Firm Transportation	$	178,352	$	178,352	$	0	$	0	$	0

Other	6,950		6,950		0		0		0
Total Letters of Credit	185,302		185,302		0		0		0
Surety Bonds:
Employee-Related	2,600		1,500		1,100		0		0
Environmental	12,312		10,717		1,595		0		0
Financial Guarantees	81,670		26,400		55,270		0		0
Other	9,285		8,594		691		0		0
Total Surety Bonds	105,867		47,211		58,656		0		0
Total Commitments	$	291,169	$	232,513	$	58,656	$	0	$	0

2324

Amount of Commitment Expiration Per Period
Total
Amounts
Committed Less Than
1 Year 1-3 Years 3-5 Years Beyond
5 Years
Letters of Credit:
Firm Transportation $ 197,919 $ 167,897 $ 30,022 $ — $ —
Other 6,950 6,950 — — —
Total Letters of Credit 204,869 174,847 30,022 — —
Surety Bonds:
Employee-Related 2,600 2,600 — — —
Environmental 12,262 12,203 59 — —
Financial Guarantees 81,670 81,670 — — —
Other 9,275 7,766 1,509 — —
Total Surety Bonds 105,807 104,239 1,568 — —
Total Commitments $ 310,676 $ 279,086 $ 31,590 $ — $ —

Excluded from the above table are commitments and guarantees entered into in conjunction with the spin-off of the Company's coal business in November 2017. Although CONSOL ~~Energy~~ has agreed to indemnify CNX to the extent that CNX would be called upon to pay any of these liabilities, there is no assurance that CONSOL ~~Energy~~ will satisfy its obligations to indemnify CNX in the event that CNX is so called ~~upon.~~upon (See ~~Part II, Item 1A –~~“Item 1A. Risk ~~Factors~~Factors” in CNX's 2019 Annual Report on Form 10-K as filed with the SEC on February 10, 2020 ("2019 Form 10-K") and in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 for additional information).

CNX enters into long-term unconditional purchase obligations to procure major equipment purchases, natural gas firm transportation, gas drilling services and other operating goods and services. These purchase obligations are not recorded in the Consolidated Balance Sheets. As of ~~June~~September 30, 2020, the purchase obligations for each of the next five years and beyond are as follows:


Obligations Due	Amount
Less than 1 year	$	~~243,817~~242,786
1 - 3 years	~~441,947~~429,062
3 - 5 years	~~373,821~~369,444
More than 5 years	~~976,664~~930,189
Total Purchase Obligations	$	~~2,036,249~~1,971,481

NOTE 11—DERIVATIVE INSTRUMENTS:

CNX enters into interest rate swap agreements to manage its exposure to interest rate volatility. These swaps change the variable-rate cash flow exposure on the debt obligations to fixed cash flows. The change in fair value of the interest rate swap agreements are accounted for on a mark-to-market basis with the changes in fair value recorded in current period earnings.

In March 2020, CNX entered into interest rate ~~swap~~swaps related to $175,000 of borrowings under the Cardinal States Facility and CSG Holdings Facility (See Note 9 - Long-Term Debt). In order to manage exposure to interest rate volatility, each respective entity entered into an interest rate swap for the full outstanding principal amounts inclusive of a put option at 25 basis points. The underlying notional for each swap and put option reduces over time based upon an expected amortization profile for each respective credit facility. In addition, CSG Holdings entered into a call option commencing March 31, 2023.

In June 2019, CNX entered into an interest rate swap agreement related to $160,000 of borrowings under CNX’s Credit Facility (See Note 7 - Revolving Credit Facilities) which has the economic effect of modifying the variable-interest obligation into a fixed-interest obligation over a three-year period. In March 2020, this swap was blended and extended via a new interest rate swap, effective April 3, 2020, into a new four-year interest rate swap inclusive of a put option at 0 basis points. Also executed in March 2020 was a new four-year $250,000 interest rate swap inclusive of a put option at 0 basis points, effective April 3, 2020. Consistent with the previous interest rate swap agreement, the $250,000 interest rate swap was entered into to manage CNX's exposure to interest rate volatility.

CNX enters into financial derivative instruments (over-the-counter swaps) to manage its exposure to commodity price volatility. Typically, CNX “sells” swaps under which it receives a fixed price from counterparties and pays a floating market

price. During the second quarter of 2020, CNX purchased, rather than sold, financial swaps for the period May through November of 2020 under which CNX will pay a fixed price to and receive a floating price from its hedge counterparties. Swaps purchased have the effect of reducing total hedged volumes for the period of the swap. Natural gas commodity hedges are accounted for on a mark-to-market basis with changes in fair value recorded in current period earnings.

CNX is exposed to credit risk in the event of non-performance by counterparties. The creditworthiness of counterparties is subject to continuing review. The Company has not experienced any issues of non-performance by derivative counterparties.

None of the Company's counterparty master agreements currently require CNX to post collateral for any of its positions. However, as stated in the counterparty master agreements, if CNX's obligations with one of its counterparties cease to be secured on the same basis as similar obligations with the other lenders under the credit facility, CNX would have to post collateral for instruments in a liability position in excess of defined thresholds. All of the Company's derivative instruments are subject to master netting arrangements with our counterparties. CNX recognizes all financial derivative instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets on a gross basis.

Each of the Company's counterparty master agreements allows, in the event of default, the ability to elect early termination of outstanding contracts. If early termination is elected, CNX and the applicable counterparty would net settle all open hedge positions.

The total notional amounts of CNX's derivative instruments were as follows:


		June 30,			December 31,		Forecasted to		September 30,			December 31,		Forecasted to
		2020			2019		Settle Through		2020			2019		Settle Through
Natural Gas Commodity Swaps (Bcf)	Natural Gas Commodity Swaps (Bcf)	1,248.5		*	1,460.6		2025	Natural Gas Commodity Swaps (Bcf)	1,280.9		*	1,460.6		2025
Natural Gas Basis Swaps (Bcf)	Natural Gas Basis Swaps (Bcf)	1,179.4		*	1,290.4		2025	Natural Gas Basis Swaps (Bcf)	1,311.8		*	1,290.4		2025
Interest Rate Swaps	Interest Rate Swaps	$	581,218		$	160,000	2028	Interest Rate Swaps	$	575,625		$	160,000	2028

*Net of purchased natural gas commodity swaps and natural gas basis swaps of ~~21.9~~5.7 Bcf and ~~12.7~~3.8 Bcf, respectively.

The gross fair value of CNX's derivative instruments was as follows:

June 30, December 31,
2020 2019
Current Assets:
  Commodity Derivative Instruments:
     Commodity Swaps $ 187,567 $ 234,238
     Basis Only Swaps 10,032 13,556
  Interest Rate Swaps 205 —
Total Current Assets $ 197,804 $ 247,794
Other Non-Current Assets:
  Commodity Derivative Instruments:
     Commodity Swaps $ 197,584 $ 288,543
     Basis Only Swaps 13,851 25,553
  Interest Rate Swaps 1,222 —
Total Other Non-Current Assets $ 212,657 $ 314,096
Current Liabilities:
  Commodity Derivative Instruments:
     Commodity Swaps $ 24,675 $ 345
     Basis Only Swaps 54,711 40,626
  Interest Rate Swaps 4,141 495
Total Current Liabilities $ 83,527 $ 41,466
Non-current Liabilities:
  Commodity Derivative Instruments:
     Commodity Swaps $ 29,305 $ 9,693
     Basis Only Swaps 136,140 105,445
  Interest Rate Swaps 12,742 724
Total Non-current Liabilities $ 178,187 $ 115,862


	September 30,		December 31,
	2020		2019
Current Assets:
Commodity Derivative Instruments:
Commodity Swaps	$	39,263	$	234,238
Basis Only Swaps	38,201		13,556
Interest Rate Swaps	144		0
Total Current Assets	$	77,608	$	247,794

Other Non-Current Assets:
Commodity Derivative Instruments:
Commodity Swaps	$	118,210	$	288,543
Basis Only Swaps	41,060		25,553
Interest Rate Swaps	828		0
Total Other Non-Current Assets	$	160,098	$	314,096

Current Liabilities:
Commodity Derivative Instruments:
Commodity Swaps	$	103,297	$	345
Basis Only Swaps	36,878		40,626
Interest Rate Swaps	4,370		495
Total Current Liabilities	$	144,545	$	41,466

Non-Current Liabilities:
Commodity Derivative Instruments:
Commodity Swaps	$	92,125	$	9,693
Basis Only Swaps	99,373		105,445
Interest Rate Swaps	12,211		724
Total Non-Current Liabilities	$	203,709	$	115,862

The effect of commodity derivative instruments on the Company's Consolidated Statements of Income was as follows:


		For the Three Months Ended						For the Six Months Ended							For the Three Months Ended				For the Nine Months Ended
		June 30,						June 30,							September 30,				September 30,
		2020		2019		2020		2019			2020		2019		2020		2019
Cash Received (Paid) in Settlement of Commodity Derivative Instruments:	Cash Received (Paid) in Settlement of Commodity Derivative Instruments:									Cash Received (Paid) in Settlement of Commodity Derivative Instruments:
Natural Gas:	Natural Gas:									Natural Gas:
Commodity Swaps	Commodity Swaps	$	153,149	$	18,567	$	310,728	$	(8,383)	Commodity Swaps	$	72,062	$	61,441	$	382,891	$	53,058

Basis Swaps	Basis Swaps	(10,893)		(7,895)		(17,311)		(22,327)		Basis Swaps	18,248		(4,400)		836		(26,727)
Total Cash Received (Paid) in Settlement of Commodity Derivative Instruments		142,256		10,672		293,417		(30,710)
Total Cash Received in Settlement of Commodity Derivative Instruments										Total Cash Received in Settlement of Commodity Derivative Instruments	90,310		57,041		383,727		26,331

Unrealized (Loss) Gain on Commodity Derivative Instruments:	Unrealized (Loss) Gain on Commodity Derivative Instruments:									Unrealized (Loss) Gain on Commodity Derivative Instruments:
Natural Gas:	Natural Gas:									Natural Gas:
Commodity Swaps	Commodity Swaps	(182,119)		226,845		(181,573)		176,084		Commodity Swaps	(369,121)		126,617		(550,694)		302,701

Basis Swaps	Basis Swaps	(23,440)		(15,936)		(60,005)		(119,169)		Basis Swaps	109,977		30,255		49,972		(88,914)
Total Unrealized (Loss) Gain on Commodity Derivative Instruments	Total Unrealized (Loss) Gain on Commodity Derivative Instruments	(205,559)		210,909		(241,578)		56,915		Total Unrealized (Loss) Gain on Commodity Derivative Instruments	(259,144)		156,872		(500,722)		213,787

(Loss) Gain on Commodity Derivative Instruments:	(Loss) Gain on Commodity Derivative Instruments:									(Loss) Gain on Commodity Derivative Instruments:
Natural Gas:	Natural Gas:									Natural Gas:
Commodity Swaps	Commodity Swaps	(28,970)		245,412		129,155		167,701		Commodity Swaps	(297,059)		188,058		(167,803)		355,759

Basis Swaps	Basis Swaps	(34,333)		(23,831)		(77,316)		(141,496)		Basis Swaps	128,225		25,855		50,808		(115,641)
Total (Loss) Gain on Commodity Derivative Instruments	Total (Loss) Gain on Commodity Derivative Instruments	$	(63,303)	$	221,581	$	51,839	$	26,205	Total (Loss) Gain on Commodity Derivative Instruments	$	(168,834)	$	213,913	$	(116,995)	$	240,118

~~During the three and six months ended June 30, 2020, cash of $536 and $592, respectively, was paid in settlement~~The effect of interest rate ~~swaps. An unrealized loss of $3,598 and $14,237 was recognized during the three and six months ended June 30, 2020, respectively, resulting in a total loss~~swaps on ~~interest rate swaps of $4,134 and $14,829, respectively, which is included in~~ Interest Expense in the Company's Consolidated Statements of ~~Income.~~Income was as follows:


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Cash (Paid) Received in Settlement of Interest Rate Swaps	$	(1,257)	$	195	$	(1,850)	$	195
Unrealized Loss on Interest Rate Swaps	(152)		(713)		(14,389)		(1,774)
Loss on Interest Rate Swaps	$	(1,409)	$	(518)	$	(16,239)	$	(1,579)

Cash (Paid) Received in Settlement of Commodity Derivative Instruments for the ~~three and six~~nine months ended ~~June~~September 30, 2020 includes $29,015 related to the monetization and termination of approximately 39 million MMBtus of NYMEX natural gas hedges and a similar quantity of financial basis hedges that were to settle at various times from May through November of 2020. Net proceeds received from the monetization are classified as operating cash flows in the Consolidated Statements of Cash Flows.

~~Cash Received in Settlement of Commodity Derivative Instruments for the six months ended June 30, 2020, in addition to the amount discussed above, also~~ includes $54,982 related to the monetization of certain NYMEX commodity swaps. The monetization resulted from reducing the contract swap prices of certain 2022, 2023 and 2024 NYMEX natural gas swap contracts. The notional quantities of the contracts were not changed by this monetization. In addition, Cash (Paid) Received in Settlement of Commodity Derivative Instruments for the ~~monetization.~~nine months ended September 30, 2020 includes $5,851 related to the monetization and termination of approximately 8 million MMBtus of NYMEX natural gas hedges and a similar quantity of financial basis hedges that were to settle at various times from October through November of 2020. Net proceeds received from the ~~monetization~~monetizations are classified as operating cash flows in the Consolidated Statements of Cash Flows.

The Company also enters into fixed price natural gas sales agreements that are satisfied by physical delivery. These physical commodity contracts qualify for the normal purchases and normal sales exception and are not subject to derivative instrument accounting.

NOTE 12—FAIR VALUE OF FINANCIAL INSTRUMENTS:

CNX determines the fair value of assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. The fair value hierarchy is based on whether the inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources (including NYMEX forward curves, LIBOR-based discount rates and basis forward curves), while unobservable inputs reflect the Company's own assumptions of what market participants would use.

The fair value hierarchy includes three levels of inputs that may be used to measure fair value as described below:

Level 1 - Quoted prices for identical instruments in active markets.

Level 2 - The fair value of the assets and liabilities included in Level 2 are based on standard industry income approach models that use significant observable inputs, including NYMEX forward curves, LIBOR-based discount rates and basis forward curves.

Level 3 - Unobservable inputs significant to the fair value measurement supported by little or no market activity.

In those cases when the inputs used to measure fair value meet the definition of more than one level of the fair value hierarchy, the lowest level input that is significant to the fair value measurement in its totality determines the applicable level in the fair value hierarchy.

The financial instrument measured at fair value on a recurring basis is summarized below:


		Fair Value Measurements at June 30, 2020										Fair Value Measurements at December 31, 2019											Fair Value Measurements at September 30, 2020				Fair Value Measurements at December 31, 2019
Description	Description	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Description	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Gas Derivatives	Gas Derivatives	$	—	$	164,203	$	—	$	—	$	405,781	$	—	Gas Derivatives	$	0	$	(94,939)	$	0	$	0	$	405,781	$	0
Interest Rate Swaps	Interest Rate Swaps	$	—	$	(15,456)	$	—	$	—	$	(1,219)	$	—	Interest Rate Swaps	$	0	$	(15,609)	$	0	$	0	$	(1,219)	$	0

The carrying amounts and fair values of financial instruments for which the fair value option was not elected are as follows:


		June 30, 2020						December 31, 2019							September 30, 2020				December 31, 2019
		Carrying Amount		Fair Value		Carrying Amount		Fair Value			Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and Cash Equivalents	Cash and Cash Equivalents	$	19,607	$	19,607	$	16,283	$	16,283	Cash and Cash Equivalents	$	150,132	$	150,132	$	16,283	$	16,283

Long-Term Debt (Excluding Debt Issuance Costs)	Long-Term Debt (Excluding Debt Issuance Costs)	$	2,577,691	$	2,555,917	$	2,763,433	$	2,619,676	Long-Term Debt (Excluding Debt Issuance Costs)	$	2,617,402	$	2,723,756	$	2,763,433	$	2,619,676

Cash and cash equivalents represent highly-liquid instruments and constitute Level 1 fair value measurements. Certain of the Company’s debt is actively traded on a public market and, as a result, constitute Level 1 fair value measurements. The portion of the Company’s debt obligations that is not actively traded is valued through reference to the applicable underlying benchmark rate and, as a result, constitute Level 2 fair value measurements.

NOTE 13—~~VARIABLE INTEREST ENTITIES:~~

The Company determined CNXM to be a variable interest entity. The Company has the power through its ownership and control of CNXM's general partner (CNX Midstream GP LLC) to direct the activities that most significantly impact CNXM's economic performance. In addition, through its limited partner interest in CNXM, the Company has the obligation to absorb the losses of CNXM and the right to receive benefits in accordance with such interests. As the Company has a controlling financial interest and is the primary beneficiary of CNXM, the Company consolidates CNXM.

The risks associated with the operations of CNXM are discussed in its Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 10, 2020 and its other periodic reports filed thereafter.ACQUISITIONS AND DISPOSITIONS:

On July 26, 2020, CNX entered into an Agreement and Plan of Merger (the “Merger Agreement”) with CNXM, CNX Midstream GP LLC (the “General Partner”) and CNX Resources Holding LLC., a wholly owned subsidiary of CNX (“Merger Sub”), pursuant to which Merger Sub merged with and into CNXM with CNXM surviving as an indirect wholly owned subsidiary of CNX (the “Merger”). ~~See Note 17 - Subsequent Event~~On September 28, 2020, the Merger was completed and CNX issued 37,054,223 shares of common stock to acquire the 42,107,071 common units of CNXM not owned by CNX prior to the Merger at a fixed exchange ratio of 0.88 shares of CNX common stock for ~~more information.~~

On January 29, 2020, CNX and CNXM executed definitive agreements to eliminate CNXM's incentive distribution rights, or IDRs, held by its general partner and to convert the 2.0% general partner interest in CNXM into a non-economic general partnership interest (collectively, the "IDR Elimination Transaction").

~~CNX received the following consideration under the IDR Elimination Transaction in exchange for the cancellation of the IDRs and conversion of the 2.0% general partner interest:~~

•~~26 million~~each CNXM common ~~units;~~

•~~3 million new CNXM Class B units, which will not receive or accrue distributions until January 1, 2022 at which time they will automatically convert into CNXM common units on a one-for-one basis; and~~

•~~$135,000 to be paid in three installments as follows: $50,000 due December 31, 2020, $50,000 due December 31, 2021 and $35,000 due December 31, 2022.~~

unit, for total implied consideration of $384,623. As a result of the ~~IDR Elimination Transaction, CNX owns 47.7 million CNXM~~Merger, CNXM’s common units ~~or approximately 53%,~~are no longer publicly traded.

Except for the Class B units of CNXM, which were automatically canceled immediately prior to the effective time of the Merger for no consideration in accordance with CNXM’s partnership agreement, the interests in CNXM owned by CNX and its subsidiaries remain outstanding as limited partner interests in ~~CNXM, excluding~~ the ~~CNXM Class B units. Prior~~surviving entity. The General Partner will continue to own the ~~IDR Elimination Transaction, the Company owned approximately 34% of the outstanding limited partner interest and 100% of the~~non-economic general partner interest. Upon conversion of the CNXM Class B units to CNXM common units on January 1, 2022, CNX's ownership will increase to 50.7 million CNXM common units, or approximately 54.6% of the outstanding limited partner interest in the surviving entity.

As CNX controlled CNXM onprior to the Merger and continues to control CNXM after the Merger, CNX accounted for the change in our ownership interest in CNXM as an equity transaction which was reflected as a ~~proforma basis.~~reduction of noncontrolling interest with corresponding increases to common stock and capital in excess of par value. No gain or loss was recognized in our condensed consolidated statements of operations as a result of the Merger.

The ~~following table presents amounts included~~tax effects of the Merger were reported as adjustments to deferred income taxes and capital in ~~the Company's Consolidated Balance Sheets that were for the use or obligation~~excess of ~~CNXM:~~

June 30, December 31,
2020 2019
Assets:
     Cash $ 989 $ 31
     Receivables - Related Party 16,583 21,076
     Receivables - Third Party 8,615 7,935
     Other Current Assets 1,672 1,976
     Property, Plant and Equipment, net 1,206,739 1,195,591
     Operating Lease ROU Asset 1,594 4,731
     Other Assets 2,698 3,262
Total Assets $ 1,238,890 $ 1,234,602
Liabilities:
     Accounts Payable and Accrued Liabilities $ 31,931 $ 67,290
     Accounts Payable - Related Party 52,191 4,787
     Revolving Credit Facility 319,000 311,750
     Long-Term Debt 394,635 394,162
     Long-Term Liabilities - Related Party 85,000 —
Total Liabilities $ 882,757 $ 777,989
par value.

Prior to the effective time of the Merger on September 28, 2020, public unitholders held a 46.9% equity interest in CNXM and CNX owned the remaining 53.1% equity interest. The earnings of CNXM that were attributed to its common units held by the public prior to the Merger are reflected in Net Income Attributable to Noncontrolling Interest in the Consolidated Statements of Income. There were no changes in our ownership interest in CNXM during the three and nine months ended September 30, 2019.

CNXM’s revolving credit facility (See Note 7 - Revolving Credit Facility) and the CNXM Senior Notes (See Note 9 - Long-Term Debt) were not impacted by the Merger.

~~The following table summarizes CNXM's~~We incurred $4,717 and $4,737 of transaction costs directly attributable to the Merger during the three and nine months ended September 30, 2020, respectively, including financial advisory, legal service and other professional fees, which were recorded to Other Expense in the Consolidated Statements of ~~Operations and Cash Flows, inclusive of affiliate amounts:~~

For the Three Months Ended June 30, For the Six Months Ended June 30,
2020 2019 2020 2019
Revenue
Gathering Revenue - Related Party $ 54,203 $ 59,205 $ 116,381 $ 112,981
Gathering Revenue - Third Party 11,749 18,896 29,702 37,339
Miscellaneous Income 86 — 151 —
Total Revenue 66,038 78,101 146,234 150,320
Expenses
Operating Expense - Related Party 4,367 6,514 8,195 12,062
Operating Expense - Third Party 6,049 6,188 14,645 12,162
General and Administrative Expense - Related Party 2,748 4,027 5,605 7,994
General and Administrative Expense - Third Party 1,585 1,364 4,350 2,900
Loss on Asset Sales and Abandonments 1,663 — 1,652 7,229
Depreciation Expense 8,209 5,860 15,787 11,510
Interest Expense 8,617 7,685 17,410 15,024
Total Expense 33,238 31,638 67,644 68,881
Net Income $ 32,800 $ 46,463 $ 78,590 $ 81,439
Net Cash Provided by Operating Activities $ 45,495 $ 74,753 $ 85,618 $ 124,666
Net Cash Used in Investing Activities $ (14,297) $ (104,310) $ (46,956) $ (182,867)
Net Cash (Used in) Provided by Financing Activities $ (35,444) $ 41,164 $ (37,704) $ 65,912

At June 30, 2020 and December 31, 2019, excluding amounts related to the IDR Elimination Transaction, CNX had a net payable of $14,453 and $16,362 respectively, due to CNX Gathering and CNXM, primarily for accrued but unpaid gathering services.

Income.

3029

NOTE 14—SEGMENT INFORMATION:

~~CNX consists of 2 principal business divisions: Exploration~~The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and ~~Production (E&P) and Midstream. The principal activity~~assessing performance as the source of the ~~E&P Division, which includes 4~~Company’s reportable segments.

The Company evaluates the performance of its reportable segments based on total revenue and other operating income, and operating expenses directly attributable to that segment. Certain expenses are managed outside the reportable segments and therefore are not allocated. These expenses include, but are not limited to, interest expense, impairment of exploration and production properties, impairment of goodwill and other corporate expenses such as selling, general and administrative costs.

CNX's principal activity is to produce pipeline quality natural gas for sale primarily to gas ~~wholesalers. The E&P Division's~~wholesalers and the Company has 2 reportable segments ~~are Marcellus~~that conducts those operations: Shale ~~Utica Shale,~~and Coalbed ~~Methane, and Other Gas.~~Methane. The Other ~~Gas~~ Segment ~~is primarily related to~~includes nominal shallow oil and gas production which is not significant to the Company. It also includes the Company's purchased gas activities, unrealized gain or loss on commodity derivative instruments, realized gain on commodity derivative instruments that were monetized prior to their settlement dates, exploration and production related other costs, impairments of exploration and production properties, as well as various other ~~operating activities assigned to~~expenses that are managed outside the ~~E&P Division but not allocated to each individual segment.~~

CNX's Midstream Division's principal activity is the ownership, operation, development and acquisition of natural gas gathering and other midstream energy assets of CNX Gathering and CNXM, which provide natural gas gathering services for the Company's produced gas,reportable segments as well as for other independent third-parties in the Marcellus Shale and Utica Shale in Pennsylvania and West Virginia. Excluded from the Midstream Division are the gathering assets and operations of CNX that have not been contributed to CNX Gathering and CNXM. CNX owns and controls 100% of CNX Gathering, making CNXM a single-sponsor master limited partnership and thus the Company consolidates CNXM. The Midstream Division is comprised of a single Midstream segment.

~~The Company's unallocated expenses include other income/expense, gain on asset sales related to non-core assets, gain/loss on debt extinguishment and income taxes.~~

~~In the preparation of the following information, intersegment sales have been recorded at amounts approximating market prices.~~discussed above. Operating profit for each segment is based on sales less identifiable operating and non-operating expenses. ~~Assets are reflected at the division level for E&P and are not allocated between each individual E&P segment. These assets are not allocated to each individual segment due~~

Prior to the ~~diverse asset base controlled by~~Merger of CNXM that occurred in September 2020 (See Note 13 - Acquisitions and Dispositions), CNX ~~whereby each individual asset may service more than one~~consisted of two principal business divisions: Exploration and Production (E&P) and Midstream. The E&P Division included four reportable segments, Marcellus Shale, Utica Shale, Coalbed Methane, and Other Gas. Certain reclassifications of 2019 segment ~~within~~information have been made to conform to the ~~division. An allocation of such asset base would not be meaningful or representative on a segment by segment basis.~~2020 presentation.

Industry segment results for the three months ended ~~June~~September 30, 2020:


		Marcellus Shale		Utica Shale		Coalbed Methane		Other Gas		Total E&P		Midstream		Unallocated		Intercompany Eliminations		Consolidated				Shale		Coalbed Methane		Other		Consolidated
Natural Gas, NGL and Oil Revenue	Natural Gas, NGL and Oil Revenue	$	123,480	$	29,147	$	22,929	$	220	$	175,776	$	—	$	—	$	—	$	175,776	(A)	Natural Gas, NGL and Oil Revenue	$	155,792	$	25,667	$	754	$	182,213	(A)

Purchased Gas Revenue	Purchased Gas Revenue	—		—		—		20,424		20,424		—		—		—		20,424			Purchased Gas Revenue	0		0		31,541		31,541
Midstream Revenue		—		—		—		—		—		66,149		—		(53,958)		12,191

Gain (Loss) on Commodity Derivative Instruments	Gain (Loss) on Commodity Derivative Instruments	79,006		21,257		13,005		(176,571)		(63,303)		—		—		—		(63,303)		(B)	Gain (Loss) on Commodity Derivative Instruments	79,773		10,518		(259,125)		(168,834)
Other Operating Income		—		—		—		4,248		4,248		—		—		(495)		3,753		(C)
Other Revenue and Operating Income																					Other Revenue and Operating Income	16,689		0		4,466		21,155		(B)
Total Revenue and Other Operating Income	Total Revenue and Other Operating Income	$	202,486	$	50,404	$	35,934	$	(151,679)	$	137,145	$	66,149	$	—	$	(54,453)	$	148,841		Total Revenue and Other Operating Income	$	252,254	$	36,185	$	(222,364)	$	66,075
Total Operating Expense	Total Operating Expense	$	144,857	$	42,876	$	29,420	$	74,617	$	291,770	$	25,195	$	—	$	(54,453)	$	262,512	(D)	Total Operating Expense	$	165,587	$	30,439	$	83,479	$	279,505
Earnings (Loss) Before Income Tax	Earnings (Loss) Before Income Tax	$	57,629	$	7,528	$	6,514	$	(263,934)	$	(192,263)	$	30,296	$	2,835	$	—	$	(159,132)		Earnings (Loss) Before Income Tax	$	86,667	$	5,746	$	(342,485)	$	(250,072)
Segment Assets	Segment Assets									$	6,584,989	$	1,754,639	$	134,047	$	(153,991)	$	8,319,684	(E)	Segment Assets	$	6,070,356	$	1,125,312	$	933,506	$	8,129,174	(C)
Depreciation, Depletion and Amortization	Depreciation, Depletion and Amortization									$	102,901	$	10,644	$	—	$	—	$	113,545		Depreciation, Depletion and Amortization	$	94,617	$	15,763	$	4,084	$	114,464
Capital Expenditures	Capital Expenditures									$	120,474	$	14,378	$	—	$	—	$	134,852		Capital Expenditures	$	105,988	$	2,310	$	37	$	108,335

(A) Included in Total Natural Gas, NGL and Oil Revenue are sales of ~~$33,711~~$35,645 to Direct Energy Business Marketing LLC, which comprises over 10% of revenue from contracts with external customers for the period.

(B) Includes equity in earnings of unconsolidated affiliates of $396 for Other.

Industry segment results for the three months ended September 30, 2019:


	Shale		Coalbed Methane		Other		Consolidated
Natural Gas, NGL and Oil Revenue	$	229,183	$	35,621	$	247	$	265,051	(D)

Purchased Gas Revenue	0		0		29,192		29,192


Gain on Commodity Derivative Instruments	50,982		6,036		156,895		213,913
Other Revenue and Operating Income	18,525		0		3,316		21,841		(E)
Total Revenue and Other Operating Income	$	298,690	$	41,657	$	189,650	$	529,997
Total Operating Expense	$	185,452	$	32,940	$	80,207	$	298,599
Earnings Before Income Tax	$	113,238	$	8,717	$	70,907	$	192,862
Segment Assets	$	6,911,677	$	1,231,509	$	1,143,072	$	9,286,258	(F)
Depreciation, Depletion and Amortization	$	100,545	$	17,400	$	2,514	$	120,459
Capital Expenditures	$	332,640	$	2,196	$	1,301	$	336,137

(D) Included in Total Natural Gas, NGL and Oil Revenue are sales of $39,092 to Direct Energy Business Marketing LLC, which comprises over 10% of revenue from contracts with external customers for the period.

(E) Includes equity in earnings of unconsolidated affiliates of $673 for Other.

(F) Includes investments in unconsolidated equity affiliates of $17,110.

Industry segment results for the nine months ended September 30, 2020:


	Shale		Coalbed Methane		Other		Consolidated
Natural Gas, NGL and Oil Revenue	$	528,913	$	79,319	$	1,251	$	609,483	(A)

Purchased Gas Revenue	0		0		78,324		78,324

Gain (Loss) on Commodity Derivative Instruments	266,488		33,210		(416,693)		(116,995)		(B)
Other Revenue and Operating Income	47,286		0		13,177		60,463		(C)
Total Revenue and Other Operating Income	$	842,687	$	112,529	$	(323,941)	$	631,275
Total Operating Expense	$	511,653	$	94,113	$	779,532	$	1,385,298
Earnings (Loss) Before Income Tax	$	331,034	$	18,416	$	(1,216,459)	$	(867,009)
Segment Assets	$	6,070,356	$	1,125,312	$	933,506	$	8,129,174	(D)
Depreciation, Depletion and Amortization	$	295,648	$	49,903	$	11,623	$	357,174
Capital Expenditures	$	385,763	$	6,796	$	2,677	$	395,236

(A) Included in Total Natural Gas, NGL and Oil Revenue are sales of $115,011 to Direct Energy Business Marketing LLC, which comprises over 10% of revenue from contracts with external customers for the period.

(B) Included in Other ~~Gas is a realized gain on commodity derivative instruments of $29,015 related to the monetization of hedges (see Note 11 - Derivative Instruments for more information).~~

~~(C) Includes equity in loss of unconsolidated affiliates of $1,259 for Total E&P.~~

~~(D) Included in Marcellus and Utica are $51,903 and $2,055, respectively, of intercompany gathering fees.~~

~~(E) Includes investments in unconsolidated equity affiliates of $15,159 for Total E&P.~~

~~Industry segment results for the three months ended June 30, 2019:~~

Marcellus
Shale Utica Shale Coalbed Methane Other
Gas Total
E&P Midstream Unallocated Intercompany Eliminations Consolidated
Natural Gas, NGL and Oil Revenue $ 237,257 $ 65,213 $ 39,638 $ 757 $ 342,865 $ — $ — $ — $ 342,865 (F)
Purchased Gas Revenue — — — 18,768 18,768 — — — 18,768
Midstream Revenue — — — — — 78,450 — (59,555) 18,895
Gain on Commodity Derivative Instruments 6,831 2,747 1,085 210,918 221,581 — — — 221,581
Other Operating Income — — — 3,038 3,038 — — (115) 2,923 (G)
Total Revenue and Other Operating Income $ 244,088 $ 67,960 $ 40,723 $ 233,481 $ 586,252 $ 78,450 $ — $ (59,670) $ 605,032
Total Operating Expense $ 193,707 $ 50,019 $ 33,120 $ 88,673 $ 365,519 $ 25,955 $ — $ (59,670) $ 331,804 (H)
Earnings Before Income Tax $ 50,381 $ 17,941 $ 7,603 $ 112,335 $ 188,260 $ 44,414 $ 811 $ — $ 233,485
Segment Assets $ 6,887,043 $ 2,116,492 $ 146,203 $ (3,041) $ 9,146,697 (I)
Depreciation, Depletion and Amortization $ 120,705 $ 8,294 $ — $ — $ 128,999
Capital Expenditures $ 224,684 $ 104,543 $ — $ — $ 329,227

(F) Included in Total Natural Gas, NGL and Oil Revenue are sales of $48,476 to Direct Energy Business Marketing LLC, which comprises over 10% of revenue from contracts with external customers for the period.

~~(G) Includes equity in earnings of unconsolidated affiliates of $527 for Total E&P.~~

~~(H) Included in Marcellus and Utica are $59,014 and $541, respectively, of intercompany gathering fees.~~

~~(I) Includes investments in unconsolidated equity affiliates of $17,637 for Total E&P.~~

~~Industry segment results for the six months ended June 30, 2020:~~

Marcellus
Shale Utica Shale Coalbed Methane Other
Gas Total
E&P Midstream Unallocated Intercompany Eliminations Consolidated
Natural Gas, NGL and Oil Revenue $ 302,524 $ 70,597 $ 53,652 $ 497 $ 427,270 $ — $ — $ — $ 427,270 (A)
Purchased Gas Revenue — — — 46,783 46,783 — — — 46,783
Midstream Revenue — — — — — 146,490 — (115,893) 30,597
Gain (Loss) on Commodity Derivative Instruments 147,458 39,257 22,692 (157,568) 51,839 — — — 51,839 (B)
Other Operating Income — — — 9,714 9,714 — — (1,003) 8,711 (C)
Total Revenue and Other Operating Income $ 449,982 $ 109,854 $ 76,344 $ (100,574) $ 535,606 $ 146,490 $ — $ (116,896) $ 565,200
Total Operating Expense $ 328,029 $ 91,693 $ 63,674 $ 213,202 $ 696,598 $ 526,109 $ — $ (116,896) $ 1,105,811 (D)
Earnings (Loss) Before Income Tax $ 121,953 $ 18,161 $ 12,670 $ (391,600) $ (238,816) $ (399,248) $ 21,127 $ — $ (616,937)
Segment Assets $ 6,584,989 $ 1,754,639 $ 134,047 $ (153,991) $ 8,319,684 (E)
Depreciation, Depletion and Amortization $ 222,053 $ 20,656 $ — $ — $ 242,709
Capital Expenditures $ 239,867 $ 47,034 $ — $ — $ 286,901

(A) Included in Total Natural Gas, NGL and Oil Revenue are sales of $79,367 to Direct Energy Business Marketing LLC, which comprises over 10% of revenue from contracts with external customers for the period.

~~(B) Included in Other Gas~~ is a realized gain on commodity derivative instruments of $83,997 related to the monetization of hedges (see Note 11 - Derivative Instruments for more information).

(D) Included in Marcellus and Utica are $111,079 and $4,814 , respectively, of intercompany gathering fees. Included in Midstream is a goodwill impairment charge of $473,045 (See Note 6 - Goodwill and Other Intangible Assets for more information).

~~(E)~~ Includes investments in unconsolidated equity affiliates of ~~15,159 for Total E&P.~~15,685.

Industry segment results for the ~~six~~nine months ended ~~June~~September 30, 2019:


		Marcellus Shale		Utica Shale		Coalbed Methane		Other Gas		Total E&P		Midstream		Unallocated		Intercompany Eliminations		Consolidated				Shale		Coalbed Methane		Other		Consolidated
Natural Gas, NGL and Oil Revenue	Natural Gas, NGL and Oil Revenue	$	530,514	$	158,164	$	89,473	$	660	$	778,811	$	—	$	—	$	—	$	778,811	(F)	Natural Gas, NGL and Oil Revenue	$	917,862	$	125,094	$	906	$	1,043,862	(E)

Purchased Gas Revenue	Purchased Gas Revenue	—		—		—		34,989		34,989		—		—		—		34,989			Purchased Gas Revenue	0		0		64,181		64,181

Midstream Revenue		—		—		—		—		—		151,019		—		(113,681)		37,338
(Loss) Gain on Commodity Derivative Instruments		(20,627)		(6,854)		(3,217)		56,903		26,205		—		—		—		26,205
Other Operating Income		—		—		—		6,296		6,296		—		—		(176)		6,120		(G)

Gain on Commodity Derivative Instruments																					Gain on Commodity Derivative Instruments	23,501		2,819		213,798		240,118
Other Revenue and Operating Income																					Other Revenue and Operating Income	55,863		0		9,436		65,299		(F)
Total Revenue and Other Operating Income	Total Revenue and Other Operating Income	$	509,887	$	151,310	$	86,256	$	98,848	$	846,301	$	151,019	$	—	$	(113,857)	$	883,463		Total Revenue and Other Operating Income	$	997,226	$	127,913	$	288,321	$	1,413,460
Total Operating Expense	Total Operating Expense	$	372,575	$	101,365	$	65,754	$	163,877	$	703,571	$	50,919	$	—	$	(113,857)	$	640,633	(H)	Total Operating Expense	$	586,030	$	98,694	$	254,510	$	939,234
Earnings (Loss) Before Income Tax	Earnings (Loss) Before Income Tax	$	137,312	$	49,945	$	20,502	$	(125,929)	$	81,830	$	76,998	$	(1,553)	$	—	$	157,275		Earnings (Loss) Before Income Tax	$	411,196	$	29,219	$	(90,278)	$	350,137
Segment Assets	Segment Assets									$	6,887,043	$	2,116,492	$	146,203	$	(3,041)	$	9,146,697	(I)	Segment Assets	$	6,911,677	$	1,231,509	$	1,143,072	$	9,286,258	(G)
Depreciation, Depletion and Amortization	Depreciation, Depletion and Amortization									$	237,780	$	16,379	$	—	$	—	$	254,159		Depreciation, Depletion and Amortization	$	316,596	$	51,669	$	6,354	$	374,619
Capital Expenditures	Capital Expenditures									$	448,475	$	179,890	$	—	$	—	$	628,365		Capital Expenditures	$	951,427	$	7,752	$	5,323	$	964,502

~~(F)~~(E) Included in Total Natural Gas, NGL and Oil Revenue are sales of ~~$116,245~~$155,337 to Direct Energy Business Marketing LLC and ~~$94,447~~$114,440 to NJR Energy Services Company, each of which comprises over 10% of revenue from contracts with external customers for the period.

~~(G)~~(F) Includes equity in earnings of unconsolidated affiliates of ~~$1,030~~$1,703 for ~~Total E&P.~~Other.

~~(H) Included in Marcellus and Utica are $112,476 and $1,205 , respectively, of intercompany gathering fees.~~

~~(I)~~(G) Includes investments in unconsolidated equity affiliates of ~~$17,637 for Total E&P.~~$17,110.

Reconciliation of Segment Information to Consolidated Amounts:

Revenue and Other Operating Income

For the Three Months Ended June 30, For the Six Months Ended June 30,
2020 2019 2020 2019
Total Segment Revenue from Contracts with External Customers $ 208,391 $ 380,528 $ 504,650 $ 851,138
(Loss) Gain on Commodity Derivative Instruments (63,303) 221,581 51,839 26,205
Other Operating Income 3,753 2,923 8,711 6,120
Total Consolidated Revenue and Other Operating Income $ 148,841 $ 605,032 $ 565,200 $ 883,463

~~Loss Before Income Tax:~~

For the Three Months Ended June 30, For the Six Months Ended June 30,
2020 2019 2020 2019
Segment (Loss) Earnings Before Income Taxes for Reportable Business Segments:
E&P $ (192,263) $ 188,260 $ (238,816) $ 81,830
Midstream 30,296 44,414 (399,248) 76,998
Total Segment (Loss) Earnings Before Income Taxes for Reportable Business Segments $ (161,967) $ 232,674 $ (638,064) $ 158,828
Unallocated Expenses:
Other (Expense) Income (4,547) 501 (9,561) 1,531
Gain on Certain Asset Sales 7,726 387 19,769 4,530
(Loss) Gain on Debt Extinguishment (344) (77) 10,919 (7,614)
(Loss) Earnings Before Income Tax $ (159,132) $ 233,485 $ (616,937) $ 157,275


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2020		2019		2020		2019
Total Segment Revenue from Contracts with External Customers	$	230,443	$	312,767	$	735,093	$	1,163,906
(Loss) Gain on Commodity Derivative Instruments	(168,834)		213,913		(116,995)		240,118
Other Operating Income	4,466		3,317		13,177		9,436
Total Consolidated Revenue and Other Operating Income	$	66,075	$	529,997	$	631,275	$	1,413,460

Total Assets:


		June 30,									September 30,
				2020			2019			2020				2019
Segment Assets for Total Reportable Business Segments:
E&P		$	6,584,989		$	6,887,043
Midstream		1,754,639			2,116,492
Intercompany Eliminations		(153,991)			(3,041)
Segment Assets for Reportable Business Segments							Segment Assets for Reportable Business Segments	$		7,195,668			$	8,143,186

Segment Assets for Other							Segment Assets for Other	782,730			1,126,404
Items Excluded from Segment Assets:	Items Excluded from Segment Assets:						Items Excluded from Segment Assets:
Cash and Cash Equivalents	Cash and Cash Equivalents	19,607			32,611		Cash and Cash Equivalents	150,132			5,484
Recoverable Income Taxes	Recoverable Income Taxes	114,440			113,592		Recoverable Income Taxes	644			11,184

Total Consolidated Assets	Total Consolidated Assets	$	8,319,684		$	9,146,697	Total Consolidated Assets	$	8,129,174		$	9,286,258

NOTE 15—STOCK REPURCHASE:

Since the October 30, 2017 inception of the current stock repurchase program, CNX's Board of Directors has approved in total a $750,000 stock repurchase program, which is not subject to an expiration date. The repurchases may be affected from time-to-time through open market purchases, privately negotiated transactions, Rule 10b5-1 plans, accelerated stock repurchases, block trades, derivative contracts or otherwise in compliance with Rule 10b-18. The timing of any repurchases will be based on a number of factors, including available liquidity, the Company's stock price, the Company's financial outlook, and alternative investment options. The stock repurchase program does not obligate the Company to repurchase any dollar amount or number of shares and the Board may modify, suspend, or discontinue its authorization of the program at any time. The Board of Directors will continue to evaluate the size of the stock repurchase program based on CNX's free cash flow position, leverage ratio, and capital plans. During the ~~six~~nine months ended ~~June~~September 30, 2019, ~~11,929,487~~12,929,487 shares were repurchased and retired at an average price of ~~$9.01~~$8.91 per share for a total cost of ~~$107,780.~~$115,477. There were 0 shares repurchased and retired during the ~~six~~nine months ended ~~June~~September 30, 2020.

NOTE 16—RECENT ACCOUNTING PRONOUNCEMENTS:

In August 2020, the FASB issued ASU 2020-06 - Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. This ASU simplifies an entity's accounting for convertible instruments by eliminating two of the three models in ASC 470-20 that require separate accounting for embedded conversion features, simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification, requires entities to use the if-converted method for all convertible instruments in the diluted EPS calculation and include the effect of potential share settlement (if the effect is more dilutive) for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards, requires new disclosures about events that occur during the reporting period and cause conversion contingencies to be met and about the fair value of an entity's convertible debt at the instrument level, among other things. The amendments in this ASU are effective for public entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, and can be adopted through either a modified retrospective method of transition or a fully retrospective method of transition. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is still evaluating the effect of adopting this guidance.

In March 2020, the FASB issued ASU 2020-04 - Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848). This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (IBORs) and, particularly, the risk of cessation of the London Interbank Offered Rate (LIBOR), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is still evaluating the effect of adopting this guidance.

In March 2020, the FASB issued ASU 2020-03 - Codification Improvements to Financial Instruments. This ASU improves and clarifies various financial instruments topics, including the CECL standard (see Note 1 - Basis of Presentation for more information). The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments in this ASU have different effective dates. The adoption of this guidance is not expected to have a material impact on the Company's financial statements.

NOTE 17—SUBSEQUENT ~~EVENTS:~~EVENT:

On ~~July 26,~~October 8, 2020, CNX entered into an Agreement and Plan of Merger (the “Merger Agreement”) with CNXM, CNX Midstream GP LLC (the “General Partner”) and CNX Resources Holding LLC., a wholly owned subsidiary of CNX (“Merger Sub”), pursuant to which Merger Sub will merge with and into CNXM with CNXM surviving as an indirect wholly owned subsidiary of CNX (the “Merger”). Underrepurchased the terms of the Merger Agreement, at the effective time of the Merger, each outstanding common unit of CNXM not owned by CNX and its subsidiaries will be converted into the right to receive 0.88 shares of CNX’s common stock.

Except for the Class B units of CNXM, which will automatically be canceled immediately prior to the effective time of the Merger for no consideration in accordance with CNXM’s partnership agreement, the interests in CNXM owned by CNX and its subsidiaries will remain outstanding as limited partner interests in the surviving entity. The General Partner will continue to own the non-economic general partner interest in the surviving entity.

Completion of the Merger is subject to certain customary conditions, including, among others: (i) the receipt of the Written Consent (as defined below); (ii) there being no law or injunction prohibiting consummation of the transactions contemplated under the Merger Agreement; (iii) the effectiveness of a registration statement on Form S-4 relating to the shares of CNX common stock to be issued pursuant to the Merger Agreement; (iv) approval for listing on the NYSE of the shares of CNX common stock to be issued pursuant to the Merger Agreement; (v) subject to specified materiality standards, the accuracy of certain representations and warranties of the other party; and (vi) compliance by the other party in all material respects with its covenants.

In connection with execution of the Merger Agreement, CNXM and two indirect wholly owned subsidiaries (the “Subsidiaries”) of CNX, entered into a Support Agreement, dated as of July 26, 2020 (the “Support Agreement”), pursuant to which the Subsidiaries have agreed to deliver a written consent (the “Written Consent”), covering all of the CNXM common units beneficially owned by them, approving the Merger. The Merger Agreement and any other matters necessary for consummation of the Merger and the other transactions contemplated in the Merger Agreement.

Upon completion of the Merger, CNXM’s common units will no longer be publicly traded. Subject to the satisfaction or waiver of the conditions described above, the Merger is expected to close in the fourth quarter of 2020.

~~In July 2020, the Company issued a notice of partial redemption to holders~~remaining $363,348 of its outstanding 5.875% senior notes due in April 2022 ~~(the “2022 Notes”), pursuant to which, on August 14, 2020, the Company will redeem $50,000 of the 2022 Notes~~ at an average price equal to ~~100.0%~~100% of the principal ~~amount thereof.~~amount.

3533

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Form 10-Q. The information provided below supplements, but does not form part of, CNX's financial statements. This discussion contains forward-looking statements that are based on the current views and beliefs of management, as well as assumptions and estimates made by management. Actual results could differ materially from any such forward-looking statements as a result of various risk factors, including those that may not be in the control of management. For further information on items that could impact future operating performance or financial condition, please see “Part II. Item 1A. Risk Factors” and the section entitled “Forward-Looking Statements” and the “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2019, which we filed with the SEC on February 10, 2020. CNX does not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

General

CNX continues to monitor the current and potential impacts of the coronavirus COVID-19 ("COVID-19") pandemic on all aspects of our business and geographies, including how it has impacted, and may in the future, impact our operations, financial results, liquidity, contractors, customers, employees and vendors. The Company also continues to monitor a number of factors that may cause actual results of operations to differ from our historical results or current expectations. These factors include: the impact of the COVID-19 pandemic and the related global economic downturn, the historically low natural gas prices and the historically low natural gas liquids prices ~~and ramifications of~~that began with the crude oil price war between the Organization of Petroleum Exporting Countries ("OPEC")/Saudi Arabia and Russia ~~that began~~ in the first quarter of 2020. The natural gas liquids prices have rebounded in the third quarter. These and other factors could affect the Company’s operations, earnings and cash flows for any period and could cause such results to not be comparable to those of the same period in previous years. The results presented in this Form 10-Q are not necessarily indicative of future operating results.

While CNX did not incur significant disruptions to operations during the three or ~~six~~nine months ended ~~June~~September 30, 2020 as a direct result of the COVID-19 pandemic, CNX is unable to predict the impact that the COVID-19 pandemic will have on us, including our financial position, operating results, liquidity and ability to obtain financing in future reporting periods, due to numerous uncertainties. These uncertainties include the volatility and severity of the virus, the duration of the outbreak, the availability of a vaccine, governmental or other actions taken to combat the virus (which could include limitations on our operations or the operations of our customers and vendors), and the effect that the COVID-19 pandemic will have on the demand for natural gas and natural gas liquids. The continued health of our employees, contractors and vendors, and our ability to meet staffing needs in our operations and certain critical functions is vital to our operations and cannot currently be predicted. Further, the continuing impacts of a potential worsening of global economic conditions and the continued disruptions to, and volatility in, the credit and financial markets as well as other unanticipated consequences remain unknown. In addition, CNX cannot predict the impact that COVID-19 will have on our customers, vendors and contractors; however, any material effect on these parties could adversely impact CNX. For instance, in the short term, CNX is starting to see a reduction in overall service and materials costs, due to oversupply of those services and costs, since industrial production has waned. However, if services providers to our industry are forced into bankruptcy or otherwise consolidate due to weakening economic conditions, demand could outpace supply in the long-term and cause these costs to increase. The situation surrounding COVID-19 remains fluid and unpredictable, and CNX is actively managing our response in collaboration with our contractors, customers, employees and vendors and assessing potential impacts to our financial position and operating results, as well as any adverse developments that could impact our business.

CNX has also taken, and is continuing to take, proactive steps to manage any disruption in our business caused by COVID-19. For instance, even though our operations were not required to close, CNX was an early adopter in employing a work-from-home system, even before any government mandate on non-essential businesses was enacted. CNX increased its technology platform, infrastructure and security to allow for a work-from-home environment ahead of the actual need, and therefore, once the hypothetical became a reality, we believe CNX was ahead of many companies in this respect. CNX has also deployed additional safety protocols at our field sites in order to help keep our employees and contractors safe and to keep our operations running without material disruption. As the COVID-19 pandemic continues to unfold, CNX ~~office employees begin~~will continue to ~~return to work, CNX has implemented certain additional safety measures~~assess and update its protocols ~~in order to maintain the safety of those employees as well.~~.

For further information regarding the impact of COVID-19 see Risk factors in Item 1A ~~of this~~in our Quarterly Reports on Form 10-Q.

3634

~~Marketing Update:~~Recent Business Developments:

~~The markets for natural gas, NGL,~~On September 28, 2020, we completed the acquisition of all of the outstanding common units of CNX Midstream Partners LP ("CNXM") and ~~crude oil remain volatile,~~CNXM became our indirect wholly-owned subsidiary (the “Merger”) (See Note 13 - Acquisitions and ~~prices may continue to fluctuate~~Dispositions in response to, among other things: Geopolitical factors, such as events that may reduce or increase production from particular oil-producing regions and/or from members of OPEC, and global events, such as the ~~ongoing COVID-19 pandemic. Overall, 2020 NYMEX oil prices have moved downward due in part to concerns about COVID-19 and its impact on near-term worldwide oil demand and due~~Notes to the ~~increase~~Unaudited Consolidated Financial Statements in ~~oil production~~Item 1 of this Form 10-Q for additional information). In connection with the closing of the Merger, we issued 37.1 million shares of our common stock to acquire the 42.1 million common units of CNXM held by ~~certain members~~third-party CNXM investors at a fixed exchange ratio of ~~OPEC. This oversupply~~0.88 shares of ~~oil and weak demand have caused a domestic oversupply~~CNX common stock for each CNXM common unit, for total implied consideration of NGLs and, when combined with current export constraints, NGL prices have been driven to historic lows, although some improvement was seen in the second quarter of 2020 at Mont Belvieu. While OPEC agreed in April of 2020 to cut production, downward pressure on liquids prices has continued and could continue for the foreseeable future, particularly given concerns over available storage capacity for crude oil and other refinery inputs including condensate, C5+ and butane, that could again result in temporary reductions in CNX’s wet gas production. During the six months ended June 30, 2020, sales of natural gas liquids comprised six percent of CNX’s revenue from external customers.$384.6 million.

~~Continued strength in natural gas production, along~~In conjunction with ~~reduced heating demand for natural gas as~~the Merger and to provide a ~~result~~greater level of ~~relatively mild winter temperatures throughout most~~transparency that is more in-line with how Management views CNX's operations, CNX has updated its segment reporting to now include a Shale segment which is made up of what was formerly the ~~United States, accounted for relatively higher inventory levels. Despite an April 12 agreement by the OPEC~~Marcellus, Utica and its allies to reduce global production by approximately 10%, the economic slowdown and global stay-at-home orders continue to suppress demand for natural gas. The U.S. Energy Information Administration’s (“EIA”) Short-Term Energy Outlook for April 2020 as well as July’s Outlook cite heightened uncertainty because of the economic slowdown, particularly industrial gas demand and changes in energy markets’ supply and demand dynamics.

For the second quarter of 2020 and 2019, CNX's average sales price for natural gas, NGLs, oil, and condensate, including the impact of cash settlements from hedging, was $2.52 per Mcfe and $2.63 per Mcfe, respectively. The average realized price for all liquids for the second quarter of 2020 was $8.73 per barrel compared to $19.14 per barrelMidstream Segments (See Note 14 - Segments in the ~~2019 quarter.~~

CNX's weighted average differential from NYMEX in the second quarter of 2020 was negative $0.29 per MMBtu. CNX's average sales price for natural gas before hedging decreased 15.8% to $1.54 per Mcf compared with the average sales price of $1.83 per Mcf in the first quarter of 2020. This decrease results from a lower Henry Hub price offset in part by improved basis pricing. Including the impact of cash settlements from hedging and excluding cash from the April 2020 hedge monetization, CNX's average sales price for natural gas was $0.03 per Mcf, or 1.2%, lower than the three months ended March 31, 2020, and $0.02 per Mcf, or 0.8%, lower than the three months ended June 30, 2019.

During the second quarter of 2020, CNX sold 114.5 Bcfe of produced natural gas, a decrease of 14.9% from the 134.5 Bcfe sold in the year-earlier quarter, primarily due to decreases in Marcellus Shale and Utica Shale volumes. The decrease in volumes was dueNotes to the ~~temporary shut-in~~Unaudited Consolidated Financial Statements in Item 1 of ~~a portion of CNX's liquids-rich Shirley-Pennsboro production in May~~this Form 10-Q for additional information). CNX has recast its current and ~~June of 2020 in response to low NGL prices. Additionally, two~~historical operating results into the new pads of dry gas turn-in-lines from April and May were temporarily shut-in May and June due to low natural gas prices. Total quarterly production costs decreased to $1.92 per Mcfe, compared to the year-earlier quarter of $2.07 per Mcfe, driven primarily by decreases in lease operating expenses and transportation, gathering and compression. Capital expenditures decreased to $135 million in the second quarter of 2020, compared to $329 million of spend in the second quarter of 2019.format.

Hedging ~~Activity:~~Update:

Total hedged natural gas production in the 2020 ~~third~~fourth quarter is ~~88.9~~124.0⁽¹⁾ Bcf. The annual gas hedge position is shown in the table below:

2020 2021
Volumes Hedged (Bcf), as of 7/8/20
437.4⁽¹⁾⁽²⁾
454.1


	2020	2021
Volumes Hedged (Bcf), as of 10/8/20	448.8(1)(2)	459.1

¹Net of purchased swaps.

²Includes actual settlements of ~~254.0~~356.2 Bcf.

CNX's hedged gas volumes include a combination of NYMEX financial hedges, index (NYMEX and basis) financial hedges, and physical fixed price sales. In addition, to protect the NYMEX hedge volumes from basis exposure, CNX enters into basis-only financial hedges and physical sales with fixed basis at certain sales points.

In March 2020, CNX monetized and repriced a portion of its 2022, 2023, and 2024 NYMEX natural gas hedge portfolio generating $55.0 million of net proceeds, which were included in (Loss) Gain on Commodity Derivative Instruments in the Consolidated Statements of Income for the six months ended June 30, 2020. Notional quantities were not affected by the restructuring. The remaining 2022 swap contracts with a notional quantity of 113.2 million MMBtus and a weighted average

price of $2.80 per MMBtu were repriced to a contract price of $2.40 per MMBtu, 2023 swap contracts with a notional quantity of 51.1 million MMBtus and a weighted average price of $2.69 per MMBtu were repriced to a contract price of $2.48 per MMBtu, and 2024 swap contracts with a notional quantity of 19.2 million MMBtus and a weighted average price of $2.62 per MMBtu were repriced to a contract price of $2.54 per MMBtu. The net proceeds from the monetization were used to reduce the Company’s absolute debt.

In April 2020, CNX monetized and terminated approximately 39 million MMBtus of NYMEX natural gas hedges and a similar quantity of financial basis hedges that were to settle at various times from May through November of 2020. In connection with these monetizations, CNX received $29 million of net proceeds, which are included in (Loss) Gain on Commodity Derivative Instruments in the Consolidated Statements of Income for the three and six months ended June 30, 2020. In addition, during the second quarter of 2020, CNX purchased financial swaps for May through November of 2020 under which CNX will pay a fixed price to and receive a floating price from its hedge counterparties. These transactions provided CNX with additional flexibility to move production to higher price periods while immediately taking the monetization proceeds.

~~Recent Business Developments:~~

On July 26, 2020, CNX entered into an Agreement and Plan of Merger (the “Merger Agreement”) with CNXM, CNX Midstream GP LLC (the “General Partner”) and CNX Resources Holdings LLC, a wholly owned subsidiary of CNX (“Merger Sub”), pursuant to which Merger Sub will merge with and into CNXM with CNXM surviving as an indirect wholly owned subsidiary of CNX (the “Merger”). Under the terms of the Merger Agreement, at the effective time of the Merger, each outstanding common unit of CNXM not owned by CNX and its subsidiaries will be converted into the right to receive 0.88 shares of CNX’s common stock.

3835

Results of Operations - Three Months Ended ~~June~~September 30, 2020 Compared with Three Months Ended ~~June~~September 30, 2019

Net (Loss) Income Attributable to CNX Resources Shareholders

CNX reported a net loss attributable to CNX Resources shareholders of ~~$146~~$205 million, or a loss per diluted share of ~~$0.78,~~$1.03, for the three months ended ~~June~~September 30, 2020, compared to net income attributable to CNX Resources shareholders of ~~$162~~$116 million, or earnings per diluted share of ~~$0.84,~~$0.61, for the three months ended ~~June~~September 30, 2019.


		For the Three Months Ended June 30,											For the Three Months Ended September 30,
(Dollars in thousands)	(Dollars in thousands)	2020		2019		Variance		(Dollars in thousands)	2020		2019		Variance
Net (Loss) Income	Net (Loss) Income	$	(130,486)	$	192,694	$	(323,180)	Net (Loss) Income	$	(188,793)	$	143,960	$	(332,753)
Less: Net Income Attributable to Noncontrolling Interest	Less: Net Income Attributable to Noncontrolling Interest	15,263		30,217		(14,954)		Less: Net Income Attributable to Noncontrolling Interest	15,905		28,422		(12,517)
Net (Loss) Income Attributable to CNX Resources Shareholders	Net (Loss) Income Attributable to CNX Resources Shareholders	$	(145,749)	$	162,477	$	(308,226)	Net (Loss) Income Attributable to CNX Resources Shareholders	$	(204,698)	$	115,538	$	(320,236)

CNX consists of two principal business divisions: Exploration and Production (E&P) and Midstream. The operating results of the Company's reportable divisions were as follows for the three months ended June 30, 2020 and 2019:

For the Three Months Ended June 30, 2020
(Dollars in millions) E&P Division Midstream Division Intercompany Eliminations Consolidated
Natural Gas, NGL and Oil Revenue $ 176 $ — $ — $ 176
Loss on Commodity Derivative Instruments (63) — — (63)
Purchased Gas Revenue 20 — — 20
Midstream Revenue - Related Party — 54 (54) —
Midstream Revenue - Third Party — 12 — 12
Other Operating Income 4 — — 4
Total Revenue and Other Operating Income 137 66 (54) 149
Operating Expense:
Lease Operating Expense 10 — — 10
Transportation, Gathering and Compression 104 10 (54) 60
Production, Ad Valorem, and Other Fees 5 — — 5
Depreciation, Depletion and Amortization 103 11 — 114
Exploration and Production Related Other Costs 3 — — 3
Purchased Gas Costs 20 — — 20
Other Operating Expense 28 — — 28
Selling, General and Administrative Costs 19 4 — 23
Total Operating Costs and Expenses 292 25 (54) 263
Interest Expense 37 9 — 46
Loss on Asset Sales and Abandonments, net — 2 — 2
Total Division Costs 329 36 (54) 311
(Loss) Earnings Before Income Tax $ (192) $ 30 $ — $ (162)

For the Three Months Ended June 30, 2019
(Dollars in millions) E&P Division Midstream Division Intercompany Eliminations Consolidated
Natural Gas, NGL and Oil Revenue $ 343 $ — $ — $ 343
Gain on Commodity Derivative Instruments 221 — — 221
Purchased Gas Revenue 19 — — 19
Midstream Revenue - Related Party — 60 (60) —
Midstream Revenue - Third Party — 18 — 18
Other Operating Income 3 — — 3
Total Revenue and Other Operating Income 586 78 (60) 604
Operating Expense:
Lease Operating Expense 20 — — 20
Transportation, Gathering and Compression 132 13 (60) 85
Production, Ad Valorem, and Other Fees 7 — — 7
Depreciation, Depletion and Amortization 121 8 — 129
Exploration and Production Related Other Costs 5 — — 5
Purchased Gas Costs 19 — — 19
Other Operating Expense 18 — — 18
Selling, General and Administrative Costs 44 5 — 49
Total Operating Costs and Expenses 366 26 (60) 332
Interest Expense 32 8 — 40
Total Division Costs 398 34 (60) 372
Earnings Before Income Tax $ 188 $ 44 $ — $ 232

The principal activity of the E&P Division is to produce pipeline quality natural gas for sale primarily to gas wholesalers. The E&P Division's reportable segments are Marcellus Shale, Utica Shale, Coalbed Methane, and Other Gas.

CNX's E&P Division had a loss before income tax of $192 million for the three months ended June 30, 2020, compared to earnings before income tax of $188 million for the three months ended June 30, 2019. Included in the loss for the three months ended ~~June~~September 30, 2020 was an unrealized loss on commodity derivative instruments of ~~$205~~$259 million. Included in the earnings for the three months ended ~~June~~September 30, 2019 was an unrealized gain on commodity derivative instruments of ~~$211~~$157 million.

~~CNX's Midstream Division's principal activity is the ownership, operation, development~~Selected Operating Revenue and acquisition of natural gas gathering and other midstream energy assets, through CNX Gathering and CNXM, which provide natural gas gathering services for the Company's produced gas, as well as for other independent third-parties in the Marcellus Shale and Utica Shale in Pennsylvania and West Virginia. Excluded from the Midstream Division are the gathering assets and operations of CNX that have not been contributed to CNX Gathering and CNXM. CNX's Midstream Division had earnings before income tax of $30 million for the three months ended June 30, 2020, compared to earnings before income tax of $44 million for the three months ended June 30, 2019.Other Cost Data

~~E&P Division Summary~~

~~Sales~~The following table presents sales volumes, revenue, costs, average sales prices (including the effects of settled ~~derivative instruments and excluding monetization),~~derivatives) and average unit costs for ~~the E&P Division were as follows:~~ production operations on a total Company basis:

For the Three Months Ended June 30,
2020 2019 Variance Percent Change
Sales Volumes (Bcfe) 114.5 134.5 (20.0) (14.9) %
Average Sales Price - Gas (per Mcf) $ 1.54 $ 2.51 $ (0.97) (38.6) %
Gain on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf)* $ 1.03 $ 0.08 $ 0.95 1,187.5 %
Average Sales Price - NGL (per Mcfe)** $ 1.31 $ 3.06 $ (1.75) (57.2) %
Average Sales Price - Oil (per Mcfe)** $ 5.15 $ 8.42 $ (3.27) (38.8) %
Average Sales Price - Condensate (per Mcfe)** $ 4.20 $ 7.56 $ (3.36) (44.4) %
Average Sales Price (per Mcfe) $ 2.52 $ 2.63 $ (0.11) (4.2) %
Lease Operating Expense (per Mcfe) 0.09 0.15 (0.06) (40.0) %
Production, Ad Valorem, and Other Fees (per Mcfe) 0.05 0.05 — — %
Transportation, Gathering and Compression (per Mcfe) 0.91 0.98 (0.07) (7.1) %
Depreciation, Depletion and Amortization (DD&A) (per Mcfe) 0.87 0.89 (0.02) (2.2) %
Average Costs (per Mcfe) $ 1.92 $ 2.07 $ (0.15) (7.2) %
Average Margin (per Mcfe) $ 0.60 $ 0.56 $ 0.04 7.1 %


	For the Three Months Ended September 30,
	2020			2019			Variance
	in Millions		Per Mcfe	in Millions		Per Mcfe	in Millions		Per Mcfe
Total Sales Volumes (Bcfe)*			115.7			128.3			(12.6)
									—
Natural Gas, NGL and Oil Revenue	$	182	1.53	$	265	2.04	$	(83)	(0.51)
Gain on Commodity Derivative Instruments - Cash Settlement - Gas	90		0.83	57		0.47	33		0.36
Total Revenue	272		2.36	322		2.51	(50)		(0.15)
Lease Operating Expense	10		0.09	14		0.11	(4)		(0.02)
Production, Ad Valorem, and Other Fees	6		0.05	6		0.05	—		—
Transportation, Gathering and Compression	69		0.59	80		0.63	(11)		(0.04)
Depreciation, Depletion and Amortization (DD&A)	112		0.98	120		0.93	(8)		0.05
Average Costs	197		1.71	220		1.72	(23)		(0.01)
Average Margin	$	75	0.65	$	102	0.79	$	(27)	(0.14)

* ~~Excluding $29 million gain from hedge monetization~~

**NGLNGLs and Oil/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,~~ NGL, condensate, and natural gas prices.

~~Natural gas, NGL, and oil revenue was $176 million for the three months ended June 30, 2020,~~The 12.6 Bcfe decrease in sales volumes when compared to ~~$343 million for~~ the ~~three months ended June 30, 2019. The decrease~~year-earlier quarter was primarily due to the ~~4.2% decrease~~temporary shut-in of new turn-in-line wells in ~~the average sales price driven by lower natural gas and NGL prices.~~

~~The decrease in average sales price was primarily the result of the $0.97 per Mcf decrease in general~~2020 due to low natural gas prices ~~when excluding the impact of hedging, in the markets in which CNX sells its natural gas. There was also a $0.04 per Mcfe decrease in the uplift from NGL~~ and condensate sales volumes when excluding the impact of hedging. Both decreases were offset, in-part, by the $0.95 per Mcf increase in the realized gain on commodity derivative instruments related to the Company's hedging program.normal production declines for legacy wells.

Changes in ~~the average costs~~Average Costs per Mcfe were primarily related to the following items:

•Lease operating expense decreased on a per unit basis primarily due to a decrease in water disposal costs in the period-to-period comparison due to an increased reuse of produced water in well completions in the current period.

•Transportation, gathering, and compression expense decreased on a per unit basis primarily due to lower processing costs due to a drier production mix and a decrease in firm transportation due to lower gas sales volumes.

•

Depreciation, depletion and amortization expense increased on a per unit basis as a result of fixed depreciation costs related to CNX's gathering infrastructure being spread over a lower production base in 2020. The lower production volumes was a result of temporary shut-ins due to lower natural gas prices.

4136

The following table is a summary of total other revenue and operating income and selected other expense line items that are included in the total (loss) earnings before income tax on a total company Mcfe equivalent and excluded from the previous table.


	For the Three Months Ended September 30,
	2020			2019			Variance
	in Millions		Per Mcfe	in Millions		Per Mcfe	in Millions		Per Mcfe
Total Company Sales Volumes (Bcfe)*			115.7			128.3			(12.6)

Total Other Revenue and Operating Income	$	21	0.18	$	22	0.17	$	(1)	0.01

Depreciation, Depletion and Amortization	2		0.02	—		0.00	2		0.02
Exploration and Production Related Other Costs	2		0.02	6		0.05	(4)		(0.03)
Selling, General and Administrative Costs	23		0.20	24		0.19	(1)		0.01
Other Operating Expense	24		0.21	21		0.16	3		0.05
Total Selected Operating Costs and Expenses	51		0.45	51		0.40	—		0.05
Other Expense	2		0.02	3		0.02	(1)		0.00
Interest Expense	38		0.33	38		0.30	—		0.03
Total Selected Other Expense	40		0.35	41		0.32	(1)		0.03
Total Selected Costs and Expenses	$	91	0.80	$	92	0.72	$	(1)	0.08

* NGLs and Oil/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 NGL, condensate, and natural gas prices.

Average Realized Price Reconciliation

The following table presents a breakout of ~~net liquid~~liquids and natural gas sales information and settled derivative information to assist in the understanding of the Company’s natural gas production and sales portfolio and information regarding settled commodity derivatives:


	For the Three Months Ended September 30,
in thousands (unless noted)	2020		2019		Variance		Percent Change
LIQUIDS
NGL:
Sales Volume (MMcfe)	6,885		8,019		(1,134)		(14.1)	%
Sales Volume (Mbbls)	1,147		1,337		(190)		(14.2)	%
Gross Price ($/Bbl)	$	13.14	$	13.68	$	(0.54)	(3.9)	%
Gross NGL Revenue	$	15,053	$	18,305	$	(3,252)	(17.8)	%

Oil/Condensate:
Sales Volume (MMcfe)	624		77		547		710.4	%
Sales Volume (Mbbls)	104		13		91		700.0	%
Gross Price ($/Bbl)	$	39.50	$	73.12	$	(33.62)	(46.0)	%
Gross Oil/Condensate Revenue	$	4,106	$	931	$	3,175	341.0	%

GAS
Sales Volume (MMcf)	108,190		120,208		(12,018)		(10.0)	%
Sales Price ($/Mcf)	$	1.51	$	2.04	$	(0.53)	(26.0)	%
Gross Gas Revenue	$	163,054	$	245,815	$	(82,761)	(33.7)	%

Hedging Impact ($/Mcf)	$	0.83	$	0.47	$	0.36	76.6	%
Gain on Commodity Derivative Instruments - Cash Settlement	$	90,311	$	57,041	$	33,270	58.3	%

For the Three Months Ended June 30,
in thousands (unless noted) 2020 2019 Variance Percent Change
LIQUIDS
NGL:
Sales Volume (MMcfe) 4,741 7,855 (3,114) (39.6) %
Sales Volume (Mbbls) 790 1,309 (519) (39.6) %
Gross Price ($/Bbl) $ 7.86 $ 18.36 $ (10.50) (57.2) %
Gross Revenue $ 6,226 $ 24,025 $ (17,799) (74.1) %
Oil:
Sales Volume (MMcfe) 50 10 40 400.0 %
Sales Volume (Mbbls) 8 2 6 300.0 %
Gross Price ($/Bbl) $ 30.90 $ 50.52 $ (19.62) (38.8) %
Gross Revenue $ 259 $ 89 $ 170 191.0 %
Condensate:
Sales Volume (MMcfe) 186 222 (36) (16.2) %
Sales Volume (Mbbls) 31 37 (6) (16.2) %
Gross Price ($/Bbl) $ 25.20 $ 45.36 $ (20.16) (44.4) %
Gross Revenue $ 781 $ 1,680 $ (899) (53.5) %
GAS
Sales Volume (MMcf) 109,527 126,378 (16,851) (13.3) %
Sales Price ($/Mcf) $ 1.54 $ 2.51 $ (0.97) (38.6) %
Gross Revenue $ 168,510 $ 317,071 $ (148,561) (46.9) %
Hedging Impact ($/Mcf) $ 1.03 $ 0.08 $ 0.95 1,187.5 %
Gain on Commodity Derivative Instruments - Cash Settlement* 113,241 10,672 102,569 961.1 %

*The decrease in the gross revenue was primarily the result of the $0.53 per Mcf decrease in general natural gas prices, when excluding the impact of hedging, in the markets in which CNX sells its natural gas and the 12.6 Bcfe decrease in sales volumes. The decrease in the gross revenue was offset, in-part, by the increase in the realized gain on commodity derivative instruments related to the Company's hedging program. ~~Excluding~~

SEGMENT ANALYSIS for the three months ended September 30, 2020 compared to the three months ended September 30, 2019:


	For the Three Months Ended								Difference to Three Months Ended
	September 30, 2020								September 30, 2019
(in millions)	Shale		CBM		Other		Total		Shale		CBM		Other		Total
Natural Gas, NGL and Oil Revenue	$	156	$	26	$	—	$	182	$	(73)	$	(10)	$	—	$	(83)
Gain (Loss) on Commodity Derivative Instruments	80		11		(260)		(169)		29		5		(417)		(383)
Purchased Gas Revenue	—		—		32		32		—		—		3		3
Other Revenue and Operating Income	17		—		4		21		(2)		—		1		(1)
Total Revenue and Other Operating Income	253		37		(224)		66		(46)		(5)		(413)		(464)
Lease Operating Expense	7		4		(1)		10		(3)		—		(1)		(4)
Production, Ad Valorem, and Other Fees	5		1		—		6		—		(1)		1		—
Transportation, Gathering and Compression	60		10		(1)		69		(10)		—		(1)		(11)
Depreciation, Depletion and Amortization	94		16		4		114		(7)		(1)		2		(6)

Exploration and Production Related Other Costs	—		—		2		2		—		—		(4)		(4)
Purchased Gas Costs	—		—		32		32		—		—		4		4
Selling, General and Administrative Costs	—		—		23		23		—		—		(1)		(1)
Other Operating Expense	—		—		24		24		—		—		3		3
Total Operating Costs and Expenses	166		31		83		280		(20)		(2)		3		(19)
Other Expense	—		—		2		2		—		—		(1)		(1)
Gain on Asset Sales and Abandonments, net	—		—		(4)		(4)		—		—		(1)		(1)

Interest Expense	—		—		38		38		—		—		—		—
Total Other Expense	—		—		36		36		—		—		(2)		(2)
Total Costs and Expenses	166		31		119		316		(20)		(2)		1		(21)
Earnings (Loss) Before Income Tax	$	87	$	6	$	(343)	$	(250)	$	(26)	$	(3)	$	(414)	$	(443)

SHALE SEGMENT

The Shale segment had earnings before income tax of $87 million for the three months ended September 30, 2020 compared to earnings before income tax of $113 million for the three months ended September 30, 2019.


	For the Three Months Ended September 30,
	2020		2019		Variance		Percent Change
Shale Gas Sales Volumes (Bcf)	95.2		106.0		(10.8)		(10.2)	%
NGL Sales Volumes (Bcfe)*	6.9		8.0		(1.1)		(13.8)	%
Oil/Condensate Sales Volumes (Bcfe)*	0.5		0.1		0.4		400.0	%
Total Shale Sales Volumes (Bcfe)*	102.6		114.1		(11.5)		(10.1)	%

Average Sales Price - Gas (per Mcf)	$	1.44	$	1.98	$	(0.54)	(27.3)	%
Gain on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf)	$	0.84	$	0.48	$	0.36	75.0	%
Average Sales Price - NGL (per Mcfe)*	$	2.18	$	2.28	$	(0.10)	(4.4)	%
Average Sales Price - Oil/Condensate (per Mcfe)*	$	6.27	$	12.76	$	(6.49)	(50.9)	%

Total Average Shale Sales Price (per Mcfe)	$	2.30	$	2.46	$	(0.16)	(6.5)	%
Average Shale Lease Operating Expenses (per Mcfe)	0.07		0.09		(0.02)		(22.2)	%
Average Shale Production, Ad Valorem, and Other Fees (per Mcfe)	0.04		0.04		—		—	%
Average Shale Transportation, Gathering and Compression Costs (per Mcfe)	0.58		0.61		(0.03)		(4.9)	%
Average Shale Depreciation, Depletion and Amortization Costs (per Mcfe)	0.93		0.89		0.04		4.5	%
Total Average Shale Costs (per Mcfe)	$	1.62	$	1.63	$	(0.01)	(0.6)	%
Average Margin for Shale (per Mcfe)	$	0.68	$	0.83	$	(0.15)	(18.1)	%

The Shale segment had natural gas, NGL and oil revenue of $156 million for the three months ended September 30, 2020 compared to $229 million for the three months ended September 30, 2019. The $73 million decrease was primarily due to a 27.3% decrease in the average sale price for natural gas and a 4.4% decrease in the average sale price of NGLs, along with a 10.1% decrease in total Shale sales volumes. The decrease in total Shale sales volumes was primarily due to the temporary shut-in of new turn-in-line wells in 2020 due to low natural gas prices.

The decrease in the total average Shale sales price was primarily due to a $0.54 per Mcf decrease in the average sales price for natural gas and a $0.10 per Mcfe decrease in the average NGL sales price, offset in part by a $0.36 per Mcf increase in the realized gain on commodity derivative instruments resulting from ~~hedge monetization~~the Company's hedging program. The notional amounts associated with these financial hedges represented approximately 89.3 Bcf of the Company's produced Shale gas sales volumes for the three months ended September 30, 2020 at an average gain of $0.89 per Mcf hedged. For the three months ended September 30, 2019, these financial hedges represented approximately 90.3 Bcf at an average gain of $0.56 per Mcf hedged.

Total operating costs and expenses for the Shale segment were $166 million for the three months ended September 30, 2020 compared to $186 million for the three months ended September 30, 2019. The decrease in total dollars and decrease in unit costs for the Shale segment were due to the following items:

•Shale lease operating expenses were $7 million for the three months ended September 30, 2020 compared to $10 million for the three months ended September 30, 2019. The decrease in total dollars and in unit costs was primarily due to a decrease in water disposal costs in the current period due to an increase in the reuse of produced water in well completions activity.

•Shale transportation, gathering and compression costs were $60 million for the three months ended September 30, 2020 compared to $70 million for the three months ended September 30, 2019. The decreases in total dollars and unit costs were primarily related to lower processing costs and a decrease in firm transportation expense due to lower gas sales volumes.

•Depreciation, depletion and amortization costs attributable to the Shale segment were $94 million for the three months ended September 30, 2020 compared to $101 million for the three months ended September 30, 2019. These amounts included

depletion on a unit of production basis of $0.81 per Mcfe and $0.82 per Mcfe, respectively. The decrease in units of production depreciation, depletion and amortization rate in the current period is the result of positive reserve revisions within our core SWPA development area and lower cost reserves added in our core SWPA development area from the 2019 development program partially offset by an increase in the units of production depreciation, depletion and amortization rate due to negative reserves revisions within our Ohio operations. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.

Total Shale other revenue and operating income relates to natural gas gathering services provided to third-parties. The Shale segment had other revenue and operating income of $17 million for the three months ended September 30, 2020 compared to $19 million for the three months ended September 30, 2019. The decrease in the period-to-period comparison was primarily due to a reduction in third-party volumes transported related to temporary production curtailments.

COALBED METHANE (CBM) SEGMENT

The CBM segment had earnings before income tax of $6 million for the three months ended September 30, 2020 compared to earnings before income tax of $9 million for the three months ended September 30, 2019.


	For the Three Months Ended September 30,
	2020		2019		Variance		Percent Change
CBM Gas Sales Volumes (Bcf)	13.0		14.1		(1.1)		(7.8)	%

Average Sales Price - Gas (per Mcf)	$	1.98	$	2.52	$	(0.54)	(21.4)	%
Gain on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf)	$	0.81	$	0.43	$	0.38	88.4	%

Total Average CBM Sales Price (per Mcf)	$	2.79	$	2.95	$	(0.16)	(5.4)	%


Average CBM Lease Operating Expenses (per Mcf)	0.28		0.28		—		—	%
Average CBM Production, Ad Valorem, and Other Fees (per Mcf)	0.09		0.10		(0.01)		(10.0)	%
Average CBM Transportation, Gathering and Compression Costs (per Mcf)	0.76		0.71		0.05		7.0	%
Average CBM Depreciation, Depletion and Amortization Costs (per Mcf)	1.21		1.24		(0.03)		(2.4)	%
Total Average CBM Costs (per Mcf)	$	2.34	$	2.33	$	0.01	0.4	%
Average Margin for CBM (per Mcf)	$	0.45	$	0.62	$	(0.17)	(27.4)	%

The CBM segment had natural gas revenue of $26 million for the three months ended September 30, 2020 compared to $36 million for the three months ended September 30, 2019. The $10 million decrease was due to the 7.8% decrease in total CBM sales volumes and the 21.4% decrease in the average sales price for natural gas. The decrease in CBM sales volumes was primarily due to normal production declines.

The total average CBM sales price decreased $0.16 per Mcf due to a $0.54 per Mcf decrease in average gas sales price, offset in part by a $0.38 per Mcf increase in the gain on commodity derivative instruments resulting from the Company's hedging program. The notional amounts associated with these financial hedges represented approximately 11.8 Bcf of the Company's produced CBM sales volumes for the three months ended September 30, 2020 at an average gain of $0.89 per Mcf hedged. For the three months ended September 30, 2019, these financial hedges represented approximately 11.3 Bcf at an average gain of $0.53 per Mcf hedged.

Total operating costs and expenses for the CBM segment were $31 million for the three months ended September 30, 2020 compared to $33 million for the three months ended September 30, 2019. The decrease in total dollars and increase in unit costs for the CBM segment was primarily due to the following:

•CBM transportation, gathering and compression costs remained consistent at $10 million for both the three months ended September 30, 2020 and 2019. The increase in unit costs were primarily related to the 7.8% decrease in CBM sales volumes.

•Depreciation, depletion and amortization costs attributable to the CBM segment were $16 million for the three months ended September 30, 2020 compared to $17 million for the three months ended September 30, 2019. These amounts included depletion on a unit of production basis of $0.67 per Mcfe and $0.70 per Mcfe, respectively. The decrease in the units of

production depreciation, depletion and amortization rate was due to positive reserve revisions. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.

OTHER SEGMENT

The Other Segment includes nominal shallow oil and gas production which is not significant to the Company. It also includes the Company's purchased gas activities, unrealized gain or loss on commodity derivative instruments, exploration and production related other costs, impairments of exploration and production properties, as well as various other expenses that are managed outside the Shale and CBM segments such as selling, general and administrative (SG&A), interest expense and income taxes.

The Other segment had a loss before income tax of $343 million for the three months ended September 30, 2020 compared to earnings before income tax of $71 million for the three months ended September 30, 2019.


	For the Three Months Ended September 30,
	2020	2019	Variance	Percent Change
Other Gas Sales Volumes (Bcf)	—	0.1	(0.1)	(100.0)	%
Oil/Condensate Sales Volumes (Bcfe)*	0.1	—	0.1	100.0	%

* Oil/Condensate is 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, condensate, and natural gas prices.

Gain or Loss on Commodity Derivative Instruments and Monetization

For the three months ended September 30, 2020, the Other Gas segment recognized an unrealized loss on commodity derivative instruments of $259 million and cash settlements paid of $1 million. For the three months ended September 30, 2019, the Other Gas segment recognized an unrealized gain on commodity derivative instruments of $157 million. The unrealized loss/gain on commodity derivative instruments represents changes in the fair value of all of the Company's existing commodity hedges on a mark-to-market basis.

Purchased Gas

Purchased gas volumes represent volumes of gas purchased at market prices from third-parties and then resold in order to fulfill contracts with certain customers and to balance supply. Purchased gas revenues were $32 million for the three months ended September 30, 2020 compared to $29 million for the three months ended September 30, 2019. Purchased gas costs were $32 million for the three months ended September 30, 2020 compared to $28 million for the three months ended September 30, 2019. The period-to-period increase in purchased gas revenue was due to an increase in purchased gas sales volumes, offset in part by a decrease in average sales price.


	For the Three Months Ended September 30,
	2020		2019		Variance		Percent Change
Purchased Gas Sales Volumes (in Bcf)	20.7		13.6		7.1		52.2	%
Average Sales Price (per Mcf)	$	1.52	$	2.14	$	(0.62)	(29.0)	%
Average Cost (per Mcf)	$	1.53	$	2.02	$	(0.49)	(24.3)	%

Other Operating Income


	For the Three Months Ended September 30,
(in millions)	2020		2019		Variance		Percent Change
Gathering Income	$	3	$	2	$	1	50.0	%
Water Income	1		—		1		100.0	%
Equity in Earnings of Affiliates	—		1		(1)		(100.0)	%
Total Other Operating Income	$	4	$	3	$	1	33.3	%

transportation capacity to other parties when possible and when beneficial. The revenue (Gathering income) from released capacity helps offset the unutilized firm transportation and processing fees in total other operating expense.

Exploration and Production Related Other Costs


	For the Three Months Ended September 30,
(in millions)	2020		2019		Variance		Percent Change
Seismic Activity	$	—	$	5	$	(5)	(100.0)	%
Lease Expiration Costs	1		1		—		—	%
Land Rentals	1		—		1		100.0	%

Total Exploration and Production Related Other Costs	$	2	$	6	$	(4)	(66.7)	%

•Seismic activity decreased in the period-to-period comparison due to additional geophysical research in the prior period.

Selling, General and Administrative ("SG&A") ~~- Total Company~~

SG&A costs include costs such as overhead, including employee labor and benefit costs, short-term incentive compensation, costs of maintaining our headquarters, audit and other professional fees, and legal compliance expenses. SG&A costs also include non-cash long-term equity-based compensation expense.

For the Three Months Ended June 30,
(in millions) 2020 2019 Variance Percent Change
SG&A
Long-Term Equity-Based Compensation (Non-Cash) $ 2 $ 24 $ (22) (91.7) %
Salaries and Wages 7 10 (3) (30.0) %
Short-Term Incentive Compensation 3 3 — — %
Other 11 12 (1) (8.3) %
Total SG&A $ 23 $ 49 $ (26) (53.1) %


	For the Three Months Ended September 30,
(in millions)	2020		2019		Variance		Percent Change
Salaries and Wages	$	8	$	10	$	(2)	(20.0)	%
Long-Term Equity-Based Compensation (Non-Cash)	2		2		—		—	%
Short-Term Incentive Compensation	3		2		1		50.0	%
Other	10		10		—		—	%
Total SG&A	$	23	$	24	$	(1)	(4.2)	%

•~~Long-term equity-based compensation~~Salaries and Wages decreased ~~$22~~$2 million due to an overall reduction in employees and employee related costs resulting from a reduction in staff at the end of 2019 period.

Other Operating Expense


	For the Three Months Ended September 30,
(in millions)	2020		2019		Variance		Percent Change
Unutilized Firm Transportation and Processing Fees	$	20	$	15	$	5	33.3	%
Idle Equipment and Service Charges	2		—		2		100.0	%
Insurance Expense	1		1		—		—	%
Other	1		5		(4)		(80.0)	%
Total Other Operating Expense	$	24	$	21	$	3	14.3	%

•Unutilized firm transportation and processing fees represent pipeline transportation capacity obtained to enable gas production to flow uninterrupted as sales volumes increase, as well as additional processing capacity for NGLs. The increase of $5 million in the period-to-period comparison was primarily due to previously acquired capacity which was not utilized during the current period to transport the Company's flowing production or to process the Company’s wet natural gas production. The increase in unutilized capacity was primarily due to the temporary shut-in of new turn-in-line wells in 2020 due to low natural gas price. In some instances, the Company may have the opportunity to realize more favorable net pricing by strategically choosing to sell natural gas into a market or to a customer that does not require the use of the Company’s own firm transportation capacity. Such sales would result in an increase in unutilized firm transportation expense. The Company attempts to minimize this expense by releasing (selling) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue received when this capacity is released (sold) is included in Gathering Income in Other Revenue and Operating Income above.

•Idle Equipment and Service Charges primarily relate to the temporary idling of one of the Company's natural gas drilling rigs as well as related equipment and other services that may be needed in the natural gas drilling and

completions process. The increase of $2 million in the period-to-period comparison was primarily the result of CNX idling one of its drilling rigs in the third-quarter.

•Other decreased $4 million in the period-to-period comparison primarily due to a ~~change in control event that occurred~~write-off of obsolete inventory in the ~~second quarter of~~ 2019 ~~and resulted~~period.

Other Expense


	For the Three Months Ended September 30,
(in millions)	2020		2019		Variance		Percent Change
Other Income


Interest Income	$	2	$	1	$	1	100.0	%
Other	6		—		6		100.0	%
Total Other Income	$	8	$	1	$	7	700.0	%

Other Expense
Professional Services	$	2	$	1	$	1	100.0	%
Merger Related Costs	5		—		5		100.0	%
Bank Fees	3		3		—		—	%
Total Other Expense	$	10	$	4	$	6	150.0	%

Total Other Expense	$	2	$	3	$	(1)	(33.3)	%

•Other income increased $7 million in the ~~acceleration~~period-to-period comparison primarily due to the receipt of ~~vesting of certain restricted stock units and performance share units held by certain employees. See~~a severance tax refund related to a prior period in the three months ended September 30, 2020 as well as additional interest income related to the alternative minimum tax (“AMT”) credit refund CNX received (See Note ~~2 - Earnings Per Share~~4- Income Taxes in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional ~~information.~~information).

•~~Salaries~~Merger-related costs consist of transaction costs directly attributable to the CNXM Merger (See Note 13- Acquisitions and ~~Wages decreased $3 million due~~Dispositions in the Notes to ~~an overall reduction~~the Unaudited Consolidated Financial Statements in ~~employees~~Item 1 of this Form 10-Q for additional information), including financial advisory, legal service and ~~employee related costs.~~

~~Unallocated Expense~~

~~Certain costs and expenses, such as~~ other ~~expense (income), gain on asset sales related~~professional fees, which were recorded to non-core assets, (gain) loss on debt extinguishment and income taxes are unallocated expenses and therefore are excluded from the per unit costs above as well as segment reporting. Below is a summary of these costs and expenses:

Other Expense ~~(Income)~~

For the Three Months Ended June 30,
(in millions) 2020 2019 Variance Percent Change
Other Income
Right of Way Sales $ 1 $ 3 $ (2) (66.7) %
Royalty Income — 1 (1) (100.0) %
Other — 1 (1) (100.0) %
Total Other Income $ 1 $ 5 $ (4) (80.0) %
Other Expense
Professional Services $ 2 $ 1 $ 1 100.0 %
Bank Fees 3 2 1 50.0 %
Corporate Expense 1 1 — — %
Total Other Expense $ 6 $ 4 $ 2 50.0 %
Total Other Expense (Income) $ 5 $ (1) $ 6 600.0 %
in the Consolidated Statements of Income.

Gain on Asset Sales and Abandonments, net

A gain on asset sales of $8$4 million related to the sale of various non-core assets was recognized in the three months ended ~~June~~September 30, 2020 compared to a ~~nominal~~ gain of $3 million in the three months ended ~~June~~September 30, 2019.

~~Also refer to the discussion of Loss on Asset Sales and Abandonmentscontained in the section "Total Midstream Division Analysis"of this Form 10-Q for additional items that are not part of Unallocated Expense.~~

Loss (Gain) Loss on Debt Extinguishment

A nominal loss on debt extinguishment was recognized in ~~each of~~ the three months ended ~~June~~September 30, ~~2020 and 2019.~~2020. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 ~~of this Form 10-Q for additional information.~~

~~Income Taxes~~

The effective income tax rate was 18.0% for the three months ended June 30, 2020 compared to 17.5% for the three months ended June 30, 2019. The effective rate for the three months ended June 30, 2020 and 2019 differs from the U.S. Federal statutory rate of 21% primarily due to the impact of noncontrolling interest, equity compensation and state income taxes.

~~See Note 4 - Income Taxes in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.~~

For the Three Months Ended June 30,
(in millions) 2020 2019 Variance Percent
Change
Total Company (Loss) Earnings Before Income Tax $ (159) $ 233 $ (392) (168.2) %
Income Tax (Benefit) Expense $ (29) $ 41 $ (70) (170.7) %
Effective Income Tax Rate 18.0 % 17.5 % 0.5 %

~~TOTAL E&P DIVISION ANALYSIS for the three months ended June 30, 2020 compared to the three months ended June 30, 2019:~~

The E&P division had a loss before income tax of $192 million for the three months ended June 30, 2020 compared to earnings before income tax of $188 million for the three months ended June 30, 2019. Variances by individual operating segment are discussed below.

For the Three Months Ended Difference to Three Months Ended
June 30, 2020 June 30, 2019
(in millions) Marcellus Utica CBM Other Gas Total E&P Marcellus Utica CBM Other Gas Total E&P
Natural Gas, NGL and Oil Revenue $ 123 $ 29 $ 23 $ 1 $ 176 $ (114) $ (37) $ (17) $ 1 $ (167)
Gain (Loss) on Commodity Derivative Instruments 79 21 13 (176) (63) 72 19 12 (387) (284)
Purchased Gas Revenue — — — 20 20 — — — 1 1
Other Operating Income — — — 4 4 — — — 1 1
Total Revenue and Other Operating Income 202 50 36 (151) 137 (42) (18) (5) (384) (449)
Lease Operating Expense 5 1 4 — 10 (6) (3) — (1) (10)
Production, Ad Valorem, and Other Fees 3 1 1 — 5 (1) (1) (1) 1 (2)
Transportation, Gathering and Compression 86 8 9 1 104 (28) — (1) 1 (28)
Depreciation, Depletion and Amortization 50 32 15 6 103 (15) (4) (2) 3 (18)
Exploration and Production Related Other Costs — — — 3 3 — — — (2) (2)
Purchased Gas Costs — — — 20 20 — — — 1 1
Other Operating Expense — — — 28 28 — — — 10 10
Selling, General and Administrative Costs — — — 19 19 — — — (25) (25)
Total Operating Costs and Expenses 144 42 29 77 292 (50) (8) (4) (12) (74)
Interest Expense — — — 37 37 — — — 5 5
Total E&P Division Costs 144 42 29 114 329 (50) (8) (4) (7) (69)
Earnings (Loss) Before Income Tax $ 58 $ 8 $ 7 $ (265) $ (192) $ 8 $ (10) $ (1) $ (377) $ (380)

Note: Included in the table above is a related party transportation, gathering and compression charge of $54 million that is offset in the Midstream Division in Midstream Revenue - Related Party. Of this charge, $52 million related to Marcellus and $2 million related to Utica. See Note 14 - Segment Information in the Notes to the Audited Consolidated Financial Statements in Item 8 of this Form 10-Q for additional information.

~~MARCELLUS SEGMENT~~

The Marcellus segment had earnings before income tax of $58 million for the three months ended June 30, 2020 compared to earnings before income tax of $50 million for the three months ended June 30, 2019.

For the Three Months Ended June 30,
2020 2019 Variance Percent Change
Marcellus Gas Sales Volumes (Bcf) 75.3 84.3 (9.0) (10.7) %
NGL Sales Volumes (Bcfe)* 4.7 7.9 (3.2) (40.5) %
Condensate Sales Volumes (Bcfe)* 0.1 0.2 (0.1) (50.0) %
Total Marcellus Sales Volumes (Bcfe)* 80.1 92.4 (12.3) (13.3) %
Average Sales Price - Gas (per Mcf) $ 1.55 $ 2.51 $ (0.96) (38.2) %
Gain on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf) $ 1.05 $ 0.08 $ 0.97 1212.5 %
Average Sales Price - NGL (per Mcfe)* $ 1.30 $ 3.06 $ (1.76) (57.5) %
Average Sales Price - Condensate (per Mcfe)* $ 2.74 $ 7.52 $ (4.78) (63.6) %
Total Average Marcellus Sales Price (per Mcfe) $ 2.53 $ 2.64 $ (0.11) (4.2) %
Average Marcellus Lease Operating Expenses (per Mcfe) 0.06 0.12 (0.06) (50.0) %
Average Marcellus Production, Ad Valorem, and Other Fees (per Mcfe) 0.04 0.04 — — %
Average Marcellus Transportation, Gathering and Compression Costs (per Mcfe) 1.07 1.24 (0.17) (13.7) %
Average Marcellus Depreciation, Depletion and Amortization Costs (per Mcfe) 0.64 0.69 (0.05) (7.2) %
Total Average Marcellus Costs (per Mcfe) $ 1.81 $ 2.09 $ (0.28) (13.4) %
Average Margin for Marcellus (per Mcfe) $ 0.72 $ 0.55 $ 0.17 30.9 %

* 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 NGL, condensate, and natural gas prices.

The Marcellus segment had natural gas, NGL and oil revenue of $123 million for the three months ended June 30, 2020 compared to $237 million for the three months ended June 30, 2019. The $114 million decrease was primarily due to a 38.2% decrease in the average sale price for natural gas and a 57.5% decrease in the average sale price of NGLs, along with a 13.3% decrease in total Marcellus sales volumes. The decrease in volumes was due to the temporary shut-in of a portion of CNX's liquids-rich Shirley-Pennsboro production in May and June of 2020 in response to low NGL prices. Additionally, two new pads of dry gas turn-in-lines from April and May were temporarily shut-in during May and June due to low natural gas prices.

The decrease in the total average Marcellus sales price was primarily due to a $0.96 per Mcf decrease in the average sales price for natural gas and a $1.76 per Mcfe decrease in the average NGL sales price, offset in part by a $0.97 per Mcf increase in the realized gain on commodity derivative instruments resulting from the Company's hedging program. The notional amounts associated with these financial hedges represented approximately 81.1 Bcf of the Company's produced Marcellus gas sales volumes for the three months ended June 30, 2020 at an average gain of $0.97 per Mcf. For the three months ended June 30, 2019, these financial hedges represented approximately 61.9 Bcf at an average gain of $0.11 per Mcf.

Total operating costs and expenses for the Marcellus segment were $144 million for the three months ended June 30, 2020 compared to $194 million for the three months ended June 30, 2019. The decrease in total dollars and decrease in unit costs for the Marcellus segment were due to the following items:

•Marcellus lease operating expenses were $5 million for the three months ended June 30, 2020 compared to $11 million for the three months ended June 30, 2019. The decrease in total dollars and in unit costs was primarily due to a decrease in water disposal costs in the current period due to an increase in the reuse of produced water in well completions activity.

•Marcellus transportation, gathering and compression costs were $86 million for the three months ended June 30, 2020 compared to $114 million for the three months ended June 30, 2019. The decrease in total dollars was primarily related to lower processing costs due to a drier production mix and a decrease in firm transportation due to lower gas sales volumes. The decrease in unit costs was driven by the drier production mix.

4543

•Depreciation, depletion and amortization costs attributable to the Marcellus segment were $50 million for the three months ended June 30, 2020 compared to $65 million for the three months ended June 30, 2019. These amounts included depletion on a unit of production basis of $0.62 per Mcfe and $0.69 per Mcfe, respectively. The decrease in units of production depreciation, depletion and amortization rate in the current period is the result of positive reserve revisions within our core development area and lower costs reserves added in our core development area from the 2019 development program. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.

~~UTICA SEGMENT~~

The Utica segment had earnings before income tax of $8 million for the three months ended June 30, 2020 compared to earnings before income tax of $18 million for the three months ended June 30, 2019.

For the Three Months Ended June 30,
2020 2019 Variance Percent Change
Utica Gas Sales Volumes (Bcf) 21.2 28.1 (6.9) (24.6) %
Condensate Sales Volumes (Bcfe)* 0.1 — 0.1 100.0 %
Total Utica Sales Volumes 21.3 28.1 (6.8) (24.2) %
Average Sales Price - Gas (per Mcf) $ 1.35 $ 2.34 $ (0.99) (42.3) %
Gain on Commodity Derivative Instruments - Cash Settlement- Gas (per Mcf) $ 1.00 $ 0.10 $ 0.90 900.0 %
Average Sales Price - Condensate (per Mcfe)* $ 6.48 $ — $ 6.48 100.0 %
Total Average Utica Sales Price (per Mcfe) $ 2.37 $ 2.44 $ (0.07) (2.9) %
Average Utica Lease Operating Expenses (per Mcfe) 0.06 0.15 (0.09) (60.0) %
Average Utica Production, Ad Valorem, and Other Fees (per Mcfe) 0.06 0.05 0.01 20.0 %
Average Utica Transportation, Gathering and Compression Costs (per Mcfe) 0.40 0.27 0.13 48.1 %
Average Utica Depreciation, Depletion and Amortization Costs (per Mcfe) 1.50 1.33 0.17 12.8 %
Total Average Utica Costs (per Mcfe) $ 2.02 $ 1.80 $ 0.22 12.2 %
Average Margin for Utica (per Mcfe) $ 0.35 $ 0.64 $ (0.29) (45.3) %

* Condensate is 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 condensate and natural gas prices.

The Utica segment had natural gas revenue of $29 million for the three months ended June 30, 2020 compared to $66 million for the three months ended June 30, 2019. The $37 million decrease was due to the 24.2% decrease in total Utica sales volumes and a 42.3% decrease in the average sales price for natural gas. The decrease in total Utica sales volumes was primarily due to normal production declines.

The decrease in total average Utica sales price was due to a $0.99 per Mcf decrease in average gas sales price. This was offset in part by a $0.90 per Mcf increase in the realized gain on commodity derivative instruments. The notional amounts associated with these financial hedges represented approximately 21.9 Bcf of the Company's produced Utica gas sales volumes for the three months ended June 30, 2020 at an average gain of 0.97 per Mcf. For the three months ended June 30, 2019, these financial hedges represented approximately 19.3 Bcf at an average gain of $0.14 per Mcf.

Total operating costs and expenses for the Utica segment were $42 million for the three months ended June 30, 2020 compared to $50 million for the three months ended June 30, 2019. The decrease in total dollars and increase in unit costs for the Utica segment were due to the following items:

•Utica lease operating expense was $1 million for the three months ended June 30, 2020 compared to $4 million for the three months ended June 30, 2019. The decrease in total dollars was primarily due to a decrease in water disposal costs due to lower production volumes, an increase in reuse of produced water in well completions and a reduction in well operating costs due to the overall decrease in Utica volumes. The decrease in unit costs was driven by the decrease in total dollars.

•Utica transportation, gathering and compression costs remained consistent at $8 million for both the three months ended June 30, 2020 and 2019. The $0.13 per Mcfe increase in unit costs was driven by an increase in utilization of firm transportation contracts for Ohio production in 2020.

•Depreciation, depletion and amortization costs attributable to the Utica segment were $32 million for the three months ended June 30, 2020 compared to $36 million for the three months ended June 30, 2019. These amounts included depletion on a unit of production basis of $1.49 per Mcfe and $1.18 per Mcfe, respectively. The increase in the units of production depreciation, depletion and amortization rate was due to negative reserve revisions in the current period and higher cost reserves added from the 2019 development program. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.

~~COALBED METHANE (CBM) SEGMENT~~

~~The CBM segment had earnings before income tax of $7 million for the three months ended June 30, 2020 compared to earnings before income tax of $8 million for the three months ended June 30, 2019.~~

For the Three Months Ended June 30,
2020 2019 Variance Percent Change
CBM Gas Sales Volumes (Bcf) 13.1 13.9 (0.8) (5.8) %
Average Sales Price - Gas (per Mcf) $ 1.75 $ 2.85 $ (1.10) (38.6) %
Gain on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf) $ 0.99 $ 0.08 $ 0.91 1137.5 %
Total Average CBM Sales Price (per Mcf) $ 2.74 $ 2.93 $ (0.19) (6.5) %
Average CBM Lease Operating Expenses (per Mcf) 0.31 0.32 (0.01) (3.1) %
Average CBM Production, Ad Valorem, and Other Fees (per Mcf) 0.09 0.13 (0.04) (30.8) %
Average CBM Transportation, Gathering and Compression Costs (per Mcf) 0.65 0.71 (0.06) (8.5) %
Average CBM Depreciation, Depletion and Amortization Costs (per Mcf) 1.19 1.22 (0.03) (2.5) %
Total Average CBM Costs (per Mcf) $ 2.24 $ 2.38 $ (0.14) (5.9) %
Average Margin for CBM (per Mcf) $ 0.50 $ 0.55 $ (0.05) (9.1) %

The CBM segment had natural gas revenue of $23 million for the three months ended June 30, 2020 compared to $40 million for the three months ended June 30, 2019. The $17 million decrease was due to the 5.8% decrease in total CBM sales volumes and the 38.6% decrease in the average sales price for natural gas. The decrease in CBM sales volumes was primarily due to normal production declines.

The total average CBM sales price decreased $0.19 per Mcf due to a $1.10 per Mcf decrease in average gas sales price, offset in part by a $0.91 per Mcf increase in the gain on commodity derivative instruments resulting from the Company's hedging program. The notional amounts associated with these financial hedges represented approximately 13.5 Bcf of the Company's produced CBM sales volumes for the three months ended June 30, 2020 at an average gain of $0.96 per Mcf. For the three months ended June 30, 2019, these financial hedges represented approximately 9.5 Bcf at an average gain of $0.11 per Mcf.

Total operating costs and expenses for the CBM segment were $29 million for the three months ended June 30, 2020 compared to $33 million for the three months ended June 30, 2019. The decrease in total dollars and decrease in unit costs for the CBM segment were due to the following items:

•CBM lease operating expense remained consistent at $4 million for both the three months ended June 30, 2020 and 2019. The decrease in unit costs was driven by the decrease in employee costs allocated to the CBM segment.

•CBM transportation, gathering and compression costs were $9 million for the three months ended June 30, 2020 compared to $10 million for the three months ended June 30, 2019. The decrease in total dollars as well as the decrease in unit costs were primarily related to decreases in electrical power expense, compressor rentals and operations labor, offset in part by an increase in non-routine repairs.

•Depreciation, depletion and amortization costs attributable to the CBM segment were at $15 million for the three months ended June 30, 2020 compared to $17 million for the three months ended June 30, 2019. These amounts included depletion on a unit of production basis of $0.67 per Mcfe and $0.70 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate was due to positive reserve revisions. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.

~~OTHER GAS SEGMENT~~

The Other Gas segment had a loss before income tax of $265 million for the three months ended June 30, 2020 compared to earnings before income tax of $112 million for the three months ended June 30, 2019.

For the Three Months Ended June 30,
2020 2019 Variance Percent Change
Other Gas Sales Volumes (Bcf) — 0.1 (0.1) (100.0) %

The Other Gas segment includes activity not assigned to the Marcellus, Utica, or CBM segments. This segment also includes unrealized gain or loss on commodity derivative instruments, realized gain on commodity derivative instruments that were monetized prior to their settlement dates, purchased gas activity, exploration and production related other costs and other operational activity not assigned to a specific segment.

There was nominal natural gas revenue related to the Other Gas segment for the three months ended June 30, 2020 and June 30, 2019. Total operating costs and expenses related to these other gas sales volumes were $3 million for the three months ended June 30, 2020 compared to $1 million for the three months ended June 30, 2019.

~~Gain or Loss on Commodity Derivative Instruments and Monetization~~

For the three months ended June 30, 2020, the Other Gas segment recognized an unrealized loss on commodity derivative instruments of $205 million as well as cash settlements received of $29 million for commodity derivative instruments that were monetized prior to their settlement dates. For the three months ended June 30, 2019, the Other Gas segment recognized an unrealized gain on commodity derivative instruments of $211 million. The unrealized loss/gain on commodity derivative instruments represents changes in the fair value of all of the Company's existing commodity hedges on a mark-to-market basis.

In April 2020, CNX monetized and terminated approximately 39 million MMBtus of NYMEX natural gas hedges and a similar quantity of financial basis hedges that were to settle at various times from May through November of 2020. In connection with these monetizations, CNX received $29 million of net proceeds, which are included in (Loss) Gain on Commodity Derivative Instruments in the Consolidated Statements of Income for the three months ended June 30, 2020. In addition, during the second quarter of 2020, CNX purchased financial swaps for May through November of 2020 under which CNX will pay a fixed price to and receive a floating price from its hedge counterparties. These transactions provided CNX with additional flexibility to move production to higher price periods while immediately taking the monetization proceeds.

~~Purchased Gas~~

Purchased gas volumes represent volumes of gas purchased at market prices from third-parties and then resold in order to fulfill contracts with certain customers and to balance supply. Purchased gas revenues were $20 million for the three months ended June 30, 2020 compared to $19 million for the three months ended June 30, 2019. Purchased gas costs were $20 million for the three months ended June 30, 2020 compared to $19 million for the three months ended June 30, 2019. The period-to-period increase in purchased gas revenue was due to an increase in purchased gas sales volumes, offset in part by a decrease in averages sales price.

For the Three Months Ended June 30,
2020 2019 Variance Percent Change
Purchased Gas Sales Volumes (in Bcf) 14.4 7.8 6.6 84.6 %
Average Sales Price (per Mcf) $ 1.42 $ 2.40 $ (0.98) (40.8) %
Average Cost (per Mcf) $ 1.39 $ 2.40 $ (1.01) (42.1) %

~~Other Operating Income~~

Other operating income was $4 million for the three months ended June 30, 2020 compared to $3 million for the three months ended June 30, 2019. The $1 million increase was due to the following items:

For the Three Months Ended June 30,
(in millions) 2020 2019 Variance Percent Change
Water Income $ 2 $ — $ 2 100.0 %
Gathering Income 3 2 1 50.0 %
Equity in (Loss) Earnings of Affiliates (1) 1 (2) (200.0) %
Total Other Operating Income $ 4 $ 3 $ 1 33.3 %

•Water income increased $2 million due to increased sales of freshwater to third-parties for hydraulic fracturing in the 2020 period and revenue for accepting deliveries of produced water from third-parties for reuse in the Company's hydraulic fracturing.

~~Exploration and Production Related Other Costs~~

Exploration and production related other costs were $3 million for the three months ended June 30, 2020 compared to $5 million for the three months ended June 30, 2019. The $2 million decrease was due to the following items:

For the Three Months Ended June 30,
(in millions) 2020 2019 Variance Percent Change
Lease Expiration Costs $ 2 $ 3 $ (1) (33.3) %
Land Rentals 1 2 (1) (50.0) %
Total Exploration and Production Related Other Costs $ 3 $ 5 $ (2) (40.0) %

~~Other Operating Expense~~

Other operating expense was $28 million for the three months ended June 30, 2020 compared to $18 million for the three months ended June 30, 2019. The $10 million increase was due to the following items:

For the Three Months Ended June 30,
(in millions) 2020 2019 Variance Percent Change
Unutilized Firm Transportation and Processing Fees $ 21 $ 14 $ 7 50.0 %
Idle Equipment and Service Charges 3 3 — — %
Insurance Expense 1 1 — — %
Other 3 — 3 100.0 %
Total Other Operating Expense $ 28 $ 18 $ 10 55.6 %

•Unutilized firm transportation and processing fees represent pipeline transportation capacity obtained to enable gas production to flow uninterrupted as sales volumes increase, as well as additional processing capacity for NGLs. The increase of $7 million in the period-to-period comparison was primarily due to previously acquired capacity which was not utilized during the current period to transport the Company's flowing production production or to process the Company’s wet natural gas production. The increase in unutilized capacity results in part from the temporary shut-in of a portion of CNX's liquids-rich Shirley-Pennsboro production in May and June of 2020 in response to low NGL prices. In some instances, the Company may have the opportunity to realize more favorable net pricing by strategically choosing to sell natural gas into a market or to a customer that does not require the use of the Company’s own firm transportation capacity. Such sales would increase unutilized firm transportation expense. The Company attempts to minimize this expense by releasing (selling) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue received when this capacity is released (sold) is included in Gathering Income in Total Other Operating Income above. There were no unutilized fees related to the Midstream Division during the three months ended June 30, 2020 or 2019.

~~Selling, General and Administrative~~

SG&A costs represent direct charges for the management and operation of CNX's E&P division. SG&A costs were $19 million for the three months ended June 30, 2020 compared to $44 million for the three months ended June 30, 2019. Refer to the discussion of total company SG&A costs contained in the section "Net (Loss) Income Attributable to CNX Resources Shareholders"~~of this Form 10-Q for a detailed cost explanation.~~

Interest Expense


	For the Three Months Ended September 30,
(in millions)	2020		2019		Variance		Percent Change
Total Interest Expense	$	38	$	38	$	—	—	%

•Interest expense remained unchanged quarter over quarter. In 2020, the Company purchased $531 million of ~~$37 million was recognized~~the outstanding 5.875% senior notes due in April 2022 during the ~~three~~nine months ended ~~June~~September 30, 2020 ~~compared to $32 million in~~and had lower average borrowings under the ~~three months ended June 30, 2019. The $5 million increase was primarily due to~~CNX credit facility. These decreases were offset by the addition of $345 million of convertible senior notes due 2026 (the “Convertible Notes”) during the three months ended June 30, 2020 and by the addition of the $125 million Cardinal States Facility and $50 million CSG Holdings Facility during the three months ended March 31, 2020. Realized and unrealized losses on interest rate swap agreements also ~~contributed to~~offset the ~~increase. These increases were offset~~decreases in part by the purchase of $71 million of the outstanding 5.875% senior notes due in April 2022 during the three months ended March 31, 2020, as well as lower borrowings on the CNX credit facility. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

~~TOTAL MIDSTREAM DIVISION ANALYSIS for the three months ended June 30, 2020 compared to the three months ended June 30, 2019:~~

Prior to the IDR Elimination Transaction, CNX Gathering held all of the interests in CNX Midstream GP LLC, which held both the general partner and limited partner interests in CNXM. CNX has owned and controlled 100% of CNX Gathering LLC, since January 2018 making CNXM a single-sponsor master limited partnership and thus the Company consolidates CNXM.

For the Three Months Ended June 30,
(in millions) 2020 2019 Variance
Midstream Revenue - Related Party $ 54 $ 60 $ (6)
Midstream Revenue - Third Party 12 18 (6)
Total Revenue $ 66 $ 78 $ (12)
Transportation, Gathering and Compression $ 10 $ 13 $ (3)
Depreciation, Depletion and Amortization 11 8 3
Selling, General, and Administrative Costs
4 5 (1)
Total Operating Costs and Expenses 25 26 (1)
Loss on Asset Sales and Abandonments, net 2 — 2
Interest Expense 9 8 1
Total Midstream Division Costs 36 34 2
Earnings Before Income Tax $ 30 $ 44 $ (14)

~~Midstream Revenue~~

Midstream revenue consists of revenue related to volumes gathered on behalf of CNX and other third-party natural gas producers. CNXM charges a higher fee for natural gas that is shipped on its wet system compared to gas shipped through its dry system. CNXM revenue can also be impacted by the relative mix of gathered volumes by area, which may vary depending upon delivery point and may change dynamically depending on commodity prices at time of shipment. Total Midstream revenue decreased $12 million primarily due to a 49.0% decrease in gathered volumes of wet gas, offset in part by an increase of 18.0% in gathered volumes of dry gas in the period-to-period comparison. The decrease in wet gas volumes was the result of temporary production curtailments by related party and third party customers. This decrease was offset in part by well turn-in-line activity that occurred over the past twelve months.

~~The table below summarizes volumes gathered by gas type:~~

For the Three Months Ended June 30,
2020 2019 Variance
Dry Gas (BBtu/d) (*) 1,047 891 156
Wet Gas (BBtu/d) (*) 373 731 (358)
Other (BBtu/d) (*)(**) 273 178 95
Total Gathered Volumes 1,693 1,800 (107)

(*) Classification as dry or wet is based upon the shipping destination of the related volumes. Because CNXM's customers have the option to ship a portion of their natural gas to destinations associated with either our wet system or our dry system, due to any number of factors, volumes may be classified as “wet” in one period and as “dry” in the comparative period.

~~(**) Includes condensate handling and third-party volumes under high-pressure short-haul agreements.~~

~~Transportation, Gathering and Compression~~

Transportation, Gathering and Compression costs were $10 million for the three months ended June 30, 2020 compared to $13 million for the three months ended June 30, 2019, and are comprised of items directly related to the cost of gathering natural gas at the wellhead and transporting it to interstate pipelines or other local sales points. These costs include items such as electrically-powered compression, compressor rental, repairs and maintenance, supplies, treating and contract services.

~~Selling, General and Administrative Expense~~

~~SG&A~~interest expense is comprised of direct charges for the management and operation of CNXM assets. SG&A costs were $4 million for the three months ended June 30, 2020 compared to $5 million for the three months ended June 30, 2019. Refer to the discussion of total Company SG&A costs contained in the section "Net (Loss) Income Attributable to CNX Resources Shareholders"mentioned above.~~of this Form 10-Q for a detailed cost explanation.~~

~~Depreciation, Depletion and Amortization Expense~~

~~Depreciation expense is recognized on gathering and other equipment on a straight-line basis, with useful lives ranging from 25 years to 40 years.~~

~~Loss on Asset Sales and Abandonments, net~~

During the three months ended June 30, 2020, due to ongoing assessments of projects that generate the highest returns on invested capital, CNXM abandoned the construction of a pipeline project that was designed to support additional production within certain operating areas, as well as land right-of-ways, resulting in a loss of $2 million that is included in (Gain) Loss on Assets Sales and Abandonments, net in the Consolidated Statements of Income. No such transactions occurred in the prior period.

~~Interest Expense~~

Interest expense is comprised of interest on the outstanding balance under CNXM's senior notes due 2026 and its revolving credit facility. Interest expense was $9 million for the three months ended June 30, 2020 compared to $8 million for the three months ended June 30, 2019.

~~Results of Operations -~~ ~~Six Months Ended June 30, 2020 Compared with Six Months Ended June 30, 2019~~

~~Net (Loss) Income Attributable to CNX Resources Shareholders~~

CNX reported a net loss attributable to CNX Resources shareholders of $475 million, or a loss per diluted share of $2.54, for the six months ended June 30, 2020, compared to net income attributable to CNX Resources shareholders of $75 million, or earnings per diluted share of $0.38, for the six months ended June 30, 2019.

For the Six Months Ended June 30,
(Dollars in thousands) 2020 2019 Variance
Net (Loss) Income $ (435,709) $ 128,044 $ (563,753)
Less: Net Income Attributable to Noncontrolling Interest 39,126 52,904 (13,778)
Net (Loss) Income Attributable to CNX Resources Shareholders $ (474,835) $ 75,140 $ (549,975)

For the Six Months Ended June 30, 2020
(Dollars in millions) E&P Division Midstream Division Intercompany Eliminations Consolidated
Natural Gas, NGL and Oil Revenue $ 427 $ — $ — $ 427
Gain on Commodity Derivative Instruments 52 — — 52
Purchased Gas Revenue 47 — — 47
Midstream Revenue - Related Party — 117 (117) —
Midstream Revenue - Third Party — 30 — 30
Other Operating Income 9 — — 9
Total Revenue and Other Operating Income 535 147 (117) 565
Operating Expense:
   Lease Operating Expense 20 — — 20
   Transportation, Gathering and Compression 237 23 (117) 143
   Production, Ad Valorem, and Other Fees 12 — — 12
   Depreciation, Depletion and Amortization 222 21 — 243
Impairment of Exploration and Production Properties 62 — — 62
Impairment of Goodwill — 473 — 473
   Exploration and Production Related Other Costs 7 — — 7
   Purchased Gas Costs 45 — — 45
   Other Operating Expense 47 — — 47
   Selling, General and Administrative Costs 44 9 — 53
Total Operating Costs and Expenses 696 526 (117) 1,105
   Interest Expense 78 17 — 95
   Loss on Asset Sales and Abandonments, net — 2 — 2
   Other Expense — 1 — 1
Total Division Costs 774 546 (117) 1,203
Loss Before Income Tax $ (239) $ (399) $ — $ (638)

For the Six Months Ended June 30, 2019
(Dollars in millions) E&P Division Midstream Division Intercompany Eliminations Consolidated
Natural Gas, NGL and Oil Revenue $ 779 $ — $ — $ 779
Gain on Commodity Derivative Instruments 26 — — 26
Purchased Gas Revenue 35 — — 35
Midstream Revenue - Related Party — 114 (114) —
Midstream Revenue - Third Party — 37 — 37
Other Operating Income 6 — — 6
Total Revenue and Other Operating Income 846 151 (114) 883
Operating Expense:
   Lease Operating Expense 39 — — 39
   Transportation, Gathering and Compression 253 24 (114) 163
   Production, Ad Valorem, and Other Fees 15 — — 15
   Depreciation, Depletion and Amortization 238 16 — 254
   Exploration and Production Related Other Costs 8 — — 8
   Purchased Gas Costs 35 — — 35
   Other Operating Expense 41 — — 41
   Selling, General and Administrative Costs 74 11 — 85
Total Operating Costs and Expenses 703 51 (114) 640
   Interest Expense 61 15 — 76
   Loss on Asset Sales and Abandonments, net — 7 — 7
   Other Expense — 1 — 1
Total Division Costs 764 74 (114) 724
Earnings Before Income Tax $ 82 $ 77 $ — $ 159

CNX's E&P Division had a loss before income tax of $239 million for the six months ended June 30, 2020, compared to earnings before income tax of $82 million for the six months ended June 30, 2019. Included in the loss for the six months ended June 30, 2020 was a $62 million non-cash impairment charge related to exploration and production properties and an unrealized loss on commodity derivative instruments of $241 million. Included in the earnings for the six months ended June 30, 2019 was an unrealized gain on commodity derivative instruments of $57 million.

CNX's Midstream Division's principal activity is the ownership, operation, development and acquisition of natural gas gathering and other midstream energy assets, through CNX Gathering and CNXM, which provide natural gas gathering services for the Company's produced gas, as well as for other independent third-parties in the Marcellus Shale and Utica Shale in Pennsylvania and West Virginia. Excluded from the Midstream Division are the gathering assets and operations of CNX that have not been contributed to CNX Gathering and CNXM. CNX's Midstream Division had a loss before income tax of $399 million for the six months ended June 30, 2020, compared to earnings before income tax of $77 million for the six months ended June 30, 2019. Included in the loss for the six months ended June 30, 2020 was a $473 million non-cash impairment charge related to goodwill. No such impairments occurred in the six months ended June 30, 2019.

~~E&P Division Summary~~

~~Sales volumes, average sales prices (including the effects of settled derivative instruments and excluding monetization), and average costs for the E&P Division were as follows:~~

For the Six Months Ended June 30,
2020 2019 Variance Percent Change
Sales Volumes (Bcfe) 248.9 267.5 (18.6) (7.0) %
Average Sales Price - Gas (per Mcf) $ 1.69 $ 2.86 $ (1.17) (40.9) %
Gain (Loss) on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf)* $ 0.89 $ (0.12) $ 1.01 841.7 %
Average Sales Price - NGL (per Mcfe)** $ 1.97 $ 3.70 $ (1.73) (46.8) %
Average Sales Price - Oil (per Mcfe)** $ 6.77 $ 7.63 $ (0.86) (11.3) %
Average Sales Price - Condensate (per Mcfe)** $ 5.49 $ 6.91 $ (1.42) (20.5) %
Average Sales Price (per Mcfe) $ 2.56 $ 2.80 $ (0.24) (8.6) %
Lease Operating Expense (per Mcfe) 0.08 0.14 (0.06) (42.9) %
Production, Ad Valorem, and Other Fees (per Mcfe) 0.04 0.05 (0.01) (20.0) %
Transportation, Gathering and Compression (per Mcfe) 0.95 0.95 — — %
Depreciation, Depletion and Amortization (DD&A) (per Mcfe) 0.88 0.89 (0.01) (1.1) %
Average Costs (per Mcfe) $ 1.95 $ 2.03 $ (0.08) (3.9) %
Average Margin (per Mcfe) $ 0.61 $ 0.77 $ (0.16) (20.8) %

* Excluding gain from hedge monetization

**NGL 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, NGL, condensate, and natural gas prices.

Natural gas, NGL, and oil revenue was $427 million for the six months ended June 30, 2020, compared to $779 million for the six months ended June 30, 2019. The decrease was primarily due to the 8.6% decrease in the average sales price driven by lower natural gas and NGL prices and a 7.0% decrease in sales volumes.

The decrease in average sales price was primarily the result of the $1.17 per Mcf decrease in general natural gas prices, when excluding the impact of hedging, in the markets in which CNX sells its natural gas. There was also a $0.02 per Mcfe decrease in the uplift from NGL and condensate sales volumes when excluding the impact of hedging. Both decreases were offset, in-part, by the $1.01 per Mcf increase in the realized gain (loss) on commodity derivative instruments related to the Company's hedging program.

~~Changes in the average costs per Mcfe were primarily related to the following items:~~

The following table presents a breakout of net liquid and natural gas sales information and settled derivative information to assist in the understanding of the Company’s natural gas production and sales portfolio and information regarding settled commodity derivatives:

For the Six Months Ended June 30,
in thousands (unless noted) 2020 2019 Variance Percent Change
LIQUIDS
NGL:
Sales Volume (MMcfe) 13,042 14,536 (1,494) (10.3) %
Sales Volume (Mbbls) 2,174 2,423 (249) (10.3) %
Gross Price ($/Bbl) $ 11.82 $ 22.20 $ (10.38) (46.8) %
Gross Revenue $ 25,638 $ 53,790 $ (28,152) (52.3) %
Oil:
Sales Volume (MMcfe) 124 34 90 264.7 %
Sales Volume (Mbbls) 21 6 15 250.0 %
Gross Price ($/Bbl) $ 40.62 $ 45.78 $ (5.16) (11.3) %
Gross Revenue $ 842 $ 256 $ 586 228.9 %
Condensate:
Sales Volume (MMcfe) 489 580 (91) (15.7) %
Sales Volume (Mbbls) 81 97 (16) (16.5) %
Gross Price ($/Bbl) $ 32.94 $ 41.46 $ (8.52) (20.5) %
Gross Revenue $ 2,682 $ 4,007 $ (1,325) (33.1) %
GAS
Sales Volume (MMcf) 235,212 252,316 (17,104) (6.8) %
Sales Price ($/Mcf) $ 1.69 $ 2.86 $ (1.17) (40.9) %
Gross Revenue $ 398,108 $ 720,758 $ (322,650) (44.8) %
Hedging Impact ($/Mcf) $ 0.89 $ (0.12) $ 1.01 841.7 %
Gain (Loss) on Commodity Derivative Instruments - Cash Settlement* 209,419 (30,710) 240,129 781.9 %

* ~~Excluding gain from hedge monetization~~

~~Selling, General and Administrative ("SG&A") - Total Company~~

For the Six Months Ended June 30,
(in millions) 2020 2019 Variance Percent
Change
SG&A
Long-Term Equity-Based Compensation (Non-Cash) $ 9 $ 35 $ (26) (74.3) %
Salaries and Wages 15 21 (6) (28.6) %
Short-Term Incentive Compensation 5 7 (2) (28.6) %
Other 24 22 2 9.1 %
Total SG&A $ 53 $ 85 $ (32) (37.6) %

•Long-term equity-based compensation decreased $26 million in the period-to-period comparison due to a change in control event that occurred in the 2019 period and resulted in the acceleration of vesting of certain restricted stock units and performance share units held by certain employees. See Note 2 - Earnings Per Share in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

•~~Salaries and Wages decreased $6 million due to an overall reduction in employees and employee related costs.~~

•~~Short-term incentive compensation decreased $2 million due to lower projected payouts in the current period.~~

~~Unallocated Expense~~

Certain costs and expenses, such as other expense (income), gain on asset sales related to non-core assets, (gain) loss on debt extinguishment and income taxes are unallocated expenses and therefore are excluded from the per unit costs above as well as segment reporting. Below is a summary of these costs and expenses:

~~Other Expense (Income)~~

For the Six Months Ended June 30,
(in millions) 2020 2019 Variance Percent
Change
Other Income
Royalty Income $ — $ 4 $ (4) (100.0) %
Right of Way Sales 1 4 (3) (75.0) %
Interest Income — 1 (1) (100.0) %
Other 2 1 1 100.0 %
Total Other Income $ 3 $ 10 $ (7) (70.0) %
Other Expense
Professional Services $ 5 $ 1 $ 4 400.0 %
Bank Fees 6 6 — — %
Other Corporate Expense 2 2 — — %
Total Other Expense $ 13 $ 9 $ 4 44.4 %
Total Other Expense (Income) $ 10 $ (1) $ 11 1,100.0 %

~~Gain on Asset Sales and Abandonments, net~~

A gain on asset sales of $20 million related to the sale of various non-core assets was recognized in the six months ended June 30, 2020 compared to a gain of $5 million in the six months ended June 30, 2019.

~~Loss (Gain) on Debt Extinguishment~~

A gain on debt extinguishment of $11 million was recognized in the six months ended June 30, 2020 compared to a loss on debt extinguishment of $8 million in the six months ended June 30, 2019. During the six months ended June 30, 2020, CNX purchased $481 million of its 5.875% Senior notes due in April 2022 at an average price equal to 97.5% of the principal amount. During the six months end June 30, 2019 CNX purchased $400 million of its 5.875% Senior notes due in April 2022 at an average price equal to 101.5% of the principal amount. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

Income Taxes


	For the Three Months Ended September 30,
(in millions)	2020			2019			Variance			Percent Change
Total Company (Loss) Earnings Before Income Tax	$	(250)		$	193		$	(443)		(229.5)	%
Income Tax (Benefit) Expense	$	(61)		$	49		$	(110)		(224.5)	%
Effective Income Tax Rate	24.5		%	25.4		%	(0.9)		%

The effective income tax rate was ~~29.4%~~24.5% for the ~~six~~three months ended ~~June~~September 30, 2020 compared to ~~18.6%~~25.4% for the ~~six~~three months ended ~~June~~September 30, 2019. The effective rate for the ~~six~~three months ended ~~June~~September 30, 2020 and 2019 differs from the U.S. Federal statutory rate of 21% primarily due to the impact of noncontrolling interest, equity compensation and state income taxes.

See Note 4 - Income Taxes in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

For the Six Months Ended June 30,
(in millions) 2020 2019 Variance Percent
Change
Total Company (Loss) Earnings Before Income Tax $ (617) $ 157 $ (774) (493.0) %
Income Tax (Benefit) Expense $ (181) $ 29 $ (210) (724.1) %
Effective Income Tax Rate 29.4 % 18.6 % 10.8 %

5644

~~TOTAL E&P DIVISION ANALYSIS~~Results of Operations - Nine Months Ended September 30, 2020 Compared with Nine Months Ended September 30, 2019

Net (Loss) Income Attributable to CNX Resources Shareholders

CNX reported a net loss attributable to CNX Resources shareholders of $680 million, or a loss per diluted share of $3.56, for the ~~six~~nine months ended ~~June~~September 30, 2020, compared to net income attributable to CNX Resources shareholders of $191 million, or earnings per diluted share of $1.01, for the ~~six~~nine months ended ~~June~~September 30, ~~2019:~~2019.

The E&P division had a loss before income tax of $239 million for the six months ended June 30, 2020 compared to earnings before income tax of $82 million for the six months ended June 30, 2019. Variances by individual operating segment are discussed below.


	For the Nine Months Ended September 30,
(Dollars in thousands)	2020		2019		Variance
Net (Loss) Income	$	(624,502)	$	272,004	$	(896,506)
Less: Net Income Attributable to Noncontrolling Interest	55,031		81,325		(26,294)
Net (Loss) Income Attributable to CNX Resources Shareholders	$	(679,533)	$	190,679	$	(870,212)

For the Six Months Ended Difference to Six Months Ended
June 30, 2020 June 30, 2019
(in millions) Marcellus Utica CBM Other
Gas Total E&P Marcellus Utica CBM Other
Gas Total
E&P
Natural Gas, NGL and Oil Revenue $ 303 $ 71 $ 54 $ (1) $ 427 $ (228) $ (87) $ (35) $ (2) $ (352)
Gain (Loss) on Commodity Derivative Instruments 147 39 23 (157) 52 168 46 26 (214) 26
Purchased Gas Revenue — — — 47 47 — — — 12 12
Other Operating Income — — — 9 9 — — — 3 3
Total Revenue and Other Operating Income 450 110 77 (102) 535 (60) (41) (9) (201) (311)
Lease Operating Expense 10 3 8 (1) 20 (11) (6) (1) (1) (19)
Production, Ad Valorem, and Other Fees 6 3 3 — 12 (1) — (1) (1) (3)
Transportation, Gathering and Compression 200 18 19 — 237 (18) 2 — — (16)
Depreciation, Depletion and Amortization 112 68 34 8 222 (15) (5) 1 3 (16)
Impairment of Exploration and Production Properties
— — — 62 62 — — — 62 62
Exploration and Production Related Other Costs — — — 7 7 — — — (1) (1)
Purchased Gas Costs — — — 45 45 — — — 10 10
Other Operating Expense — — — 47 47 — — — 6 6
Selling, General and Administrative Costs
— — — 44 44 — — — (30) (30)
Total Operating Costs and Expenses 328 92 64 212 696 (45) (9) (1) 48 (7)
Interest Expense — — — 78 78 — — — 17 17
Total E&P Division Costs 328 92 64 290 774 (45) (9) (1) 65 10
Earnings (Loss) Before Income Tax $ 122 $ 18 $ 13 $ (392) $ (239) $ (15) $ (32) $ (8) $ (266) $ (321)

~~Note:~~ Included in the ~~table above is~~loss for the nine months ended September 30, 2020 was a $62 million non-cash impairment charge related ~~party transportation, gathering~~to exploration and ~~compression~~production properties, a $473 million non-cash impairment charge related to goodwill and an unrealized loss on commodity derivative instruments of ~~$116 million that is offset~~$501 million. Included in the ~~Midstream Division in Midstream Revenue - Related Party. Of this charge, $111 million related to Marcellus and $5 million related to Utica. See Note 14 - Segment Information in~~earnings for the ~~Notes to the Audited Consolidated Financial Statements in Item 8~~nine months ended September 30, 2019 was an unrealized gain on commodity derivative instruments of ~~this Form 10-Q for additional information.~~$214 million.

57Selected Operating Revenue and Other Cost Data

~~MARCELLUS SEGMENT~~

The ~~Marcellus segment had earnings before income tax~~following table presents sales volumes, average sales prices (including the effects of ~~$122 million for the six months ended June 30, 2020 compared to earnings before income tax of $137 million for the six months ended June 30, 2019.~~settled derivatives and excluding hedge monetizations) and average costs on a total Company basis:

For the Six Months Ended June 30,
2020 2019 Variance Percent
Change
Marcellus Gas Sales Volumes (Bcf) 162.9 166.0 (3.1) (1.9) %
NGL Sales Volumes (Bcfe)* 13.0 14.5 (1.5) (10.3) %
Oil Sales Volumes (Bcfe)* 0.1 — 0.1 100.0 %
Condensate Sales Volumes (Bcfe)* 0.4 0.6 (0.2) (33.3) %
Total Marcellus Sales Volumes (Bcfe)* 176.4 181.1 (4.7) (2.6) %
Average Sales Price - Gas (per Mcf) $ 1.68 $ 2.85 $ (1.17) (41.1) %
Gain (Loss) on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf) $ 0.91 $ (0.12) $ 1.03 858.3 %
Average Sales Price - NGL (per Mcfe)* $ 1.96 $ 3.70 $ (1.74) (47.0) %
Average Sales Price - Oil (per Mcfe)* $ 6.70 $ — $ 6.70 100.0 %
Average Sales Price - Condensate (per Mcfe)* $ 5.16 $ 6.88 $ (1.72) (25.0) %
Total Average Marcellus Sales Price (per Mcfe) $ 2.55 $ 2.82 $ (0.27) (9.6) %
Average Marcellus Lease Operating Expenses (per Mcfe) 0.05 0.11 (0.06) (54.5) %
Average Marcellus Production, Ad Valorem, and Other Fees (per Mcfe) 0.04 0.04 — — %
Average Marcellus Transportation, Gathering and Compression Costs (per Mcfe) 1.13 1.21 (0.08) (6.6) %
Average Marcellus Depreciation, Depletion and Amortization Costs (per Mcfe) 0.64 0.70 (0.06) (8.6) %
Total Average Marcellus Costs (per Mcfe) $ 1.86 $ 2.06 $ (0.20) (9.7) %
Average Margin for Marcellus (per Mcfe) $ 0.69 $ 0.76 $ (0.07) (9.2) %


	For the Nine Months Ended September 30,
	2020			2019			Variance
	in Millions		Per Mcfe	in Millions		Per Mcfe	in Millions		Per Mcfe
Total Sales Volumes (Bcfe)*			364.6			395.8			(31.2)

Natural Gas, NGL and Oil Revenue	$	609	1.62	$	1,044	2.63	$	(435)	(1.01)
Gain on Commodity Derivative Instruments - Cash Settlement - Gas **	300		0.87	26		0.07	274		0.80
Total Revenue	909		2.49	1,070		2.70	(161)		(0.21)
Lease Operating Expense	31		0.08	53		0.13	(22)		(0.05)
Production, Ad Valorem, and Other Fees	17		0.04	20		0.05	(3)		(0.01)
Transportation, Gathering and Compression	212		0.58	244		0.62	(32)		(0.04)
Depreciation, Depletion and Amortization (DD&A)	350		0.97	373		0.94	(23)		0.03
Average Costs	610		1.67	690		1.74	(80)		(0.07)
Average Margin	$	299	0.82	$	380	0.96	$	(81)	(0.14)

*NGLs ~~Oil~~ and Oil/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,~~ NGL, condensate, and natural gas prices.

~~The Marcellus segment had natural gas, NGL and oil revenue of $303~~**Excluding $84 million for the six months ended June 30, 2020 compared to $531 million for the six months ended June 30, 2019. The $228 million decrease was due primarily to a 41.1% decrease in the average sale price for natural gas and a 47.0% decrease in the average sales price of NGLs.gain from hedge monetization

The ~~2.6%~~31.2 Bcfe decrease in ~~total Marcellus sales~~ volumes isin the period-to period comparison was primarily due to the temporary shut-in of a portion of CNX's liquids-rich Shirley-Pennsboro production in May and June of 2020 in response to low NGL prices. Additionally, ~~two~~four new pads of dry gas turn-in-lines from April and May were temporarily shut-in May ~~and June~~through September due to low natural gas prices. Normal production declines also contributed to the decrease in total volumes.

Changes in the average costs per Mcfe were primarily related to the following items:

•Lease operating expense decreased on a per unit basis primarily due to a decrease in water disposal costs in the period-to-period comparison as a result of increased reuse of produced water in well completions in the current period.

•Depreciation, depletion and amortization expense increased on a per unit basis as a result of fixed depreciation costs related to CNX's gathering infrastructure being spread over a lower production base in 2020. The lower production volumes was a result of temporary shut-ins due to lower natural gas prices.


	For the Nine Months Ended September 30,
	2020			2019			Variance
	in Millions		Per Mcfe	in Millions		Per Mcfe	in Millions		Per Mcfe
Total Company Sales Volumes (Bcfe)*			364.6			395.8			(31.2)

Total Other Revenue and Operating Income	$	61	0.17	$	65	0.16	$	(4)	0.01

Depreciation, Depletion and Amortization	7		0.02	2		0.01	5		0.01
Exploration and Production Related Other Costs	9		0.02	15		0.04	(6)		(0.02)
Selling, General and Administrative Costs	76		0.21	109		0.28	(33)		(0.07)
Other Operating Expense	71		0.19	61		0.15	10		0.04
Total Selected Operating Costs and Expenses	163		0.44	187		0.48	(24)		(0.04)
Other Expense	12		0.03	3		0.01	9		0.02
Interest Expense	133		0.36	114		0.29	19		0.07
Total Selected Other Expense	145		0.39	117		0.30	28		0.09
Total Selected Costs and Expenses	$	308	0.83	$	304	0.78	$	4	0.05

Average Realized Price Reconciliation

The following table presents a breakout of liquids and natural gas sales information and settled derivative information to assist in the understanding of the Company’s natural gas production and sales portfolio and information regarding settled commodity derivatives:


	For the Nine Months Ended September 30,
in thousands (unless noted)	2020		2019		Variance		Percent Change
LIQUIDS
NGL:
Sales Volume (MMcfe)	19,927		22,556		(2,629)		(11.7)	%
Sales Volume (Mbbls)	3,321		3,759		(438)		(11.7)	%
Gross Price ($/Bbl)	$	12.24	$	19.20	$	(6.96)	(36.3)	%
Gross Revenue	$	40,691	$	72,095	$	(31,404)	(43.6)	%

Oil/Condensate:
Sales Volume (MMcfe)	1,236		690		546		79.1	%
Sales Volume (Mbbls)	206		115		91		79.1	%
Gross Price ($/Bbl)	$	37.01	$	45.16	$	(8.15)	(18.0)	%
Gross Revenue	$	7,630	$	5,193	$	2,437	46.9	%

GAS
Sales Volume (MMcf)	343,403		372,524		(29,121)		(7.8)	%
Sales Price ($/Mcf)	$	1.63	$	2.59	$	(0.96)	(37.1)	%
Gross Revenue	$	561,162	$	966,574	$	(405,412)	(41.9)	%

Hedging Impact ($/Mcf)	$	0.87	$	0.07	$	0.80	1,142.9	%
Gain on Commodity Derivative Instruments - Cash Settlement*	$	299,730	$	26,331	$	273,399	1,038.3	%

* Excluding gains from hedge monetizations

The decrease in gross revenue was primarily the result of the $0.96 per Mcf decrease in general natural gas prices, when excluding the impact of hedging, in the markets in which CNX sells its natural gas, the 31.2 Bcfe decrease in sales volumes, and the $6.96 per Bbl. decrease in NGL prices. These decreases were offset, in-part, by the increase in the realized gain on commodity derivative instruments related to the Company's hedging program.

SEGMENT ANALYSIS for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019:


	For the Nine Months Ended								Difference to the Nine Months Ended
	September 30, 2020								September 30, 2019
(in millions)	Shale		CBM		Other		Total E&P		Shale		CBM		Other		Total E&P



Natural Gas, NGL and Oil Revenue	$	529	$	79	$	1	$	609	$	(389)	$	(46)	$	—	$	(435)
Gain (Loss) on Commodity Derivative Instruments	266		33		(416)		(117)		242		30		(629)		(357)
Purchased Gas Revenue	—		—		78		78		—		—		14		14
Other Revenue and Operating Income	47		—		14		61		(9)		—		5		(4)

Total Revenue and Other Operating Income	842		112		(323)		631		(156)		(16)		(610)		(782)
Lease Operating Expense	19		11		1		31		(21)		(2)		1		(22)
Production, Ad Valorem, and Other Fees	14		4		—		18		(1)		(1)		—		(2)
Transportation, Gathering and Compression	183		29		—		212		(32)		—		—		(32)
Depreciation, Depletion and Amortization	295		50		12		357		(22)		(2)		6		(18)
Impairment of Exploration and Production Properties	—		—		62		62		—		—		62		62
Impairment of Goodwill	—		—		473		473		—		—		473		473
Exploration and Production Related Other Costs	—		—		9		9		—		—		(6)		(6)
Purchased Gas Costs	—		—		77		77		—		—		15		15
Other Operating Expense	—		—		71		71		—		—		10		10
Selling, General and Administrative Costs	—		—		76		76		—		—		(33)		(33)
Total Operating Costs and Expenses	511		94		781		1,386		(76)		(5)		528		447
Other Expense	—		—		12		12		—		—		9		9
Gain on Asset Sales and Abandonments, net	—		—		(22)		(22)		—		—		(21)		(21)
Gain on Debt Extinguishment	—		—		(11)		(11)		—		—		(19)		(19)
Interest Expense	—		—		133		133		—		—		19		19
Total Other Expenses	—		—		112		112		—		—		(12)		(12)
Total Costs and Expenses	511		94		893		1,498		$	(76)	$	(5)	$	516	$	435
Earnings (Loss) Before Income Tax	$	331	$	18	$	(1,216)	$	(867)	$	(80)	$	(11)	$	(1,126)	$	(1,217)

SHALE SEGMENT

The Shale segment had earnings before income tax of $331 million for the nine months ended September 30, 2020 compared to earnings before income tax of $411 million for the nine months ended September 30, 2019.


	For the Nine Months Ended September 30,
	2020		2019		Variance		Percent Change
Shale Gas Sales Volumes (Bcf)	304.0		330.6		(26.6)		(8.0)	%
NGLs Sales Volumes (Bcfe)*	19.9		22.6		(2.7)		(11.9)	%
Oil/Condensate Sales Volumes (Bcfe)*	1.2		0.6		0.6		100.0	%
Total Shale Sales Volumes (Bcfe)*	325.1		353.8		(28.7)		(8.1)	%

Average Sales Price - Gas (per Mcf)	$	1.58	$	2.54	$	(0.96)	(37.8)	%
Gain on Commodity Derivative Instruments - Cash Settlement- Gas (per Mcf)	$	0.88	$	0.07	$	0.81	1,157.1	%
Average Sales Price - NGLs (per Mcfe)*	$	2.04	$	3.20	$	(1.16)	(36.3)	%
Average Sales Price - Oil/Condensate (per Mcfe)*	$	5.98	$	7.50	$	(1.52)	(20.3)	%

Total Average Shale Sales Price (per Mcfe)	$	2.45	$	2.66	$	(0.21)	(7.9)	%
Average Shale Lease Operating Expenses (per Mcfe)	0.06		0.11		(0.05)		(45.5)	%
Average Shale Production, Ad Valorem, and Other Fees (per Mcfe)	0.04		0.05		(0.01)		(20.0)	%
Average Shale Transportation, Gathering and Compression Costs (per Mcfe)	0.56		0.61		(0.05)		(8.2)	%
Average Shale Depreciation, Depletion and Amortization Costs (per Mcfe)	0.92		0.89		0.03		3.4	%
Total Average Shale Costs (per Mcfe)	$	1.58	$	1.66	$	(0.08)	(4.8)	%
Average Margin for Shale (per Mcfe)	$	0.87	$	1.00	$	(0.13)	(13.0)	%

The Shale segment had natural gas, NGL and oil/condensate revenue of $529 million for the nine months ended September 30, 2020 compared to $918 million for the nine months ended September 30, 2019. The $389 million decrease ~~in the total average Marcellus sales price~~ was due primarily ~~due~~ to a ~~$1.17 per Mcf~~37.8% decrease in the average sales price for natural gas, an 8.1% decrease in total Shale sales volumes, and a ~~$1.74~~36.3% decrease in the average sales price of NGLs.

The decrease in total Shale volumes was due to the temporary shut-in of a portion of CNX's liquids-rich Shirley-Pennsboro production in May and June of 2020 in response to low NGL prices. Additionally, four new pads of dry gas turn-in-lines from April and May were temporarily shut-in during May through September due to low natural gas prices. Normal production declines also contributed to the decrease in total Shale volumes.

The decrease in total average Shale sales price was primarily due to a $0.96 per Mcf decrease in average gas sales price and a $1.16 per Mcfe decrease in the average NGL sales ~~price,~~price. These decreases were offset in part by a ~~$1.03~~$0.81 per Mcf increase in the realized gain ~~(loss)~~ on commodity derivative ~~instruments resulting from the Company's hedging program.~~instruments. The notional amounts associated with these financial hedges represented approximately ~~163.7~~296.6 Bcf of the Company's produced ~~Marcellus~~Shale gas sales volumes for the ~~six~~nine months ended ~~June~~September 30, 2020 at an average gain of $0.90 per ~~Mcf.~~Mcf hedged. For the ~~six~~nine months ended ~~June~~September 30, 2019, these financial hedges represented approximately ~~117.2~~246.5 Bcf at an average ~~loss~~gain of ~~$0.18~~$0.10 per ~~Mcf.~~Mcf hedged.

Total operating costs and expenses for the ~~Marcellus~~Shale segment were ~~$328~~$511 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$373~~$587 million for the ~~six~~nine months ended ~~June~~September 30, 2019. The decrease in total dollars and decrease in unit costs for the ~~Marcellus~~Shale segment were due to the following items:

•~~Marcellus~~Shale lease operating ~~expenses were $10~~expense was $19 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$21~~$40 million for the ~~six~~nine months ended ~~June~~September 30, 2019. The decrease in total dollars was primarily due to a decrease in water disposal costs in the current period resulting from an increase in the reuse of produced water in well completions activity. The decrease in unit costs was driven by the decrease in total ~~dollars, along with~~dollars.

•Shale transportation, gathering and compression costs were $183 million for the ~~2.6% decrease~~nine months ended September 30, 2020 compared to $215 million for the nine months ended September 30, 2019. The decreases in total ~~Marcellus sales volumes.~~

dollars and unit costs

5848

•~~Marcellus transportation, gathering and compression costs~~ were ~~$200 million for the six months ended June 30, 2020 compared to $218 million for the six months ended June 30, 2019. The decrease in total dollars was~~ primarily related to lower processing costs due to a drier production mix. ~~The~~Lower firm transportation costs from lower gas sales volumes contributed to the decrease in ~~unit costs was driven by the decreased~~ total ~~dollars described above.~~dollars.

•Depreciation, depletion and amortization costs attributable to the ~~Marcellus~~Shale segment were ~~$112~~$295 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$127~~$317 million for the ~~six~~nine months ended ~~June~~September 30, 2019. These amounts included depletion on a unit of production basis of ~~$0.61~~$0.81 per Mcfe and ~~$0.69~~$0.82 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate in the current period ~~are~~is the result of positive reserve revisions within our core SWPA development area and lower ~~costs~~cost reserves added in our core SWPA development area from the 2019 development ~~program.~~program partially offset by an increase in the units of production depreciation, depletion and amortization rate due to negative reserves revisions within our Ohio operations. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.

~~UTICA SEGMENT~~

Total Shale other revenue and operating income relates to natural gas gathering services provided to third-parties. The ~~Utica~~Shale segment had ~~earnings before~~other revenue and operating income ~~tax~~ of ~~$18~~$47 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~earnings before income tax of $50~~$56 million for the ~~six~~nine months ended ~~June 30, 2019.~~

For the Six Months Ended June 30,
2020 2019 Variance Percent
Change
Utica Gas Sales Volumes (Bcf) 46.0 58.6 (12.6) (21.5) %
NGLs Sales Volumes (Bcfe)* 0.1 — 0.1 100.0 %
Condensate Sales Volumes (Bcfe)* 0.1 — 0.1 100.0 %
Total Utica Sales Volumes (Bcfe)* 46.2 58.6 (12.4) (21.2) %
Average Sales Price - Gas (per Mcf) $ 1.52 $ 2.70 $ (1.18) (43.7) %
Gain (Loss) on Commodity Derivative Instruments - Cash Settlement- Gas (per Mcf) $ 0.85 $ (0.12) $ 0.97 808.3 %
Average Sales Price - NGLs (per Mcfe)* $ 2.50 $ — $ 2.50 100.0 %
Average Sales Price - Condensate (per Mcfe)* $ 6.89 $ — $ 6.89 100.0 %
Total Average Utica Sales Price (per Mcfe) $ 2.38 $ 2.58 $ (0.20) (7.8) %
Average Utica Lease Operating Expenses (per Mcfe) 0.07 0.15 (0.08) (53.3) %
Average Utica Production, Ad Valorem, and Other Fees (per Mcfe) 0.06 0.05 0.01 20.0 %
Average Utica Transportation, Gathering and Compression Costs (per Mcfe) 0.38 0.28 0.10 35.7 %
Average Utica Depreciation, Depletion and Amortization Costs (per Mcfe) 1.48 1.25 0.23 18.4 %
Total Average Utica Costs (per Mcfe) $ 1.99 $ 1.73 $ 0.26 15.0 %
Average Margin for Utica (per Mcfe) $ 0.39 $ 0.85 $ (0.46) (54.1) %

The Utica segment had natural gas revenue of $71 million for the six months ended June 30, 2020 compared to $158 million for the six months ended June 30, 2019. The $87 million decrease was due to the 21.2% decrease in total Utica sales volumes and a 43.7% decrease in the average sales price for natural gas. The decrease in total Utica sales volumes was primarily due to normal production declines.

The decrease in total average Utica sales price was due to a $1.18 per Mcf decrease in average gas sales price. This was offset in part by a $0.97 per Mcf increase in the realized gain (loss) on commodity derivative instruments. The notional amounts associated with these financial hedges represented approximately 43.6 Bcf of the Company's produced Utica gas sales volumes for the six months ended June 30, 2020 at an average gain of $0.90 per Mcf. For the six months ended June 30, 2019, these financial hedges represented approximately 38.9 Bcf at an average loss of $0.18 per Mcf.

~~Total operating costs and expenses for the Utica segment were $92 million for the six months ended June 30, 2020 compared to $101 million for the six months ended June~~September 30, 2019. The decrease in ~~total dollars and increase in unit costs for~~ the ~~Utica segment were due to the following items:~~

•~~Utica lease operating expense was $3 million for the six months ended June 30, 2020 compared to $9 million for the six months ended June 30, 2019. The decrease in total dollars~~period-to-period comparison was primarily due to a ~~decrease in water disposal costs and a~~ reduction in ~~well operating costs due to lower production~~third-party volumes ~~as well as an increase in the reuse of produced water. The decrease in unit costs was driven by the decrease in total dollars.~~

•Utica transportation, gathering and compression costs were $18 million for the six months ended June 30, 2020 compared to $16 million for the six months ended June 30, 2019. The increases in total dollars and unit costs was driven by an increase in utilization of firm transportation contracts for Ohio production in 2020 and annual rate escalations from third-party providers.

•Depreciation, depletion and amortization costs attributable to the Utica segment were $68 million for the six months ended June 30, 2020 compared to $73 million for the six months ended June 30, 2019. These amounts included depletion on a unit of production basis of $1.49 per Mcfe and $1.18 per Mcfe, respectively. The increase in the units of production depreciation, depletion and amortization rate was due to negative reserve revisions in the current period and higher cost reserves added from the 2019 development program. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis ortransported related to ~~asset retirement obligations.~~temporary production curtailments.

COALBED METHANE (CBM) SEGMENT

The CBM segment had earnings before income tax of ~~$13~~$18 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to earnings before income tax of ~~$21~~$29 million for the ~~six~~nine months ended ~~June~~September 30, 2019.


		For the Six Months Ended June 30,															For the Nine Months Ended September 30,
		2020		2019		Variance		Percent Change			2020		2019		Variance		Percent Change
CBM Gas Sales Volumes (Bcf)	CBM Gas Sales Volumes (Bcf)	26.3		27.6		(1.3)		(4.7)	%	CBM Gas Sales Volumes (Bcf)	39.3		41.7		(2.4)		(5.8)	%

Average Sales Price - Gas (per Mcf)	Average Sales Price - Gas (per Mcf)	$	2.04	$	3.24	$	(1.20)	(37.0)	%	Average Sales Price - Gas (per Mcf)	$	2.02	$	3.00	$	(0.98)	(32.7)	%
Gain (Loss) on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf)		$	0.86	$	(0.11)	$	0.97	881.8	%
Gain on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf)										Gain on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf)	$	0.84	$	0.07	$	0.77	1,100.0	%

Total Average CBM Sales Price (per Mcf)	Total Average CBM Sales Price (per Mcf)	$	2.90	$	3.13	$	(0.23)	(7.3)	%	Total Average CBM Sales Price (per Mcf)	$	2.86	$	3.07	$	(0.21)	(6.8)	%
Average CBM Lease Operating Expenses (per Mcf)	Average CBM Lease Operating Expenses (per Mcf)	0.29		0.31		(0.02)		(6.5)	%	Average CBM Lease Operating Expenses (per Mcf)	0.29		0.30		(0.01)		(3.3)	%
Average CBM Production, Ad Valorem, and Other Fees (per Mcf)	Average CBM Production, Ad Valorem, and Other Fees (per Mcf)	0.10		0.14		(0.04)		(28.6)	%	Average CBM Production, Ad Valorem, and Other Fees (per Mcf)	0.10		0.13		(0.03)		(23.1)	%
Average CBM Transportation, Gathering and Compression Costs (per Mcf)	Average CBM Transportation, Gathering and Compression Costs (per Mcf)	0.74		0.70		0.04		5.7	%	Average CBM Transportation, Gathering and Compression Costs (per Mcf)	0.74		0.70		0.04		5.7	%
Average CBM Depreciation, Depletion and Amortization Costs (per Mcf)	Average CBM Depreciation, Depletion and Amortization Costs (per Mcf)	1.29		1.24		0.05		4.0	%	Average CBM Depreciation, Depletion and Amortization Costs (per Mcf)	1.25		1.24		0.01		0.8	%
Total Average CBM Costs (per Mcf)	Total Average CBM Costs (per Mcf)	$	2.42	$	2.39	$	0.03	1.3	%	Total Average CBM Costs (per Mcf)	$	2.38	$	2.37	$	0.01	0.4	%
Average Margin for CBM (per Mcf)	Average Margin for CBM (per Mcf)	$	0.48	$	0.74	$	(0.26)	(35.1)	%	Average Margin for CBM (per Mcf)	$	0.48	$	0.70	$	(0.22)	(31.4)	%

The CBM segment had natural gas revenue of ~~$54~~$79 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$89~~$125 million for the ~~six~~nine months ended ~~June~~September 30, 2019. The ~~$35~~$46 million decrease was due to the ~~4.7%~~5.8% decrease in total CBM sales volumes and the ~~37.0%~~32.7% decrease in the average sales price for natural ~~gas.~~gas in the current period. The decrease in CBM sales volumes was primarily due to normal production declines.

The total average CBM sales price decreased ~~$0.23~~$0.21 per Mcf due to a ~~$1.20~~$0.98 per Mcf decrease in average gas sales price, offset in part by a ~~$0.97~~$0.77 per Mcf increase in the gain ~~(loss)~~ on commodity derivative instruments resulting from the Company's hedging program. The notional amounts associated with these financial hedges represented approximately ~~25.2~~37.0 Bcf of the Company's produced CBM sales volumes for the ~~six~~nine months ended ~~June~~September 30, 2020 at an average gain of $0.90 per ~~Mcf.~~Mcf hedged. For the ~~six~~nine months ended ~~June~~September 30, 2019, these financial hedges represented approximately ~~18.3~~29.6 Bcf at an average ~~loss~~gain of ~~$0.18~~$0.10 per ~~Mcf.~~Mcf hedged.

Total operating costs and expenses for the CBM segment were ~~$64~~$94 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$65~~$99 million for the ~~six~~nine months ended ~~June~~September 30, 2019. The decrease in total dollars and increase in unit costs for the CBM segment were due to the following items:

6049

•CBM lease operating expense was $8$11 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to $9$13 million for the ~~six~~nine months ended ~~June~~September 30, 2019. The decrease in total dollars was due to a decrease in water disposal costs as well as a decrease in repairs and maintenance. The decrease in unit costs was driven by the decrease in total dollars.

•CBM transportation, gathering and compression costs remained consistent at $19 million for both the six months ended June 30, 2020 and 2019. The $0.04 per Mcf increase in unit costs was driven by the overall decrease in CBM volumes.

•Depreciation, depletion and amortization costs attributable to the CBM segment were ~~at $34~~$50 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$33~~$52 million for the ~~six~~nine months ended ~~June~~September 30, 2019. These amounts included depletion on a unit of production basis of ~~$0.69~~$0.68 per Mcfe and $0.70 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate was due to reduced production, offset in part by negative reserve revisions. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.

OTHER ~~GAS~~ SEGMENT

The Other ~~Gas segment had a loss before income tax of $392 million for the six months ended June 30, 2020 compared to a loss before income tax of $126 million for the six months ended June 30, 2019.~~

For the Six Months Ended June 30,
2020 2019 Variance Percent
Change
Other Gas Sales Volumes (Bcf) — 0.2 (0.2) (100.0) %

~~The Other Gas segment~~Segment includes ~~activity~~nominal shallow oil and gas production which is not ~~assigned~~significant to the ~~Marcellus, Utica, or CBM segments. This segment~~Company. It also includes the Company's purchased gas activities, unrealized gain or loss on commodity derivative instruments, realized gain on commodity derivative instruments that were ~~partially~~ monetized prior to their settlement dates, ~~purchased gas activity, impairment of exploration and production properties,~~ exploration and production related other costs, impairments of exploration and production properties, as well as various other ~~operational activity not assigned to a specific segment.~~expenses that are managed outside the Shale and CBM segments such as SG&A, interest expense and income taxes.

~~There was nominal natural gas revenue related to the~~The Other Gas segment had a loss before income tax of $1,216 million for the ~~six~~nine months ended ~~June~~September 30, 2020 ~~and June~~compared to a loss before income tax of $90 million for the nine months ended September 30, 2019. ~~Total operating costs and expenses related to these other gas sales volumes were $3 million for both the six months ended June 30, 2020 and 2019.~~


	For the Nine Months Ended September 30,
	2020	2019	Variance	Percent Change
Other Gas Sales Volumes (Bcf)	0.1	0.3	(0.2)	(66.7)	%

Gain or Loss on Commodity Derivative Instruments and Monetization

For the ~~six~~nine months ended ~~June~~September 30, 2020, the Other Gas segment recognized an unrealized loss on commodity derivative instruments of ~~$241~~$501 million as well as cash settlements received of ~~$84 million for commodity derivative instruments that were partially monetized prior to their settlement dates.~~$85 million. For the ~~six~~nine months ended ~~June~~September 30, 2019, the Other Gas segment recognized an unrealized gain on commodity derivative instruments of ~~$57~~$214 million as well as cash settlements paid of $1 million. The unrealized gain/loss on commodity derivative instruments represents changes in the fair value of all of the Company's existing commodity hedges on a mark-to-market basis.

~~In March 2020, CNX monetized and repriced a portion of its 2022, 2023, and 2024 NYMEX natural gas hedge portfolio generating $55 million of net proceeds, which are included~~ Included in ~~(Loss) Gain on Commodity Derivative Instruments in the Consolidated Statements of Income~~cash settlements for the ~~six~~nine months ended ~~June~~September 30, ~~2020. Notional quantities were not affected by the restructuring. The remaining 2022 swap contracts with a notional quantity of 113.2~~2020 is $84 million ~~MMBtu and a weighted average price of $2.80 per MMBtu were repriced~~related to a contract price of $2.40 per MMBtu, 2023 swap contracts with a notional quantity of 51.1 million MMBtu and a weighted average price of $2.69 per MMBtu were repriced to a contract price of $2.48 per MMBtu, and 2024 swap contracts with a notional quantity of 19.2 million MMBtu and a weighted average price of $2.62 per MMBtu were repriced to a contract price of $2.54 per MMBtu. The net proceeds from the monetization was used to reduce the Company's absolute debt.

~~In April 2020, CNX monetized and terminated approximately 39 million MMBtus of NYMEX~~ natural gas hedges and ~~a similar quantity of~~ financial basis hedges that were partially monetized or terminated prior to ~~settle at various times from May through November of 2020. In connection with these monetizations, CNX received $29 million of net proceeds, which are included in (Loss) Gain on Commodity~~their settlement date. See Note 11 - Derivative Instruments in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of ~~Income~~this Form 10-Q for additional information related to the six months ended June 30, 2020. In addition, during the second quarter of 2020, CNX purchased financial swaps for May through November of 2020 under which CNX will pay a fixed price to and receive a floating price from its hedge counterparties. These moves gave CNX additional flexibility to move production to higher price periods while immediately taking the monetization proceeds.cash settlements.

Purchased Gas

Purchased gas volumes represent volumes of gas purchased at market prices from third-parties and then resold in order to fulfill contracts with certain customers and to balance supply. Purchased gas revenues were ~~$47~~$78 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$35~~$64 million for the ~~six~~nine months ended ~~June~~September 30, 2019. Purchased gas costs were ~~$45~~$77 million for the ~~six~~nine months ended ~~June~~September 30, 2020 compared to ~~$35~~$62 million for the ~~six~~nine months ended ~~June~~September 30, 2019. The period-to-period increase in purchased gas revenue was due to an increase in purchased gas sales volumes, offset in part by a decrease in averages sales price.


		For the Six Months Ended June 30,															For the Nine Months Ended September 30,
		2020		2019		Variance		Percent Change			2020		2019		Variance		Percent Change
Purchased Gas Sales Volumes (in Bcf)	Purchased Gas Sales Volumes (in Bcf)	27.5		13.2		14.3		108.3	%	Purchased Gas Sales Volumes (in Bcf)	48.2		26.9		21.3		79.2	%
Average Sales Price (per Mcf)	Average Sales Price (per Mcf)	$	1.70	$	2.64	$	(0.94)	(35.6)	%	Average Sales Price (per Mcf)	$	1.63	$	2.39	$	(0.76)	(31.8)	%
Average Cost (per Mcf)	Average Cost (per Mcf)	$	1.64	$	2.64	$	(1.00)	(37.9)	%	Average Cost (per Mcf)	$	1.59	$	2.33	$	(0.74)	(31.8)	%

Other Operating Income

~~Other operating income was $9 million for the six months ended June 30, 2020 compared to $6 million for the six months ended June 30, 2019. The $3 million increase was due to the following items:~~


		For the Six Months Ended June 30,															For the Nine Months Ended September 30,
(in millions)	(in millions)	2020		2019		Variance		Percent Change		(in millions)	2020		2019		Variance		Percent Change
Water Income	Water Income	$	4	$	—	$	4	100.0	%	Water Income	$	5	$	1	$	4	400.0	%
Gathering Income	Gathering Income	6		5		1		20.0	%	Gathering Income	9		7		2		28.6	%
Equity in (Loss) Earnings of Affiliates	Equity in (Loss) Earnings of Affiliates	(1)		1		(2)		(200.0)	%	Equity in (Loss) Earnings of Affiliates	(1)		1		(2)		(200.0)	%
Other										Other	1		—		1		100.0	%

Total Other Operating Income										Total Other Operating Income	$	14	$	9	$	5	55.6	%

Total Other Operating Income		$	9	$	6	$	3	50.0	%

•Water income increased $4 million ~~due to increased sales of freshwater to third-parties for hydraulic fracturing~~ in the 2020 period ~~and~~due to increased revenue for accepting deliveries of produced water from third-parties for reuse in the Company's hydraulic fracturing and increased sales of freshwater to third-parties for hydraulic fracturing.

•Gathering income represents revenue from the sale of excess firm transportation capacity to third-parties. The Company obtains firm pipeline transportation capacity to enable gas production to flow uninterrupted as sales volumes increase. In order to minimize this unutilized firm transportation expense, CNX is able to release (sell) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue (Gathering income) from released capacity helps offsets the unutilized firm transportation and processing fees in total other operating expense.

Impairment of Exploration and Production Properties

During the ~~six~~nine months ended ~~June~~September 30, 2020, CNX recognized certain indicators of impairments specific to our Southwest Pennsylvania (SWPA) CBM asset group and determined that the carrying value of that asset group was not recoverable. The fair value of the asset group was estimated by discounting the estimated future cash flows using discount rates and other assumptions that market participants would use in their estimates of fair value. As a result, an impairment of $62 million was recognized and is included in Impairment of Exploration and Production Properties in the Consolidated Statements of Income. The impairment was related to an economic decision to temporarily idle certain wells and the related processing facility during the first quarter.

~~Exploration and Production Related Other Costs~~

Exploration and production related other costs were $7 million for the six months ended June 30, 2020 compared to $8 million for the six months ended June 30, 2019. The $1 million decrease was due to the following items:

For the Six Months Ended June 30,
(in millions) 2020 2019 Variance Percent
Change
Land Rentals $ 1 $ 3 $ (2) (66.7) %
Lease Expiration Costs 4 5 (1) (20.0) %
Permitting Expense 2 — 2 100.0 %
Total Exploration and Production Related Other Costs $ 7 $ 8 $ (1) (12.5) %

~~Other Operating Expense~~

~~Other operating expense was $47 million for the six months ended June 30, 2020 compared to $41 million for the six months ended June 30, 2019. The $6 million increase was due to the following items:~~

For the Six Months Ended June 30,
(in millions) 2020 2019 Variance Percent
Change
Unutilized Firm Transportation and Processing Fees $ 34 $ 28 $ 6 21.4 %
Water Expense 1 — 1 100.0 %
Insurance Expense 1 1 — — %
Idle Equipment and Service Charges 6 8 (2) (25.0) %
Other 5 4 1 25.0 %
Total Other Operating Expense $ 47 $ 41 $ 6 14.6 %

•Unutilized firm transportation and processing fees represent pipeline transportation capacity obtained to enable gas production to flow uninterrupted as sales volumes increase, as well as additional processing capacity for NGLs. The increase of $6 million in the period-to-period comparison was primarily due to previously acquired capacity which was not utilized during the current period to transport the Company's flowing production or to process the Company’s wet natural gas production. The increase in unutilized capacity results in part from the temporary shut-in of a portion of CNX's liquids-rich Shirley-Pennsboro production in May and June of 2020 in response to low NGL prices. In some instances, the Company may have the opportunity to realize more favorable net pricing by strategically choosing to sell natural gas into a market or to a customer that does not require the use of the Company’s own firm transportation capacity. Such sales would increase unutilized firm transportation expense. The Company attempts to minimize this expense by releasing (selling) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue received when this capacity is released (sold) is included in Gathering Income in Total Other Operating Income above. There were no unutilized fees related to the Midstream Division during the six months ended June 30, 2020 or 2019.

~~Selling, General and Administrative~~

SG&A costs represent direct charges for the management and operation of CNX's E&P division. SG&A costs were $44 million for the six months ended June 30, 2020 compared to $74 million for the six months ended June 30, 2019. Refer to the discussion of total company SG&A costs contained in the section "Net (Loss) Income Attributable to CNX Resources Shareholders"~~of this Form 10-Q for a detailed cost explanation.~~

~~Interest Expense~~

Interest expense of $78 million was recognized in the six months ended June 30, 2020 compared to $61 million in the six months ended June 30, 2019. The $17 million increase was primarily due to realized and unrealized losses on interest rate swap agreements during the six months ended June 30, 2020. The addition of $345 million of convertible senior notes due 2026, the addition of the $125 million Cardinal States Facility and the $50 million CSG Holdings Facility all in the current period also contributed to the increase. These increases were offset in part by the purchase of $400 million of the outstanding 5.875% senior notes due in April 2022 during the three months ended March 31, 2019 and the purchase of $71 million during the three months ended March 31, 2020, as well as lower borrowings on the CNX credit facility. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

~~TOTAL MIDSTREAM DIVISION ANALYSIS for the six months ended June 30, 2020 compared to the six months ended June 30, 2019:~~

For the Six Months Ended June 30,
(in millions) 2020 2019 Variance
Midstream Revenue - Related Party $ 117 $ 114 $ 3
Midstream Revenue - Third Party 30 37 (7)
Total Revenue $ 147 $ 151 $ (4)
Transportation, Gathering and Compression $ 23 $ 24 $ (1)
Depreciation, Depletion and Amortization 21 16 5
Impairment of Goodwill 473 — 473
Selling, General, and Administrative Costs
9 11 (2)
Total Operating Costs and Expenses 526 51 475
Other Expense 1 1 —
Loss on Asset Sales and Abandonments, net 2 7 (5)
Interest Expense 17 15 2
Total Midstream Division Costs 546 74 472
(Loss) Earnings Before Income Tax $ (399) $ 77 $ (476)

~~Midstream Revenue~~

Midstream revenue consists of revenue related to volumes gathered on behalf of CNX and other third-party natural gas producers. CNXM charges a higher fee for natural gas that is shipped on its wet system compared to gas shipped through its dry system. CNXM revenue can also be impacted by the relative mix of gathered volumes by area, which may vary depending upon delivery point and may change dynamically depending on commodity prices at time of shipment. Total Midstream revenue decreased $4 million primarily due to a 32.2% decrease in gathered volumes of wet gas, offset in part by an increase of 25.1% in gathered volumes of dry gas in the period-to-period comparison. The decrease was the result of temporary production curtailments by related party and third party customers that reduced the wet gas gathering revenue. This decrease was offset in part by well turn-in-line activity that occurred over the past twelve months.

~~The table below summarizes volumes gathered by gas type:~~

For the Six Months Ended June 30,
2020 2019 Variance
Dry Gas (BBtu/d) (*) 1,076 865 211
Wet Gas (BBtu/d) (*) 485 715 (230)
Other (BBtu/d) (*)(**) 286 156 130
Total Gathered Volumes 1,847 1,736 111

~~(**) Includes condensate handling and third-party volumes under high-pressure short-haul agreements.~~

~~Transportation, Gathering and Compression~~

Transportation, Gathering and Compression costs were $23 million for the six months ended June 30, 2020 compared to $24 million for the six months ended June 30, 2019, and are comprised of items directly related to the cost of gathering natural gas at the wellhead and transporting it to interstate pipelines or other local sales points. These costs include items such as electrically-powered compression, compressor rental, repairs and maintenance, supplies, treating and contract services.

~~Selling, General and Administrative Expense~~

SG&A expense is comprised of direct charges for the management and operation of CNXM assets. SG&A costs were $9 million for the six months ended June 30, 2020 compared to $11 million for the six months ended June 30, 2019. Refer to the discussion of total Company SG&A costs contained in the section "Net (Loss) Income Attributable to CNX Resources Shareholders"~~of this Form 10-Q for a detailed cost explanation.~~

~~Depreciation, Depletion and Amortization Expense~~

~~Depreciation expense is recognized on gathering and other equipment on a straight-line basis, with useful lives ranging from 25 years to 40 years.~~

Impairment of Goodwill

In connection with the CNX Midstream Acquisition that ~~closed on~~occurred in January 3, 2018, CNX recorded $796 million of goodwill.

Goodwill is tested for impairment annually during the fourth quarter, or more frequently if recent events or prevailing conditions indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount using the qualitative assessment, a quantitative impairment test is performed. From time to time, CNX may also bypass the qualitative assessment and proceed directly to the quantitative impairment test.

In connection with CNX's assessment of goodwill in the first quarter of 2020 in relation to the deteriorating macroeconomic conditions, and the decline in the observable market value of CNXM securities both in relation to the COVID-19 pandemic and the overall decline in the MLP market space, CNX bypassed the qualitative assessment and performed a quantitative test that utilized a combination of the income and market approaches to estimate the fair value of the Midstream reporting unit. As a result of this assessment, CNX concluded that the carrying value exceed its estimated fair value, and as a result, an impairment of $473 million was included in Impairment of Goodwill in the Consolidated Statement of Income. No such impairment occurred in the prior period. See Note 6 - Goodwill and Other Intangible Assets in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

~~Loss~~

Exploration and Production Related Other Costs


	For the Nine Months Ended September 30,
(in millions)	2020		2019		Variance		Percent Change
Seismic Activity	$	—	$	6	$	(6)	(100.0)	%
Land Rentals	2		2		—		—	%
Lease Expiration Costs	5		5		—		—	%
Permitting Expense	2		—		2		100.0	%
Other	—		2		(2)		(100.0)	%
Total Exploration and Production Related Other Costs	$	9	$	15	$	(6)	(40.0)	%

•Seismic activity decreased in the period-to-period comparison due to additional geophysical research in the prior period.

Selling, General and Administrative ("SG&A")


	For the Nine Months Ended September 30,
(in millions)	2020		2019		Variance		Percent Change
Long-Term Equity-Based Compensation (Non-Cash)	$	12	$	37	$	(25)	(67.6)	%
Salaries and Wages	23		31		(8)		(25.8)	%
Short-Term Incentive Compensation	7		9		(2)		(22.2)	%
Other	34		32		2		6.3	%
Total SG&A	$	76	$	109	$	(33)	(30.3)	%

•Long-term equity-based compensation decreased $25 million in the period-to-period comparison due to a change in control event that occurred in the second quarter of 2019 and resulted in the acceleration of vesting of certain restricted stock units and performance share units held by certain employees. See Note 2 - Earnings Per Share in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

•Salaries and Wages decreased $8 million due to an overall reduction in employees and employee related costs resulting from a reduction in staff in the 2019 period.

Other Operating Expense


	For the Nine Months Ended September 30,
(in millions)	2020		2019		Variance		Percent Change
Unutilized Firm Transportation and Processing Fees	$	54	$	43	$	11	25.6	%
Water Expense	1		1		—		—	%
Insurance Expense	2		2		—		—	%
Idle Equipment and Service Charges	8		8		—		—	%

Severance Expense	—		1		(1)		(100.0)	%
Other	6		6		—		—	%
Total Other Operating Expense	$	71	$	61	$	10	16.4	%

turn-in-line wells due to low natural gas prices. In some instances, the Company may have the opportunity to realize more favorable net pricing by strategically choosing to sell natural gas into a market or to a customer that does not require the use of the Company’s own firm transportation capacity. Such sales would result in an increase in unutilized firm transportation expense. The Company attempts to minimize this expense by releasing (selling) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue received when this capacity is released (sold) is included in Gathering Income in Total Revenue and Other Operating Income above.

Gain on Asset Sales and Abandonments, net

~~During~~A gain on asset sales of $22 million related to the ~~six~~sale of various non-core assets was recognized in the nine months ended June 30, 2020, due to ongoing assessments of projects that generate the highest returns on invested capital, CNXM abandoned the construction of a pipeline project that was designed to support additional production within certain operating areas, as well as land right-of-ways, resulting in a loss of $2 million that is included in (Gain) Loss on Assets Sales and Abandonments, net in the Consolidated Statements of Income.

During the six months ended June 30, 2019, CNXM abandoned the construction of a compressor station that was designed to support additional production within certain areas of their "Anchor Systems," incurring a loss of $7 million that is included in (Gain) Loss on Asset Sales and Abandonments, net in the Consolidated Statements of Income.

~~Interest Expense~~

Interest expense is comprised of interest on the outstanding balance under CNXM's senior notes due 2026 and its revolving credit facility. Interest expense was $17 million for the six months ended JuneSeptember 30, 2020 compared to ~~$15~~a gain of $1 million ~~for~~in the ~~six~~nine months ended ~~June~~September 30, 2019.

Loss (Gain) on Debt Extinguishment

A gain on debt extinguishment of $11 million was recognized in the nine months ended September 30, 2020 compared to a loss on debt extinguishment of $8 million in the nine months ended September 30, 2019. During the nine months ended September 30, 2020, CNX purchased $531 million of its 5.875% Senior notes due in April 2022 at an average price equal to 97.5% of the principal amount. During the nine months ended September 30, 2019 CNX purchased $400 million of its 5.875% Senior notes due in April 2022 at an average price equal to 101.5% of the principal amount. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

Other Expense


	For the Nine Months Ended September 30,
(in millions)	2020		2019		Variance		Percent Change
Other Income
Royalty Income	$	—	$	4	$	(4)	(100.0)	%
Right of Way Sales	2		4		(2)		(50.0)	%
Interest Income	2		2		—		—	%
Other	7		2		5		250.0	%
Total Other Income	$	11	$	12	$	(1)	(8.3)	%

Other Expense
Professional Services	$	6	$	2	$	4	200.0	%
Merger Related Costs	5		—		5		100.0	%
Bank Fees	9		9		—		—	%

Other Corporate Expense	3		4		(1)		(25.0)	%
Total Other Expense	$	23	$	15	$	8	53.3	%

Total Other Expense	$	12	$	3	$	9	(300.0)	%

•Royalty income is comprised of royalties CNX received on non-operated properties unrelated to natural gas. The ~~increase~~decrease of $4 million in the period-to-period comparison was due to a reduction in third-party activity.

•Other income increased $5 million in the period-to-period comparison primarily due to the receipt of a severance tax refund related to a prior period in the nine months ended September 30, 2020 (See Note 4- Income Taxes in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional ~~borrowings on~~information).

•Merger-related costs consist of transaction costs directly attributable to the ~~revolving credit facility.~~CNXM Merger (See Note 13- Acquisitions and Dispositions in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information), including financial advisory, legal service and other professional fees, which were recorded to Other Expense in the Consolidated Statements of Income.

•Professional services increased $4 million in the period-to-period comparison primarily due to fees related to an agreement to eliminate CNXM's incentive distribution rights, or IDRs, in January of 2020, prior to the Merger.

6553

Interest Expense


	For the Nine Months Ended September 30,
(in millions)	2020		2019		Variance		Percent Change
Total Interest Expense	$	133	$	114	$	19	16.7	%

•The $19 million increase was primarily due to realized and unrealized losses on interest rate swap agreements during the nine months ended September 30, 2020. The addition of $345 million of convertible senior notes due 2026, the addition of the $125 million Cardinal States Facility and the $50 million CSG Holdings Facility all in the current period also contributed to the increase. These increases were offset in part by the purchase of $531 million of the outstanding 5.875% senior notes due in April 2022 during the nine months ended September 30, 2020, as well as lower borrowings on the CNX credit facility. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

Income Taxes


	For the Nine Months Ended September 30,
(in millions)	2020			2019			Variance			Percent Change
Total Company (Loss) Earnings Before Income Tax	$	(867)		$	350		$	(1,217)		(347.7)	%
Income Tax (Benefit) Expense	$	(243)		$	78		$	(321)		(411.5)	%
Effective Income Tax Rate	28.0		%	22.3		%	5.7		%

The effective income tax rate was 28.0% for the nine months ended September 30, 2020 compared to 22.3% for the nine months ended September 30, 2019. The effective rate for the nine months ended September 30, 2020 and 2019 differs from the U.S. Federal statutory rate of 21% primarily due to the impact of noncontrolling interest, equity compensation and state income taxes.

See Note 4 - Income Taxes in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

Liquidity and Capital Resources

CNX generally has satisfied its working capital requirements and funded its capital expenditures and debt service obligations with cash generated from operations and proceeds from borrowings. CNX currently believes that cash generated from operations, asset sales and the Company's borrowing capacity will be sufficient to meet the Company's working capital requirements, anticipated capital expenditures (other than major acquisitions), scheduled debt payments, anticipated dividend payments and to provide required letters of credit for the next fiscal year. Nevertheless, the ability of CNX to satisfy its working capital requirements, to service its debt obligations, to fund planned capital expenditures, or to pay dividends will depend upon future operating performance, which will be affected by prevailing economic conditions in the natural gas industry and other financial and business factors, including the current COVID 19 pandemic, some of which are beyond CNX’s control.

From time to time, CNX is required to post financial assurances to satisfy contractual and other requirements generated in the normal course of business. Some of these assurances are posted to comply with federal, state or other government agencies' statutes and regulations. CNX sometimes uses letters of credit to satisfy these requirements and these letters of credit reduce the Company's borrowing facility capacity.

CNX continuously reviews its liquidity and capital resources. If market conditions were to change, for instance due to the significant decline in oil prices or uncertainty created by the COVID-19 pandemic, and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced.

As of ~~June~~September 30, 2020, CNX was in compliance with all of its debt covenants. After considering the current and potential effect of the significant decline in oil prices, current and expected future natural gas prices, and uncertainty created by the COVID-19 pandemic on its operations, CNX currently expects to remain in compliance with its debt covenants.

In order to manage the market risk exposure of volatile natural gas prices in the future, CNX enters into various physical natural gas supply transactions with both gas marketers and end users for terms varying in length. CNX has also entered into various natural gas swap ~~and option~~ transactions, which exist parallel to the underlying physical transactions. The fair value of these contracts was a net ~~asset~~liability of ~~$164~~$95 million at ~~June~~September 30, 2020 and a net asset of $406 million at December 31, 2019. The Company has not experienced any issues of non-performance by derivative counterparties.

CNX frequently evaluates potential acquisitions. CNX has funded acquisitions with cash generated from operations and a variety of other sources, depending on the size of the transaction, including debt and equity financing. There can be no assurance that additional capital resources, including debt and equity financing, will be available to CNX on terms which CNX finds acceptable, or at all.

Cash Flows (in millions)


		For the Six Months Ended June 30,											For the Nine Months Ended September 30,
		2020		2019		Change			2020		2019		Change
Cash Provided by Operating Activities	Cash Provided by Operating Activities	$	411	$	561	$	(150)	Cash Provided by Operating Activities	$	634	$	866	$	(232)
Cash Used in Investing Activities	Cash Used in Investing Activities	$	(261)	$	(621)	$	360	Cash Used in Investing Activities	$	(363)	$	(949)	$	586
Cash (Used in) Provided by Financing Activities	Cash (Used in) Provided by Financing Activities	$	(141)	$	76	$	(217)	Cash (Used in) Provided by Financing Activities	$	(131)	$	71	$	(202)

Cash flows from operating activities changed in the period-to-period comparison primarily due to the following items:

•Net income decreased ~~$564~~$897 million in the period-to-period comparison.

•Adjustments to reconcile net income to cash provided by operating activities primarily consisted of a $473 million impairment of goodwill, a $62 million impairment of exploration and production properties, a ~~$155~~$265 million change in deferred income taxes, a ~~$298~~$729 million net change in ~~commodity~~ derivative instruments, a $25 million decrease in stock-based compensation expense, a $21 million increase in gain on asset sales and abandonments, and a ~~$19~~$18 million increase in the gain on debt extinguishment.

Cash flows from investing activities changed in the period-to-period comparison primarily due to the following items:

•Capital expenditures decreased ~~$341~~$569 million in the period-to-period comparison primarily due to decreased expenditures in the ~~Utica and Marcellus~~ Shale ~~segments~~segment resulting from decreased drilling and completions activity. ~~CNXM's~~Gathering capital expenditures decreased due primarily to the substantial build out that was completed during 2019.

•Proceeds from asset sales increased ~~$19~~$17 million mainly due to increased surface sales and oil and gas assignment sales in the ~~six~~nine months ended ~~June~~September 30, 2020.

6655

Cash flows from financing activities changed in the period-to-period comparison primarily due to the following items:

•During the ~~six~~nine months ended ~~June~~September 30, 2020, CNX paid ~~$469~~$519 million to purchase ~~$481~~$531 million of senior notes due in 2022 at ~~97.5%~~97.7% of the principal amount. During the ~~six~~nine months ended ~~June~~September 30, 2019, CNX paid $406 million to purchase $400 million of the senior notes due in 2022 at 101.5% of the principal amount. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

•In the ~~six~~nine months ended ~~June~~September 30, 2020, there were $7$31 million of net proceeds from the CNXM credit facility compared to ~~$124~~$162 million of net proceeds during the ~~six~~nine months ended ~~June~~September 30, 2019.

•In the ~~six~~nine months ended ~~June~~September 30, 2020, there were ~~$111~~$251 million of net payments on the CNX credit facility compared to ~~$18~~$1 million of net proceeds during the ~~six~~nine months ended ~~June~~September 30, 2019.

•During the ~~six~~nine months ended ~~June~~September 30, ~~2019,~~2020, CNX ~~received proceeds~~closed on $200 million aggregate principal amount of ~~$500 million from the issuance of~~its senior notes due in ~~2027.~~2027 at a price of 103.5% for cash proceeds of $207 million. These new $200 million senior notes due in 2027 were offered as additional notes to the previously issued $500 million senior notes due in 2027 during the nine months ended September 30, 2019. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

•In the ~~six~~nine months ended ~~June~~September 30, 2020, there were ~~$170~~$164 million of net proceeds from the Cardinal States Gathering LLC and CSG Holdings II LLC non-revolving credit facilities. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

•During the ~~six~~nine months ended ~~June 20,~~September 30, 2020, CNX received proceeds of $335 million from the issuance of ~~convertible senior notes due in 2026.~~the Convertible Notes. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

•During the ~~six~~nine months ended ~~June 20,~~September 30, 2020, CNX paid $36 million for capped call transactions related to the issuance of the ~~convertible debt as mentioned above.~~Convertible Notes. See Note 9 - Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.

•In the ~~six~~nine months ended ~~June~~September 30, 2019, CNX repurchased ~~$110~~$117 million of its common stock on the open market compared to no purchases in the ~~six~~nine months ended ~~June~~September 30, 2020.

•Debt issuance and financing fees increased $2$5 million primarily due to the fees associated with the borrowings on the Cardinal States Gathering LLC and CSG Holdings II LLC non-revolving credit facilities as well as the issuance of the ~~convertible senior notes.~~Convertible Notes.

The following is a summary of the Company's significant contractual obligations at ~~June~~September 30, 2020 (in thousands):


		Payments due by Year																			Payments due by Year
		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years		Total			Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years		Total

Purchase Order Firm Commitments	Purchase Order Firm Commitments	$	806	$	1,293	$	—	$	—	$	2,099	Purchase Order Firm Commitments	$	806	$	1,131	$	—	$	—	$	1,937
Gas Firm Transportation and Processing	Gas Firm Transportation and Processing	243,011		440,654		373,821		976,664		2,034,150		Gas Firm Transportation and Processing	241,980		427,931		369,444		930,189		1,969,544
Long-Term Debt	Long-Term Debt	22,430		461,095		915,430		1,178,736		2,577,691		Long-Term Debt	22,488		411,411		798,992		1,384,511		2,617,402
Interest on Long-Term Debt	Interest on Long-Term Debt	124,723		221,675		165,167		111,933		623,498		Interest on Long-Term Debt	132,249		239,504		186,647		101,764		660,164
Finance Lease Obligations	Finance Lease Obligations	7,295		3,857		368		—		11,520		Finance Lease Obligations	7,419		2,049		273		—		9,741
Interest on Finance Lease Obligations	Interest on Finance Lease Obligations	525		111		27		—		663		Interest on Finance Lease Obligations	396		63		19		—		478
Operating Lease Obligations	Operating Lease Obligations	52,110		48,154		7,283		24,264		131,811		Operating Lease Obligations	52,032		35,436		7,369		23,375		118,212
Interest on Operating Lease Obligations	Interest on Operating Lease Obligations	4,588		4,475		2,802		4,131		15,996		Interest on Operating Lease Obligations	4,101		4,054		2,924		3,808		14,887
Long-Term Liabilities—Employee Related (a)	Long-Term Liabilities—Employee Related (a)	1,840		3,950		4,538		31,574		41,902		Long-Term Liabilities—Employee Related (a)	1,860		3,999		4,633		31,274		41,766
Other Long-Term Liabilities (b)	Other Long-Term Liabilities (b)	216,603		15,875		14,250		32,418		279,146		Other Long-Term Liabilities (b)	281,530		10,000		10,000		41,761		343,291
Total Contractual Obligations (c)	Total Contractual Obligations (c)	$	673,931	$	1,201,139	$	1,483,686	$	2,359,720	$	5,718,476	Total Contractual Obligations (c)	$	744,861	$	1,135,578	$	1,380,301	$	2,516,682	$	5,777,422

_________________________

(a)Employee related long-term liabilities include salaried retirement contributions and work-related injuries and illnesses.

(b)Other long-term liabilities include royalties and other long-term liability costs.

(c)The ~~significant obligation~~ table above does not include obligations to taxing authorities due to the uncertainty surrounding the ultimate settlement of amounts and timing of these obligations.

6756

Debt

At ~~June~~September 30, 2020, CNX had total long-term debt of ~~$2,578~~$2,617 million, including the current portion of long-term debt of $22 million and excluding unamortized debt issuance costs. This long-term debt consisted of:

•An aggregate principal amount of ~~$550 million in outstanding borrowings under the CNX Revolving Credit Facility.~~

•~~An aggregate principal amount of $500~~$700 million of 7.25% senior notes due in March ~~2027.~~2027 plus $7 million of unamortized bond premium. Interest on the notes is payable March 14 and September 14 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM or CSG Holdings III LLC (or its subsidiaries).

•An aggregate principal amount of ~~$413~~$410 million ~~of 5.875% senior notes due~~ in ~~April 2022 plus a nominal unamortized bond premium. Interest on~~outstanding borrowings under the notes is payable April 15 and October 15 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner) or CSG Holdings III LLC (or its subsidiaries).CNX Revolving Credit Facility.

•An aggregate principal amount of $400 million of 6.50% senior notes due in March 2026 issued by CNXM, less $4 million of unamortized bond discount. Interest on the notes is payable March 15 and September 15 of each year. Payment of the principal and interest on the notes is guaranteed by certain of CNXM's subsidiaries. CNX is not a guarantor of these notes.

•An aggregate principal amount of $363 million of 5.875% senior notes due in April 2022 plus a nominal unamortized bond premium. Interest on the notes is payable April 15 and October 15 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner) or CSG Holdings III LLC (or its subsidiaries).

•An aggregate principal amount of $345 million of 2.25% senior notes due in May 2026, unless earlier redeemed, repurchased, or converted, less ~~$115~~$112 million of unamortized bond discount and issuance costs. Interest on the notes is payable May 1 and November 1 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner) or CSG Holdings III LLC (or its subsidiaries).

•An aggregate principal amount of ~~$319~~$343 million in outstanding borrowings under the CNXM revolver. CNX is not a guarantor of CNXM's revolving credit facility.

•An aggregate principal amount of $119 million in outstanding borrowings under the Cardinal States Gathering Company Credit Facility, ~~of $123 million~~ less $1 million of unamortized discount. Interest and a portion of the obligation are paid quarterly.

•An aggregate principal amount of $47 million in outstanding borrowings under the CSG Holdings II LLC Credit Facility, ~~of $49 million~~ less ~~$1 million~~a nominal unamortized discount. Interest and a portion of the obligation are paid quarterly.

Total Equity and Dividends

CNX had total equity of ~~$4,567~~$4,270 million at ~~June~~September 30, 2020 compared to $4,962 million at December 31, 2019. See the Consolidated Statements of Stockholders' Equity in Item 1 of this Form 10-Q for additional details.

On September 28, 2020, the Merger of CNXM was completed (See Note 13 - Acquisitions and Dispositions in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information). CNX accounted for the change in our ownership interest in CNXM as an equity transaction which was reflected as a reduction of noncontrolling interest with corresponding increases to common stock and capital in excess of par value.

The declaration and payment of dividends by CNX is subject to the discretion of CNX's Board of Directors, and no assurance can be given that CNX will pay dividends in the future. CNX's Board of Directors determines whether dividends will be paid quarterly. CNX suspended its quarterly dividend in March 2016 to further reflect the Company's increased emphasis on growth. The determination to pay dividends in the future will depend upon, among other things, general business conditions, CNX's financial results, contractual and legal restrictions regarding the payment of dividends by CNX, planned investments by CNX, and such other factors as the Board of Directors deems relevant. The Company's Credit Facility limits CNX's ability to pay dividends in excess of an annual rate of $0.10 per share when the Company's net leverage ratio exceeds 3.00 to 1.00 and is subject to availability under the Credit Facility of at least 15% of the aggregate commitments. The net leverage ratio was ~~2.38~~2.34 to 1.00 at ~~June~~September 30, 2020. The Credit Facility does not permit dividend payments in the event of default. The indentures to the 5.875% senior notes due in April 2022 and the 7.25% senior notes due in March 2027 limit dividends to $0.50 per share annually unless several conditions are met. These conditions include no defaults, ability to incur additional debt and other payment limitations under the indentures. There were no defaults in the ~~six~~nine months ended ~~June~~September 30, ~~2020.~~

On July 27, 2020 the Board of Directors of CNX Midstream GP LLC, the general partner of CNX Midstream Partners LP, announced the declaration of a cash distribution of $0.50 per unit with respect to the second quarter of 2020. The distribution will be made on August 14, 2020 to unitholders of record as of the close of business on August 7, 2020.

Off-Balance Sheet Transactions

CNX does not maintain off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that are reasonably likely to have a material current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources which are not disclosed in the Notes to the Unaudited Consolidated Financial Statements. CNX uses a combination of

surety bonds, corporate guarantees and letters of credit to secure the Company's financial obligations for employee-related, environmental, performance and various other items which are not reflected in the Consolidated Balance Sheet at ~~June~~September 30, 2020. Management believes these items will expire without being funded. See Note 10 - Commitments and Contingent

Liabilities in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional details of the various financial guarantees that have been issued by CNX.

~~Critical Accounting Policies (Interim Update)~~

~~Convertible Senior Notes~~

The Convertible Senior Notes due May 2026 ("Convertible Notes") are accounted for in accordance with FASB ASC Subtopic 470-20, Debt with Conversion and Other Options. Pursuant to ASC Subtopic 470-20, issuers of certain convertible debt instruments, such as the Convertible Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument is computed by estimating the fair value of a similar liability without the conversion option. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the instrument. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the respective term of the Convertible Notes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the Convertible Notes, the allocation of issuance costs incurred between the liability and equity components was based on their relative values.

Forward-Looking Statements

We are including the following cautionary statement in this Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q are forward-looking statements (as defined in Section 21E of 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 a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q; we disclaim any obligation to update these statements unless required by securities law, and we caution you not to rely on them unduly. 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;

•our dependence on gathering, processing and transportation facilities and other midstream facilities owned by ~~CNX Midstream Partners LP (NYSE: CNXM) (CNXM) and others;~~third-parties;

•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;

•challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities;

•the substantial capital expenditures required for our development and exploration projects, as well as ~~CNXM’s~~ midstream system development;

•the impact of 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;

•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;

•if natural gas prices decrease or drilling efforts are unsuccessful, we may be required to record write-downs of our proved natural gas properties;

•the availability of storage capacity for refined products such as crude, and refinery inputs including condensate, c5+ and butane;

•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;

•the impact of outbreaks of communicable diseases such as ~~the novel highly transmissible and pathogenic coronavirus (“COVID-19”)~~COVID-19 on business activity, the Company’s operations and national and global economic conditions, ~~generally~~generally;

;

•hedging activities may prevent us from benefiting from price increases and may expose us to other risks;

•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;

•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;

•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;

•changes in federal or state income tax laws;

•cyber-incidents could have a material adverse effect on our business, financial condition or results of operations;

•construction of new gathering, compression, dehydration, treating or other midstream assets ~~by CNXM~~ may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks;

•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;

•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;

•acquisitions and divestitures, we anticipate may not occur or produce anticipated benefits;

•the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act;

•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;

•negative public perception regarding our industry could have an adverse effect on our operations;

•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;

•Risks associated with our ~~issuance of~~ 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 ~~Note~~Notes issuance, including counterparty risk;

•~~the possibility that the market price of the Company's common stock will fluctuate prior to the completion of the Merger causing the value of the merger consideration to change;~~

•~~the risk that a condition to the closing of the Merger may not be satisfied on a timely basis, if at all;~~

•~~the timing of the completion of the Merger;~~

•~~the substantial transaction-related costs that may be incurred by the Company and the Partnership in connection with the Merger;~~

•~~the possibility that the Company and the Partnership may, under certain specified circumstances, be responsible for the other party's expenses;~~

•the possibility that Company and ~~the Partnership~~CNXM may be the targets of securities class actions and derivative lawsuits;

•the ~~limited duties~~risk that cost savings, tax benefits and any other synergies from the ~~partnership agreement places on the General Partner for actions taken by the General Partner;~~Merger may not be fully realized or may take longer to realize than expected;

•the ~~risk that certain officers~~impact and ~~directors~~outcome of ~~the Company~~pending and ~~the General Partner have interests in the Merger that are different from, or in addition~~future litigation, including litigation, relating to the ~~interests they may have as the Partnership's unitholders or the Company's stockholders, respectively;~~

•~~the possibility that financial projections by the Company and the Partnership may not prove to be reflective of actual future results;~~Merger; and

•certain other factors addressed in this report.

Although forward-looking statements reflect our good faith beliefs at the time they are made, they involve known and unknown risks, uncertainties and other factors. For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, including, among others, that our business plans may change as circumstances warrant, please refer to the “Risk Factors” and “Forward-Looking Statements” sections of our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Commission on February 10, 2020 and subsequent Quarterly Reports on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In addition to the risks inherent in operations, CNX is exposed to financial, market, political and economic risks. The following discussion provides additional detail regarding CNX's exposure to the risks of changing commodity prices, interest rates and foreign exchange rates.

CNX is exposed to market price risk in the normal course of selling natural gas and liquids. CNX uses fixed-price contracts, options and derivative commodity instruments (over-the-counter swaps) to minimize exposure to market price volatility in the sale of natural gas. Under our risk management policy, it is not our intent to engage in derivative activities for speculative purposes. Typically, CNX “sells” swaps under which it receives a fixed price from counterparties and pays a floating market price. During the second quarter of 2020, CNX purchased, rather than sold, financial swaps for the period May through November of 2020 under which CNX will pay a fixed price to and receive a floating price from its hedge counterparties.

CNX has established risk management policies and procedures to strengthen the internal control environment of the marketing of commodities produced from its asset base. All of the derivative instruments without other risk assessment procedures are held for purposes other than trading. They are used primarily to mitigate uncertainty and volatility and cover underlying exposures. The Company's market risk strategy incorporates fundamental risk management tools to assess market price risk and establish a framework in which management can maintain a portfolio of transactions within pre-defined risk parameters.

CNX believes that the use of derivative instruments, along with our risk assessment procedures and internal controls, mitigates our exposure to material risks. The use of derivative instruments without other risk assessment procedures could materially affect the Company's results of operations depending on market prices; however, we believe that use of these instruments will not have a material adverse effect on our financial position or liquidity due to our risk assessment procedures and internal controls.

For a summary of accounting policies related to derivative instruments, see Note 1—Significant Accounting Policies in the Notes to the Audited Consolidated Financial Statements in Item 8 of CNX's 2019 Annual Report on Form 10-K.

At ~~June~~September 30, 2020 our open gas derivative instruments were in a net liability position with a fair value of $95 million, and at December 31, 2019 our open gas derivative instruments were in a net asset position with a fair value of ~~$164 million and~~ $406 ~~million, respectively.~~million. A sensitivity analysis has been performed to determine the incremental effect on future earnings related to open derivative instruments at ~~June~~September 30, 2020 and December 31, 2019. A hypothetical 10 percent increase in future natural gas prices would have decreased the fair value by ~~$361~~$393 million and $383 million at ~~June~~September 30, 2020 and December 31, 2019, respectively. A hypothetical 10 percent decrease in future natural gas prices would have increased the fair value by ~~$339~~$389 million and $402 million at ~~June~~September 30, 2020 and December 31, 2019, respectively.

CNX's interest expense is sensitive to changes in the general level of interest rates in the United States. The Company uses derivative instruments to manage risk related to interest rates. At ~~June~~September 30, 2020 and December 31, 2019, CNX had ~~$1,544~~$1,700 million and $1,797 million, respectively, aggregate principal amount of debt outstanding under fixed-rate instruments, including unamortized debt issuance costs of $7$10 million and $9 million, respectively. At ~~June~~September 30, 2020 and December 31, 2019, CNX had ~~$1,031~~$910 million and $973 million, respectively, of debt outstanding under variable-rate instruments, including unamortized debt issuance costs of $8$7 million at ~~June~~September 30, 2020. CNX’s primary exposure to market risk for changes in interest rates relates to our Credit Facility, under which there were ~~$550~~$410 million of borrowings at ~~June~~September 30, 2020 and $661 million at December 31, 2019, CNXM's revolving credit facility, under which there were ~~$319~~$343 million of borrowings at ~~June~~September 30, 2020 and $312 million at December 31, 2019, and the Cardinal States Gathering LLC and CSG Holdings II LLC Credit Agreements, under which there were ~~$171~~$166 million of borrowings at ~~June~~September 30, 2020. A hypothetical 100 basis-point increase in the average rate for CNX's variable-rate instruments would decrease pre-tax future earnings as of ~~June~~September 30, 2020 and December 31, 2019 by $9 million and $10 million, respectively, on an annualized basis.

All of the Company’s transactions are denominated in U.S. dollars and, as a result, it does not have material exposure to currency exchange-rate risks.

Natural Gas Hedging Volumes

As of ~~July~~October 8, 2020, our hedged volumes for the periods indicated are as follows:


		For the Three Months Ended																	For the Three Months Ended
		March 31,		June 30,		September 30,		December 31,		Total Year			March 31,		June 30,		September 30,		December 31,		Total Year
2020 Fixed Price Volumes*	2020 Fixed Price Volumes*											2020 Fixed Price Volumes*
Hedged Bcf	Hedged Bcf	N/A		N/A		105.2		120.8		226.0		Hedged Bcf	N/A		N/A		N/A		130.2		130.2
Weighted Average Hedge Price per Mcf	Weighted Average Hedge Price per Mcf	N/A		N/A		$	2.47	$	2.56	$	2.52	Weighted Average Hedge Price per Mcf	N/A		N/A		N/A		$	2.50	$	2.50
2021 Fixed Price Volumes	2021 Fixed Price Volumes											2021 Fixed Price Volumes
Hedged Bcf	Hedged Bcf	118.8		111.2		112.5		111.6		454.1		Hedged Bcf	120.6		110.9		112.8		115.6		459.1**
Weighted Average Hedge Price per Mcf	Weighted Average Hedge Price per Mcf	$	2.54	$	2.42	$	2.42	$	2.45	$	2.46	Weighted Average Hedge Price per Mcf	$	2.56	$	2.42	$	2.42	$	2.48	$	2.47
2022 Fixed Price Volumes	2022 Fixed Price Volumes											2022 Fixed Price Volumes
Hedged Bcf	Hedged Bcf	84.7		82.1		83.0		80.3		330.1		Hedged Bcf	99.5		97.1		98.1		95.3		390.0
Weighted Average Hedge Price per Mcf	Weighted Average Hedge Price per Mcf	$	2.38	$	2.30	$	2.30	$	2.28	$	2.32	Weighted Average Hedge Price per Mcf	$	2.37	$	2.30	$	2.30	$	2.28	$	2.32
2023 Fixed Price Volumes	2023 Fixed Price Volumes											2023 Fixed Price Volumes
Hedged Bcf	Hedged Bcf	48.4		48.9		49.5		49.5		196.3		Hedged Bcf	67.2		68.0		68.7		68.7		272.6
Weighted Average Hedge Price per Mcf	Weighted Average Hedge Price per Mcf	$	2.28	$	2.24	$	2.24	$	2.26	$	2.26	Weighted Average Hedge Price per Mcf	$	2.26	$	2.24	$	2.24	$	2.25	$	2.24
2024 Fixed Price Volumes	2024 Fixed Price Volumes											2024 Fixed Price Volumes
Hedged Bcf	Hedged Bcf	45.8		42.9		43.4		43.4		175.5		Hedged Bcf	64.2		61.3		61.9		61.9		249.3
Weighted Average Hedge Price per Mcf	Weighted Average Hedge Price per Mcf	$	2.37	$	2.30	$	2.30	$	2.30	$	2.32	Weighted Average Hedge Price per Mcf	$	2.34	$	2.28	$	2.28	$	2.28	$	2.30
2025 Fixed Price Volumes	2025 Fixed Price Volumes											2025 Fixed Price Volumes
Hedged Bcf	Hedged Bcf	15.3		15.5		15.7		15.7		62.2		Hedged Bcf	22.0		22.2		22.5		22.4		89.1
Weighted Average Hedge Price per Mcf	Weighted Average Hedge Price per Mcf	$	2.08	$	2.08	$	2.08	$	2.08	$	2.08	Weighted Average Hedge Price per Mcf	$	2.10	$	2.10	$	2.10	$	2.10	$	2.10

*Excludes purchased swaps. The Company's purchased swaps are as follows:

For the Three Months Ended
September 30, December 31,
2020 2020 Total Year
Hedged Bcf 16.2 6.2 21.8**
Weighted Average Fixed Price per Mcf $ 1.78 $ 1.74 $ 1.75


	For the Three Months Ended
	December 31, 2020
Hedged Bcf	6.2
Weighted Average Fixed Price per Mcf	$	1.75

**Quarterly volumes do not add to annual volumes inasmuch as a discrete condition in individual quarters, where basis hedge volumes exceed NYMEX hedge volumes, does not exist for the year taken as a whole.

7261

ITEM 4.CONTROLS AND PROCEDURES

Disclosure controls and procedures. CNX, under the supervision and with the participation of its management, including CNX’s principal executive officer and principal financial officer, evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, CNX’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures are effective as of ~~June~~September 30, 2020 to ensure that information required to be disclosed by CNX in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and includes controls and procedures designed to ensure that information required to be disclosed by CNX in such reports is accumulated and communicated to CNX’s management, including CNX’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in internal controls over financial reporting. There were no changes in the Company's internal controls over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II: OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

The first and second paragraph of Note 10—Commitments and Contingent Liabilities in the Notes to the Unaudited Consolidated Financial Statements included in Item 1 of this Form 10-Q is incorporated herein by reference.

Environmental Proceedings

From time to time, CNX and ~~the Pennsylvania Department of Environmental Protection ("PA DEP")~~federal, state, and local regulatory agencies that oversee CNX’s activities enter into agreements regarding notices of ~~violation issued by the PA DEP.~~noncompliance. With respect to the subsurface pressure anomaly experienced at one of our Utica wells in January 2019, CNX and the ~~PA DEP are negotiating~~Pennsylvania Department of Environmental Protection executed a consent order and agreement, which ~~we expect to be~~was immaterial to CNX’s financial statements.

ITEM 1A. RISK FACTORS

CNX is also subject to additional risks and hazards due to the nature of the business activities it conducts. For a discussion of these risks, see “Item 1A. Risk Factors” in CNX's 2019 Annual Report on Form 10-K as filed with the SEC on February 10, 2020 ("2019 Form 10-K"). and in our Quarterly Reports on Form 10Q for the quarters ended March 31, 2020 and June 30, 2020. The risks described ~~in the 2019 Form 10-K~~ could materially and adversely affect CNX's business, financial condition, cash flows, and results of operations. ~~Other than as set forth below, there have been no additional material changes to the risks described in the 2019 Form 10-K.~~ CNX may experience additional risks and uncertainties not currently known; or, as a result of developments occurring in the future, conditions that are currently deemed to be immaterial may also materially and adversely affect CNX's business, financial condition, cash flows, and results of operations.

Events beyond our control, including a global or domestic health crisis, may result in unexpected adverse operating and financial results.

The recent outbreak of the coronavirus pandemic (COVID-19) has affected, and may materially and adversely affect, our business, operating and financial results and liquidity. The severity, magnitude and duration of the current COVID-19 outbreak remains uncertain, but continues to be rapidly changing and hard to predict. While the full impact of this virus and the long-term worldwide reaction to it and impact from it remains unknown at this time, government reaction to the pandemic and restrictions and limitations applied by the government as a result, continued widespread growth in infections, travel restrictions, quarantines, or site closures as a result of the virus could, among other things, impact the ability of our employees and contractors to perform their duties, cause increased technology and security risk due to extended and company-wide telecommuting, lead to disruptions in our supply chain (including necessary contractors), lead to a disruption in our resource acquisition or permitting activities and cause disruption in our relationship with our customers. Additionally, the COVID-19 outbreak has significantly impacted economic activity and markets around the world, and COVID-19 or another similar outbreak could negatively impact our business in numerous ways, including, but not limited to, the following:

•our revenue may be reduced if the outbreak results in an economic downturn or recession, as many experts predict, to the extent it leads to a prolonged decrease in the demand for natural gas and liquefied natural gas ("LNG") and, to a lesser extent, NGLs and oil;

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•our operations may be disrupted or impaired, thus lowering our production level, if a significant portion of our employees or contractors are unable to work due to illness or if our field operations are suspended or temporarily shut-down or restricted due to control measures designed to contain the outbreak;

•the operations of our midstream service providers, on whom we rely for the transmission, gathering and processing of a significant portion of our produced natural gas, NGLs and oil, may be disrupted or suspended in response to containing the outbreak, and/or the difficult economic environment may lead to the bankruptcy or closing of the facilities and infrastructure of our midstream service providers, which may result in substantial discounts in the prices we receive for our produced natural gas, NGLs and oil or result in the shut-in of producing wells or the delay or discontinuance of development plans for our properties; and

•the disruption and instability in the financial markets and the uncertainty in the general business environment may affect our ability to find attractive asset monetization opportunities and successfully execute our plan to deleverage our business on the timeframe previously anticipated or at all; for example, the market value of the assets to be monetized may be reduced and the financial condition or prospects of prospective purchasers and other counterparties, and such parties’ access to financing on acceptable terms, may be adversely affected.

In addition, the COVID-19 pandemic has increased volatility and caused negative pressure in the capital and credit markets. As a result, we may experience difficulty accessing the capital or financing needed to fund our exploration and production operations, which have substantial capital requirements, or refinance our upcoming maturities on satisfactory terms or at all. We typically fund our capital expenditures with existing cash and cash generated by operations (which is subject to a number of variables, including many beyond our control) and, to the extent our capital expenditures exceed our cash resources, from borrowings under our revolving credit facility and other external sources of capital, we could be required to curtail our operations and the development of our properties, which in turn could lead to a decline in our reserves and production, and could adversely affect our business, results of operations and financial position.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks set forth in Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, such as those relating to our financial performance and debt obligations. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on our business, which will depend on numerous evolving factors and future developments that we are not able to predict, including the length of time that the pandemic continues, its effect on the demand for natural gas, LNG, NGLs and oil, the response of the overall economy and the financial markets as well as the effect of governmental actions taken in response to the pandemic. Any of these outcomes could have a material adverse effect on our business, operations, financial results and liquidity.

The accounting method for convertible debt securities that may be settled in cash, such as the Convertible Notes, could have a material effect on our reported financial results.

Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options (“ASC 470-20”), an entity must separately account for the liability and equity components of the convertible debt instruments (such as the Convertible Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for the Convertible Notes is that the equity component is required to be included in the ~~additional paid-in capital~~Capital in Excess of Par Value section of ~~stockholders’ equity~~Stockholders’ Equity on our ~~consolidated balance sheet~~Consolidated Balance Sheet at the issuance date and the value of the equity component would be treated as debt discount for purposes of accounting for the debt component of the Convertible Notes. As a result, we will be required to record non-cash interest expense through the amortization of the excess of the face amount over the carrying amount of the expected life of the Convertible Notes. We will report larger net losses (or lower net income) in our financial results because ASC 470-20 will require interest to include both the amortization of the debt discount and the instrument’s cash coupon interest rate, which could adversely affect our reported or future financial results, the trading price of our common stock and the trading price of the Convertible Notes.

In addition, under certain circumstances, convertible debt instruments (such as the Convertible Notes) that may be settled entirely or partly in cash may be accounted for utilizing the treasury stock method, the effect of which is that the shares issuable upon conversion of such Convertible Notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of such Convertible Notes exceeds their principal amount. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares of common stock that would be necessary to settle such excess, if we elected to settle such excess in shares, are included in the denominator for purposes of calculating diluted earnings per share. We cannot be sure that the accounting standards in the future will continue to permit the use of the treasury stock method. If we are unable or otherwise elect not to use the treasury stock method in accounting for the shares issuable upon conversion of the Convertible Notes, then our diluted earnings per share could be adversely affected.

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The capped call transactions may affect the value of the Convertible Notes and our common ~~stock~~.stock.

In connection with the pricing of the Convertible Notes, we entered into capped call transactions with certain financial institutions. The capped call transactions are expected generally to reduce the potential dilution to our common stock upon any conversion of the Convertible Notes and/or offset any potential cash payments we are required to make in excess of the principal amount of converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap.

In connection with establishing their initial hedges of the capped call transactions, these financial institutions or their respective affiliates purchased shares of our common stock and/or entered into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the Convertible Notes. These financial institutions or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions following the pricing of the Convertible Notes and prior to the maturity of the Convertible Notes (and are likely to do so during any observation period related to a conversion of Convertible Notes). This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the Convertible Notes.

The potential effect, if any, of these transactions and activities on the price of our common stock or the Convertible Notes will depend in part on market conditions and cannot be ascertained at this time. Any of these activities could adversely affect the value of our common stock.

We are subject to counterparty risk with respect to the capped call transactions.

The counterparties to the capped call transactions are financial institutions or affiliates of financial institutions, and we will be subject to the risk that they might default under the capped call transactions. Our exposure to the credit risk of the counterparties will not be secured by any collateral. Global economic conditions have from time to time resulted in the actual or perceived failure or financial difficulties of many financial institutions. If a counterparty becomes subject to insolvency proceedings, with respect to such option counterparty’s obligations under the relevant capped call transaction, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with that counterparty. Our exposure will depend on many factors, but, generally, the increase in our exposure will be positively correlated to the increase in the market price and in the volatility of our common stock. In addition, upon a default by a counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of any counterparty.

Conversion of the Convertible Notes may dilute the ownership interest of existing stockholders, including holders who had previously converted their Convertible Notes, or may otherwise depress the price of our common ~~stock.~~stock.

The conversion of some or all of the Convertible Notes will dilute the ownership interests of existing stockholders to the extent we deliver shares of our common stock upon conversion of any of the Convertible Notes and the potential dilution is not reduced or offset by the capped call transactions we entered into. The Convertible Notes may become convertible at the option of holders prior to their scheduled terms under certain circumstances. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the Convertible Notes may encourage short selling by market participants because the conversion of the Convertible Notes could be used to satisfy short positions, or anticipated conversion of the Convertible Notes into shares of our common stock could depress the price of our common stock.

We may be unable to raise the funds necessary to repurchase the Convertible Notes for cash following a fundamental change, or to pay any cash amounts due upon conversion, and our other indebtedness may limit our ability to repurchase the Convertible Notes or pay cash upon their conversion.

Noteholders may, subject to a limited exception, require us to repurchase their Convertible Notes following a fundamental change at a cash repurchase price generally equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any. In addition, upon conversion, we will satisfy part or all of our conversion obligation in cash unless we elect to settle conversions solely in shares of our common stock. We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the Convertible Notes or pay the cash amounts due upon conversion. In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness, may restrict our ability to repurchase the Convertible Notes or pay the cash amounts due upon conversion. Our inability to satisfy our obligations under the Convertible Notes could harm our reputation and affect the trading price of our common stock.

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Our failure to repurchase the Convertible Notes or to pay the cash amounts due upon conversion when required will constitute a default under the indenture. A default under the indenture or the occurrence of the fundamental change itself could also lead to a default under agreements governing our other indebtedness, which may result in that other indebtedness becoming immediately payable in full. We may not have sufficient funds to satisfy all amounts due under the other indebtedness and the Convertible Notes.

The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the Convertible Notes is triggered, holders of Convertible Notes will be entitled to convert their Convertible Notes at any time during specified periods at their option. If one or more holders elect to convert their Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely common stock (other than paying cash in lieu of delivering any fractional shares), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.

Provisions of our Convertible Notes could delay or prevent an otherwise beneficial takeover of us.us.

Certain provisions of our Convertible Notes and the indenture governing the Convertible Notes could make a third-party attempt to acquire us more difficult or expensive. For example, if a takeover constitutes a “fundamental change” (as defined in the indenture), then noteholders will have the right to require us to repurchase their Convertible Notes for cash. In addition, if a takeover constitutes a “make-whole fundamental change” (as defined in the indenture), then we may be required to temporarily increase the conversion rate. In either case, and in other cases, our obligations under the Convertible Notes and the indenture could increase the cost of acquiring us or otherwise discourage a third party from acquiring us, including in a transaction that noteholders or holders of our common stock may view as favorable.

In connection with the separation of our coal business, CONSOL Energy has agreed to indemnify us for certain liabilities, and we have agreed to indemnify CONSOL Energy for certain liabilities. If we are required to pay under these indemnities to CONSOL Energy, our financial results could be negatively impacted. The CONSOL Energy indemnity may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy has been allocated responsibility, and CONSOL Energy may not be able to satisfy its indemnification obligations in the ~~future.~~future.

Pursuant to the Separation and Distribution Agreement and certain other agreements with CONSOL Energy, CNX and CONSOL Energy have agreed to indemnify the other for certain liabilities in each case for uncapped amounts.

We remain liable as a guarantor on certain liabilities that were assumed by CONSOL Energy in connection with the separation. The estimated value of these guarantees was approximately ~~$175~~$166 million as of ~~June~~September 30, 2020. Although CONSOL Energy agreed to indemnify us to the extent that we are called upon to pay any of these liabilities, there is no assurance that CONSOL Energy will satisfy its obligations to indemnify us in these situations.

For example, we could be liable for liabilities assumed by Murray Energy and its subsidiaries (Murray Energy) in connection with the disposition of certain mines to Murray Energy in 2013 in the event that both Murray Energy and CONSOL Energy are unable to satisfy those liabilities.

Indemnities that CNX may be required to provide CONSOL Energy are not subject to any cap, may be significant and could negatively impact our business. ~~Third-parties~~Third parties could also seek to hold us responsible for any of the liabilities that CONSOL Energy has agreed to retain, including in respect of certain statutory obligations related to, among others, health and environmental matters. For example, see disclosure in Note 10 Commitments and Contingent Liabilities in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for information regarding a lawsuit filed by the UMWA 1992 Benefit Plan against CNX and CONSOL Energy in May 2020.

Any amounts we are required to pay pursuant to these indemnification obligations and other liabilities could require us to divert cash that would otherwise have been used in furtherance of our operating business. Further, the indemnity from CONSOL Energy may not be sufficient to protect us against the full amount of such liabilities, and CONSOL Energy may not be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from CONSOL Energy any amounts for which we are held liable, CNX may be temporarily required to bear such losses. Each of these risks could negatively affect our business, results of operations and financial condition.

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The Merger is subject to conditions, including some conditions that may not be satisfied on a timely basis, if at all. Failure to complete the Merger, or significant delays in completing the Merger, could negatively affect each party’s future business and financial results and the trading prices of our common stock and the Partnership’s common units.

The completion of the Merger is subject to a number of conditions. The completion of the Merger is not assured and is subject to risks. The Merger Agreement contains conditions, some of which are beyond the parties’ control, that, if not satisfied or waived, may prevent, delay or otherwise result in the Merger not occurring.

If the Merger is not completed, or if there are significant delays in completing the Merger, CNX’s and the Partnership’s future business and financial results and the trading prices of our common stock and the Partnership’s common units could be negatively affected, and each of the parties will be subject to several risks, including the following:

•~~the parties may be liable for fees or expenses up to $3.5 million to one another under the terms and conditions of the Merger Agreement;~~

•there may be negative reactions from the financial markets due to the fact that current prices of our common stock and the Partnership’s common units may reflect a market assumption that the Merger will be completed; and

•the attention of our management will have been diverted to the Merger rather than their own operations and pursuit of other opportunities that could have been beneficial to their respective businesses.

Because the exchange ratio is fixed and because the market price of our common stock will fluctuate prior to the completion of the Merger, the Partnership’s common unitholders cannot be sure of the market value of the CNX common stock they will receive as merger consideration relative to the value of the Partnership’s common units they exchange.

The market value of the consideration that the Partnership’s common unitholders will receive in the Merger will depend on the trading price of our common stock at the closing of the Merger. The exchange ratio that determines the number of shares of our common stock that the Partnership’s common unitholders will receive in the Merger is fixed at 0.88 shares of our common stock for each of the Partnership’s common unit. This means that there is no mechanism contained in the Merger Agreement that would adjust the number of shares of our common stock that the Partnership’s common unitholders will receive based on any decreases or increases in the trading price of our common stock. Stock or unit price changes may result from a variety of factors (many of which are beyond our and the Partnership’s control), including:

•~~changes in our or the Partnership’s business, operations and prospects;~~

•~~changes in market assessments of our or the Partnership’s business, operations and prospects;~~

•~~changes in market assessments of the likelihood that the Merger will be completed;~~

•~~interest rates, commodity prices, general market, industry and economic conditions and other factors generally affecting the price of our common stock or the Partnership’s common units; and~~

•~~federal, state and local legislation, governmental regulation and legal developments in the businesses in which we and the Partnership operate.~~

If the price of our common stock at the closing of the Merger is less than the price of our common stock on the date that the Merger Agreement was signed, then the market value of the merger consideration will be less than contemplated at the time the Merger Agreement was signed.

~~The date the Partnership’s common unitholders will receive the merger consideration depends on the completion date of the Merger, which is uncertain.~~

Completing the Merger is subject to several conditions, not all of which are controllable by us or the Partnership. Accordingly, the date on which common unitholders will receive merger consideration depends on the completion date of the Merger, which is uncertain and subject to several other closing conditions.

~~We and the Partnership may incur substantial transaction-related costs in connection with the Merger.~~

We and the Partnership expect to incur substantial expenses in connection with completing the Merger, including fees paid to legal, financial and accounting advisors, filing fees, proxy solicitation costs and printing costs. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time.

Certain executive officers and directors of CNX Midstream GP LLC and CNX have interests in the Merger that are different from, or in addition to, the interests they may have as the Partnership’s common unitholders or our stockholders, respectively, which could have influenced their decision to support or approve the Merger.

Certain executive officers and directors of CNX Midstream GP LLC own equity interests in us, receive fees and other compensation from us and will have rights to ongoing indemnification and insurance coverage by the surviving company that give them interests in the Merger that may be different from, or be in addition to, interests of an unaffiliated unitholder of the Partnership.

Additionally, certain of our executive officers and directors beneficially own Partnership common units and will receive the applicable merger consideration upon completion of the Merger, receive fees and other compensation from us and are entitled to indemnification arrangements with us that give them interests in the Merger that may be different from, or be in addition to, interests a holder of our common stock may have as an CNX stockholder.

~~Financial projections by us and the Partnership may not prove to be reflective of actual future results.~~

In connection with the Merger, we and the Partnership prepared and considered, among other things, internal financial forecasts for CNX and the Partnership, respectively. These forecasts speak only as of the date made and will not be updated. These financial projections were not provided with a view to public disclosure, are subject to significant economic, competitive, industry and other uncertainties and may not be achieved in full, at all or within projected time frames. In addition, the failure of businesses to achieve projected results could have a material adverse effect on our share price and financial position following the Merger.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no issuer purchases of equity securities in the ~~second~~third quarter of fiscal year 2020. ~~Since the October 30, 2017 inception of the~~Under our current stock ~~repurchases,~~repurchase program, which is not subject to an expiration date, CNX's Board of Directors has approved up to $750 million of ~~repurchases, which is not subject to an expiration date.~~repurchases. As of ~~June~~September 30, 2020, approximately $148.5 million remained available under the stock repurchase program. The stock repurchase program does not obligate the Company to repurchase any dollar amount or number of shares and the Board may modify, suspend, or discontinue its authorization of the program at any time. See Note 15 - Stock Repurchase in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for more information.

See Part III. Item 12. "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" included in CNX Resources Corporation's Annual Report on Form 10-K as filed with the Securities and Exchange Commission on February 10, 2020 for information relating to CNX's equity compensation plans.

ITEM 6.EXHIBITS


~~4.1~~2.1						~~Indenture,~~Agreement and Plan of Merger, dated as of ~~May 1,~~July 26, 2020, by and among CNX Resources Corporation, ~~the subsidiary guarantors party thereto~~CNX Resources Holdings LLC, CNX Midstream GP LLC and ~~UMB Bank, N.A., as trustee~~CNX Midstream Partners LP (incorporated by reference ~~into~~to Exhibit 2.1 to Current Report on Form 8-K (file number 001-14901) filed on ~~May 4,~~July 27, 2020).
10.1						~~Amendment No. 4, dated as of April 24, 2020, to the Second Amended and Restated Credit~~Support Agreement, dated as of ~~March 8, 2018,~~July 26, 2020, by and among CNX ~~Resources Corporation, the guarantors party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as syndication agent,~~Midstream Partners LP, CNX Gas Company LLC and ~~PNC Bank, National Association, as administrative agent and collateral agent~~CNX Gas Holdings, Inc. (incorporated by reference ~~into~~to Exhibit 10.1 to Current Report on Form 8-K (file number 001-14901) filed on ~~April 28,~~July 27, 2020).
10.2						Purchase Agreement, dated as of ~~April 28,~~September 8, 2020 among CNX Resources Corporation, the subsidiary guarantors party thereto and ~~J.P. Morgan~~BofA Securities, ~~LLC~~Inc. and ~~Credit Suisse~~Wells Fargo Securities, ~~(USA)~~ LLC, as representatives of the ~~several~~ initial purchasers named therein (incorporated by reference ~~into~~to Exhibit 10.1 to Current Report on Form 8-K (file number 001-14901) filed on ~~May 4,~~September 9, 2020).
10.3						~~Form of Confirmation of Base Capped Call Transaction (incorporated by reference into Current Report on Form 8-K (file number 001-14901) filed on May 4, 2020)~~
~~10.4~~						~~Form of Confirmation of Additional Capped Call Transaction (incorporated by reference into Current Report on Form 8-K (file number 001-14901) filed on May 4, 2020)~~
~~10.5~~						Amendment to CNX Resources Corporation Amended and Restated Equity ~~and~~ Incentive ~~Compensation~~ Plan (incorporated by reference ~~into Current Report on~~to Exhibit 4.5 to Form ~~8-K~~S-8 (file number ~~001-14901)~~333-249096) filed on ~~May 7,~~September 28, 2020)
10.6*						~~Form of CNX Resources Corporation Amended and Restated Equity and Incentive Compensation Plan Deferred Stock Unit Grant Agreement for Non-Employee Directors~~
10.7*						~~Form of Restricted Stock Unit Award Under CNX Resources Corporation Amended and Restated Equity and Incentive Compensation Plan for Non-Employee Directors~~
10.8*						~~Form of CNX Resources Corporation Non-Employee Director Non-Qualified Stock Option Agreement~~.
31.1*						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH*						XBRL Taxonomy Extension Schema Document.
101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document.
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* Filed herewith

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: ~~July 30,~~October 29, 2020

CNX RESOURCES CORPORATION

By:

/S/ NICHOLAS J. DEIULIIS

Nicholas J. DeIuliis

Director, Chief Executive Officer and President
(Duly Authorized Officer and Principal Executive Officer)

By:

/S/ DONALD W. RUSH

Donald W. Rush

Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)

By:

/S/ ALAN K. SHEPARD

Alan K. Shepard

Chief Accounting Officer and Vice President
(Duly Authorized Officer and Principal Accounting Officer)

By:

/S/ JASON L. MUMFORD

Jason L. Mumford

Vice President and Controller

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	2020	2021
Volumes Hedged (Bcf), as of 7/8/20	437.4⁽¹⁾⁽²⁾	454.1


	For the Three Months Ended June 30, 2020
(Dollars in millions)	E&P Division		Midstream Division		Intercompany Eliminations		Consolidated
Natural Gas, NGL and Oil Revenue	$	176	$	—	$	—	$	176
Loss on Commodity Derivative Instruments	(63)		—		—		(63)
Purchased Gas Revenue	20		—		—		20
Midstream Revenue - Related Party	—		54		(54)		—
Midstream Revenue - Third Party	—		12		—		12
Other Operating Income	4		—		—		4
Total Revenue and Other Operating Income	137		66		(54)		149
Operating Expense:
Lease Operating Expense	10		—		—		10
Transportation, Gathering and Compression	104		10		(54)		60
Production, Ad Valorem, and Other Fees	5		—		—		5
Depreciation, Depletion and Amortization	103		11		—		114


Exploration and Production Related Other Costs	3		—		—		3
Purchased Gas Costs	20		—		—		20
Other Operating Expense	28		—		—		28
Selling, General and Administrative Costs	19		4		—		23
Total Operating Costs and Expenses	292		25		(54)		263
Interest Expense	37		9		—		46
Loss on Asset Sales and Abandonments, net	—		2		—		2
Total Division Costs	329		36		(54)		311
(Loss) Earnings Before Income Tax	$	(192)	$	30	$	—	$	(162)


	For the Six Months Ended June 30, 2020
(Dollars in millions)	E&P Division		Midstream Division		Intercompany Eliminations		Consolidated
Natural Gas, NGL and Oil Revenue	$	427	$	—	$	—	$	427
Gain on Commodity Derivative Instruments	52		—		—		52
Purchased Gas Revenue	47		—		—		47
Midstream Revenue - Related Party	—		117		(117)		—
Midstream Revenue - Third Party	—		30		—		30
Other Operating Income	9		—		—		9
Total Revenue and Other Operating Income	535		147		(117)		565
Operating Expense:
Lease Operating Expense	20		—		—		20
Transportation, Gathering and Compression	237		23		(117)		143
Production, Ad Valorem, and Other Fees	12		—		—		12
Depreciation, Depletion and Amortization	222		21		—		243
Impairment of Exploration and Production Properties	62		—		—		62
Impairment of Goodwill	—		473		—		473
Exploration and Production Related Other Costs	7		—		—		7
Purchased Gas Costs	45		—		—		45
Other Operating Expense	47		—		—		47
Selling, General and Administrative Costs	44		9		—		53
Total Operating Costs and Expenses	696		526		(117)		1,105
Interest Expense	78		17		—		95
Loss on Asset Sales and Abandonments, net	—		2		—		2
Other Expense	—		1		—		1
Total Division Costs	774		546		(117)		1,203
Loss Before Income Tax	$	(239)	$	(399)	$	—	$	(638)


	For the Six Months Ended June 30, 2019
(Dollars in millions)	E&P Division		Midstream Division		Intercompany Eliminations		Consolidated
Natural Gas, NGL and Oil Revenue	$	779	$	—	$	—	$	779
Gain on Commodity Derivative Instruments	26		—		—		26
Purchased Gas Revenue	35		—		—		35
Midstream Revenue - Related Party	—		114		(114)		—
Midstream Revenue - Third Party	—		37		—		37
Other Operating Income	6		—		—		6
Total Revenue and Other Operating Income	846		151		(114)		883
Operating Expense:
Lease Operating Expense	39		—		—		39
Transportation, Gathering and Compression	253		24		(114)		163
Production, Ad Valorem, and Other Fees	15		—		—		15
Depreciation, Depletion and Amortization	238		16		—		254
Exploration and Production Related Other Costs	8		—		—		8
Purchased Gas Costs	35		—		—		35
Other Operating Expense	41		—		—		41
Selling, General and Administrative Costs	74		11		—		85
Total Operating Costs and Expenses	703		51		(114)		640
Interest Expense	61		15		—		76
Loss on Asset Sales and Abandonments, net	—		7		—		7
Other Expense	—		1		—		1
Total Division Costs	764		74		(114)		724
Earnings Before Income Tax	$	82	$	77	$	—	$	159


	For the Six Months Ended																		Difference to Six Months Ended
	June 30, 2020																		June 30, 2019
(in millions)	Marcellus		Utica		CBM		Other Gas		Total E&P		Marcellus		Utica		CBM		Other Gas		Total E&P



Natural Gas, NGL and Oil Revenue	$	303	$	71	$	54	$	(1)	$	427	$	(228)	$	(87)	$	(35)	$	(2)	$	(352)
Gain (Loss) on Commodity Derivative Instruments	147		39		23		(157)		52		168		46		26		(214)		26
Purchased Gas Revenue	—		—		—		47		47		—		—		—		12		12
Other Operating Income	—		—		—		9		9		—		—		—		3		3

Total Revenue and Other Operating Income	450		110		77		(102)		535		(60)		(41)		(9)		(201)		(311)
Lease Operating Expense	10		3		8		(1)		20		(11)		(6)		(1)		(1)		(19)
Production, Ad Valorem, and Other Fees	6		3		3		—		12		(1)		—		(1)		(1)		(3)
Transportation, Gathering and Compression	200		18		19		—		237		(18)		2		—		—		(16)
Depreciation, Depletion and Amortization	112		68		34		8		222		(15)		(5)		1		3		(16)
Impairment of Exploration and Production Properties	—		—		—		62		62		—		—		—		62		62
Exploration and Production Related Other Costs	—		—		—		7		7		—		—		—		(1)		(1)
Purchased Gas Costs	—		—		—		45		45		—		—		—		10		10
Other Operating Expense	—		—		—		47		47		—		—		—		6		6
Selling, General and Administrative Costs	—		—		—		44		44		—		—		—		(30)		(30)
Total Operating Costs and Expenses	328		92		64		212		696		(45)		(9)		(1)		48		(7)

Interest Expense	—		—		—		78		78		—		—		—		17		17
Total E&P Division Costs	328		92		64		290		774		(45)		(9)		(1)		65		10
Earnings (Loss) Before Income Tax	$	122	$	18	$	13	$	(392)	$	(239)	$	(15)	$	(32)	$	(8)	$	(266)	$	(321)