SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



Delaware		47-3445032
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1000 CONSOL Energy Drive, Suite 100

Canonsburg, PA15317-6506

~~(724)~~ (724) 416-8300

(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 each exchange on which registered
Common Units representing limited partner interests	CCR	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.

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).

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.

Large accelerated filer o☐Accelerated filerx ☒Non-accelerated filer o☐ Smaller Reporting Company x ☒Emerging Growth Company x☒

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 x☒

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

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



~~Title of each class~~	~~Trading Symbol(s)~~	~~Name of each exchange on which registered~~
~~Common Units representing limited partner interests~~	~~CCR~~	~~New York Stock Exchange~~

CONSOL Coal Resources LP had ~~16,021,699~~27,632,824 common ~~units, 11,611,067 subordinated~~ units and a 1.7% general partner interest outstanding at ~~April~~October 25, 2019.



		Page
	Part I. Financial Information

Item 1.	Financial Statements
	Consolidated Statements of Operations for the three and nine months ended ~~March 31,~~September 30, 2019 and 2018	4
	Consolidated Statements of Comprehensive Income for the three and nine months ended ~~March 31,~~September 30, 2019 and 2018	5
	Consolidated Balance Sheets at ~~March 31,~~September 30, 2019 and December 31, 2018	6
	Consolidated Statement of Partners’ Capital for the three and nine months ended ~~March 31,~~September 30, 2019 and 2018	7
	Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 and 2018	89
	Notes to the Consolidated Financial Statements	910

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2022

Item 4.	Controls and Procedures	3035

	Part II. Other Information

Item 1.	Legal Proceedings	3136

Item 1A.	Risk Factors	3136

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3136

Item 4.	Mine Safety Disclosures	3136

Item 6.	Exhibits	3136

	Signatures	3338

Significant Relationships and Other Terms Referenced in this Quarterly Report

“CONSOL Coal Resources LP,” the “Partnership,” “we,” “our,” “us” and similar terms refer to CONSOL Coal Resources LP, a Delaware limited partnership, and its subsidiaries, with common units listed for trading on the New York Stock Exchange under the ticker “CCR”;

“Affiliated Company Credit Agreement” refers to an agreement entered into on November 28, 2017 among the Partnership and certain of its subsidiaries (collectively, the “Credit Parties”), CONSOL Energy, as lender and administrative agent, and PNC Bank, National Association, as collateral agent (“PNC”), as amended by Amendment No. 1 to Affiliated Company Credit Agreement, dated March 28, 2019. The Affiliated Company Credit Agreement provides for a revolving credit facility in an aggregate principal amount of up to $275 million to be provided by CONSOL Energy, as lender;

“common units” refer to the limited partner interests in CONSOL Coal Resources LP. The holders of common units are entitled to participate in partnership distributions and are entitled to exercise the rights or privileges of limited partners under the Partnership Agreement. The common units are listed on the New York Stock Exchange under the symbol “CCR”;

“CONSOL Coal Finance” refers to CONSOL Coal Finance Corporation, a Delaware corporation and a direct, wholly owned subsidiary of the Partnership;

“CONSOL Energy” and our “sponsor” refer to CONSOL Energy Inc., a Delaware corporation and the parent of our general partner, and its subsidiaries other than our general partner, us and our subsidiaries;

“CONSOL Operating” refers to CONSOL Operating LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of the Partnership;

“CONSOL Thermal Holdings” refers to CONSOL Thermal Holdings LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of CONSOL Operating; CONSOL Thermal Holdings owns a 25% undivided interest in the assets, liabilities, revenues and expenses comprising the Pennsylvania Mining Complex;

~~“Conrhein” refers to Conrhein Coal Company, a Pennsylvania general partnership and a wholly owned subsidiary of CONSOL Energy;~~

“CPCC” refers to CONSOL Pennsylvania Coal Company LLC, a Delaware limited liability company and a wholly owned subsidiary of CONSOL Energy;

“general partner” refers to CONSOL Coal Resources GP LLC, a Delaware limited liability company and our general partner;

“Omnibus Agreement” refers to the Omnibus Agreement dated July 7, 2015, as replaced by the First Amended and Restated Omnibus Agreement dated as of September 30, 2016, and as amended by the First Amendment to the First Amended and Restated Omnibus Agreement, dated November 28, 2017;

“Partnership Agreement” refers to the Third Amended and Restated Partnership Agreement dated as of November 28, 2017;

“Pennsylvania Mining Complex” refers to the Bailey, Enlow Fork, and Harvey coal mines, coal reserves and related assets and operations, located primarily in southwestern Pennsylvania. The Pennsylvania Mining Complex is owned 75% by our sponsor and its subsidiaries and 25% by CONSOL Thermal Holdings;

“preferred units” refer to any limited partnership interests, other than the common units and subordinated units, issued in accordance with the Partnership Agreement that, as determined by our general partner, have special voting rights to which our common units are not entitled. As of the date of this Quarterly Report on Form 10-Q, there are no outstanding preferred units;

“SEC” refers to the United States Securities and Exchange Commission;

“sponsor” or “our sponsor” refers to CONSOL Energy; and

“subordinated units” refer to limited partner interests in CONSOL Coal Resources LP having the rights and obligations specified with respect to subordinated units in the Partnership Agreement. ~~All~~On August 16, 2019, all 11,611,067 subordinated units, which were owned entirely by CONSOL Energy Inc., were converted into common units on a one-for-one basis. As of ~~our~~the date of this Quarterly Report on Form 10-Q, there are no outstanding subordinated ~~units are held by CONSOL Energy.~~units.

PART I : FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOL COAL RESOURCES LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except unit data)

(unaudited)


	Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2019		2018
Coal Revenue	$	83,126	$	87,752	$	75,385	$	73,700	$	246,166	$	254,126
Freight Revenue	1,665		4,472		900		611		3,529		9,444
Other Income	1,316		2,277		1,096		1,003		3,440		4,302
Total Revenue and Other Income	86,107		94,501		77,381		75,314		253,135		267,872

Operating and Other Costs ¹	52,094		52,287		53,998		49,540		164,542		159,126
Depreciation, Depletion and Amortization	11,217		10,814		11,086		11,059		33,639		33,769
Freight Expense	1,665		4,472		900		611		3,529		9,444
Selling, General and Administrative Expenses ²	4,560		3,020		2,840		3,899		10,353		10,260
Interest Expense, Net ³	1,351		1,951		1,587		1,560		4,495		5,295
Total Costs	70,887		72,544		70,411		66,669		216,558		217,894
Net Income	$	15,220	$	21,957	$	6,970	$	8,645	$	36,577	$	49,978

Less: General Partner Interest in Net Income	257		372		118		146		617		846
Limited Partner Interest in Net Income	$	14,963	$	21,585	$	6,852	$	8,499	$	35,960	$	49,132

Net Income per Limited Partner Unit - Basic	$	0.54	$	0.79	$	0.25	$	0.31	$	1.30	$	1.79
Net Income per Limited Partner Unit - Diluted	$	0.54	$	0.78	$	0.25	$	0.31	$	1.30	$	1.78

Limited Partner Units Outstanding - Basic	27,589,172		27,482,544		27,632,770		27,521,519		27,618,396		27,508,275
Limited Partner Units Outstanding - Diluted	27,645,697		27,567,690		27,667,477		27,628,202		27,654,684		27,592,838

Cash Distributions Declared per Unit ⁴					$	0.5125	$	0.5125	$	1.5375	$	1.5375
Common Unit	$	0.5125	$	0.5125
Subordinated Unit	$	0.5125	$	0.5125

¹Related Party of ~~$763~~$838 and ~~$685~~$725 for the three months ended ~~March 31,~~and $2,368 and $2,172 for the nine months ended September 30, 2019 and ~~March 31,~~September 30, 2018, respectively.

²Related Party of ~~$3,056~~$1,902 and ~~$1,645~~$2,345 for the three months ended ~~March 31,~~and $6,932 and $5,943 for the nine months ended September 30, 2019 and ~~March 31,~~September 30, 2018, respectively.

³Related party of ~~$1,351~~$1,587 and ~~$1,951~~$1,560 for the three months ended ~~March 31,~~and $4,495 and $5,295 nine months ended September 30, 2019 and ~~March 31,~~September 30, 2018, respectively.

⁴Represents the cash distributions declared related to the period presented. See Note 16 - Subsequent Events.

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

CONSOL COAL RESOURCES LP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(unaudited)


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018
Net Income	$	15,220		$	21,957		$	6,970		$	8,645		$	36,577		$	49,978

Recognized Net Actuarial Gain	(3		)	(2		)	(5		)	(2		)	(11		)	(6		)
Other Comprehensive Loss	(3		)	(2		)	(5		)	(2		)	(11		)	(6		)

Comprehensive Income	$	15,217		$	21,955		$	6,965		$	8,643		$	36,566		$	49,972

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

CONSOL COAL RESOURCES LP

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)


	(unaudited)				(unaudited)
	March 31, 2019		December 31, 2018		September 30, 2019		December 31, 2018
ASSETS
Current Assets:
Cash	$	405	$	1,003	$	10,611	$	1,003
Trade Receivables	26,968		21,871		27,245		21,871
Other Receivables	2,564		1,068		56		1,068
Inventories	12,645		11,066		11,339		11,066
Prepaid Expenses	4,620		5,096		7,094		5,096
Total Current Assets	47,202		40,104		56,345		40,104
Property, Plant and Equipment:
Property, Plant and Equipment	955,884		946,298		977,418		946,298
Less—Accumulated Depreciation, Depletion and Amortization	537,727		526,747		559,538		526,747
Total Property, Plant and Equipment—Net	418,157		419,551		417,880		419,551
Other Assets:
Right of Use Asset—Operating Leases	19,190		—		16,855		—
Other Assets	14,190		14,908		13,298		14,908
Total Other Assets	33,380		14,908		30,153		14,908
TOTAL ASSETS	$	498,739	$	474,563	$	504,378	$	474,563


LIABILITIES AND PARTNERS’ CAPITAL
Current Liabilities:
Accounts Payable	$	26,535		$	24,834		$	23,405	$	24,834
Accounts Payable—Related Party	6,002			3,831			2,882		3,831
Current Portion of Long-Term Debt							4,599		3,503
Other Accrued Liabilities	42,276			35,419			38,192		31,916
Total Current Liabilities	74,813			64,084			69,078		64,084
Long-Term Debt:
Affiliated Company Credit Agreement—Related Party	161,500			163,000			181,400		163,000
Finance Lease Obligations	4,093			5,067			2,085		5,067
Total Long-Term Debt	165,593			168,067			183,485		168,067
Other Liabilities:
Pneumoconiosis Benefits	4,477			4,260			4,897		4,260
Workers’ Compensation	3,094			3,119			2,914		3,119
Asset Retirement Obligations	9,973			9,775			10,939		9,775
Operating Lease Liability	15,191			—			14,224		—
Other	529			518			547		518
Total Other Liabilities	33,264			17,672			33,521		17,672
TOTAL LIABILITIES	273,670			249,823			286,084		249,823
Partners’ Capital:
Common Units (16,021,699 Units Outstanding at March 31, 2019; 15,911,211 Units Outstanding at December 31, 2018)	212,104			212,122
Subordinated Units (11,611,067 Units Outstanding at March 31, 2019 and December 31, 2018)	(11,085		)	(11,421		)
Common Units (27,632,824 Units Outstanding at September 30, 2019; 15,911,211 Units Outstanding at December 31, 2018)							194,378		212,122
Subordinated Units (No Units Outstanding at September 30, 2019; 11,611,067 Units Outstanding at December 31, 2018)							—		(11,421		)
General Partner Interest	12,133			12,119			12,007		12,119
Accumulated Other Comprehensive Income	11,917			11,920			11,909		11,920
Total Partners’ Capital	225,069			224,740			218,294		224,740
TOTAL LIABILITIES AND PARTNERS’ CAPITAL	$	498,739		$	474,563		$	504,378	$	474,563

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

CONSOL COAL RESOURCES LP

CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL

(Dollars in thousands)


	Limited Partners															Limited Partners
	Common			Subordinated			General Partner			Accumulated Other Comprehensive Income (Loss)			Total			Common			Subordinated			General Partner			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 31, 2018	$	212,122		$	(11,421	)	$	12,119		$	11,920		$	224,740		$	212,122		$	(11,421	)	$	12,119		$	11,920		$	224,740
(unaudited)
Net Income	8,676			6,287			257			—			15,220			8,676			6,287			257			—			15,220
Unitholder Distributions	(8,211		)	(5,951		)	(243		)	—			(14,405		)	(8,211		)	(5,951		)	(243		)	—			(14,405		)
Unit-Based Compensation	397			—			—			—			397			397			—			—			—			397
Units Withheld for Taxes	(880		)	—			—			—			(880		)	(880		)	—			—			—			(880		)
Actuarially Determined Long-Term Liability Adjustments	—			—			—			(3		)	(3		)	—			—			—			(3		)	(3		)
Balance at March 31, 2019	$	212,104		$	(11,085	)	$	12,133		$	11,917		$	225,069		$	212,104		$	(11,085	)	$	12,133		$	11,917		$	225,069
Net Income																8,201			5,944			242			—			14,387
Unitholder Distributions																(8,211		)	(5,950		)	(243		)	—			(14,404		)
Unit-Based Compensation																341			—			—			—			341
Actuarially Determined Long-Term Liability Adjustments																—			—			—			(3		)	(3		)
Balance at June 30, 2019																$	212,435		$	(11,091	)	$	12,132		$	11,914		$	225,390
Net Income																6,852			—			118			—			6,970
Unitholder Distributions																(8,211		)	(5,951		)	(243		)	—			(14,405		)
Conversion of Subordinated Units to Common Units¹																(17,042		)	17,042			—			—			—
Unit-Based Compensation																344			—			—			—			344
Actuarially Determined Long-Term Liability Adjustments																—			—			—			(5		)	(5		)
Balance at September 30, 2019																$	194,378		$	—		$	12,007		$	11,909		$	218,294

¹All subordinated units were converted to common units on a 1-for-one basis on August 16, 2019. For purposes of calculating net income per common and subordinated unit, the conversion of the subordinated units is deemed to have occurred on July 1, 2019. See Note 3 - Net Income Per Limited Partner and General Partner Interest.

Limited Partners
Common Subordinated General Partner Accumulated Other Comprehensive Income (Loss) Total
Balance at December 31, 2017 $ 205,974
$ (15,225 ) $ 11,964
$ 10,443
$ 213,156
(unaudited)
Net Income 12,477
9,108
372
—
21,957
Unitholder Distributions (8,153 ) (5,951 ) (242 ) —
(14,346 )
Unit-Based Compensation 359
—
—
—
359
Units Withheld for Taxes (899 ) —
—
—
(899 )
Actuarially Determined Long-Term Liability Adjustments —
—
—
(2 ) (2 )
Balance at March 31, 2018 $ 209,758
$ (12,068 ) $ 12,094
$ 10,441
$ 220,225

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



	Limited Partners
	Common			Subordinated			General Partner			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 31, 2017	$	205,974		$	(15,225	)	$	11,964		$	10,443		$	213,156
(unaudited)
Net Income	12,477			9,108			372			—			21,957
Unitholder Distributions	(8,153		)	(5,951		)	(242		)	—			(14,346		)
Unit-Based Compensation	359			—			—			—			359
Units Withheld for Taxes	(899		)	—			—			—			(899		)
Actuarially Determined Long-Term Liability Adjustments	—			—			—			(2		)	(2		)
Balance at March 31, 2018	$	209,758		$	(12,068	)	$	12,094		$	10,441		$	220,225
Net Income	11,013			8,035			328			—			19,376
Unitholder Distributions	(8,153		)	(5,950		)	(244		)	—			(14,347		)
Unit-Based Compensation	508			—			—			—			508
Actuarially Determined Long-Term Liability Adjustments	—			—			—			(2		)	(2		)
Balance at June 30, 2018	$	213,126		$	(9,983	)	$	12,178		$	10,439		$	225,760
Net Income	4,914			3,585			146			—			8,645
Unitholder Distributions	(8,154		)	(5,951		)	(243		)	—			(14,348		)
Unit-Based Compensation	503			—			—			—			503
Units Withheld for Taxes	(13		)	—			—			—			(13		)
Actuarially Determined Long-Term Liability Adjustments	—			—			—			(2		)	(2		)
Balance at September 30, 2018	$	210,376		$	(12,349	)	$	12,081		$	10,437		$	220,545

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

CONSOL COAL RESOURCES LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)


	Three Months Ended March 31,						Nine Months Ended September 30,
	2019			2018			2019			2018
Cash Flows from Operating Activities:
Net Income	$	15,220		$	21,957		$	36,577		$	49,978
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation, Depletion and Amortization	11,217			10,814			33,639			33,769
Gain on Sale of Assets	(5		)	(76		)
Loss (Gain) on Sale of Assets							5			(62		)
Unit-Based Compensation	397			359			1,082			1,370
Changes in Operating Assets:
Accounts and Notes Receivable	(6,588		)	1,240			(4,353		)	13,393
Inventories	(1,579		)	(1,818		)	(273		)	278
Prepaid Expenses	476			224			(1,998		)	(1,708		)
Changes in Other Assets	718			791			1,610			531
Changes in Operating Liabilities:
Accounts Payable	185			(1,931		)	(2,041		)	680
Accounts Payable—Related Party	2,171			(2,136		)	(949		)	(1,498		)
Other Operating Liabilities	2,811			(575		)	3,645			(2,483		)
Changes in Other Liabilities	195			415			561			886
Net Cash Provided by Operating Activities	25,218			29,264			67,505			95,134
Cash Flows from Investing Activities:
Capital Expenditures	(8,093		)	(4,929		)	(29,354		)	(20,256		)
Proceeds from Sales of Assets	—			75			4			170
Net Cash Used in Investing Activities	(8,093		)	(4,854		)	(29,350		)	(20,086		)
Cash Flows from Financing Activities:
Payments on Finance Leases	(938		)	(367		)	(2,853		)	(2,125		)
Net Payments on Related Party Long-Term Notes	(1,500		)	(9,583		)
Net Proceeds from (Payments on) Related Party Long-Term Notes							18,400			(29,583		)
Payments for Unitholder Distributions	(14,405		)	(14,346		)	(43,214		)	(43,041		)
Units Withheld for Taxes	(880		)	(899		)	(880		)	(912		)
Net Cash Used in Financing Activities	(17,723		)	(25,195		)	(28,547		)	(75,661		)
Net Decrease in Cash	(598		)	(785		)
Net Increase (Decrease) in Cash							9,608			(613		)
Cash at Beginning of Period	1,003			1,533			1,003			1,533
Cash at End of Period	$	405		$	748		$	10,611		$	920

Non-Cash Investing and Financing Activities:
Finance Lease	$	—		$	5,658		$	—		$	11,495
Longwall Shield Rebuild							959			—

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

CONSOL COAL RESOURCES LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per unit amounts)

NOTE 1—BASIS OF PRESENTATION:

The accompanying unaudited Consolidated Financial Statements were prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

For the three and nine months ended ~~March 31,~~September 30, 2019 and 2018, the unaudited Consolidated Financial Statements include the accounts of CONSOL Operating and CONSOL Thermal Holdings, wholly owned and controlled subsidiaries.

The Partnership is a master limited partnership formed on March 16, 2015 to manage and further develop all of our sponsor's active coal operations in Pennsylvania. As of ~~March 31,~~September 30, 2019, the Partnership's assets are comprised of a 25% undivided interest in, and operational control over, the Pennsylvania Mining Complex. The Partnership's common units trade on the New York Stock Exchange under the ticker symbol “CCR.”

Recent Accounting Pronouncements:

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15 - Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40) to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. The amendments in update 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements of capitalizing implementation ~~cost~~costs incurred to develop or obtain internal-use software. These changes will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Management ~~is currently evaluating the~~does not expect this update to have a material impact ~~this guidance may have~~ on the ~~Partnership’s~~Partnership's financial statements.

In August 2018, the FASB issued ASU 2018-14 - Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) to improve the effectiveness of disclosures in the notes to the financial statements by facilitating clear communication of the information required by GAAP. The amendments modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. These changes will be effective for fiscal years ending after December 15, 2020, including interim periods within those fiscal years. Management is currently evaluating the impact this guidance may have on the Partnership's financial statements.

In August 2018, the FASB issued ASU 2018-13 - Fair Value Measurement (Topic 820) to improve the effectiveness of disclosures in the notes to the financial statements by facilitating clear communication of the information required by GAAP. The amendments modify the disclosure requirements on fair value measurements, including the consideration of costs and benefits. These changes will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Management ~~is currently evaluating the impact this guidance may have on the Partnership's financial statements.~~

~~In June 2018, the FASB issued ASU 2018-07 - Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based Payment Accounting. The amendments in~~does not expect this update ~~seek~~ to simplify accounting for nonemployee share-based payments by clarifying and improving the areas of the overall measurement objective, measurement date, and awards with performance conditions. This update was adopted during the three months ended March 31, 2019 and did not have a material impact on the Partnership's financial statements.

In June 2016, the FASB issued ASU 2016-13 - Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this, the amendments in this ASU replace the incurred loss impairment methodology in current GAAP 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 will be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. In May 2019, the FASB updated Topic 326 by issuing ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, which provides entities that have certain instruments within the scope of Subtopic 326-20, Financial Instruments-Credit Losses - Measured at Amortized Cost, with an option to irrevocably elect the fair value option in Subtopic 825-10, Financial Instruments-Overall, applied on an instrument-by-instrument basis for eligible instruments, upon adoption of Topic 326. The amendments in ~~this ASU~~these updates will be applied using a modified-retrospective approach and, for public entities, are effective for fiscal years beginning after December 15, 2019 and interim periods within

those annual periods. Management does not expect this update to have a material impact on the Partnership's financial statements.

Reclassifications:

Certain amounts in prior periods have been reclassified to conform with the report classifications of the current period, including the reclassification of the Current Portion of Long-Term Debt, previously included in Other Accrued Liabilities on the Consolidated Balance Sheets. These reclassifications had no effect on previously reported Total Current Liabilities and are not material to the prior year presentation.

NOTE 2—REVENUE:

The following table disaggregates our revenue by major source for the three and nine months ended ~~March 31,~~September 30, 2019 and ~~March 31,~~September 30, 2018:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Coal Revenue	$	75,385	$	73,700	$	246,166	$	254,126
Freight Revenue	900		611		3,529		9,444
Total Revenue from Contracts with Customers	$	76,285	$	74,311	$	249,695	$	263,570

Three Months Ended March 31, 2019 Three Months Ended March 31, 2018
Coal Revenue $ 83,126
$ 87,752
Freight Revenue 1,665
4,472
Total Revenue from Contracts with Customers $ 84,791
$ 92,224

Our revenue is recognized when title passes to the customer. We have determined that each ton of coal represents a separate and distinct performance obligation. Our coal supply contracts and other sales and operating revenue contracts vary in length from short-term to long-term contracts and do not typically have significant financing components.

The estimated transaction price from each of our contracts is based on the total amount of consideration to which we expect to be entitled under the contract. Included in the transaction price for certain coal supply contracts is the impact of variable consideration, including quality price adjustments, handling services, ~~per ton~~per-ton price fluctuations based on certain coal sales price indices and anticipated payments in lieu of shipments. The estimated transaction price for each contract is allocated to our performance obligations based on relative standalone selling prices determined at contract inception.

Coal Revenue

Revenues are recognized when title passes to the customers and the price is fixed and determinable. Generally, title passes when coal is loaded at the central preparation facility and, on occasion, at terminal locations or other customer destinations. Our coal contract revenue per ton is fixed and determinable and adjusted for nominal quality adjustments. Some coal contracts also contain positive electric power price-related adjustments in addition to a fixed base-price per ton. None of the Partnership's coal contracts allow for retroactive adjustments to pricing after title to the coal has passed.

Some of our contracts span multiple years and have annual pricing modification provisions, based upon market-driven or inflationary adjustments, where no additional value is exchanged. Also, some of our contracts contain favorable electric power ~~price related~~price-related adjustments, which represent market-driven price adjustments, wherein there is no additional value ~~being~~ exchanged. Management believes that the invoice price is the most appropriate rate at which to recognize revenue.

While we do, from time to time, experience costs of obtaining coal customer contracts with amortization periods greater than one year, those costs have been immaterial to our net income. As of and for the three and nine months ended ~~March 31,~~September 30, 2019 and ~~March 31,~~September 30, 2018, we do not have any capitalized costs to obtain customer contracts on our balance sheet nor have we recognized any amortization of previously existing capitalized costs of obtaining customer contracts. Further, the Partnership has not recognized any revenue in the current period from performance obligations satisfied (or partially satisfied) in previous periods.

Freight Revenue

Some of our coal contracts require that we sell our coal at locations other than our central preparation plant. The cost to transport our coal to the ultimate sales point is passed through to our customers and we recognize the freight revenue equal to the transportation cost when title of the coal passes to the customer.

Contract Balances

Contract assets are recorded as trade receivables and reported separately in the Partnership's unaudited Consolidated Balance Sheets from other contract assets as title passes to the customer and the Partnership's right to consideration becomes

unconditional. Payments for coal shipments are typically due within two to four weeks of the invoice date. The Partnership typically does not have material contract assets that are stated separately from trade receivables as the Partnership's performance obligations are satisfied as control of the goods or services passes to the customer, thereby granting the Partnership an unconditional right to receive consideration. Contract liabilities relate to consideration received in advance of

the satisfaction of the Partnership's performance obligations. Contract liabilities are recognized as revenue at the point in time when control of the good or service passes to the customer.

NOTE 3—NET INCOME PER LIMITED PARTNER AND GENERAL PARTNER INTEREST:

The Partnership allocates net income among our general partner and limited partners using the two-class method in accordance with applicable authoritative accounting guidance. Under the two-class method, we allocate our net income to our limited partners and our general partner in accordance with the terms of our Partnership Agreement. We also allocate any earnings in excess of distributions to our limited partners and our general partner in accordance with the terms of our Partnership Agreement. We allocate any distributions in excess of earnings for the period to our general partner and our limited partners based on their respective proportionate ownership interests in us, after taking into account distributions to be paid with respect to the incentive distribution rights, as set forth in the Partnership Agreement.

Diluted net income per limited partner unit reflects the potential dilution that could occur if securities or agreements to issue common units, such as awards under the long-term incentive plan, were exercised, settled or converted into common units. When it is determined that potential common units resulting from an award subject to performance or market conditions should be included in the diluted net income per limited partner unit calculation, the impact is reflected by applying the treasury stock method.

On August 16, 2019, all 11,611,067 subordinated units were converted into common units on a 1-for-one basis. For purposes of calculating net income per common and subordinated unit, the conversion of the subordinated units is deemed to have occurred on July 1, 2019. The conversion did not impact the amount of the cash distribution paid or the total number of the Partnership’s outstanding units representing limited partner interests. Upon payment of the cash distribution for the second quarter of 2019, the financial requirements for the conversion of all subordinated units were satisfied.

The following table illustrates the Partnership’s calculation of net income per unit for common units and subordinated units (in thousands, except for per unit information):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Net Income	$	6,970	$	8,645	$	36,577	$	49,978
Less: General Partner Interest in Net Income	118		146		617		846
Net Income Allocable to Limited Partner Units	$	6,852	$	8,499	$	35,960	$	49,132

Limited Partner Interest in Net Income - Common Units	$	6,852	$	4,914	$	23,729	$	28,404
Limited Partner Interest in Net Income - Subordinated Units	—		3,585		12,231		20,728
Limited Partner Interest in Net Income - Basic & Diluted	$	6,852	$	8,499	$	35,960	$	49,132

Weighted Average Limited Partner Units Outstanding - Basic	27,632,770		27,521,519		27,618,396		27,508,275

Weighted Average Limited Partner Units Outstanding - Diluted	27,667,477		27,628,202		27,654,684		27,592,838

Net Income Per Limited Partner Unit - Basic
Common Units	$	0.25	$	0.31	$	1.30	$	1.79
Subordinated Units	$	—	$	0.31	$	1.05	$	1.79
Net Income Per Limited Partner Unit - Basic	$	0.25	$	0.31	$	1.30	$	1.79

Net Income Per Limited Partner Unit - Diluted
Common Units	$	0.25	$	0.31	$	1.30	$	1.78
Subordinated Units	$	—	$	0.31	$	1.05	$	1.79
Net Income Per Limited Partner Unit - Diluted	$	0.25	$	0.31	$	1.30	$	1.78

Three Months Ended March 31,
2019 2018
Net Income $ 15,220
$ 21,957
Less: General Partner Interest in Net Income 257
372
Net Income Allocable to Limited Partner Units $ 14,963
$ 21,585

Limited Partner Interest in Net Income - Common Units $ 8,676
$ 12,477
Limited Partner Interest in Net Income - Subordinated Units 6,287
9,108
Limited Partner Interest in Net Income - Basic & Diluted $ 14,963
$ 21,585

Weighted Average Limited Partner Units Outstanding - Basic
Common Units 15,978,105
15,871,477
Subordinated Units 11,611,067
11,611,067
Total 27,589,172
27,482,544

Weighted Average Limited Partner Units Outstanding - Diluted
Common Units 16,034,630
15,956,623
Subordinated Units 11,611,067
11,611,067
Total 27,645,697
27,567,690

Net Income Per Limited Partner Unit - Basic
Common Units $ 0.54
$ 0.79
Subordinated Units $ 0.54
$ 0.78
Net Income Per Limited Partner Unit - Basic $ 0.54
$ 0.79

Net Income Per Limited Partner Unit - Diluted
Common Units $ 0.54
$ 0.78
Subordinated Units $ 0.54
$ 0.78
Net Income Per Limited Partner Unit - Diluted $ 0.54
$ 0.78

There were ~~zero~~0 phantom units excluded from the computation of the diluted earnings per unit, because their effect would be anti-dilutive for the three and nine months ended ~~March 31, 2019. There were 129,850 phantom units excluded from the computation of the diluted earnings per unit, because their effect would be anti-dilutive for the three months ended March 31,~~September 30, 2019 and 2018.

NOTE 4—INVENTORIES:



	September 30, 2019		December 31, 2018
Coal	$	993	$	1,160
Supplies	10,346		9,906
Total Inventories	$	11,339	$	11,066

March 31,
2019 December 31,
2018
Coal $ 2,213
$ 1,160
Supplies 10,432
9,906
Total Inventories $ 12,645
$ 11,066

Inventories are stated at the lower of cost or net realizable value. The cost of coal inventories is determined by the first-in, first-out (FIFO) method. Coal inventory costs include labor, supplies, equipment costs, operating overhead, depreciation, depletion and amortization, and other related costs. The cost of supplies inventory is determined by the average cost method and includes operating and maintenance supplies to be used in our coal operations.

NOTE 5—PROPERTY, PLANT AND EQUIPMENT:



	September 30, 2019		December 31, 2018
Coal and Other Plant and Equipment	$	663,048	$	636,105
Coal Properties and Surface Lands	123,933		122,679
Airshafts	105,148		102,275
Mine Development	81,538		81,538
Advance Mining Royalties	3,751		3,701
Total Property, Plant and Equipment	977,418		946,298
Less: Accumulated Depreciation, Depletion and Amortization	559,538		526,747
Total Property, Plant and Equipment, Net	$	417,880	$	419,551

March 31,
2019 December 31,
2018
Coal and Other Plant and Equipment $ 643,363
$ 636,105
Coal Properties and Surface Lands 122,679
122,679
Airshafts 104,596
102,275
Mine Development 81,538
81,538
Advance Mining Royalties 3,708
3,701
Total Property, Plant and Equipment 955,884
946,298
Less: Accumulated Depreciation, Depletion and Amortization 537,727
526,747
Total Property, Plant and Equipment, Net $ 418,157
$ 419,551

Coal reserves are controlled either through fee ownership or by lease. The duration of the leases vary; however, the lease terms generally are extended automatically to the exhaustion of economically recoverable reserves, as long as active mining continues. Coal interests held by lease provide the same rights as fee ownership for mineral extraction and are legally considered real property interests.

As of ~~March 31,~~September 30, 2019 and December 31, 2018, property, plant and equipment includes gross assets under finance lease of ~~$11,894~~$11,879 and $11,919, respectively. Accumulated amortization for finance leases was ~~$4,460~~$6,380 and $3,529 at ~~March 31,~~September 30, 2019 and December 31, 2018, respectively. Amortization expense for assets under finance leases approximated ~~$967~~$966 and ~~$327~~$967 for the three months ended ~~March 31,~~and $2,899 and $2,262 for the nine months ended September 30, 2019 and ~~March 31,~~September 30, 2018, respectively, and is included in Depreciation, Depletion and Amortization in the accompanying unaudited Consolidated Statements of Operations.

NOTE 6—LEASES:

On January 1, 2019, the Partnership adopted Accounting Standards Codification (“ASC”) Topic 842 using the transition option, “Comparatives Under 840 Option,” established by ASU 2018-11, Leases (Topic 842), Targeted Improvements. As allowed under this guidance, the Partnership elected not to recast the comparative periods presented when transitioning to ASC 842. As most of the Partnership's leases do not provide an implicit rate, ~~CONSOL Coal Resources~~the Partnership has taken a portfolio approach of applying its incremental borrowing rate based on the information available at the adoption date to calculate the present value of lease payments over the lease term. The Partnership has elected the package of practical expedients permitted under the transition guidance within the standard, which allows the Partnership (1) to not reassess whether any expired or existing contracts are or contain leases, (2) to not reassess the lease classification for any expired or existing leases, and (3) to not reassess initial direct costs for any existing leases. The Partnership has also elected the practical expedient to not evaluate land easements that existed or expired before its adoption of Topic 842 and the practical expedient to not separate lease and non-lease components; that is, to account lease and non-lease components in a contract as a single lease component for all

classes of underlying assets. Further, the Partnership made an accounting policy election to keep leases with an initial term of twelve

months or less off the ~~balance sheet. CONSOL Coal Resources~~Consolidated Balance Sheets. The Partnership will recognize those lease payments in the unaudited Consolidated Statements of Operations over the lease term. For the three and nine months ended ~~March 31,~~September 30, 2019, these short term lease expenses were not material to the Partnership's financial statements.

Based on the Partnership's lease portfolio, the standard had a material impact on the Partnership’s unaudited Consolidated Balance ~~Sheet,~~Sheets, but did not have a significant impact on the Partnership’s consolidated net earnings and cash flows. The most significant impact was the recognition of Right of Use (“ROU”) assets and lease liabilities for operating leases, while the accounting for finance leases remained substantially unchanged. The Partnership's bank covenants were not affected by this update. The Partnership recorded operating lease ROU assets and operating lease liabilities of approximately $20 million as of January 1, 2019, primarily related to mining equipment, based on the present value of the future lease payments on the date of adoption.

The Partnership determines if an arrangement is an operating or finance lease at inception of the applicable lease. For leases where the Partnership is the lessee, ROU assets represent the Partnership’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of the Partnership’s leases do not provide an implicit interest rate, the Partnership uses its incremental borrowing rate based on the information available on the commencement date in determining the present value of lease payments. The ROU asset also consists of any prepaid lease payments, lease incentives received, and costs which will be incurred in exiting a lease. The lease terms used to calculate the ROU asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Partnership will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while the expense for finance leases is recognized as depreciation expense and interest expense using the interest method of recognition.

The Partnership has operating leases for mining or other equipment used in operations and office space. Many leases include one or more options to renew, some of which include options to extend the leases, and some leases include options to terminate or buy out the leases within a set period of time. In ~~certain~~some of the Partnership’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for inflation and/or changes in other indexes. Many of our operating lease payments for mining equipment contain a variable component which is calculated based upon production metrics such as feet of advance or raw tonnage mined. While most of our leases contain clauses regarding the general condition of the equipment upon lease termination, they do not contain residual value guarantees.

For the three ~~months~~and nine ended ~~March 31,~~September 30, 2019, the components of operating lease expense were as follows:


			Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Fixed Operating Lease Expense	$	1,642	$	1,494	$	4,674
Variable Operating Lease Expense	763		711		2,303
Total Operating Lease Expense	$	2,405	$	2,205	$	6,977

Supplemental cash flow information related to the Partnership’s operating leases for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 was as follows:



Cash Paid for Amounts Included in the Measurement of Operating Lease Liabilities	$	2,367
ROU Assets Obtained in Exchange for Operating Lease Obligations	$	—

Cash Paid for Amounts Included in the Measurement of Operating Lease Liabilities $ 936
ROU Assets Obtained in Exchange for Operating Lease Obligations $ —

The following table presents the lease balances within the unaudited Consolidated Balance ~~Sheet,~~Sheets, weighted average lease term, and weighted average discount rates related to the Partnership’s operating leases as of ~~March 31,~~September 30, 2019:



Lease Assets and Liabilities	Classification	Amount
Assets:
Operating Lease ROU Assets	Other Assets	$	16,855

Liabilities:
Current:
Operating Lease Liabilities	Other Accrued Liabilities	$	3,829
Long-Term:
Operating Lease Liabilities	Operating Lease Liabilities	$	14,224
Total Operating Lease Liabilities		$	18,053

Weighted Average Remaining Lease Term (in Years)		4.10
Weighted Average Discount Rate		6.7		%

Lease Assets and Liabilities Classification Amount
Assets:
Operating Lease ROU Assets Other Assets $ 19,190

Liabilities:
Current:
Operating Lease Liabilities Other Accrued Liabilities $ 4,791
Long-Term:
Operating Lease Liabilities Operating Lease Liabilities 15,191
Total Operating Lease Liabilities $ 19,982

Weighted Average Remaining Lease Term (in Years) 4.53
Weighted Average Discount Rate 6.68 %

The Partnership also enters into finance leases for mining equipment and automobiles. Assets arising from finance leases are included in Property, Plant and Equipment, Net and the liabilities are included in Other Accrued Liabilities and Long-Term Debt in the Partnership's unaudited Consolidated Balance ~~Sheet.~~Sheets.

For the three and nine months ended ~~March 31,~~September 30, 2019, the components of finance lease expense were as follows:

The following table presents the weighted average lease term and weighted average discount rates related to the Partnership’s finance leases as of ~~March 31,~~September 30, 2019:



Weighted Average Remaining Lease Term (in Years)	~~1.95~~1.45
Weighted Average Discount Rate	~~5.25~~5.24	%

The following table presents the future maturities of the Partnership’s operating and finance lease liabilities, together with the present value of the net minimum lease payments, at ~~March 31,~~September 30, 2019:



	Finance Leases		Operating Leases
Remainder of 2019	$	700	$	2,114
2020	4,179		5,722
2021	1,054		5,483
2022	14		3,029
2023	11		1,314
Thereafter	—		2,941
Total minimum lease payments	$	5,958	$	20,603
Less amount representing interest	233		2,550
Present value of minimum lease payments	$	5,725	$	18,053

Finance Leases Operating Leases
Remainder of 2019 $ 2,794
$ 4,719
2020 4,181
5,686
2021 1,055
5,483
2022 15
3,029
2023 11
1,314
Thereafter —
3,003
Total minimum lease payments $ 8,056
$ 23,234
Less amount representing interest 413
3,252
Present value of minimum lease payments $ 7,643
$ 19,982

As of ~~March 31,~~September 30, 2019, the Partnership had no additional significant operating or finance leases that had not yet commenced.

NOTE 7—OTHER ACCRUED LIABILITIES:



	September 30, 2019		December 31, 2018
Subsidence Liability	$	23,301	$	20,883
Accrued Payroll and Benefits	3,677		2,693
Accrued Interest (Related Party)	2,300		1,767
Accrued Other Taxes	534		1,071
Other	1,345		2,440
Current Portion of Long-Term Liabilities:
Operating Lease Liability	3,829		—
Workers’ Compensation	1,985		1,554
Asset Retirement Obligations	954		1,202
Pneumoconiosis Benefits	146		165
Long-Term Disability	121		141
Total Other Accrued Liabilities	$	38,192	$	31,916

March 31,
2019 December 31, 2018
Subsidence Liability $ 22,264
$ 20,883
Accrued Payroll and Benefits 3,389
2,693
Accrued Interest (Related Party) 1,796
1,767
Accrued Other Taxes 750
1,071
Other 2,544
2,440
Current Portion of Long-Term Liabilities:
Operating Lease Liability 4,791
—
Finance Leases 3,550
3,503
Workers’ Compensation 1,697
1,554
Asset Retirement Obligations 1,202
1,202
Pneumoconiosis Benefits 159
165
Long-Term Disability 134
141
Total Other Accrued Liabilities $ 42,276
$ 35,419

NOTE 8—~~AFFILIATED COMPANY CREDIT AGREEMENT:~~LONG-TERM DEBT:



	September 30, 2019		December 31, 2018
Affiliated Company Credit Agreement (4.00% and 3.75% interest rate at September 30, 2019 and December 31, 2018, respectively)	$	181,400	$	163,000
Other Asset-Backed Financing Maturing in December 2020, 6.35% Weighted Average Interest Rate at September 30, 2019	959		—
	182,359		163,000
Less: Amounts Due in One Year*	959		—
Long-Term Debt	$	181,400	$	163,000

March 31,
2019 December 31,
2018
Affiliated Company Credit Agreement (3.75% interest rate at March 31, 2019 and December 31, 2018) $ 161,500
$ 163,000

~~Affiliated Company Credit Agreement~~* Excludes current portion of Finance Lease Obligations of $3,640 and at $3,503 at September 30, 2019 and December 31, 2018, respectively.

On November 28, 2017, the Partnership and the other Credit Parties entered into the Affiliated Company Credit Agreement by and among the Credit Parties, CONSOL Energy, as lender and administrative agent, and PNC. On March 28, 2019, the Affiliated Company Credit Agreement was amended to extend the maturity date from February 27, 2023 to December 28, 2024. The Affiliated Company Credit Agreement provides for a revolving credit facility in an aggregate principal amount of up to $275,000 to be provided by CONSOL Energy, as lender. In connection with the Partnership’s entry into the Affiliated Company Credit Agreement, the Partnership made an initial draw of $200,583, the net proceeds of which were used to repay the amounts outstanding under the Partnership's prior credit facility. Additional drawings under the Affiliated Company Credit Agreement are available for general partnership purposes. The obligations under the Affiliated Company Credit Agreement are guaranteed by the Partnership’s subsidiaries and secured by substantially all of the assets of the Partnership and its subsidiaries pursuant to the security agreement and various mortgages.

Interest on outstanding obligations under our Affiliated Company Credit Agreement accrues at a fixed rate ranging from 3.75% to 4.75%, depending on the total net leverage ratio. The unused portion of our Affiliated Company Credit Agreement is subject to a commitment fee of 0.50% per annum.

The Partnership had available capacity under the Affiliated Company Credit Agreement of ~~$113,500~~$93,600 and $112,000 as of ~~March 31,~~September 30, 2019 and December 31, 2018, respectively. Interest on outstanding borrowings under the Affiliated Company Credit Agreement was accrued at a rate of 4.00% and 3.75% as of ~~March 31,~~September 30, 2019 and December 31, ~~2018.~~2018, respectively. The Affiliated Company Credit Agreement contains certain covenants and conditions that, among other things, limit the Partnership’s ability to: (i) incur or guarantee additional debt; (ii) make cash distributions (subject to certain limited exceptions); provided that we will be able to make cash distributions of available cash to partners so long as no event of default

For example, the Partnership is obligated to maintain at the end of each fiscal quarter (a) maximum first lien gross leverage ratio of 2.75 to 1.00 and (b) a maximum total net leverage ratio of 3.25 to 1.00, each of which will be calculated on a consolidated basis for the Partnership and its restricted subsidiaries at the end of each fiscal quarter. At ~~March 31,~~September 30, 2019, the Partnership was in compliance with its debt covenants with the first lien gross leverage ratio at ~~1.46~~1.73 to 1.00 and the total net leverage ratio at ~~1.45~~1.64 to 1.00.

During the nine months ended September 30, 2019, the Partnership entered into an asset-backed financing arrangement related to certain equipment. The equipment, which has an approximate value of $959, fully collateralizes the loan.

NOTE 9—COMPONENTS OF COAL WORKERS’ PNEUMOCONIOSIS (CWP) AND WORKERS’ COMPENSATION NET PERIODIC BENEFIT COSTS:

The Partnership is obligated to CONSOL Energy for medical and disability benefits to certain CPCC employees and their dependents resulting from occurrences of coal workers’ pneumoconiosis disease and is also obligated to CONSOL Energy to compensate certain individuals who are entitled benefits under workers’ compensation laws.



	CWP										Workers’ Compensation
	Three Months Ended September 30,					Nine Months Ended September 30,					Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018			2019		2018			2019			2018			2019			2018
Service Cost	$	200	$	372		$	600	$	1,117		$	349		$	366		$	1,046		$	1,098
Interest Cost	49		36			146		108			41			35			124			105
Amortization of Actuarial (Gain) Loss	6		(5		)	19		(16		)	(12		)	(1		)	(37		)	(4		)
State Administrative Fees and Insurance Bond Premiums	—		—			—		—			53			18			149			47
Net Periodic Benefit Cost	$	255	$	403		$	765	$	1,209		$	431		$	418		$	1,282		$	1,246

CWP
Workers’ Compensation
Three Months Ended
March 31, Three Months Ended
March 31,
2019 2018 2019 2018
Service Cost $ 200
$ 372
$ 349
$ 366
Interest Cost 49
36
41
35
Amortization of Actuarial (Gain) Loss 6
(5 ) (12 ) (1 )
State Administrative Fees and Insurance Bond Premiums —
—
51
7
Net Periodic Benefit Cost $ 255
$ 403
$ 429
$ 407

NOTE 10—FAIR VALUE OF FINANCIAL INSTRUMENTS:

The Partnership 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 LIBOR-based discount rates), while unobservable inputs reflect the Partnership’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 One - Quoted prices for identical instruments in active markets.

Level Two - 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 LIBOR-based discount rates.

Level Three - Unobservable inputs significant to the fair value measurement supported by little or no market activity. The significant unobservable inputs used in the fair value measurement of the Partnership’s third party guarantees are the credit risk of the third party and the third party surety bond markets.

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 following methods and assumptions were used to estimate the fair value for which the fair value option was not elected:

Long-term debt: The fair value of long-term debt is measured using unadjusted quoted market prices or estimated using discounted cash flow analyses. The discounted cash flow analyses are based on current market rates for instruments with similar cash flows.

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



	September 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Affiliated Company Credit Agreement - Related Party	$	181,400	$	181,400	$	163,000	$	163,000

March 31, 2019 December 31, 2018

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value
Affiliated Company Credit Agreement - Related Party $ 161,500
$ 161,500
$ 163,000
$ 163,000

The Partnership’s debt obligations are valued through reference to the applicable underlying benchmark rate and, as a result, constitute Level 2 fair value measurements.

NOTE 11—COMMITMENTS AND CONTINGENT LIABILITIES:

The Partnership is subject to various lawsuits and claims with respect to such matters as personal injury, wrongful death, damage to property, exposure to hazardous substances, governmental regulations (including environmental remediation), employment and contract disputes and other claims and actions arising out of the normal course of its business. We accrue the estimated loss for these lawsuits and claims when the loss is probable and can be estimated. Our 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 the Partnership. 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 the Partnership; however, such amounts cannot be reasonably estimated.

At ~~March 31,~~September 30, 2019, the Partnership was contractually obligated to CONSOL Energy for financial guarantees and letters of credit to certain third parties which were issued by CONSOL Energy on behalf of the Partnership. The maximum potential total of future payments that we could be required to make under these instruments is ~~$89,333.~~$99,075. The instruments are comprised of ~~$301~~$1,629 of letters of credit expiring within ~~one~~the next year, ~~$79,846~~$88,834 of environmental surety bonds expiring within the next three years, and ~~$9,186~~$8,612 of employee-related and other surety bonds expiring within the next three years. Employee-related financial guarantees have primarily been provided to support various state workers’ compensation and federal black lung self-insurance programs. Environmental financial guarantees have primarily been provided to support various performance bonds related to reclamation and other environmental issues. Other guarantees have been extended to support insurance policies, legal matters, full and timely payments of mining equipment leases, and various other items necessary in the normal course of business. 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 financial guarantees and letters of credit are recorded as liabilities on the financial statements. The Partnership’s management believes that these guarantees will expire without being funded, and therefore the commitments will not have a material adverse effect on the financial condition of the Partnership.

NOTE 12—RECEIVABLES FINANCING AGREEMENT

On November 30, 2017, (i) CONSOL Marine Terminals LLC, as an originator of receivables, (ii) CPCC, as an originator of receivables and as initial servicer of the receivables for itself and the other originators (collectively, the “Originators”), each a wholly owned subsidiary of CONSOL Energy, and (iii) CONSOL Funding LLC (the “SPV”), as buyer, entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”). Concurrently, (i) CONSOL Thermal Holdings, as sub-originator, and (ii) CPCC, as buyer and as initial servicer of the receivables for itself and CONSOL Thermal Holdings, entered into a Sub-Originator Agreement (the “Sub-Originator PSA”). In addition, on that date, the SPV entered into a Receivables Financing Agreement (the “Receivables Financing Agreement”) by and among (i) the SPV, as borrower, (ii) CPCC, as initial servicer, (iii) PNC, as administrative agent, LC Bank and lender, and (iv) the additional persons from time to time party thereto as lenders. Together, the Purchase and Sale Agreement, the Sub-Originator PSA and the Receivables

Financing Agreement establish the primary terms and conditions of an accounts receivable securitization program (the “Securitization”). On August 30, 2018, the Securitization was amended, among other things, to extend the scheduled termination date to August 30, 2021.

Pursuant to the Securitization, (i) CONSOL Thermal Holdings will sell current and future trade receivables to CPCC and (ii) the Originators will sell and/or contribute current and future trade receivables (including receivables sold to CPCC by CONSOL Thermal Holdings) to the SPV and the SPV will, in turn, pledge its interests in the receivables to PNC, which will either make loans or issue letters of credit on behalf of the SPV. The maximum amount of advances and letters of credit outstanding under the Securitization may not exceed $100,000. Loans under the Securitization will accrue interest at a reserve-adjusted LIBOR market index rate equal to the one-month Eurodollar rate. Loans and letters of credit under the Securitization

also will accrue a program fee and participation fee, respectively, ranging from 2.00% to 2.50% per annum, depending on the total net leverage ratio of CONSOL Energy. In addition, the SPV paid certain structuring fees to PNC Capital Markets LLC and will pay other customary fees to the lenders, including a fee on unused commitments. The SPV’s assets and credit are not available to satisfy the debts and obligations owed to the creditors of CONSOL Energy, CONSOL Thermal Holdings or any of the Originators. CONSOL Thermal Holdings, the Originators and CPCC as servicer are independently liable for their own customary representations, warranties, covenants and indemnities. In addition, CONSOL Energy has guaranteed the performance of the obligations of CONSOL Thermal Holdings, the Originators and CPCC as servicer, and will guarantee the obligations of any additional originators or successor servicer that may become party to the Securitization. However, neither CONSOL Energy nor its affiliates will guarantee collectability of receivables or the creditworthiness of obligors thereunder.

The Securitization contains various customary representations and warranties, covenants and default provisions which provide for the termination and acceleration of the commitments and loans under the Securitization in circumstances including, but not limited to, failure to make payments when due, breach of representation, warranty or covenant, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.

As of ~~March 31,~~September 30, 2019, the Partnership, through CONSOL Thermal Holdings, had sold ~~$26,968~~$27,245 of trade receivables to CPCC. The Partnership has not derecognized the receivables due to its continued involvement in the collections efforts.

NOTE 13—RELATED PARTY:

Omnibus Agreement

The Partnership is a party to the Omnibus Agreement, dated September 30, 2016, as amended on November 28, 2017, with our sponsor and certain of its subsidiaries. Under the Omnibus Agreement, we are obligated to make certain payments to, and reimburse, CONSOL Energy for the provision of certain services in connection with our operations.

Charges for services from CONSOL Energy under the Omnibus Agreement include the following:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Operating and Other Costs	$	838	$	725	$	2,368	$	2,172
Selling, General and Administrative Expenses	1,902		2,345		6,932		5,943
Total Services from CONSOL Energy	$	2,740	$	3,070	$	9,300	$	8,115

Three Months Ended
March 31,
2019 2018
Operating and Other Costs $ 763
$ 685
Selling, General and Administrative Expenses 3,056
1,645
Total Services from CONSOL Energy $ 3,819
$ 2,330

At ~~March 31,~~September 30, 2019 and December 31, 2018, the Partnership had a net payable to CONSOL Energy in the amount of ~~$6,002~~$2,882 and $3,831, respectively. This payable includes reimbursements for business expenses, executive fees, stock-based compensation and other items under the Omnibus Agreement.

Affiliated Company Credit Agreement

As described in Note 8, the Partnership is also a party to the Affiliated Company Credit Agreement with CONSOL Energy.

For the three and nine months ended ~~March 31,~~September 30, 2019, ~~$1,796~~$2,003 and $5,770, respectively, of interest was incurred under the Affiliated Company Credit Agreement, of which ~~$1,351~~$1,587 and $4,495, respectively, is included in Interest Expense, Net in the unaudited Consolidated Statements of Operations, and ~~$445~~$416 and $1,275, respectively, was capitalized and included in

Property, Plant and Equipment in the unaudited Consolidated Balance Sheets. For the three and nine months ended ~~March 31,~~September 30, 2018, ~~$2,134~~$1,832 and $5,942, respectively, of interest was incurred under the Affiliated Company Credit Agreement, of which ~~$1,951~~$1,560 and $5,295, respectively, is included in Interest Expense, Net in the unaudited Consolidated Statements of Operations, and ~~$183~~$272 and $647, respectively, was capitalized and included in Property, Plant and Equipment in the unaudited Consolidated Balance Sheets. Interest is calculated based upon a fixed rate, determined quarterly, depending on the total net leverage ratio. For the three and nine months ended ~~March 31,~~September 30, 2019, the average interest rate was 3.88% and ~~March 31,~~3.79%, respectively. For the three and nine months ended September 30, 2018, the average interest rate was ~~3.75%~~3.87% and ~~4.25%~~4.04%, respectively. See Note 8 - ~~Affiliated Company Credit Agreement~~Long-Term Debt for more information.

Repurchase Program

In May 2019, CONSOL ~~Energy Inc.'s~~Energy's Board of Directors approved an expansion of the stock, unit and debt repurchase program. The program previously allowed CONSOL Energy to use up to $25 million of the program to purchase ~~CONSOL~~

~~Coal Resources LP's~~the Partnership's outstanding common units in the open market. CONSOL Energy's Board of Directors approved changing the termination date of the program from June 30, 2019 to June 30, 2020. Also, in accordance with CONSOL Energy’s credit facility covenants, asthe total amount that can be used for repurchases of ~~March 31, 2019, CONSOL Energy's limit~~the Partnership's outstanding common units was raised to ~~a total~~$50 million. During the three and nine months ended September 30, 2019, 19,413 and 26,297 common units were purchased at an average price of ~~$50 million~~$12.88 and $14.05 per unit, respectively. During the three and nine months ended September 30, 2018, 77,536 common units were purchased at an average price of $17.86 per unit, respectively.

Conversion of Subordinated Units

In August 2019, upon payment of the cash distribution with respect to ~~be used~~the quarter ended June 30, 2019, the financial requirements for the ~~purchase~~conversion of all the Partnership's subordinated units were satisfied. As a result, all 11,611,067 subordinated units, owned entirely by CONSOL ~~Coal Resources LP's outstanding~~Energy Inc., were converted into common units inon a one-for-one basis. The conversion did not impact the ~~open market.~~amount of the cash distribution paid or the total number of the Partnership’s outstanding units representing limited partner interests.

NOTE 14—LONG-TERM INCENTIVE PLAN:

Under the CONSOL Coal Resources LP 2015 Long-Term Incentive Plan (the “LTIP”), our general partner may issue long-term equity-based awards to directors, officers and employees of our general partner or its affiliates, or to any consultants, affiliates of our general partner or other individuals who perform services for us. These awards are intended to compensate the recipients thereof based on the performance of our common units and their continued service during the vesting period, as well as to align their long-term interests with those of our unitholders. We are responsible for the cost of awards granted under the LTIP and all determinations with respect to awards to be made under the LTIP will be made by the board of directors of our general partner or any committee thereof that may be established for such purpose or by any delegate of the board of directors or such committee, subject to applicable law, which we refer to as the plan administrator.

The LTIP limits the number of units that may be delivered pursuant to vested awards to 2,300,000 common units, subject to proportionate adjustment in the event of unit splits and similar events. Common units subject to awards that are canceled, forfeited, withheld to satisfy exercise prices or tax withholding obligations or otherwise terminated without delivery of the common units will be available for delivery pursuant to other awards. The Partnership recognizes forfeitures as they occur.

The general partner has granted equity-based phantom units that vest over a period of a recipient’s continued service with the Partnership. The phantom units will be paid in common units or an amount of cash equal to the fair market value of a unit based on the vesting date. The awards may accelerate upon a change in control of the Partnership. Compensation expense is recognized on a straight-line basis over the requisite service period, which is generally the vesting term. The Partnership recognized compensation expense of ~~$397~~$344 and ~~$360~~$503 for the three months ended ~~March 31,~~and $1,082 and $1,370 for the nine months ended September 30, 2019 and ~~March 31,~~September 30, 2018, respectively, which is included in Selling, General and Administrative Expense in the unaudited Consolidated Statements of Operations. As of ~~March 31,~~September 30, 2019, there is ~~$1,208~~$471 of unearned compensation that will vest over a weighted average period of ~~0.84~~0.34 years. The total fair value of phantom units vested during the three months ended ~~March 31,~~September 30, 2019 and ~~March 31,~~September 30, 2018 was ~~$2,905~~$1 and ~~$2,419,~~$40, respectively. The total fair value of phantom units vested during the nine months ended September 30, 2019 and September 30, 2018 was $2,906 and $2,508, respectively. The following represents the nonvested phantom units and their corresponding weighted average grant date fair value:

Number of Units Weighted Average Grant Date Fair Value per Unit
Nonvested at December 31, 2018 223,676
$ 15.67
Granted 17,190
$ 17.45
Vested (158,491 ) $ 13.40
Forfeited (109 ) $ 18.95
Nonvested at March 31, 2019 82,266
$ 18.64



	Number of Units		Weighted Average Grant Date Fair Value per Unit
Nonvested at December 31, 2018	223,676		$	15.67
Granted	17,190		$	17.45
Vested	(158,554	)	$	13.41
Forfeited	(2,723	)	$	18.95
Nonvested at September 30, 2019	79,589		$	18.63

NOTE 15—FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND FINANCE SUBSIDIARY OF POSSIBLE FUTURE PUBLIC DEBT:

The Partnership filed a Registration Statement on Form S-3 ~~(333-215962)~~(Reg. No. 333-215962) with the SEC on March 10, 2017, which was declared effective by the SEC on March 14, 2017, to register the offer and sale of various securities, including debt securities. The registration statement registers guarantees of debt securities by CONSOL Operating and CONSOL Thermal Holdings (“Subsidiary Guarantors”). The Subsidiary Guarantors are 100% owned by the Partnership and any guarantees by the Subsidiary Guarantors will be full and unconditional and joint and several. In addition, the registration statement also includes CONSOL Coal Finance, which was formed for the sole purpose of co-issuing future debt securities with the Partnership. CONSOL Coal Finance is wholly owned by the Partnership, has no assets or any liabilities and its activities will be limited to co-issuing debt securities and engaging in other activities incidental thereto. The Partnership does not have any other subsidiaries other than the Subsidiary Guarantors and CONSOL Coal Finance. In addition, the Partnership has no assets or operations independent of the Subsidiary Guarantors, and there are no significant restrictions upon the ability of the Subsidiary Guarantors to distribute funds to the Partnership by dividend or loan other than under the Affiliated Company Credit Agreement described in these notes. In the event that more than one of the Subsidiary Guarantors guarantee public debt securities of the Partnership in the future, those guarantees will be full and unconditional and will constitute the joint and several obligations of

the Subsidiary Guarantors. None of the assets of the Partnership, the Subsidiary Guarantors or CONSOL Coal Finance represent restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X under the Securities Act of 1933, as amended.

NOTE 16—SUBSEQUENT EVENTS:

On ~~April 25,~~October 30, 2019, the Board of Directors of our general partner declared a cash distribution of $0.5125 per unit for the quarter ended ~~March 31,~~September 30, 2019 to the limited partner unitholders and the holder of the general partner interest. The cash distribution will be paid on ~~May~~November 15, 2019 to the unitholders of record at the close of business on ~~May 7,~~November 11, 2019.

In May 2019, CONSOL Energy Inc.'s Board of Directors approved an expansion of the stock, unit and debt repurchase program. The program previously allowed CONSOL Energy to use up to $25 million of the program to purchase CONSOL Coal Resources LP's outstanding common units in the open market. CONSOL Energy's Board of Directors approved changing the termination date of the program from June 30, 2019 to June 30, 2020. Also, in accordance with CONSOL Energy’s credit facility covenants, as of March 31, 2019, CONSOL Energy's limit was raised to a total of $50 million to be used for the purchase of CONSOL Coal Resources LP's outstanding common units in the open market.

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

Unless otherwise indicated, the following discussion and analysis of the financial condition and results of operations of our Partnership reflect a 25% undivided interest in the assets, liabilities and results of operations of the Pennsylvania Mining Complex. As used in the following discussion and analysis of the financial condition and results of operations of our Partnership, the terms “we,” “our,” “us,” or like terms refer to the Partnership with respect to its 25% undivided interest in the Pennsylvania Mining Complex’s combined assets, liabilities, revenues and costs. All amounts except per unit or per ton are displayed in thousands.

Overview

We are a master limited partnership formed in 2015 to manage and further develop all of our sponsor's active coal operations in Pennsylvania. Our primary strategy for growing our business and increasing distributions to our unitholders is to increase operating efficiencies to maximize realizations and make acquisitions that increase our distributable cash flow. At ~~March 31,~~September 30, 2019, the Partnership’s assets include a 25% undivided interest in, and operational control over, CONSOL Energy’s Pennsylvania Mining Complex, which consists of three underground mines and related infrastructure that produce high-Btu coal that is sold primarily to electric utilities in the eastern United States. We believe that our ability to efficiently produce and deliver large volumes of high-quality coal at competitive prices, the strategic location of our mines, and the industry experience of our management team position us as a leading producer of high-Btu thermal coal in the Northern Appalachian Basin and the eastern United States.

How We Evaluate Our Operations

Our management team uses a variety of financial and operating metrics to analyze our performance. These metrics are significant factors in assessing our operating results and profitability. The metrics include: (i) coal production, sales volumes and average revenue per ton; (ii) cost of coal sold, a non-GAAP financial measure; (iii) cash cost of coal sold, a non-GAAP financial measure; (iv) average cash margin per ton, an operating ratio derived from non-GAAP financial measures; (v) adjusted EBITDA, a non-GAAP financial measure; and (vi) distributable cash flow, a non-GAAP financial measure.

Cost of coal sold, cash cost of coal sold, average cash margin per ton, adjusted EBITDA and distributable cash flow normalize the volatility contained within comparable GAAP measures by adjusting certain non-operating or non-cash transactions. Each of these non-GAAP metrics are used as supplemental financial measures by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:

• our operating performance as compared to the operating performance of other companies in the coal industry, without regard to financing methods, historical cost basis or capital structure;

• the ability of our assets to generate sufficient cash flow to make distributions to our partners;

• our ability to incur and service debt and fund capital expenditures;

• the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities; and

• the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities.

These non-GAAP financial measures should not be considered an alternative to total costs, total coal revenue, net income, operating cash flow, or any other measure of financial performance or liquidity presented in accordance with GAAP. These measures exclude some, but not all, items that affect net income or net cash, and these measures and the way we calculate them may vary from those of other companies. As a result, the items presented below may not be comparable to similarly titled measures of other companies.

Reconciliation of Non-GAAP Financial Measures

We evaluate our cost of coal sold and cash cost of coal sold on a cost per ton basis. Our cost of coal sold per ton represents our costs of coal sold divided by the tons of coal we sell. We define cost of coal sold as operating and other

production costs related to produced tons sold, along with changes in coal inventory, both in volumes and carrying values. The cost of coal sold per ton includes items such as direct operating costs, royalty and production taxes, direct administration, and depreciation, depletion and amortization costs on production assets. Our costs exclude any indirect costs such as selling, general and administrative costs, freight expenses, interest expenses, depreciation, depletion and amortization costs on non-production assets and other costs not directly attributable to the production of coal. The GAAP measure most directly comparable to cost of coal sold is total costs. The cash cost of coal sold includes cost of coal sold less depreciation, depletion and amortization cost on production assets. The GAAP measure most directly comparable to cash cost of coal sold is total costs.

The following table presents a reconciliation of cost of coal sold and cash cost of coal sold to total costs, the most directly comparable GAAP financial measure, on a historical basis for each of the periods indicated (in thousands).


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2019			2018
Total Costs	$	70,887		$	72,544		$	70,411		$	66,669		$	216,558		$	217,894
Freight Expense	(1,665		)	(4,472		)	(900		)	(611		)	(3,529		)	(9,444		)
Selling, General and Administrative Expenses	(4,560		)	(3,020		)	(2,840		)	(3,899		)	(10,353		)	(10,260		)
Interest Expense, Net	(1,351		)	(1,951		)	(1,587		)	(1,560		)	(4,495		)	(5,295		)
Other Costs (Non-Production)	(2,264		)	(4,026		)	(983		)	(1,545		)	(4,154		)	(9,810		)
Depreciation, Depletion and Amortization (Non-Production)	(577		)	(540		)	(519		)	(542		)	(1,605		)	(1,625		)
Cost of Coal Sold	$	60,470		$	58,535		$	63,582		$	58,512		$	192,422		$	181,460
Depreciation, Depletion and Amortization (Production)	(10,640		)	(10,274		)	(10,567		)	(10,517		)	(32,034		)	(32,144		)
Cash Cost of Coal Sold	$	49,830		$	48,261		$	53,015		$	47,995		$	160,388		$	149,316

We define average cash margin per ton as average coal revenue per ton, net of average cash cost of coal sold per ton. The GAAP measure most directly comparable to average cash margin per ton sold is total coal revenue.

The following table presents a reconciliation of average cash margin per ton sold to total coal revenue, the most directly comparable GAAP financial measure, on a historical basis for each of the periods indicated (in thousands, except per ton information).

We define adjusted EBITDA as (i) net income (loss) before net interest expense, depreciation, depletion and amortization, as adjusted for (ii) certain non-cash items, such as long-term incentive awards including phantom units under the CONSOL Coal Resources LP 2015 Long-Term Incentive Plan (“Unit-Based Compensation”). The GAAP measure most directly comparable to adjusted EBITDA is net income.

We define distributable cash flow as (i) net income before net interest expense, depreciation, depletion and amortization, as adjusted for (ii) certain non-cash items, such as Unit-Based Compensation, less net cash interest paid and estimated maintenance capital expenditures, which is defined as those forecasted average capital expenditures required to maintain, over the long-term, the operating capacity of our capital assets. These estimated capital expenditures do not reflect the actual cash capital incurred in the period presented. Distributable cash flow will not reflect changes in working capital balances. The GAAP measures most directly comparable to distributable cash flow are net income and net cash provided by operating activities. We define distribution coverage ratio as a ratio of the distributable cash flow to the distributions, which is the $0.5125 per quarter distribution for all limited partner units, including common and subordinated units, issued for the periods presented.

The following table presents a reconciliation of adjusted EBITDA to net income, the most directly comparable GAAP financial measure, on a historical basis for each of the periods ~~indicated.~~indicated (in thousands). The table also presents a reconciliation of distributable cash flow to net income and operating cash flows, the most directly comparable GAAP financial measures, on a historical basis for each of the periods indicated (in thousands).

Results of Operations

Three Months Ended ~~March 31,~~September 30, 2019 Compared with the Three Months Ended ~~March 31,~~September 30, 2018

Total net income was ~~$15,220~~$6,970 for the three months ended ~~March 31,~~September 30, 2019 compared to ~~$21,957~~$8,645 for the three months ended ~~March 31,~~September 30, 2018. Our results of operations for each of these periods are presented in the table below. Variances are discussed following the table.


	For the Three Months Ended							For the Three Months Ended
	March 31,							September 30,
	2019		2018		Variance			2019		2018		Variance
	(in thousands)							(in thousands)
Revenue:
Coal Revenue	$	83,126	$	87,752	$	(4,626	)	$	75,385	$	73,700	$	1,685
Freight Revenue	1,665		4,472		(2,807		)	900		611		289
Other Income	1,316		2,277		(961		)	1,096		1,003		93
Total Revenue and Other Income	86,107		94,501		(8,394		)	77,381		75,314		2,067
Cost of Coal Sold:
Operating Costs	49,830		48,261		1,569			53,015		47,995		5,020
Depreciation, Depletion and Amortization	10,640		10,274		366			10,567		10,517		50
Total Cost of Coal Sold	60,470		58,535		1,935			63,582		58,512		5,070
Other Costs:
Other Costs	2,264		4,026		(1,762		)	983		1,545		(562		)
Depreciation, Depletion and Amortization	577		540		37			519		542		(23		)
Total Other Costs	2,841		4,566		(1,725		)	1,502		2,087		(585		)
Freight Expense	1,665		4,472		(2,807		)	900		611		289
Selling, General and Administrative Expenses	4,560		3,020		1,540			2,840		3,899		(1,059		)
Interest Expense	1,351		1,951		(600		)	1,587		1,560		27
Total Costs	70,887		72,544		(1,657		)	70,411		66,669		3,742
Net Income	$	15,220	$	21,957	$	(6,737	)	$	6,970	$	8,645	$	(1,675	)
Adjusted EBITDA	$	28,185	$	35,081	$	(6,896	)	$	19,987	$	21,767	$	(1,780	)
Distributable Cash Flow	$	17,329	$	25,290	$	(7,961	)	$	9,218	$	10,739	$	(1,521	)
Distribution Coverage Ratio	1.2		1.8		(0.6		)	0.6		0.7		(0.1		)

Coal Production

The table below presents total tons produced from the Pennsylvania Mining Complex on our 25% undivided interest basis for the periods indicated:


	Three Months Ended March 31,				Three Months Ended September 30,
Mine	2019	2018	Variance		2019	2018	Variance
Bailey	737	953	(216	)	695	599	96
Enlow Fork	707	504	203		597	646	(49	)
Harvey	268	218	50		331	348	(17	)
Total	1,712	1,675	37		1,623	1,593	30

Coal production was ~~1,712~~1,623 tons for the three months ended ~~March 31,~~September 30, 2019 compared to ~~1,675~~1,593 tons for the three months ended ~~March 31,~~September 30, 2018. ~~The Partnership’s coal~~Coal production increased ~~slightly due~~as a result of one fewer longwall move at the Pennsylvania Mining Complex in the current period compared to ~~increased production~~the year-ago quarter, partially offset by adverse geological conditions and other operational delays at the Enlow Fork ~~mine, as geological conditions improved compared to~~and Harvey mines. The Pennsylvania Mining Complex achieved record-high third quarter production during the ~~same period in 2018, and at the Harvey mine. This was partially offset by reduced production at the Bailey mine, resulting from a longwall move and other operational delays.~~three months ended September 30, 2019.

Coal revenue and cost components on a per unit basis for the three months ended ~~March 31,~~September 30, 2019 and 2018 are detailed in the table below. Our operations also include various costs such as selling, general and administrative, freight and other costs not included in our unit cost analysis because these costs are not directly associated with coal production.

Average Cash Cost of Coal Sold Per Ton ⁽¹⁾

(1) Average cash cost of coal sold per ton is a non-GAAP measure and average cash margin per ton is an operating ratio derived from non-GAAP measures. See “How We Evaluate Our Operations – Reconciliation of Non-GAAP Financial Measures” for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures.

Revenue and Other Income

Coal revenue was ~~$83,126~~$75,385 for the three months ended ~~March 31,~~September 30, 2019 compared to ~~$87,752~~$73,700 for the three months ended ~~March 31,~~September 30, 2018. Total sales tons increased in the period-to-period comparison to meet market demand. The ~~$4,626~~ decrease ~~was primarily attributable to a $3.60 lower~~in the average ~~sales price~~revenue per ton sold ~~in the 2019 period,~~was mainly driven by lower domestic netback ~~pricing compared to the year-ago quarter.~~contract pricing.

Freight revenue is the amount billed to customers for transportation costs incurred. This revenue is based on the weight of coal shipped, negotiated freight rates and method of transportation, primarily rail, used by the customers for which we contractually provide transportation services. Freight revenue is completely offset in freight expense. Freight revenue and freight expense were both ~~$1,665~~$900 for the three months ended ~~March 31,~~September 30, 2019 compared to ~~$4,472~~$611 for the three months ended ~~March 31,~~September 30, 2018. The ~~$2,807 decrease~~$289 increase was due to ~~decreased~~increased shipments to customers where we were contractually obligated to provide transportation services.

Other income is comprised of income generated by the Partnership ~~not in the ordinary course of business.~~related to non-coal producing activities. Other income remained materially consistent in the period-to-period comparison.

Cost of coal sold is comprised of operating costs related to produced tons sold, along with changes in both volumes and carrying values of coal inventory. The cost of coal sold includes items such as direct operating costs, royalties and production taxes, direct administration expenses, and depreciation, depletion, and amortization costs on production assets. Total cost of coal sold was ~~$60,470~~$63,582 for the three months ended ~~March 31,~~September 30, 2019, or ~~$1,935~~$5,070 higher than the ~~$58,535~~$58,512 for the three months ended ~~March 31,~~September 30, 2018. Total costs per ton sold were ~~$35.92~~$39.29 per ton for the three months ended ~~March 31,~~September 30, 2019, compared to ~~$35.34~~$37.48 per ton for the three months ended ~~March 31,~~September 30, 2018. The increase in the total cost of coal sold was primarily driven by

~~increased project expenses and gas well plugging activities, partially offset by reduced lease/rental expense as two longwall shields' operating leases were refinanced as finance leases~~ non-typical challenges faced in the ~~first quarter of 2018. Since the fourth quarter of 2017, the Partnership has seen modest inflation~~current period, including a roof fall and equipment breakdowns. These geological and equipment-related issues resulted in ~~the cost of supplies that contain steel~~higher mine maintenance and other commodities for which prices are strengthening, as well as in the cost of contract labor. The Partnership has been successful in managing these inflationary pressures and keeping its overall cost increase to a minimum through productivity gains and automation.project expenses.

Total other costs are comprised of various costs that are not allocated to ~~each~~an individual mine and therefore are not included in unit costs. Total other costs decreased $1,725 for the three months ended March 31, 2019 compared to the three months ended March 31, 2018. The decrease was primarily attributable to a decrease in current quarter costs related to externally purchased coal to blend and resell, and demurrage charges incurredremained materially consistent in the ~~year-ago quarter.~~period-to-period comparison.

Selling, General, and Administrative Expense

Interest expense, which primarily relates to obligations under our Affiliated Company Credit Agreement, remained materially consistent in the period-to-period comparison.

Adjusted EBITDA was ~~$28,185~~$19,987 for the three months ended ~~March 31,~~September 30, 2019 compared to ~~$35,081~~$21,767 for the three months ended ~~March 31,~~September 30, 2018. The ~~$6,896~~$1,780 decrease was primarily a result of a ~~$4.10~~$2.52 decrease in the average cash margin per ton sold, ~~or $6,900. This was~~which equated to a $3,335 decrease to adjusted EBITDA, partially offset by ~~a slight increase~~57 additional tons sold in ~~sales tons~~the quarter and ~~changes in various~~lower non-production related costs as ~~described~~discussed above.

Distributable cash flow was ~~$17,329~~$9,218 for the three months ended ~~March 31,~~September 30, 2019 compared to ~~$25,290~~$10,739 for the three months ended ~~March 31,~~September 30, 2018. The ~~$7,961~~$1,521 decrease was primarily attributable to a ~~$6,896~~$1,780 decrease in Adjusted EBITDA, as discussed above.

Nine Months Ended September 30, 2019 Compared with the Nine Months Ended September 30, 2018

Total net income was $36,577 for the nine months ended September 30, 2019 compared to $49,978 for the nine months ended September 30, 2018. Our results of operations for each of these periods are presented in the table below. Variances are discussed following the table.



	For the Nine Months Ended
	September 30,
	2019		2018		Variance
	(in thousands)
Revenue:
Coal Revenue	$	246,166	$	254,126	$	(7,960	)
Freight Revenue	3,529		9,444		(5,915		)
Other Income	3,440		4,302		(862		)
Total Revenue and Other Income	253,135		267,872		(14,737		)
Cost of Coal Sold:
Operating Costs	160,388		149,316		11,072
Depreciation, Depletion and Amortization	32,034		32,144		(110		)
Total Cost of Coal Sold	192,422		181,460		10,962
Other Costs:
Other Costs	4,154		9,810		(5,656		)
Depreciation, Depletion and Amortization	1,605		1,625		(20		)
Total Other Costs	5,759		11,435		(5,676		)
Freight Expense	3,529		9,444		(5,915		)
Selling, General and Administrative Expenses	10,353		10,260		93
Interest Expense	4,495		5,295		(800		)
Total Costs	216,558		217,894		(1,336		)
Net Income	$	36,577	$	49,978	$	(13,401	)
Adjusted EBITDA	$	75,793	$	90,412	$	(14,619	)
Distributable Cash Flow	$	43,325	$	58,178	$	(14,853	)
Distribution Coverage Ratio	1.0		1.4		(0.4		)

The table below presents total tons produced from the Pennsylvania Mining Complex on our 25% undivided interest basis for the periods indicated:



	Nine months ended September 30,
Mine	2019	2018	Variance
Bailey	2,239	2,415	(176	)
Enlow Fork	1,919	1,846	73
Harvey	983	927	56
Total	5,141	5,188	(47	)

Coal production was 5,141 tons for the nine months ended September 30, 2019 compared to 5,188 tons for the nine months ended September 30, 2018. Coal production decreased slightly, mainly due to reduced production at the Bailey mine resulting from one additional longwall move and other operational delays. This was partially offset by increased production at the Enlow Fork mine, as geological conditions improved throughout the first half of 2019 compared to the year-ago period, and at the Harvey mine.

Coal revenue and cost components on a per unit basis for the nine months ended September 30, 2019 and 2018 are detailed in the table below. Our operations also include various costs such as selling, general and administrative, freight and other costs not included in our unit cost analysis because these costs are not directly associated with coal production.



	Nine months ended September 30,
	2019		2018		Variance
Total Tons Sold (in thousands)	5,145		5,175		(30		)
Average Revenue Per Ton Sold	$	47.84	$	49.11	$	(1.27	)

Average Cash Cost of Coal Sold Per Ton ⁽¹⁾	$	31.16	$	28.87	$	2.29
Depreciation, Depletion and Amortization Per Ton Sold (Non-Cash Cost)	6.23		6.20		0.03
Average Cost of Coal Sold Per Ton	$	37.39	$	35.07	$	2.32
Average Margin Per Ton Sold	$	10.45	$	14.04	$	(3.59	)
Add: Depreciation, Depletion and Amortization Costs Per Ton Sold	6.23		6.20		0.03
Average Cash Margin Per Ton Sold ⁽¹⁾	$	16.68	$	20.24	$	(3.56	)

Revenue and Other Income

Coal revenue was $246,166 for the nine months ended September 30, 2019 compared to $254,126 for the nine months ended September 30, 2018. The $7,960 decrease was primarily attributable to a $1.27 lower average sales price per ton sold in the 2019 period, mainly driven by lower domestic netback contract pricing compared to the year-ago period, as well as a slight decrease in ~~distributable cash flow~~tons sold. This decrease was ~~also~~partially offset by an increase in prices the Partnership received for its export coal.

Freight revenue is the amount billed to customers for transportation costs incurred. This revenue is based on the weight of coal shipped, negotiated freight rates and method of transportation, primarily rail, used by the customers for which we contractually provide transportation services. Freight revenue is completely offset in freight expense. Freight revenue and freight expense were both $3,529 for the nine months ended September 30, 2019 compared to $9,444 for the nine months ended September 30, 2018. The $5,915 decrease was due to ~~a $1,047 increase in cash interest paid. Although interest expense~~decreased shipments to customers where we were contractually obligated to provide transportation services.

Other income is comprised of income generated by the Partnership relating to non-coal producing activities. Other income remained materially consistent in the period-to-period ~~comparison,~~comparison.

Cost of coal sold is comprised of operating costs related to produced tons sold, along with changes in both volumes and carrying values of coal inventory. The cost of coal sold includes items such as direct operating costs, royalties and production taxes, direct administration expenses, and depreciation, depletion, and amortization costs on production assets. Total cost of coal sold was $192,422 for the ~~debt restructuring~~nine months ended September 30, 2019, or $10,962 higher than the $181,460 for the nine months ended September 30, 2018. Total costs per ton sold were $37.39 per ton for the nine months ended September 30, 2019 compared to $35.07 per ton for the nine months ended September 30, 2018. The increase in ~~November 2017~~the total cost of coal sold was primarily driven by additional equipment rebuilds and longwall overhauls due to the timing of longwall moves and panel development. Also, the Partnership faced non-typical challenges during the current year, including a roof fall and equipment breakdowns. These geological and equipment-related issues resulted in ~~only one month~~higher mine maintenance and project expenses.

Total other costs are comprised of ~~interest being paid during~~various costs that are not allocated to an individual mine and therefore are not included in unit costs. Total other costs decreased $5,676 in the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2019 compared to ~~a full quarter of interest paid during~~ the ~~three~~nine months ended ~~March 31, 2019.~~September 30, 2018. The decrease was primarily attributable to additional costs incurred in the year-ago period related to externally purchased coal to blend and resell, discretionary employee benefit expenses and demurrage charges.

Selling, General, and Administrative Expense

Interest expense, which primarily relates to obligations under our Affiliated Company Credit Agreement, remained materially consistent in the period-to-period comparison.

Adjusted EBITDA was $75,793 for the nine months ended September 30, 2019 compared to $90,412 for the nine months ended September 30, 2018. The $14,619 decrease was primarily a result of a $3.56 decrease in the average cash margin per ton sold, coupled with 30 fewer tons sold in the period, which equated to a $19,032 decrease to adjusted EBITDA. This was partially offset by lower non-production related costs as discussed above.

Distributable cash flow was $43,325 for the nine months ended September 30, 2019 compared to $58,178 for the nine months ended September 30, 2018. The $14,853 decrease was primarily attributable to a $14,619 decrease in Adjusted EBITDA, as discussed above.

Capital Resources and Liquidity

Liquidity and Financing Arrangements

We expect our ongoing sources of liquidity to include cash generated from operations, borrowings under our Affiliated Company Credit Agreement, and, if necessary, the issuance of additional equity or debt securities. We believe that cash generated from these sources will be sufficient to meet our short-term working capital requirements and our long-term capital expenditure requirements and to make quarterly cash distributions as declared by the board of directors of our general partner. The Partnership filed a universal shelf registration statement on Form S-3 ~~(333-215962)~~(Reg. No. 333-215962) on March 10, 2017, which was declared effective by the SEC on March 14, 2017, for an aggregate amount of $750,000 to provide the Partnership with additional flexibility to access capital markets quickly.

We expect to generate adequate cash flow from operations in 2019 ~~through continued demand from the export and domestic thermal markets~~due to our strong contracted position and consistent cost control measures. We started a capital construction project on the coarse refuse disposal area ~~project~~ in 2017, which is expected to continue through 2021. Our total 2019 capital needs, including the coarse refuse disposal area project, are expected to be between $34,000 to $38,000, which is increased from 2018 levels due to additional expected maintenance capital expenditures related to airshaft construction projects, as well as additional belt system related expenditures.

From time to time we change our exposure to various countries depending on the economics and profitability of coal sales. Given that coal markets are global, we expect, if possible, to offset any adverse impact from tariffs that may be imposed by governments in the countries in which one or more of our end users are located, by reallocating our customer base to other countries or to the domestic USU.S. markets.

We expect to generate adequate cash flows and liquidity to meet reasonable increases in the cost of supplies that are passed on from our suppliers. We will also continue to seek alternate sources of supplies and replacement material to offset any unexpected increase in the cost of supplies.

Our Partnership Agreement requires that we distribute all of our available cash to our unitholders. As a result, we expect to rely primarily upon financing under the Affiliated Company Credit Agreement and the issuance of debt and equity securities to fund our acquisitions and expansion capital expenditures, if any.

On July 25, 2019, the Board of Directors of our general partner announced that upon payment of the cash distribution with respect to the quarter ended June 30, 2019, the financial requirements for the conversion of all subordinated units had been satisfied. As a result, on August 16, 2019, all 11,611,067 subordinated units, which were owned entirely by CONSOL Energy Inc., were converted into common units on a one-for-one basis. The conversion did not impact the amount of the cash distribution paid or the total number of the Partnership's outstanding units representing limited partner interests.

Affiliated Company Credit Agreement

On November 28, 2017, the Partnership and the other Credit Parties entered into the Affiliated Company Credit Agreement by and among the Credit Parties, CONSOL Energy, as lender and administrative agent, and PNC, as collateral agent. On March 28, 2019, the Affiliated Company Credit Agreement was amended to extend the maturity date from February 27, 2023 to December 28, 2024. The Affiliated Company Credit Agreement provides for a revolving credit facility in an aggregate principal amount of up to $275,000 to be provided by CONSOL Energy, as lender. In connection with the Partnership’s entry into the Affiliated Company Credit Agreement, the Partnership made an initial draw of $200,583, the net proceeds of which were used to repay the amounts outstanding under the Partnership's prior credit facility. Additional drawings under the Affiliated Company Credit Agreement are available for general partnership purposes. The obligations under the Affiliated Company Credit Agreement are guaranteed by the Partnership’s subsidiaries and secured by substantially all of the assets of the Partnership and its subsidiaries pursuant to the security agreement and various mortgages.

Interest on outstanding obligations under our Affiliated Company Credit Agreement accrues at a fixed rate ranging from 3.75% to 4.75% depending on the total net leverage ratio. The unused portion of our Affiliated Company Credit Agreement is subject to a commitment fee of 0.50% per annum.

As of ~~March 31,~~September 30, 2019, the Partnership had ~~$161,500~~$181,400 of borrowings outstanding under the Affiliated Company Credit Agreement, leaving ~~$113,500~~$93,600 of unused capacity. Interest on outstanding borrowings under the Affiliated Company Credit Agreement at ~~March 31,~~September 30, 2019 was accrued at a rate of ~~3.75%~~4.00%.

The Affiliated Company Credit Agreement contains certain covenants and conditions that, among other things, limit the Partnership’s ability to: (i) incur or guarantee additional debt; (ii) make cash distributions (subject to certain limited exceptions); provided that we will be able to make cash distributions of available cash to partners so long as no event of default

is continuing or would result therefrom; (iii) incur certain liens or permit them to exist; (iv) make particular investments and loans; provided that we will be able to increase our ownership percentage of our undivided interest in the Pennsylvania Mining Complex and make investments in the Pennsylvania Mining Complex in accordance with our ratable ownership; (v) enter into certain types of transactions with affiliates; (vi) merge or consolidate with another company; and (vii) transfer, sell or otherwise dispose of assets. The Partnership is also subject to covenants that require the Partnership to maintain certain financial ratios. For example, the Partnership is obligated to maintain at the end of each fiscal quarter (a) maximum first lien gross leverage ratio of 2.75 to 1.00 and (b) a maximum total net leverage ratio of 3.25 to 1.00, each of which will be calculated on a consolidated basis for the Partnership and its restricted subsidiaries at the end of each fiscal quarter. At ~~March 31,~~September 30, 2019, the Partnership was in compliance with its debt covenants with the first lien gross leverage ratio at ~~1.46~~1.73 to 1.00 and the total net leverage ratio at ~~1.45~~1.64 to 1.00.

Receivables Financing Agreement

Loans under the Securitization will accrue interest at a reserve-adjusted LIBOR market index rate equal to the one-month Eurodollar rate. Loans and letters of credit under the Securitization also will accrue a program fee and a letter of credit participation fee, respectively, ranging from 2.00% to 2.50% per annum, depending on the total net leverage ratio of CONSOL Energy. In addition, the SPV paid certain structuring fees to PNC Capital Markets LLC and will pay other customary fees to the lenders, including a fee on unused commitments equal to 0.60% per annum.

The SPV’s assets and credit are not available to satisfy the debts and obligations owed to the creditors of CONSOL Energy, CONSOL Thermal Holdings or any of the Originators. CONSOL Thermal Holdings, the Originators and CPCC as servicer are independently liable for their own customary representations, warranties, covenants and indemnities. In addition, CONSOL Energy has guaranteed the performance of the obligations of CONSOL Thermal Holdings, the Originators and CPCC as servicer, and will guarantee the obligations of any additional originators or successor servicer that may become party to the Securitization. However, neither CONSOL Energy nor its affiliates will guarantee collectability of receivables or the creditworthiness of obligors thereunder.

The agreements comprising the Securitization contain various customary representations and warranties, covenants and default provisions which provide for the termination and acceleration of the commitments and loans under the Securitization in certain circumstances including, but not limited to, failure to make payments when due, breach of representation, warranty or covenant, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.

Cash Flows


	Three Months Ended March 31,									Nine Months Ended September 30,
	2019			2018			Variance			2019			2018			Variance
	(in thousands)									(in thousands)
Cash flows provided by operating activities	$	25,218		$	29,264		$	(4,046	)	$	67,505		$	95,134		$	(27,629	)
Cash used in investing activities	$	(8,093	)	$	(4,854	)	$	(3,239	)	$	(29,350	)	$	(20,086	)	$	(9,264	)
Cash used in financing activities	$	(17,723	)	$	(25,195	)	$	7,472		$	(28,547	)	$	(75,661	)	$	47,114

Cash ~~flows~~ provided by operating activities decreased ~~$4,046~~$27,629 in the ~~three~~nine months ended ~~March 31,~~September 30, 2019 compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2018, primarily due to a decrease in net income and ~~a change~~changes in working capital.

Cash used in investing activities increased ~~$3,239~~$9,264 in the ~~three~~nine months ended ~~March 31,~~September 30, 2019 compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2018, primarily as a result of increased capital expenditures of ~~$3,164, primarily~~$9,098, mainly due to an increase in airshaft construction projects, ~~and additional~~ belt system related ~~expenditures.~~expenditures, new equipment, and rebuilds of current equipment. The table below represents the various items for which cash was used for investing purposes during the nine months ended September 30, 2019 and 2018.

Cash flows used in financing activities decreased ~~$7,472~~$47,114 in the ~~three~~nine months ended ~~March 31,~~September 30, 2019 compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2018. The decrease in cash used in financing activities was primarily due to ~~an $8,083 decrease in net~~less discretionary payments made under the Affiliated Company Credit Agreement. Net payments made under the Affiliated Company Credit Agreement ~~due~~were $29,583 in the nine months ended September 30, 2018, compared to ~~a decrease~~$18,400 in ~~distributable cash flow.~~net proceeds received under the Affiliated Company Credit Agreement in the nine months ended September 30, 2019.

We do not maintain off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that have or are reasonably likely to have a material current or future effect on our 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 in this Form 10-Q.

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 and outcomes to differ materially from results expressed in or implied by our forward-looking statements. 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,” “continue,” “intend,” “expect,” “may,” “should,” “anticipate,” “could,” “estimate,” “plan,” “predict,” “project,” “will,” or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this 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:

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the management of the Partnership’s general partner, including the Chief Executive Officer and the Chief Financial Officer of the general partner, an evaluation of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), was conducted as of the end of the period covered by this report. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer of the Partnership’s general partner have concluded that the Partnership’s disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended ~~March 31,~~September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Partnership implemented an enterprise resource planning (“ERP”) system, which is expected to improve the efficiency of certain financial and related transactional processes. During the first ~~quarter~~half of fiscal year 2019, the Partnership completed the implementation of certain processes, and revised and updated the related controls. These changes did not materially affect the Partnership's internal control over financial reporting. As the Partnership implements the remaining functionality under this ERP system over the next year, it will continue to assess the impact on its internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to paragraph one within Part 1, Item 1. Financial Statements, “Note 11. Commitments and Contingent Liabilities,” which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this quarterly report, you should carefully consider the factors discussed in “Part I - Item 1A. Risk Factors” of our 2018 Form 10-K, as updated by any subsequent Form 10-Qs. These described risks are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth purchases of the Partnership’s common units during the three months ended September 30, 2019 made by CONSOL Energy:



	(a)	(b)		(c)	(d)
Period	Total Number of Units Purchased ⁽¹⁾	Average Price Paid per Unit		Total Number of Units Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Units that May Yet be Purchased Under the Plans or Programs (in thousands)⁽¹⁾⁽²⁾
July 1, 2019 - July 31, 2019	—	$	—	—	$	46,802
August 1, 2019 - August 31, 2019	9,610	$	12.55	9,610	$	46,681
September 1, 2019 - September 30, 2019	9,803	$	13.20	9,803	$	46,552
Total	19,413	$	12.88	19,413

(1) In May 2019, CONSOL Energy Inc.'s Board of Directors approved an expansion of the stock, unit and debt repurchase program. The program previously allowed CONSOL Energy to use up to $25 million of the program to purchase CONSOL Coal Resources LP's outstanding common units in the open market. CONSOL Energy's Board of Directors approved changing the termination date of the program from June 30, 2019 to June 30, 2020. Also, in accordance with CONSOL Energy’s credit facility covenants, the total amount that can be used for repurchases of the Partnership's outstanding common units was raised to $50 million.

(2) Management of CONSOL Energy cannot estimate the number of common units that will be purchased because purchases are made based upon the price of the Partnership’s units, the Partnership’s financial outlook and alternative investment options.

As disclosed above, the Affiliated Company Credit Agreement includes covenants limiting our ability to make cash distributions (subject to certain limited exceptions); provided that we are able to make cash distributions of available cash to partners so long as no event of default is continuing or would result therefrom.

ITEM 4. MINE SAFETY DISCLOSURES

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95 to this Quarterly Report on Form 10-Q.



Exhibits	Description	Method of Filing

~~10.1~~	Amendment No. 1, dated as of March 28, 2019, to Affiliated Company Credit Agreement, dated November 28, 2017, by and among CONSOL Coal Resources LP, certain of its affiliates party thereto, CONSOL Energy Inc. and PNC Bank, National Association	~~Filed as Exhibit 10.1 to Form 8-K (#001-37456) filed on April 3, 2019~~

31.1	Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002	Filed herewith

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

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.	Filed herewith

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.	Filed herewith

95	Mine Safety and Health Administration Safety Data.	Filed herewith

101	Interactive Data File (Form 10-Q for the quarterly period ended ~~March 31,~~September 30, 2019, furnished in XBRL).	Filed herewith

104	Cover Page Interactive Data File (formatted as Inline XBRL)	Contained in Exhibit 101

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: ~~May 8,~~November 5, 2019



	CONSOL Coal Resources LP

	By:		CONSOL Coal Resources GP LLC, its general partner
	By:		/s/ JAMES A. BROCK
			James A. Brock
			Chief Executive Officer, Chairman of the Board and Director (Duly Authorized Officer and Principal Executive Officer)

	By:		CONSOL Coal Resources GP LLC, its general partner
	By:		/s/ DAVID M. KHANI
			David M. Khani
			Chief Financial Officer and Director (Duly Authorized Officer and Principal Financial Officer)

	By:		CONSOL Coal Resources GP LLC, its general partner
	By:		/s/ JOHN M. ROTHKA
			John M. Rothka
			Chief Accounting Officer (Duly Authorized Officer and Principal Accounting Officer)

3338


	Three Months Ended March 31,							Three Months Ended September 30,
	2019		2018		Variance			2019		2018		Variance
Total Tons Sold (in thousands)	1,683		1,656		27			1,618		1,561		57
Average Revenue Per Ton Sold	$	49.38	$	52.98	$	(3.60	)	$	46.59	$	47.21	$	(0.62	)

Average Cash Cost Per Ton Sold	$	29.71	$	29.21	$	0.50
Average Cash Cost of Coal Sold Per Ton ⁽¹⁾								$	32.78	$	30.88	$	1.90
Depreciation, Depletion and Amortization Per Ton Sold (Non-Cash Cost)	6.21		6.13		0.08			6.51		6.60		(0.09		)
Total Costs Per Ton Sold	$	35.92	$	35.34	$	0.58
Average Cost of Coal Sold Per Ton								$	39.29	$	37.48	$	1.81
Average Margin Per Ton Sold	$	13.46	$	17.64	$	(4.18	)	$	7.30	$	9.73	$	(2.43	)
Add: Depreciation, Depletion and Amortization Costs Per Ton Sold	6.21		6.13		0.08			6.51		6.60		(0.09		)
Average Cash Margin Per Ton Sold (1)	$	19.67	$	23.77	$	(4.10	)	$	13.81	$	16.33	$	(2.52	)



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



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



	Three Months Ended March 31, 2019		Three Months Ended March 31, 2018
Coal Revenue	$	83,126	$	87,752
Freight Revenue	1,665		4,472
Total Revenue from Contracts with Customers	$	84,791	$	92,224


			Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Amortization of Right of Use Assets	$	967	$	966	$	2,899
Interest Expense	$	109	$	83	$	288



	March 31, 2019		December 31, 2018
Affiliated Company Credit Agreement (3.75% interest rate at March 31, 2019 and December 31, 2018)	$	161,500	$	163,000



	March 31, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Affiliated Company Credit Agreement - Related Party	$	161,500	$	161,500	$	163,000	$	163,000